Responsibility Center Management

David Proulx, Assistant Vice President for Financial Planning and Budgeting EMail: [email protected]

Budget Office Website: http://www.unh.edu/budget RCM Website: http://www.unh.edu/rcm

Presentation Outline 1. UNH Overview

2. What is RCM?

3. 5 year review

28.5% T uition and Fees, net of Financial Aid $123.9M

Current Fund Revenue FY06* $435.1 Million**

27.0% Sponsored Programs & Federal Aid $117.8M

5.0% Gifts & Endowment Income $21.6M

14.2% State of NH General Appropriations $61.7M

*Includes Durham, M anchester, NHPTV and UNH-Foundation 25.3% Other Sources, Primarily Auxiliaries $110.1M

**Excludes Loan, Plant, and Endowment & Similar Funds

State Appropriations for Higher Education Operations Per Capita FY 2006

New Hampshire #50 Colorado #49 Vermont #48 $50 $65 Source: Nat ional Cent er f or Public Policy and Higher Educat ion ht t p:/ / measuringup.highereducat ion.org/ $80 $95 $110

Pe r C api ta Appropri ati on Dol l ars

$125 $140 New Hampshire would have to increase it's funding by:

44%

to reach #49 (Colorado) and

48%

to reach #48 (Vermont)

UNH Resident Cost of Attendance Tuition/Room/Board/Fees vs. New England Land Grant Institutions

$19,000 $18,000 $17,000 $16,000 $15,000 $14,000 $13,000 $12,000 $11,000 $10,000 FY 02 FY 03 FY 04 FY 05 FY 06 UVM UNH UMASS/AMHERST AVERAGE UCONN URI UMAINE

UNH Non-Resident Cost of Attendance Tuition/Room/Board/Fees vs. New England Land Grant Institutions

$34,000 $32,000 $30,000 $28,000 $26,000 $24,000 $22,000 $20,000 $18,000 FY 02 FY 03 FY 04 FY 05 FY 06 UVM UNH UCONN URI AVERAGE UMASS/AMHERST UMAINE

UNH Durham General Fund Undergraduate Aid

$18,000,000 $16,000,000 $14,000,000 $12,000,000 $10,000,000 $8,000,000 $6,000,000 $4,000,000 $2,000,000 $ FY1998 FY1999 FY2000 FY2001 FY2002

Fiscal Year

FY2003 FY2004 FY2005 FY2006 Need Based Financial Aid Merit Based Financial Aid Athletic Scholarships Cooperative Agreements Entitlements

Revenue Summary

$435 million current fund revenues Research, net tuition and auxiliary revenue greatest sources Major challenges in state appropriation revenues, financial aid and grant funding Great dependence on out of state students

15.7%

Current Fund Expenditures FY06* $427.6 Million**

Fringe Benefits $67.3M

24.4% Supplies & Services $104.5M

3.5% Utilities $14.9M

47.3% Salaries & Wages $202.1M

9.1% Transfers $38.8M

*Durham, Manchester, NHPTV, UNH-Foundation **Excludes Unfunded Benefits, Loan, Plant and Endowment & Similar Funds

$8,000,000 $7,000,000 $6,000,000 $5,000,000 $4,000,000 $3,000,000 $2,000,000 $1,000,000 $0 FY02

UNH Durham Energy Costs

FY03 FY04 Electricity (14,8% Grow th) Heating Oil #6 (18% Grow th) Natural Gas (38.3% Grow th) Heating Oil #2 (38.9% Grow th) Propane (22.9% Grow th) FY05 FY06

Expense Summary

Personnel – largest component of expense Medical benefit cost growing significantly Energy costs growing significantly Behind on renewal and replacement of physical plant Growth rate on general fund revenue – 4% and expense – 4.5%. Need to address structural issue

Presentation Outline

1. UNH Overview

2. What is RCM?

3. 5 year review

What is RCM?

