Transcript CAB Presentation on principles of RCM for UH MFS meeting 11/19/14

FACULTY SENATE
Responsibility
Center
Management
(RCM) for UHM?
Mānoa Faculty Senate, 11/19/14
FACULTY SENATE
Agenda
 Need
for Change
 What is RCM?
 RCM at other Institutions
 Advantages/Disadvantages
Mānoa Faculty Senate, 11/19/14
FACULTY SENATE
Current UHM
Incremental Budget Model
State General Funds and Tuition Revenues
Prior year expenditure
level+/- incremental change
Schools, Colleges and Support Units
Positive incremental change is selective
Negative incremental change is typically across the board
Mānoa Faculty Senate, 11/19/14
FACULTY SENATE
Why we Need Change








Periodic fiscal crises places UHM at risk
Negative incentive to expand/innovate
Units hoard space
Budget rationale incomprehensible after 20+ years
Contributes to lack of confidence in leadership
Difficulty in garnering support from Legislature
Erosion of public confidence in UHM
VCAA has no budget
Mānoa Faculty Senate, 11/19/14
FACULTY SENATE
RCM Values
 Transparency
 Accountability
 Equity
 Predictability
Mānoa Faculty Senate, 11/19/14
FACULTY SENATE
RCM Principles
 Align
resources with generating units
 Align authority with financial responsibility
 Precisely prescribe revenue sharing
Mānoa Faculty Senate, 11/19/14
FACULTY SENATE
Agenda
 Need
for change
 What is RCM?
 RCM at other Institutions
 Advantages/Disadvantages
Mānoa Faculty Senate, 11/19/14
FACULTY SENATE
RCM at Univ. of Florida
State General
Funds
Leverage and
Strategic
Initiative Funds
Tuition
Revenues
Indirect Cost Recovery
Responsibility Centers
Support Centers
Mānoa Faculty Senate, 11/19/14
FACULTY SENATE
Responsibility Center
 Is
a Department or college/school
 Gets a large % of revenue it generates


Tuition based on SSH/majors & G-funds
May vary to account for cost of instruction
 Pays


costs
Direct: personnel & facilities
Shared: support centers
 Can
keep carry-forward funds
Mānoa Faculty Senate, 11/19/14
FACULTY SENATE
Support Center
 Multi-unit

operations
E.g. libraries,
student services,
academic support,
IT,
general admin
Mānoa Faculty Senate, 11/19/14
FACULTY SENATE
Subvention
 Is
a tax on revenues
 Pays for univ. level “strategic” initiatives
 In dept RCM, pays for college initiatives
Mānoa Faculty Senate, 11/19/14
FACULTY SENATE
Agenda
 Need
for change
 What is RCM?
 RCM at other Institutions
 Advantages/Disadvantages
Mānoa Faculty Senate, 11/19/14
FACULTY SENATE
RCM at Elite Universities

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U. Pennsylvania
CalTech
Duke
Harvard
UCLA
U. Illinois – Urbana Champaign
Michigan
USC
Vanderbilt
21% of all public doctoral institutions
Mānoa Faculty Senate, 11/19/14
FACULTY SENATE
RCM at Peers & Benchmarks
 U.
Arizona - Tuscon
 U. Illinois – Chicago (partial RCM)
 U. Kentucky (partial RCM)
 U. New Mexico
 U. Iowa – Iowa City
Mānoa Faculty Senate, 11/19/14
FACULTY SENATE
RCM Compatible w. Kuali
 Kuali
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Indiana
Iowa State
 Kuali

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Coeus Sustaining Partners (with UH):
Coeus Basic Partners:
Kent State
Purdue
Mānoa Faculty Senate, 11/19/14
FACULTY SENATE
Agenda
 Need
for change
 What is RCM?
 RCM at other Institutions
 Advantages/Disadvantages
Mānoa Faculty Senate, 11/19/14
FACULTY SENATE
RCM Advantages
 Encourages:
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Revenue generation/cost effectiveness
Entrepreneurial activities
 Aligns
authority & accountability locally
 Improves responsiveness to change
 Enhances ability to plan
 Increases revenue transparency
 No RCM institution has ever switched back
Mānoa Faculty Senate, 11/19/14
FACULTY SENATE
RCM Concerns and Realities

May not advance univ. mission
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Money grubbing  lower quality education
Local optimization dominates global good
Vigilance needed against:
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Possible misalignment of revenue & priorities
Trade barriers
Gut courses
Arguments about allocation rules
Support centers need efficiency incentives
Rapid redistributions may need “surge tanks”
Mānoa Faculty Senate, 11/19/14
FACULTY SENATE
RCs: Dept. vs. College
 Depts.
make decisions about courses
 Less dependent on having a good dean
 Deans have explicit subvention funds so:
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
Initiatives are more transparent
Initiatives are not considered parasitic
Mānoa Faculty Senate, 11/19/14
FACULTY SENATE
Further Reading

“Responsibility Center Management: 25 years
of Lesson Learned” NACUBO
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“Responsibility Center Management at Major
Public Universities” Hanover Research Council
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http://eric.ed.gov/?id=ED469330
http://www.uky.edu/financialmodel/sites/www.uky.edu.financialmodel/files/u3/RCM_at_major_public_universitie
s.pdf
U. Penn model
U. Oregon model
Rutgers model
Mānoa Faculty Senate, 11/19/14
FACULTY SENATE
Conclusion
“Once RCM is in place,
people get addicted to the information
connecting all the moving parts!
Devolution into the black box is not an option.”
Mānoa Faculty Senate, 11/19/14