Transcript Slide 1

UNIVERSITY OF NEWHAMPSHIRE
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Responsibility Centered Management
(Decentralized Budgeting System)
 Divide the university into 19 budgetary units
 Allocate out all our revenue via formula
 All units responsible for their full costs (facilities,
benefits, and overhead)
 Direct financial incentives for revenue generation
and cost savings
 Financial resources are matched with activity levels
http://www.unh.edu/rcm
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The RCM Vision
Increase:
 Incentives for planning, cost effectiveness and revenue
generation
 Local responsibility and authority
 Flexibility to match revenue streams with changing
program demands
 Attentiveness to all categories of money
 Accountability at all levels of management
Decrease:
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Rigid resource allocation process
Involvement of institutional leaders in budgetary detail
Mystery and mistrust surrounding UNH finances
“Use it or lose it” mentality
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UNH RCM Principles
 Equity and simplicity
 RC units receive all revenue and are responsible for
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all expenditures generated by their activities
Maximize management flexibility within RC Units.
Maintain reserves at the RC unit level
Credible governance mechanisms required to prevent
unhealthy internal competition
Transition to new model should not create winners or
losers
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RC Units
Colleges and Related Service Units
 College of Life Sciences and
Agriculture
 College of Liberal Arts
 College of Engineering and Physical
Sciences
 Whittemore School of Business and
Economics
 School of Health and Human Services
 UNH – Manchester
 Library
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Student and Community Life Units
Student Affairs
Housing
Hospitality Services
Intercollegiate Athletics
Whittemore Center Arena
Research and Public Service Units
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Cooperative Extension
Research and Public Service
New Hampshire Public Television
Institute for Earth, Oceans and Space
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Governance, Advancement and
Infrastructure Units
Facilities Services
Computing and Information Services
General Administration
Academic Affairs
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RC Unit Revenues
 Direct revenues - fees, sales of goods/services,
gifts, grants/contracts, endowment income
 Allocated revenues:
 Undergraduate net tuition - based on share of
weighted credit hours taught over prior two years.
Weights are based on historical average expense
per credit hour
 Graduate tuition - based on enrollment
 State Appropriations (30%) - based on faculty
salaries
 Indirect Cost Revenue - based on actual indirect
costs earned
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RC Unit Expenses
 Direct Expenses - salaries, wages, fringe benefits,
supplies, other direct expenses.
 Allocated expenses (overhead):
 Facilities Services (maintenance, utilities,
housekeeping, R&R) - based on net square feet
 General Administration (President, Research, Finance
& Administration, Student Affairs) - based on prior year
revenues and personnel expenses
 Academic Affairs (Provost, Registrar, Financial Aid
Office, Admissions) - based on prior year revenues and
personnel expenses
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“Balancing Adjustment”
 Major principle of RCM was that no unit would begin better
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or worse off than they would have been under the old
system –thus they were ‘held harmless’
A "balancing adjustment" was used to bring Units into RCM
in a "revenue neutral" budget position
Balancing adjustments are permanent but not inflated
RC Unit FY01 Original Budget
Direct Revenue
Allocated Revenue
Balancing Adjustment
Total Revenues
"Old"
Budget System
$
20,000,000
$
20,000,000
$
$
$
$
Direct Expenditures
Allocated Expenditures
Total Expenditures
$
$
$
20,000,000
20,000,000
$
$
$
Net
$
RCM
20,000,000
8,000,000
2,000,000
30,000,000
20,000,000
10,000,000
30,000,000
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$
-
Reserves
 100% of unspent funds at year end are automatically
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added to the RC Unit fund balance
Minimum fund balance level of 3% of prior year
expenditures and transfers
RC units can access reserves – up to 1/3 of balance with
Dean/Director approval only; remainder with VP and
President’s approval
Each RC Unit is developing individual reserve goals
Reduces dependence on limited central funding:
 Liberal Arts invests in Murkland Language Lab.
 WSBE – Saving for building renovation/expansion.
 CEPS – Saving for Kingsbury equipment costs.
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Current Status
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Currently in 5th year of RCM – FY05
Reserves have grown significantly
Budgets based on activity levels
Strategic planning at RC unit level
Impact on academic programs
Impact on Service Units
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General Fund Reserve Summary
$16,000,000
$14,000,000
$12,000,000
$10,000,000
$8,000,000
$6,000,000
$4,000,000
$2,000,000
$1995
1996
1997
1998
1999
2000
2001
2002
2003
2004
Fiscal Year
Note: Increases in General Fund Reserve are the result of the transition to RCM, and the ability of all RC
Units to keep their fund balances. Many units have planned uses for these fund balances. While the reserve
levels are much improved, UNH remains undercapitalized. T o put the reserve balance in perspective, if
UNH were an indivitual making $45,000 per year, that person would have $2,052 in savings.