Responsibility Center Management A tool to help UNH manage its resources in a manner to meet the goals outlined in the University’s Academic Plan  Informs management of financial impact of decisions  Makes explicit where revenues go and how they are spent  Promotes accountability at all levels of management

Old Budget System

Institutional Revenue - Tuition - Indirect Cost Recov ery - State Appropriation Rev enue University Budget Panel allocates rev enue to departments in form of $142 million E&G Budget Institutional Overhead (Service Units) - Facilities - CIS - Student Affairs - VP Research - General Admin - Academic Affairs UNH Divisions Colleges/Library - Research and Public Serv ice Units - Auxiliary Operations Department (Direct) Revenue - Grant/Contracts - Restricted Gifts/Endow ment - Sales of goods/serv ices - Fees Direct Expense - Payroll - Support - Debt serv ice

RCM Budget System

Revenue - Tuition - Indirect Cost Recovery - State Appropriation Revenue - Direct Revenue (Grant, Gift, Sales, Fees, etc.) RC Units - Academic - Research - Auxiliary Direct Expense - Salaries, Wages & Benefits - Support - Debt service Institutional Overhead - Facilities - CIS - Student Affairs - VP Research - General Admin - Academic Affairs Central Budget Committee

- Incremental funding decisions - $700k University Fund allocation - Service Unit Advisory Board subcommittee to review Service Units if necessary

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

Student and Community Life Units

    Student Affairs Housing Hospitality Services Intercollegiate Athletics  Whittemore Center Arena

Research and Public Service Units

    Cooperative Extension Research and Public Service New Hampshire Public Television Institute for Earth, Oceans and Space

Governance, Advancement and Infrastructure Units

    Facilities Services Computing and Information Services General Administration Academic Affairs

RCM Principles

1.

2.

3.

4.

It should be simple to provide easy comprehension and efficient administration It should produce results that are widely perceived as fair It should encourage behaviors that support the institution’s mission and academic plan It should have strong governance and planning mechanisms

Shared Governance

Central Budget Committee  The governing group on budget policy and financial planning for the campus community.

  Responsibilities include oversight of RCM, review of internal fees, oversight of assessment rates and central service budgets, oversight of facilities chargeout rates, and advising President on significant budgetary/financial issues.

Comprised of President (Chair), Vice Presidents, 2 Deans, 4 Faculty, 2 RC Unit Directors, Staff rep,

Student Treasurer,

Graduate Student Organization rep

Unit Financial Structure

Units receive direct revenues (fees, grants, gifts, etc) as well as applicable allocated revenues (net tuition, state appropriations, indirect cost recovery, CBC allocations and hold harmless) Units are responsible for direct expenses (salaries, wages, fringe benefits, support) as well as indirect expenses (facilities, general and academic overhead) Unspent funds at end of year are allowed to drop to a unit “reserve” Most auxiliary operations (MUB, Campus Rec, Health Services, Counseling Center, Housing and Dining) have operated in a RCM type system prior to campus wide implementation of RCM

Before and After

RCM implemented on July 1, 2001.

Item

Overhead for Auxiliaries Academic incentives Governance Incentives for good financial management

Before

Admin Service charge, safety and security allocation, facilities charge No incentives for schools and colleges to pay attention to enrollments, curriculum and retention of students No participation in central financial governance by students, faculty or staff Few incentives in non auxiliary units to be efficient or generate new revenues

After

General assessment and facilities allocation Direct financial incentives for enrollments, curriculum and retention Central Budget Committee – seats for faculty, students and staff Incentives for all units to be efficient and generate new revenues

Presentation Outline

1. Overview 2. What is RCM?

3. 5 year review

Purpose

Understand impact of RCM over the past 5 years Align RCM allocation methodologies to goals outlined in Academic Plan Provide opportunity for community to be informed and participate in discussions

Timeline

Dec. 2004 – April 2005 – open discussions with all RC units on RCM April 2005 – August 2005 – Data accumulation and review structure development August 2005 – January 2006 – Subcommittee review and Steering Committee recommendations February 2006 – Central Budget Committee Review and President decision July 1, 2006 – Implementation of changes

Participation

Steering Committee and 7 subcommittees – 58 total members including 2 students on Steering Committee 17 meetings and 2 open forums for information gathering/feedback. 2 open forums for initial recommendations.

Review Results

RCM works well for UNH and should remain as budgeting tool Enhance communications in some areas Allocation formulas changed to create better incentives/more alignment with Academic Plan (impact in FY07 of changes was zero – offset by hold harmless allocation) Elimination of hold harmless allocation and review of assessment funded units RCM should be reviewed again in FY11

Where to get help?

UNH RCM Website – information on 5 year review, RCM principles, RCM manual, etc – www.unh.edu/rcm Call David Proulx at 2-2421 or send me email at [email protected]