1. 1 U N I V E R S I T Y O F N E W H A M P S H I R E

2. 2 Responsibility Centered Management ( Decentralized Budgeting System)  Divide the university into 19 budgetary units  Allocate out all our revenue via formula  All units responsible for their full costs (facilities, benefits, and overhead)  Direct financial incentives for revenue generation and cost savings  Financial resources are matched with activity levels http://www.unh.edu/rcm

3. 3 The RCM Vision Increase:  Incentives for planning, cost effectiveness and revenue generation  Local responsibility and authority  Flexibility to match revenue streams with changing program demands  Attentiveness to all categories of money  Accountability at all levels of management Decrease:  Rigid resource allocation process  Involvement of institutional leaders in budgetary detail  Mystery and mistrust surrounding UNH finances  “Use it or lose it” mentality

4. 4 UNH RCM Principles  Equity and simplicity  RC units receive all revenue and are responsible for all expenditures generated by their activities  Maximize management flexibility within RC Units.  Maintain reserves at the RC unit level  Credible governance mechanisms required to prevent unhealthy internal competition  Transition to new model should not create winners or losers

5. 5 RC Units

6. 6 RC Unit Revenues  Direct revenues - fees, sales of goods/services, gifts, grants/contracts, endowment income  Allocated revenues:  Undergraduate net tuition - based on share of weighted credit hours taught over prior two years. Weights are based on historical average expense per credit hour  Graduate tuition - based on enrollment  State Appropriations (30%) - based on faculty salaries  Indirect Cost Revenue - based on actual indirect costs earned

7. 7 RC Unit Expenses  Direct Expenses - salaries, wages, fringe benefits, supplies, other direct expenses.  Allocated expenses (overhead):  Facilities Services (maintenance, utilities, housekeeping, R&R) - based on net square feet  General Administration (President, Research, Finance & Administration, Student Affairs) - based on prior year revenues and personnel expenses  Academic Affairs (Provost, Registrar, Financial Aid Office, Admissions) - based on prior year revenues and personnel expenses

8. 8 “Balancing Adjustment”  Major principle of RCM was that no unit would begin better or worse off than they would have been under the old system –thus they were ‘held harmless’  A "balancing adjustment" was used to bring Units into RCM in a "revenue neutral" budget position  Balancing adjustments are permanent but not inflated

9. 9Reserves  100% of unspent funds at year end are automatically added to the RC Unit fund balance  Minimum fund balance level of 3% of prior year expenditures and transfers  RC units can access reserves – up to 1/3 of balance with Dean/Director approval only; remainder with VP and President’s approval  Each RC Unit is developing individual reserve goals  Reduces dependence on limited central funding:  Liberal Arts invests in Murkland Language Lab.  WSBE – Saving for building renovation/expansion.  CEPS – Saving for Kingsbury equipment costs.

10. 10 Current Status  Currently in 5th year of RCM – FY05  Reserves have grown significantly  Budgets based on activity levels  Strategic planning at RC unit level  Impact on academic programs  Impact on Service Units

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13. 13 Strategic Planning  Each unit is responsible for preparing and maintaining a 3-5 year plan, which is reviewed by the Central Budget Committee and approved by the President  Plans coincide with University objectives and Academic Plan  RC Unit performance is judged against plans  Unit plans are available for review by the campus community to promote accountability  Institutional Effectiveness – Utilizing strategic indicators to improve effectiveness & accountability

14. 14 Impact on Academic Programs  Student access  HHS case study  Productivity review  Library periodical review  Space utilization  Research productivity

15. 15 Student Access  Improving access to classes for first year students  College-based open houses to attract undeclared students  Reviewing courses and curriculum to improve the student experience  College based student retention effort

16. 16 School of Health & Human Services  Pre RCM – Reduced cost by cutting general education requirement courses for freshmen to preserve the core major courses  Post RCM – Developed new courses to attract students and redesign the curriculum to make it more efficient

17. 17 Space Utilization  Colleges transferring ”college controlled” classrooms to Registrar’s Office to be available for University use  Review of lab utilization and the reassignment of lab space at COLSA and CEPS to more productive faculty

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19. 19 Impact on Service Units Service units have become more accountable and responsive to customer needs:  Facilities – cost reduction efforts and service provider agreements  Library – periodical budget/allocation review  CIS – Customer focus groups and Strategic Plan that focus on service  Budget increases for the Central Administration is lower than Colleges and Research Units.

20. 20 RCM Issues  Credit Hour weighting – used to distribute net undergraduate tuition revenue  Library Funding  Cultural change – making decisions based on both programmatic and financial consideration  Cost/Benefit analysis of grants, financial and programmatic  Financial deficits at some units.  Concerns about the appropriate level of central strategic funding available  Facilities methodology

21. 21 UNH/RCM in National Context  47% of Private vs. 8% of Public Universities employ an RCM model  UNH Presented at EACUBO Annual Convention  Representatives from numerous institutions visited UNH to explore RCM (UMASS, UVM, URI, UCONN, UMAINE, UColorado at Denver,, Eihme University in Japan, Queen’s University, Ontario, University at Alberta)  Numerous consultations with other institutions (South Carolina, North Texas, Idaho, University of Wisconsin, Pace University)  Asked to write a chapter in a NACUBO book about RCM.  UNH RCM Website receives 10,000 hits per year. *Survey of the Resource Allocation Methodologies Employed at Public and Private Research and Doctoral Universities. Cornell Higher Education Research Institute, 1/4/2000.

22. 22 Using RCM as a Tool While financial issues must be considered when making decisions, it cannot be the primary driver. Relevance to mission and priorities of the institution must be the primary consideration. “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, 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 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 goals.“* * Former Provost David Hiley

23. 23 Conclusion  RCM is a work in progress – changes can and will be made where necessary  To date, we consider RCM a true success

24. 24 RCM Resources  Papers/Articles:  “Whither Decentralization Management?” by John Strauss and John Curry  “RCM as a Catalyst” by Ed Whalen http://www.nacubo.org/website/members/bomag/rcm_0897.html http://www.nacubo.org/website/members/bomag/rcm_0897.html  Five Year Review of RCM at Indiana University http://www.provost.uiuc.edu/provost/budget/historical/reform/indiana.htm  Websites  University of New Hampshire – RCM Page – http://www.unh.edu/rcm http://www.unh.edu/rcm  University of Illinois – Budgetary Principles and Practice- http://www.provost.uiuc.edu/provost/budget/budgetary.html  Ohio State University – Budget Restructuring – http://www.rpia.ohio- state.edu/Budget_planning/Budget_restruct.htm http://www.rpia.ohio- state.edu/Budget_planning/Budget_restruct.htmhttp://www.rpia.ohio- state.edu/Budget_planning/Budget_restruct.htm  University of Idaho – http://www.webs.uidaho.edu/ipb/rcm.htm http://www.webs.uidaho.edu/ipb/rcm.htm  University of Minnesota – Incentives for Managed Growth – http://www.evpp.umn.edu/evpp/img/  University of South Carolina – Value Centered Management – http://www.sc.edu/library/pubserv/value.html  Brandeis University – RCM – http://www.brandeis.edu/evpcoo/documents/rcm_procedures_2000-06-27.pdf http://www.brandeis.edu/evpcoo/documents/rcm_procedures_2000-06-27.pdf