1. IFAS Faculty Assembly March 3, 2011 Dr. Joe Joyce Executive Associate Vice President Institute of Food and Agricultural Sciences University of Florida RCM

2. http://www.hr.ufl.edu/training/rcm/index.html

3. What is RCM? Responsibility Center Management, or RCM, is a budgeting philosophy that decentralizes decisions and financial authority/responsibility to academic leadership – that is, to the college deans and their faculty who are in a position to understand the impact of resource use and related decisions. RCM is designed to encourage academic units to take greater responsibility for revenue generation and spending decisions – promoting “entrepreneurial thinking.” It can also support growth even when government funding is limited.

4. University of Illinois-Urbana Champaign Southern Illinois University Marquette University American University University of California at Los Angeles (UCLA) University of Toledo Clemson University Harvard University Washington University of St. Louis Indiana University of Pennsylvania Mercer University California Institute of Technology (Caltech) Vanderbilt University Duke University Auburn University Clarkson University (considering) Purdue University Temple University University of Oregon University of Pennsylvania University of Southern California University of Toronto West Chester University (PA) Central Michigan University University of Iowa University of Alaska McGill University Rensselaer Polytechnic Institute Other RCM Universities

5. How does RCM compare to our current budget model? UF currently uses an incremental budgeting process, which means that central UF administration provides funds to colleges and administrative areas based primarily on historic spending. Central authority for financial planning, execution, and control Budgets based on past allocations Changes are gradual and occur over time as circumstances warrant and resources allow

6. How does RCM compare to our current budget model? RCM uses a formula to allocate state appropriations based on Student Credit Hours (SCHs), enrollment, and other factors. Colleges/auxiliaries keep surplus funds and all entrepreneurial revenue generated. Instruction: Student Credit Hours Entrepreneurial Activities: Research Self-Funded Classes Auxiliaries, etc. Strategic Direction

7. Deans have more info (increased transparency) and control over their budget Overall effect: Improved outcomes for UF Can use limited resources more effectively to support priorities With RCM:

8. Let’s define some key concepts as they relate to RCM Colleges, auxiliaries, and certain centers are considered Responsibility Centers (RCs). Responsibility Centers generate revenue and incur costs. The appropriate dean, director, or vice president is accountable for both. IFAS is a Responsibility Center Responsibility Center

9. Support Center Support Centers are administrative units that tend to generate little or no revenue, but do incur costs. Managers of these areas are accountable for costs – and value of services provided. Support Centers will be funded via assessments to each Responsibility Center. Let’s define some key concepts as they relate to RCM

10. Each year, Support Centers will explain their value and services to a Budget Review Council to justify their budget requests. This council will be composed of 12 to 15 representatives from colleges, VP areas, and the Faculty Senate, with rotating membership. Every five to six years, each Support Center will go through a “zero-based” budget review in front of this council. Let’s define some key concepts as they relate to RCM Budget Review Council

11. Certain areas receive funding directly from the state. These Direct-Funded Units are neither Responsibility nor Support Centers. For these units, state-appropriated funds will be provided directly. They will receive their budgets going forward, which will change if they receive new state funding or budget reductions. Let’s define some key concepts as they relate to RCM Direct-Funded Unit

12. http://cfo.ufl.edu/rcmc/RCMMatrixDetail.pdf Hybrid:Unit has both Responsibility Center and Support Center functions. Support Center: Unit is an administrative unit that provides support services university-wide. Responsibility Center: Unit earns revenue from student credit hours and/or entrepreneurial activities. Direct Funded Center: Unit is appropriated State Appropriations outside student credit hour model.

13. Key concepts:What are Student Credit Hours (SCHs) and enrollment? Enrollment # of students accepted and enrolled in a college regardless of where they are taking classes Total SCH # of credit hours for classes # of students in classes

14. Five weightings will be used for each college’s SCHs: Lower level, upper level, graduate I, graduate II, and graduate III. These weightings are based on historical expenditure analysis (FY 09/10) of what it costs to teach classes in each college: Number of personnel engaged in academic activity and salary cost Actual state-appropriated expenditures Number of SCH by level Here are some additional key concepts Weighted Cost of Delivery

15. Key concept: What is weighted cost of delivery? The process used to determine weighted cost of delivery was non-judgmental, based on historical percentage of university state budget. However, any funding biases in the past were brought forward since historical data were used. To control for that, weightings were then compared with other schools: For example, universities in Ohio, Texas, and other Florida publics. The weights were then adjusted accordingly.

17. Here are some additional key concepts Base Student Allocation refers to the value assigned to one student credit hour (SCH) with a weight of 1.00 – that is, it provides a baseline associated with a 1.0 weighting. 1 Lower Level SCH = $109.77 (BSA) BSA is then used to calculate how much of state appropriations the colleges will receive through RCM. The end result is the allocation of state ‑ appropriated funds. Base Student Allocation (BSA)

18. Key concept: What is the Base Student Allocation (BSA)? If your college’s lower level SCH weighting is 10, then, for each lower level SCH, the college will receive state appropriation dollars of $1,097.70.

