11

U N I V E R S I T Y O F N E W H A M P S U N I V E R S I T Y O F N E W H A M P S H I R EH I R E

22

Responsibility Centered ManagementResponsibility Centered Management((Decentralized Budgeting System)Decentralized Budgeting System)

Divide the university into 19 budgetary unitsDivide the university into 19 budgetary units Allocate out all our revenue via formulaAllocate out all our revenue via formula All units responsible for their full costs (facilities, All units responsible for their full costs (facilities,

benefits, and overhead) benefits, and overhead) Direct financial incentives for revenue generation Direct financial incentives for revenue generation

and cost savingsand cost savings Financial resources are matched with activity levelsFinancial resources are matched with activity levels

http://www.unh.edu/rcmhttp://www.unh.edu/rcm

33

The RCM VisionThe RCM Vision

Increase:Increase: Incentives for planning, cost effectiveness and revenue Incentives for planning, cost effectiveness and revenue

generationgeneration Local responsibility and authorityLocal responsibility and authority Flexibility to match revenue streams with changing program Flexibility to match revenue streams with changing program

demandsdemands Attentiveness to all categories of moneyAttentiveness to all categories of money Accountability at all levels of managementAccountability at all levels of management

Decrease:Decrease: Rigid resource allocation processRigid resource allocation process Involvement of institutional leaders in budgetary detailInvolvement of institutional leaders in budgetary detail Mystery and mistrust surrounding UNH financesMystery and mistrust surrounding UNH finances ““Use it or lose it” mentality Use it or lose it” mentality

44

UNH RCM PrinciplesUNH RCM Principles

Equity and simplicity Equity and simplicity RC units receive all revenue and are responsible for RC units receive all revenue and are responsible for

all expenditures generated by their activitiesall expenditures generated by their activities Maximize management flexibility within RC Units.Maximize management flexibility within RC Units. Maintain reserves at the RC unit levelMaintain reserves at the RC unit level Credible governance mechanisms required to prevent Credible governance mechanisms required to prevent

unhealthy internal competitionunhealthy internal competition Transition to new model should not create winners or Transition to new model should not create winners or

loserslosers

55

RC UnitsRC UnitsColleges 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

66

RC Unit RevenuesRC Unit Revenues

Direct revenues - fees, sales of goods/services, Direct revenues - fees, sales of goods/services, gifts, grants/contracts, endowment incomegifts, grants/contracts, endowment income

Allocated revenues:Allocated revenues: Undergraduate net tuition - based on share of Undergraduate net tuition - based on share of

weighted credit hours taught over prior two years. weighted credit hours taught over prior two years. Weights are based on historical average Weights are based on historical average expense per credit hourexpense per credit hour

Graduate tuition - based on enrollmentGraduate tuition - based on enrollment State Appropriations (30%) - based on faculty State Appropriations (30%) - based on faculty

salariessalaries Indirect Cost Revenue - based on actual indirect Indirect Cost Revenue - based on actual indirect

costs earnedcosts earned

77

RC Unit ExpensesRC Unit Expenses

Direct Expenses - salaries, wages, fringe benefits, Direct Expenses - salaries, wages, fringe benefits, supplies, other direct expenses.supplies, other direct expenses.

Allocated expenses (overhead):Allocated expenses (overhead): Facilities Services (maintenance, utilities, Facilities Services (maintenance, utilities,

housekeeping, R&R) - based on net square feet housekeeping, R&R) - based on net square feet General Administration (President, Research, Finance General Administration (President, Research, Finance

& Administration, Student Affairs) - based on prior year & Administration, Student Affairs) - based on prior year revenues and personnel expensesrevenues and personnel expenses

Academic Affairs (Provost, Registrar, Financial Aid Academic Affairs (Provost, Registrar, Financial Aid Office, Admissions) - based on prior year revenues and Office, Admissions) - based on prior year revenues and personnel expensespersonnel expenses

88

““Balancing Adjustment”Balancing Adjustment”

Major principle of RCM was that no unit would begin Major principle of RCM was that no unit would begin betterbetter

or or worse off than they would have been under the oldworse off than they would have been under the old

system –thus they were ‘held harmless’system –thus they were ‘held harmless’A "balancing adjustment" was used to bring Units into A "balancing adjustment" was used to bring Units into

RCMRCM

in a "revenue neutral" budget position in a "revenue neutral" budget position Balancing adjustments are permanent but not inflatedBalancing adjustments are permanent but not inflatedRC Unit FY01 Original Budget

"Old"Budget System RCM

Direct Revenue 20,000,000$ 20,000,000$ Allocated Revenue 8,000,000$ Balancing Adjustment 2,000,000$ Total Revenues 20,000,000$ 30,000,000$

Direct Expenditures 20,000,000$ 20,000,000$ Allocated Expenditures -$ 10,000,000$ Total Expenditures 20,000,000$ 30,000,000$

Net -$ -$

99

ReservesReserves

100% of unspent funds at year end are automatically 100% of unspent funds at year end are automatically added to the RC Unit fund balance added to the RC Unit fund balance

Minimum fund balance level of 3% of prior year Minimum fund balance level of 3% of prior year expenditures and transfersexpenditures and transfers

RC units can access reserves – up to 1/3 of balance with RC units can access reserves – up to 1/3 of balance with Dean/Director approval only; remainder with VP and Dean/Director approval only; remainder with VP and President’s approvalPresident’s approval

Each RC Unit is developing individual reserve goalsEach RC Unit is developing individual reserve goals Reduces dependence on limited central funding:Reduces dependence on limited central funding:

Liberal Arts invests in Murkland Language Lab.Liberal Arts invests in Murkland Language Lab. WSBE – Saving for building renovation/expansion.WSBE – Saving for building renovation/expansion. CEPS – Saving for Kingsbury equipment costs.CEPS – Saving for Kingsbury equipment costs.

