F ACULTY S ENATE Responsibility Center Management (RCM) for UHM? Mānoa Faculty Senate, 11/19/14

F ACULTY S ENATE Agenda  Need for Change  What is RCM?  RCM at other Institutions  Advantages/Disadvantages Mānoa Faculty Senate, 11/19/14

F ACULTY S ENATE Current UHM Incremental Budget Model Mānoa Faculty Senate, 11/19/14 State General Funds and Tuition Revenues Schools, Colleges and Support Units Prior year expenditure level+/- incremental change Positive incremental change is selective Negative incremental change is typically across the board

F ACULTY S ENATE 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

F ACULTY S ENATE Agenda  Need for change  What is RCM?  RCM at other Institutions  Advantages/Disadvantages Mānoa Faculty Senate, 11/19/14

F ACULTY S ENATE RCM Values  Transparency  Accountability  Equity  Predictability Mānoa Faculty Senate, 11/19/14

F ACULTY S ENATE RCM Principles  Align resources with generating units  Align authority with financial responsibility  Precisely prescribe revenue sharing Mānoa Faculty Senate, 11/19/14

F ACULTY S ENATE RCM at Univ. of Florida Mānoa Faculty Senate, 11/19/14 Tuition Revenues Responsibility Centers Leverage and Strategic Initiative Funds State General Funds Indirect Cost Recovery Support Centers

F ACULTY S ENATE 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

F ACULTY S ENATE Support Center  Multi-unit operations  E.g. libraries, student services, academic support, IT, general admin Mānoa Faculty Senate, 11/19/14

F ACULTY S ENATE 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

F ACULTY S ENATE Agenda  Need for change  What is RCM?  RCM at other Institutions  Advantages/Disadvantages Mānoa Faculty Senate, 11/19/14

F ACULTY S ENATE RCM at Elite Universities  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

F ACULTY S ENATE 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

F ACULTY S ENATE RCM Compatible w. Kuali  Kuali Coeus Sustaining Partners (with UH):  Indiana  Iowa State  Kuali Coeus Basic Partners:  Kent State  Purdue Mānoa Faculty Senate, 11/19/14

F ACULTY S ENATE Agenda  Need for change  What is RCM?  RCM at other Institutions  Advantages/Disadvantages Mānoa Faculty Senate, 11/19/14

F ACULTY S ENATE RCM Advantages  Encourages:  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

F ACULTY S ENATE RCM Concerns and Realities  May not advance univ. mission  Possible misalignment of revenue & priorities  Money grubbing  lower quality education  Local optimization dominates global good  Vigilance needed against:  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

F ACULTY S ENATE RCs: Dept. vs. College  Depts. make decisions about courses  Less dependent on having a good dean  Deans have explicit subvention funds so:  Initiatives are more transparent  Initiatives are not considered parasitic Mānoa Faculty Senate, 11/19/14

F ACULTY S ENATE Further Reading  “Responsibility Center Management: Lessons from 25 Years of Decentralized Management” NACUBO   “Responsibility Center Management at Major Public Universities” Hanover Research Council  model/sites/ model/files/u3/RCM_at_major_public_universities.p df  U. Penn model  U. Oregon model  Rutgers model Mānoa Faculty Senate, 11/19/14

F ACULTY S ENATE 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