19. Here are some additional key concepts With RCM, there also is a strategic fund available that is designed to support new or key initiatives. This central fund is funded by tuition increases as well as the University’s Pepsi fund, logo fund, etc. It is used at the discretion of the President. Strategic Fund

20. There are five basic components associated with revenue under RCM State AppropriationsEntrepreneurial ActivitiesContracts and GrantsEndowment Earnings and Gifts Material & Supply (M&S) and Equipment Use Fees Total College Revenue

21. Let’s look at these revenue components more closely State Appropriations Includes: General Revenue Lottery Tuition

22. State Appropriations – General Revenue and Lottery Per College 70 Percent Based on Student Credit Hours (SCH) 30 Percent Based on Enrollment

23. State Appropriations – General Revenue and Lottery Goes to College Teaching the Class 70 Percent Based on Student Credit Hours (SCH) 30 Percent Based on Enrollment

24. State Appropriations – General Revenue and Lottery SCHs are Weighted Based on Cost of Instruction of the Class 70 Percent Based on Student Credit Hours (SCH) 30 Percent Based on Enrollment

25. Based on Number of Students Enrolled in College. Also Weighted State Appropriations – General Revenue and Lottery 70 Percent Based on Student Credit Hours (SCH) 30 Percent Based on Enrollment

26. State Appropriations – Tuition Tuition Distribution Per College 70 Percent Based on Student Credit Hours (SCH) 30 Percent Based on Enrollment

27. State Appropriations – Tuition Goes to College Teaching the Class. SCH Weighted 70 Percent Based on Student Credit Hours (SCH) 30 Percent Based on Enrollment

28. State Appropriations – Tuition Based on Students Enrolled. Not Weighted 70 Percent Based on Student Credit Hours (SCH) 30 Percent Based on Enrollment

29. CALS Update RCM, SCH CALS 09-10 = 123,139 SCH, ~9.3% of UF Weighted SCH ~ $$ Grad programs generate ~20% of credit hours but >50% of budget Tuition, teaching WeightSCHWeighted SCH UG lower1.5631,41249,003 UG upper2.6568,480181,472 Grad I (MS)9.3610,701100,161 Grad II (PhD)12.9912,546162,972

30. FY 2010-11 RCM SCH Revenues College of Agricultural and Life Sciences

31. FY 2010-11 RCM REVENUES

32. FY 2010-11 RCM REVENUES (continued)

33. Expected expense components Info Technology Total Assessments General Admin HSC Admin Student Services Admin Facilities Library Sponsored Project Admin

34. University Support Units Budget for 2011 - $274.6 M

35. FY 2010-11 Support Unit Overhead Expenditure Rates Facility $9.17/unweighted square foot General Administration7.39% Information Technology3.74% Sponsored Projects Administration 8.25%

36. Space/Facilities Assessments Space TypeWeight Lab Classroom Office Other 2.75 1.50 1.25 The current, unweighted cost per square foot is $9.17. For example, if 100 square feet of lab space is being used by an RC, such RC would incur a cost of $2,522 (9.17 x 100 square feet x 2.75 weight).

37. RCM Overhead Assessments for 2011

38. Base + Salary Savings + Grad Fellowships $7.5 million Base + Salary Savings Base Grad Fellowships $2.3 million To 22 Graduate Programs Salary Savings $0.3 million To Depts by request & negotiation, for temporary teaching Unit Operating $1.5 million Depts ~70% RECs ~30% Matching Assistantships $3.0 million Depts ~80% RECs ~20% CALS Operating $0.4 million Income, SHARE & Endowments $0.2 million Recruiting 15% Events, meetings 8% Alumni, Career 15% Comp lab 7% Travel 4% Study Abroad 2% Stu Travel 5% Pubs 3% Awards, grants 18% Other 5% DE 18% Carry forward CALS Budget 95% + goes to units

41. BOG Minimum Graduate Levels Program Minimum/Year (5 year Average) CALS B.S. M.S. Ph.D. 6 4 3 2 5 1

42. References Introduction to Responsibility Center Management (RCM 100 - online course designed and developed by UF Training & Organizational Development in collaboration with the Office of the Vice President and Chief Financial Officer - located at: http://www.hr.ufl.edu/training/rcm/index.html).http://www.hr.ufl.edu/training/rcm/index.html Whalen, Edward L. (1991) Responsibility Center Budgeting: An Approach to Decentralized Management for Institutions of Higher Education. Indiana University Press, Bloomington, IN. UF RCM Manual (TBP). UF Annual Budget Book (TBP).

43. QUESTIONS?