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Current Status Current Status

Currently in 5th year of RCM – FY05Currently in 5th year of RCM – FY05 Reserves have grown significantlyReserves have grown significantly Budgets based on activity levels Budgets based on activity levels Strategic planning at RC unit levelStrategic planning at RC unit level Impact on academic programsImpact on academic programs Impact on Service UnitsImpact on Service Units

1111

$-

$2,000,000

$4,000,000

$6,000,000

$8,000,000

$10,000,000

$12,000,000

$14,000,000

$16,000,000

1995 1996 1997 1998 1999 2000 2001 2002 2003 2004

Fiscal Year

General Fund Reserve Summary

RC Unit Reserves

Institutional Reserve

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. To put the reserve balance in perspective, if UNH were an indivitual making $45,000 per year, that person would have $2,052 in savings.

1212

Annual Growth in General Fund Budgets FY01 - FY05

5.12%

5.92%

6.01%

6.15%

6.21%

6.38%

6.79%

7.13%

8.68%

13.14%

6.55%

6.72%

0% 2% 4% 6% 8% 10% 12% 14%

Central Administration

Computing and Information Services

Facilities Services

Library

College of Liberal Arts

School of Health and Human Services

College of Life Sciences and Agriculture

Institutional *

College of Engineering and Physical Sciences

Research and Public Service

UNH Manchester

Whittemore School of Business and Economics

* USNH central service cost, insurance and UNH contingency.

1313

Strategic PlanningStrategic Planning

Each unit is responsible for preparing and maintaining Each unit is responsible for preparing and maintaining a 3-5 year plan, which is reviewed by the Central a 3-5 year plan, which is reviewed by the Central Budget Committee and approved by the PresidentBudget Committee and approved by the President

Plans coincide with University objectives and Plans coincide with University objectives and Academic PlanAcademic Plan

RC Unit performance is judged against plansRC Unit performance is judged against plans Unit plans are available for review by the campus Unit plans are available for review by the campus

community to promote accountabilitycommunity to promote accountability Institutional Effectiveness – Utilizing strategic Institutional Effectiveness – Utilizing strategic

indicators to improve effectiveness & accountabilityindicators to improve effectiveness & accountability

1414

Impact on Academic ProgramsImpact on Academic Programs

Student accessStudent access HHS case studyHHS case study Productivity reviewProductivity review Library periodical reviewLibrary periodical review Space utilizationSpace utilization Research productivityResearch productivity

1515

Student AccessStudent Access

Improving access to classes for first year Improving access to classes for first year studentsstudents

College-based open houses to attract College-based open houses to attract undeclared studentsundeclared students

Reviewing courses and curriculum to improve Reviewing courses and curriculum to improve the student experiencethe student experience

College based student retention effortCollege based student retention effort

1616

School of Health & Human School of Health & Human ServicesServices

Pre RCM – Reduced cost by cutting general Pre RCM – Reduced cost by cutting general education requirement courses for freshmen to education requirement courses for freshmen to preserve the core major coursespreserve the core major courses

Post RCM – Developed new courses to attract Post RCM – Developed new courses to attract students and redesign the curriculum to make students and redesign the curriculum to make it more efficientit more efficient

1717

Space UtilizationSpace Utilization

Colleges transferring ”college controlled” Colleges transferring ”college controlled” classrooms to Registrar’s Office to be classrooms to Registrar’s Office to be available for University useavailable for University use

Review of lab utilization and the Review of lab utilization and the reassignment of lab space at COLSA reassignment of lab space at COLSA and CEPS to more productive facultyand CEPS to more productive faculty

1818

56%

83%

132%

0% 20% 40% 60% 80% 100% 120% 140%

College of Life Sciencesand Agriculture

School of Health andHuman Services

Cooperative Extension

Indirect Cost Revenue Growth FY02 to FY04

1919

Impact on Service UnitsImpact on Service Units

Service units have become more Service units have become more accountable and responsive to customeraccountable and responsive to customerneeds:needs: Facilities – cost reduction efforts and service Facilities – cost reduction efforts and service

provider agreementsprovider agreements Library – periodical budget/allocation reviewLibrary – periodical budget/allocation review CIS – Customer focus groups and Strategic Plan CIS – Customer focus groups and Strategic Plan

that focus on servicethat focus on service Budget increases for the Central Administration Budget increases for the Central Administration

is lower than Colleges and Research Units.is lower than Colleges and Research Units.