RC Unit Reserves
Institutional Reserve
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Annual Growth in General Fund Budgets
FY01 - FY05
Whittemore School of Business and Economics 13.14%
UNH Manchester 8.68%
Research and Public Service 7.13%
College of Engineering and Physical Sciences 6.79%
Institutional * 6.72%
College of Life Sciences and Agriculture 6.55%
School of Health and Human Services 6.38%
College of Liberal Arts 6.21%
Library 6.15%
Facilities Services 6.01%
Computing and Information Services 5.92%
Central Administration 5.12%
0%
2%
4%
6%
8%
10%
12%
14%
* USNH central service cost, insurance and UNH contingency.
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Strategic Planning
 Each unit is responsible for preparing and maintaining
a 3-5 year plan, which is reviewed by the Central
Budget Committee and approved by the President
 Plans coincide with University objectives and
Academic Plan
 RC Unit performance is judged against plans
 Unit plans are available for review by the campus
community to promote accountability
 Institutional Effectiveness – Utilizing strategic
indicators to improve effectiveness & accountability
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Impact on Academic Programs
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Student access
HHS case study
Productivity review
Library periodical review
Space utilization
Research productivity
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Student Access
 Improving access to classes for first year
students
 College-based open houses to attract
undeclared students
 Reviewing courses and curriculum to improve
the student experience
 College based student retention effort
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School of Health & Human
Services
 Pre RCM – Reduced cost by cutting general
education requirement courses for freshmen to
preserve the core major courses
 Post RCM – Developed new courses to attract
students and redesign the curriculum to make
it more efficient
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Space Utilization
 Colleges transferring ”college controlled”
classrooms to Registrar’s Office to be
available for University use
 Review of lab utilization and the
reassignment of lab space at COLSA
and CEPS to more productive faculty
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Indirect Cost Revenue Growth
FY02 to FY04
132%
Co o p erative Extens io n
Scho o l o f Health and
Human Services
83%
56%
Co lleg e o f Life Sciences
and Ag riculture
0%
20%
40%
60%
80%
100%
120%
140%
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Impact on Service Units
Service units have become more
accountable and responsive to customer
needs:
 Facilities – cost reduction efforts and service
provider agreements
 Library – periodical budget/allocation review
 CIS – Customer focus groups and Strategic Plan
that focus on service
 Budget increases for the Central Administration
is lower than Colleges and Research Units.
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RCM Issues
 Credit Hour weighting – used to distribute net
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undergraduate tuition revenue
Library Funding
Cultural change – making decisions based on
both programmatic and financial consideration
Cost/Benefit analysis of grants, financial and
programmatic
Financial deficits at some units.
Concerns about the appropriate level of central
strategic funding available
Facilities methodology
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UNH/RCM in National Context
 47% of Private vs. 8% of Public Universities employ an RCM model
 UNH Presented at EACUBO Annual Convention
 Representatives from numerous institutions visited UNH to explore
RCM (UMASS, UVM, URI, UCONN, UMAINE, UColorado at
Denver,, Eihme University in Japan, Queen’s University, Ontario,
University at Alberta)
 Numerous consultations with other institutions (South Carolina,
North Texas, Idaho, University of Wisconsin, Pace University)
 Asked to write a chapter in a NACUBO book about RCM.
 UNH RCM Website receives 10,000 hits per year.
*Survey of the Resource Allocation Methodologies Employed at Public and
Private Research and Doctoral Universities. Cornell Higher Education
Research Institute, 1/4/2000.
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Using RCM as a Tool
While financial issues must be considered when making
decisions, it cannot be the primary driver. Relevance to
mission and priorities of the institution must be the primary
consideration.
“We must remember that RCM is merely a tool. Like any tool it can
be used well or badly. It is not a substitute for decision-making,
judgment or leadership. It is merely an aid. The ultimate success of
RCM depends on the people who use it -- on how we at UNH
choose to use it, how we prepare ourselves to use it well, and how
we are held accountable for using RCM to achieve university-wide
goals.“*
* Former Provost David Hiley
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Conclusion
 RCM is a work in progress – changes
can and will be made where necessary
 To date, we consider RCM a true
success
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RCM Resources
 Papers/Articles:
 “Whither Decentralization Management?” by John Strauss and John Curry
 “RCM as a Catalyst” by Ed Whalen
http://www.nacubo.org/website/members/bomag/rcm_0897.html
 Five Year Review of RCM at Indiana University
http://www.provost.uiuc.edu/provost/budget/historical/reform/indiana.htm
 Websites
 University of New Hampshire – RCM Page – http://www.unh.edu/rcm
 University of Illinois – Budgetary Principles and Practicehttp://www.provost.uiuc.edu/provost/budget/budgetary.html
 Ohio State University – Budget Restructuring – http://www.rpia.ohiostate.edu/Budget_planning/Budget_restruct.htm
 University of Idaho – http://www.webs.uidaho.edu/ipb/rcm.htm
 University of Minnesota – Incentives for Managed Growth –
http://www.evpp.umn.edu/evpp/img/
 University of South Carolina – Value Centered Management –
http://www.sc.edu/library/pubserv/value.html
 Brandeis University – RCM –
http://www.brandeis.edu/evpcoo/documents/rcm_procedures_2000-06-27.pdf
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