Responsibility Center Management and Performance

Based Budgeting

September, 2012

RCM and PBBResponsibility Center Management (RCM) is a management concept that relocates and enhances responsibility for planning and budgeting in a decentralized manner. The goal is to improve institutional performance by making decisions about the allocation and generation of services, as well as delivery at the units that are most responsible for these things (in our case – the College).

Performance Based BudgetingThis concept is implicit in the RCM as part of the process by which decisions are made as to which parts of an organization are to be grown, maintained, and eliminated. It uses performance metrics as the basis for funding decisions. The literature is inconclusive of this concept as part of educational system enhancement.

Other Universities using RCM

• American Univ • Auburn Univ • CalTechUniv • Central Michigan • Clemson• Duke • Harvard • Indiana • Kent State • Purdue • Temple Univ • Tulane• University of California—Los Angeles (UCLA) • Univ of Michigan • Univ of Minnesota • Ohio State • Vanderbilt(currently 22-29 Universities)

Rationale for RCM-PBB

• Reduced state funding

• UNM’s model is historical and non-strategic

• Unclear how current budgets link to priorities

• Enhance transparency and inform decision-making

Concerns with RCM-PBB

• Time needed to “re-base” College budgets

• How to ensure Program Quality• Maintaining focus on tenure track faculty• Accurate and timely data for decision

making• Funding for doctoral programs

RCM/PBB

Revenues + Expenses

Profit Centers Cost Centers

Translated directly into the budget…

RCM – Become responsible for all decisions the unit makes…

RCM CONCEPTS

Profit/Responsibility Centers: areas of the system that produce revenue (e.g. Colleges, cost for services centers) Cost Centers: areas of the system that use funds to provide support services (e.g. Business and Finance, Facilities, the Dean’s office).Profit Centers can be deficit operations if their revenues are EXCEEDED by their expenses.

The Emerging COE RCM Model

COE

Revenues

Instruction(Funding Formula)

SCH Completers (82%)

Factors (18%)

Graduations

Retention

STEM

Research Development

Expenses

Facilities

Upkeep

Utilities

Materials & Supplies

SupportServices

CSS

Admin

Centers

-

Things to ConsiderNew Ways of Thinking

• Move away from a relatively passive approach to funding our work

• New knowledge and skills are required• Stronger curriculum planning required• Toward an entrepreneurial mind set• RCM can be more empowering to Colleges

and faculty

“Deep Meaning”

• RCM will require us to re-think what it means to be a College of Education

• Are we primarily a degree factory? Do we have the right balance between undergraduate and graduate degree programs and enrollments? Do we have the right kind and number of degree programs? How do we balance research, teaching and service?

Proposed Timeline

• Phase I: Initial design recommendations by 12/31/2012. (90 days)

• Phase II: Refinement of recommendations - Jan 2013-Jan 2014 (1 year)

• Phase III: Implementation of RCM/PBB model within FY15 budgeting process – estimated Jan 2014-April 2014 (4 months)

COE Preparatory Steps

Discovery/Investigation Phase: 3 monthsDevelop Teams of Faculty, Staff, Admin. to research:

• Best Practices• Data Requirements• Communication

Best Practices

• BP Team to travel to COE’s – established RCMs• Multiple perspectives: program, finance,

administration• Scripted questions/protocols• Focus on entire process: Preparation, Initial

Implementation, Post Implementation

Data Requirements

Enrollment Management

Business Intelligence

(OIR)

Human Resources

Business and Finance

CSS: TK-20, Advisement,

Field Exp

Provost’s office

COEDecision Making

Communications

• Regular updates at meetings: Faculty, Staff, GPSA

• Communications Plan Developed• Engage all elements of College in Decision-

making process• Change process monitored for results and

impact

The Future

• Major implications to all aspects of the life of the College

• Accountability will force changes to our “way of life”

• Can empower as well as create conflict• It is ours to manage….preparation is

everything in these implementations

Responses/Questions