1. University Budget Models Session Chair: Marsha Weinraub Breakout Session 1, Madero A COGDOP Annual Meeting San Antonio, TX February 20, 2015

2. 3/26/20142

3. Goals for this session Meet others with similar budget models Share experiences with different budget models Learn more about RCM (Responsibility Centered Management) budget models from those who have used them Learn from each other about how to survive and maybe even prosper under RCM and other models 3/26/20143

4. Overview for Today’s Breakout Introductions What budget model do you use at your University? In 2 minutes or less, how does it work? General principles of RCM Models (aka DB, aka…) RCM at Temple University 2013-present Critical things to think about as your university starts this model and then continues with this model 2015-2 COGDOP 20154

5. RCM adoption in the US 1974: RCM adopted at the U of Pennsylvania. 1980's RCM adopted by University of Toronto, University of Michigan, University of Southern California and Indiana University. Many other public and private universities have implemented RCM. Among these are University of New Hampshire, Kent State University, University of Illinois Urbana Champaign and University of Iowa. Every school does it differently. 3/26/20145

6. Mission-driven Align Authority with Responsibility & Accountability Fairness…consistent, predictable and transparent Encourage Innovation, Entrepreneurship & Efficiency ….discourage unnecessary internal competition Simplicity Temple University RCM Guiding Principles 62015-2 COGDOP 2015

7. 4 Income Flow Student Tuition Income Other Income Responsibility Center (RC) Generated Revenue Direct Expenses Allocated Costs Assessments (based upon Tuition Income Only) Student Tuition Income: This includes UG/Grad/Prof through both direct and transfer Other Income: This includes PA Public Welfare, Other Student Fees, ICR & Clinical Revenue TU Strategic Fund: Year one allocation used to Hold Harmless and to fund Strategic Initiatives. Direct Expenses: Compensation, benefits, travel, faculty startup, tuition remission, etc. Assessment Charge: Plant Fund and Financial Aid Allocated Costs: Support Unit Funding TU Strategic Fund Available Resources

8. Assessments? Costs taken off the top of tuition income  17 % of undergrad tuition  Financial Aid UnG  2.5 % of graduate tuition  Financial Aid Grad  4.9 % of tuition  Plant fund 83/26/2014

9. Allocated costs? Operating costs Those costs required to run the university and provide student services, human resources, campus safety, facilities, HR, etc. Revenue centers have to pay for these things As time goes on, the administration adjusts costs Cost drivers dictate who pays, for how much, of these things 93/26/2014

10. Cost Drivers The amount of allocated costs paid by each unit is based on a formula that considers cost drivers. These include  CHG Students (undergraduate, graduate & professional)  FTE* Faculty (tenured/tenure track, non-tenure track)  FTE Staff  Total direct expenditures from all sources  Square footage  Living alumni  Major donors  Research expenditures * FTE = Full time equivalent 10 3/26/2014

11. Support Centers with Allocated Cost Drivers… And there are more Academic Support Advancement Auxiliary Subsidy Campus Safety Computer Services 80% UG CHG 10% Graduate CHG 10% Prof CHG 80% estimated living Alumni 20% Major Donors 80% UG CHG 10% Graduate CHG 10% Prof CHG 40% UG CHG 5% Graduate CHG 5% Prof CHG 25% Faculty FTE 25% Staff FTE 40% UG CHG 5% Graduate CHG 5% Prof CHG 25% Faculty FTE 25% Staff FTE 3/26/2014

12. More Support Centers with Allocated Cost Drivers 12 Facilities Management Faculty Affairs Financial Services General Administration Human Resources Revenue Centers at $18.07 per sq. ft. (FY2013 Rate) 100% Direct Expenditures 50% Faculty FTE 50% Staff FTE 100% Faculty FTE 100% Direct Expenditures And there are more 3/26/2014

13. More Support Centers with Allocated Cost Drivers 13 Library Research Student Services Uncollectibles University College 60% UG CHG 7.5% Graduate CHG 7.5% Prof CHG 80% UG CHG 10% Graduate CHG 10% Prof CHG 50% Faculty FTE 85% UG CHG 10% Graduate CHG 5% Prof CHG 50% Research Expenditures 25% Faculty FTE 80% UG CHG 10% Graduate CHG 10% Prof CHG 3/26/2014

14. 4 Income Flow Student Tuition Income Other Income Responsibility Center (RC) Generated Revenue Direct Expenses Allocated Costs Assessments (based upon Tuition Income Only) Student Tuition Income: This includes UG/Grad/Prof through both direct and transfer Other Income: This includes PA Public Welfare, Other Student Fees, ICR & Clinical Revenue TU Strategic Fund: Year one allocation used to Hold Harmless and to fund Strategic Initiatives. Direct Expenses: Compensation, benefits, travel, faculty startup, tuition remission, etc. Assessment Charge: Plant Fund and Financial Aid Allocated Costs: Support Unit Funding TU Strategic Fund Available Resources 3/26/2014

15. RCM Challenges If your college or department is losing enrollments, your college may be in trouble. Dean’s have more power Chronical article: Unleash the deans http://chronicle.com/article/Colleges-Unleash-the-Deans/151711/?cid=at&utm_source=at&utm_medium=en Pursuing increased revenue may threaten the quality and integrity of instruction  May create larger class sizes, heavier teaching loads, etc.  May create pressure for more online courses Flat undergrad enrollment may lead to  Adversarial relations among colleges  Competitive relations across departments 3/26/201415

16. RCM Opportunities?  Development of innovative undergrad and grad programs, those likely to attract enrollments  May encourage college to clarify priorities  Moves college to be more attentive to students  More effective story to bring to potential donors  May encourage unique collaborations among colleges 3/26/201416

17. Critical things to think about as your university starts RCM Pay attention to cost drivers: Who is on the committee that makes decisions? How is tuition calculated across different units, students? What is the base year for deciding budget? Is it a single year or 3 year rolling average? How is state funding directed? How often are the rules for cost drivers and assessments and allocations revisited? Is it a public discussion? What happens if a college doesn’t have sufficient funds in a given year? How much is set aside for strategic funding requests? 3/26/201417

18. 3/26/201418 Critical things to think about as our universities continue using RCM? Other types of budgets?