Transcript Slide 1

Responsibility Center Management
David Proulx, Senior Financial Analyst - RCM Project Manager
EMail: [email protected]
Budget Office Website: http://www.unh.edu/budget
RCM Website: http://www.unh.edu/rcm
Institutional Rev enue
- Tuition
- Indir ect Cost Recov ery
- S tate Appr opr iation
Rev enue
Old
Budget
System
University Budget Panel
allocates r ev e nue to
depar tments in for m of $142
million E &G Budget
Institutional Ov erhead
(Service Units)
UNH Div isions
- Colleges/Libra ry
- Facilities
- CIS
- S tudent Affair s
- V P Research
- General Admin
- Academic Affairs
- Research and Public
S erv ice Units
- Auxiliary Ope rations
Direct Expense
- P ayr oll
- S upport
- Debt serv ice
Department (Direct)
Rev enue
- Grant/Contra cts
- Restricted
Gifts/Endowment
- S ales of goods/ser v ices
- Fees
RCM Model
Revenue
RCM
Budget
System
- Tuition
- Indirect Cost Recovery
- State Appropriation
Revenue
- Direct Revenue (Grant,
Gift, Sales, Fees, etc.)
RCM Model
Central Budget
Committee
RC Units
- Academic
- Research
- Auxiliary
Direct Expense
- Salaries, Wages & Benefits
- Support
- Debt service
- Incremental funding
decisions
- $700k University Fund
allocation
- Service Unit Advisory Board
subcommittee to review
Service Units if necessary
Institutional Overhead
- Facilities
- CIS
- Student Affairs
- VP Research
- General Admin
- Academic Affairs
RC Units
RCM Model
Colleges and Related Service Units
Research and Public 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
Cooperative Extension
Research and Public Service
New Hampshire Public Television
Institute for Earth, Oceans, and Space
Student and Community Life Units
Governance, Advancement and
Infrastructure Units
Student Affairs
Housing
Hospitality Services
Intercollegiate Athletics
Whittemore Center Arena
Facilities Services
Computing and Information Services
General Administration
Academic Affairs
RCM Principles
1.
2.
3.
4.
5.
6.
RCM Model
Create incentives for good management
Fairness/Simplicity
Unit plans must align with University’s mission and
strategic plan
Smooth transition - no redistribution of resources
Credible governance mechanisms required to prevent
unhealthy internal competition
Same rules for all operations – academic, research,
auxiliary, administrative
RCM Model
RCM Principles, cont.
7. RCM principles/formulas apply to the RC unit level.
8. RC units receive all revenue and are responsible for all
expenditures generated by their activities.
9. RC units carry forward excess funds from one year to
next and manage reserves at the unit level.
10. Each RC unit determines how to manage RCM within
their unit.
11. RCM is not a cost accounting model but rather a
general incentive/allocation model.
RC Unit Revenues
RCM Model
Direct revenues - fees, sales of goods/services, gifts,
grants/contracts, endowment income
Allocated revenues:
 Undergraduate tuition - based on weighted credit
hours taught over the past two years. Weights are
based on historical average expense per credit hour.
 Graduate tuition - based on enrollment
 State Appropriations - based on faculty salaries
 Indirect Cost Revenue - based on actual indirect
costs generated
* Weightings are COLSA 1.0, WSBE 1.0, SHHS 1.0, CEPS 1.5, COLA .8
RC Unit Expenses
RCM Model
Direct Expenses - salaries, wages, fringe benefits,
equipment, travel, supplies, other direct expenses.
Allocated expenses (overhead):
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

Facilities Services (maintenance, utilities, housekeeping, grounds
and roads, R&R) - based on net square feet ($15.40 per NSF)
General Administration (President, Research, Finance &
Administration, Student Affairs, and support units reporting to VP’s)
- based on prior fiscal year revenues and personnel expenses.
Average rate – 11% of total revenues.
Academic Affairs (Provost, Registrar, Financial Aid Office,
Admission and other units reporting to Provost) - based on prior
fiscal year revenues and personnel expenses. Average rate – 7%
of total revenues.
“Balancing Adjustment”
RCM Model
Major principle of RCM was that no unit would begin better
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 revenues
UNH budget allocation
Allocated revenue
Balancing adjustment
Total revenues
"Old"
Budget System
$
1,000,000
$
19,000,000
$
20,000,000
Direct expenditures
Allocated expenditures
Total Expenditures
$
20,000,000
$
20,000,000
Net
$
-
$
RCM
1,000,000
$
$
$
27,000,000
2,000,000
30,000,000
$
$
$
20,000,000
10,000,000
30,000,000
$
-
The University Fund
RCM Model
Balancing adjustments do not inflate and are funded from
state appropriations.
Inflation proceeds become the “University Fund”
“University Fund” is flexible central funding to allocate
based on strategic priorities of the institution
Managed by the Central Budget Committee (CBC)
Units make requests via strategic plans to their VP. VP
brings requests before the CBC. CBC decides to provide
permanent, one time or no funding.
Reserves
RCM Model
Under RCM, unspent funds at year end are automatically
added to the School/College fund balance. This required a
change in Board of Trustee policy.
RC units are obligated to meet an agreed upon minimum fund
balance level (initially 1% 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 approval.
Unit reserves reduce dependence on limited central reserves
Current Status
RCM Model
Fifth year of RCM
Increased discussion/understanding about budgetary
impact of decisions made by faculty and deans
More collaborative budget process at institutional and
unit levels
Has improved attentiveness to student needs – more
sections, new programs, restructuring of existing
programs
Service units redesigning processes to increase
efficiency
Current Status, cont.
RCM Model
RCM has facilitated strategic planning at the unit
level – long term vs. short term view
Institutional leaders focus on institutional strategic
issues vs. small dollar budgetary requests
Attentiveness to all categories of money rather
than just General fund
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%
* USNH central s ervice co s t, ins urance and UNH co nting ency.
7/21/2015
2%
4%
6%
8%
10%
12%
14%
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
Purpose of Review
RCM Model
Model is not perfect
Ensure that model does not impede progress
toward reaching goals outlined in the Academic
Plan
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Need to understand impact of perceived and actual
incentives/ disincentives created by RCM.
Understand if governing mechanisms are working as
intended
Changes will be made to the model after the review
process
Ensure as much understanding of the RCM
across the University as possible