2020

RCM IssuesRCM Issues

Credit Hour weighting – used to distribute net Credit Hour weighting – used to distribute net undergraduate tuition revenueundergraduate tuition revenue

Library FundingLibrary Funding Cultural change – making decisions based on Cultural change – making decisions based on

both programmatic and financial considerationboth programmatic and financial consideration Cost/Benefit analysis of grants, financial and Cost/Benefit analysis of grants, financial and

programmaticprogrammatic Financial deficits at some units.Financial deficits at some units. Concerns about the appropriate level of central Concerns about the appropriate level of central

strategic funding availablestrategic funding available Facilities methodologyFacilities methodology

2121

UNH/RCM in National ContextUNH/RCM in National Context

47% of Private vs. 8% of Public Universities employ an RCM model 47% of Private vs. 8% of Public Universities employ an RCM model UNH Presented at EACUBO Annual ConventionUNH Presented at EACUBO Annual Convention Representatives from numerous institutions visited UNH to explore Representatives from numerous institutions visited UNH to explore

RCM (UMASS, UVM, URI, UCONN, UMAINE, UColorado at RCM (UMASS, UVM, URI, UCONN, UMAINE, UColorado at Denver,, Eihme University in Japan, Queen’s University, Ontario, Denver,, Eihme University in Japan, Queen’s University, Ontario, University at Alberta) University at Alberta)

Numerous consultations with other institutions (South Carolina, Numerous consultations with other institutions (South Carolina, North Texas, Idaho, University of Wisconsin, Pace University)North Texas, Idaho, University of Wisconsin, Pace University)

Asked to write a chapter in a NACUBO book about RCM.Asked to write a chapter in a NACUBO book about RCM. UNH RCM Website receives 10,000 hits per year.UNH RCM Website receives 10,000 hits per year.

*Survey of the Resource Allocation Methodologies Employed at Public and *Survey of the Resource Allocation Methodologies Employed at Public and Private Research and Doctoral Universities. Cornell Higher Education Private Research and Doctoral Universities. Cornell Higher Education Research Institute, 1/4/2000.Research Institute, 1/4/2000.

2222

Using RCM as a ToolUsing RCM as a Tool

While financial issues must be considered when makingWhile financial issues must be considered when making

decisions, it cannot be the primary driver. Relevance todecisions, it cannot be the primary driver. Relevance to

mission and priorities of the institution must be the primary mission and priorities of the institution must be the primary

consideration.consideration.

““We must remember that RCM is merely a tool. Like any tool it can 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, 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 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 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 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 we are held accountable for using RCM to achieve university-wide goals.“*goals.“*

* Former Provost David Hiley* Former Provost David Hiley

2323

ConclusionConclusion

RCM is a work in progress – changes RCM is a work in progress – changes can and will be made where necessary can and will be made where necessary

To date, we consider RCM a true To date, we consider RCM a true success success

2424

RCM ResourcesRCM Resources

Papers/Articles:Papers/Articles: ““Whither Decentralization Management?” by John Strauss and John CurryWhither Decentralization Management?” by John Strauss and John Curry ““RCM as a Catalyst” by Ed Whalen RCM as a Catalyst” by Ed Whalen

http://www.nacubo.org/website/members/bomag/rcm_0897.htmlhttp://www.nacubo.org/website/members/bomag/rcm_0897.html Five Year Review of RCM at Indiana UniversityFive Year Review of RCM at Indiana University

http://www.provost.uiuc.edu/provost/budget/historical/reform/indiana.htmhttp://www.provost.uiuc.edu/provost/budget/historical/reform/indiana.htm WebsitesWebsites

University of New Hampshire – RCM Page – University of New Hampshire – RCM Page – http://www.unh.edu/rcmhttp://www.unh.edu/rcm University of Illinois – Budgetary Principles and Practice- University of Illinois – Budgetary Principles and Practice-

http://www.provost.uiuc.edu/provost/budget/budgetary.htmlhttp://www.provost.uiuc.edu/provost/budget/budgetary.html Ohio State University – Budget Restructuring – http://www.rpia.ohio-Ohio State University – Budget Restructuring – http://www.rpia.ohio-

state.edu/Budget_planning/Budget_restruct.htmstate.edu/Budget_planning/Budget_restruct.htm University of Idaho – http://www.webs.uidaho.edu/ipb/rcm.htmUniversity of Idaho – http://www.webs.uidaho.edu/ipb/rcm.htm University of Minnesota – Incentives for Managed Growth – University of Minnesota – Incentives for Managed Growth –

http://www.evpp.umn.edu/evpp/img/http://www.evpp.umn.edu/evpp/img/ University of South Carolina – Value Centered Management – University of South Carolina – Value Centered Management –

http://www.sc.edu/library/pubserv/value.htmlhttp://www.sc.edu/library/pubserv/value.html Brandeis University – RCM – Brandeis University – RCM –

http://www.brandeis.edu/evpcoo/documents/rcm_procedures_2000-06-27.pdfhttp://www.brandeis.edu/evpcoo/documents/rcm_procedures_2000-06-27.pdf