Responsibility Centered Management (RCM): A New Budget Model

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Presentation transcript:

Responsibility Centered Management (RCM): A New Budget Model Lisa N. Rulney Assistant Dean, Finance & Administration lisa.rulney@arizona.edu

RCM Basics How is an RCM budget different than the current budget system? Incremental Activity Based Budgeting Revenue associated with tuition flows to colleges Expenses associated with activity flows to colleges

Has RCM worked at other institutions? Penn is credited with being the first institution to adopt RCM in 1974

What is an RCU? Responsibility Center Units are either: Revenue Units or Service Center Units Revenue Units Colleges Auxiliary Units

What is an RCU? Responsibility Center Units are either: Revenue Units or Service Center Units Service Center Units Research and Public Service Administration & Institutional Support Student Support Facilities

Components of an RCM Model Revenue Tuition Revenue Undergraduate Graduate Differential Tuition Program Fees Summer Session Outreach College State Appropriation Revenue associated with Sponsored Activity: Indirect Cost Return

Components of an RCM Model Expenses Cost Associated with Sponsored Activity Sponsored Projects Services Office of Research and Contract Analysis Research Compliance Units Cost Associated with Space Facilities Management

Expense Components continued: Costs associated with Administration & Institutional Support Administration President’s Office Academic Affairs & Provost University Information and Technology Services (UITS) Human Resources University Libraries Business Affairs (Non-Facility Related) Arizona Health Sciences Center (Administration) Distributed Education (Outreach, UA South) Institutional Support University Insurance Bank Fees Strategic Investment Fund

Expense Allocation Methods: Assessment Based Allocation Revenue Based Allocation Expenditure Based Allocation

Frequently Asked Questions about RCM Will RCM create efficiency? How much revenue will we receive? How much will we be taxed? How will RCM be implemented by colleges? What is the formula?

To Implement or Not? Is the state cutting the budget? Is enrollment decreasing? Are you implementing new enterprise-wide systems? Do you have accurate data?

Advice for Success Learn from the Past Avoid Groupthink Research recommendations from other institution’s experience Avoid Groupthink Communicate, Communicate, Communicate Seek External Advice Timing

RCM Guiding Principles Strategic Plan Incentives Negative Outcomes Balance Transparency Matching Simplicity Predictability Adaptability Central Funds Investment Data Risk Communication Leadership Governance http://rcm.arizona.edu/sites/rcm2/files/rcm_guiding_principles_3-8-2013_0.pdf

How can we prepare for RCM? Key to Success: Alignment of skills with job responsibilities Remember the components of the model: Tuition (All Types) State Appropriation Revenue associated with Sponsored Activity Cost associated with Sponsored Activity Cost associated with Space Cost associated with Administration, Institutional Support, and Strategic Investments Know Your Data! Academic Research Space Training

Resources http://rcm.arizona.edu/ http://rcm.arizona.edu/questions-comments Responsibility Center Management, A Guide to Balancing Academic Entrepreneurship with Fiscal Responsibility John R. Curry, Andrew L. Laws, Jon C. Strauss

Questions?