david proulx, assistant vice president for financial planning and budgeting email:...

David Proulx, Assistant Vice President for Financial Planning and BudgetingDavid Proulx, Assistant Vice President for Financial Planning and BudgetingEMail: [email protected]: [email protected]

Budget Office Website: http://www.unh.edu/budgetBudget Office Website: http://www.unh.edu/budgetRCM Website: http://www.unh.edu/rcmRCM Website: http://www.unh.edu/rcm

Responsibility Center ManagementResponsibility Center Management

Presentation OutlinePresentation Outline

1. Overview1. Overview2. Allocation Methodologies2. Allocation Methodologies

3. Results thus far3. Results thus far

4. 5 year review4. 5 year review

Why RCM?Decentralization of Budget Authority

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 at all levels of management

Overview

Old Old

BudgetBudget

SystemSystem

Old Old

BudgetBudget

SystemSystem

Institutional Revenue- Tuition- Indirect Cost Recovery- State AppropriationRevenue

UNH Divisions- Colleges/Library- Research and PublicService Units- Auxiliary Operations

Direct Expense- Payroll- Support- Debt service

University Budget Panelallocates revenue to

departments in form of $142million E&G Budget

Department (Direct) Revenue- Grant/Contracts- RestrictedGifts/Endowment- Sales of goods/services- Fees

Institutional Overhead (Service Units)- Facilities- CIS- Student Affairs- VP Research- General Admin- Academic Affairs

Overview

RCM RCM

BudgetBudget

SystemSystem

RCM RCM

BudgetBudget

SystemSystem

Overview

Revenue- Tuition- Indirect Cost Recovery- State AppropriationRevenue- Direct Revenue (Grant,Gift, Sales, Fees, etc.)

RC Units- Academic- Research- Auxiliary

Direct Expense- Salaries, Wages & Benefits- Support- Debt service

Central Budget Committee

- Incremental fundingdecisions- $700k University Fundallocation- Service Unit Advisory Boardsubcommittee to reviewService Units if necessary

Institutional Overhead- Facilities- CIS- Student Affairs- VP Research- General Admin- Academic Affairs

RC Units

Colleges and Related Service Units Research and Public Service Units

College of Life Sciences and Agriculture

College of Liberal Arts College of Engineering and Physical

Sciences Whittemore School of Business and

Economics School of Health and Human Services UNH – Manchester Library

Cooperative Extension Research and Public Service New Hampshire Public Television Institute for Earth, Oceans and Space

Student and Community Life Units Governance, Advancement and Infrastructure Units

Student Affairs Housing Hospitality Services Intercollegiate Athletics Whittemore Center Arena

Facilities Services Computing and Information Services General Administration Academic Affairs

Overview

RCM Principles

1. Create incentives for good management

2. Fairness/Simplicity

3. Unit plans must align with University’s mission and strategic plan

4. Smooth transition - no redistribution of resources

5. Credible governance mechanisms required to prevent unhealthy internal competition

6. Same rules for all operations – academic, research, auxiliary, administrative

Overview

RCM Principles, cont.

7. RCM principles/formulas apply to the RC unit level. 8. RC units receive all revenue and are responsible for all

expenditures generated by their activities.9. RC units carry forward excess funds from one year to

next and manage reserves at the unit level.10. RCM is not a cost accounting model but rather a

general incentive/allocation model.

Overview

Shared Governance

Central Budget Committee The governing group on budget policy and financial planning for

the campus community. Comprised of President, Vice Presidents, 2 Deans, 4 Faculty, 2

RC Unit Directors, Student Treasurer

Service Unit Advisory Board Functions as subcommittee of the Central Budget Committee

University Curriculum and Academic Policies Committee Advisory to Provost – monitors academic quality and curriculum

issues. Comprised of Provost, 11Tenured Faculty, 2 Students, Chair of

Academic Standards and Advising Committee

Overview

National ContextNational Context

47% of Private vs. 8% of Public Universities employ an RCM model 47% of Private vs. 8% of Public Universities employ an RCM model UNH Presented at EACUBO Annual ConventionUNH Presented at EACUBO Annual ConventionRepresentatives from numerous institutions visited UNH to explore Representatives from numerous institutions visited UNH to explore RCM (UMASS, UVM, URI, UCONN, UMAINE, UColorado at RCM (UMASS, UVM, URI, UCONN, UMAINE, UColorado at Denver,Southern Mississippi, Eihme University in Japan, Ohio Denver,Southern Mississippi, Eihme University in Japan, Ohio University, Queen’s University, Ontario, University of Alberta and University, Queen’s University, Ontario, University of Alberta and Universities from Russia, Switzerland and Pakistan) Universities from Russia, Switzerland and Pakistan) Numerous consultations with other institutions (South Carolina, Numerous consultations with other institutions (South Carolina, North Texas, Idaho, University of Wisconsin, Iowa State, Pace North Texas, Idaho, University of Wisconsin, Iowa State, Pace University, Kutztown University)University, Kutztown University)Wrote a chapter in a NACUBO book about RCM.Wrote a chapter in a NACUBO book about RCM.UNH RCM Website receives 10,000 hits per year.UNH RCM Website receives 10,000 hits per year.

*Survey of the Resource Allocation Methodologies Employed at Public and *Survey of the Resource Allocation Methodologies Employed at Public and Private Research and Doctoral Universities. Cornell Higher Education Private Research and Doctoral Universities. Cornell Higher Education Research Institute, 1/4/2000.Research Institute, 1/4/2000.

Overview


1. Overview1. Overview

2.2.Allocation MethodologiesAllocation Methodologies3. Results thus far3. Results thus far


Unit Financial Unit Financial StructureStructure

Units receive direct revenues (fees, grants, gifts, Units receive direct revenues (fees, grants, gifts, etc) as well as applicable allocated revenues etc) as well as applicable allocated revenues (net tuition, state appropriations, indirect cost (net tuition, state appropriations, indirect cost recovery, CBC allocations and hold harmless)recovery, CBC allocations and hold harmless)

Units are responsible for direct expenses Units are responsible for direct expenses (salaries, wages, fringe benefits, support) as (salaries, wages, fringe benefits, support) as well as indirect expenses (facilities, general and well as indirect expenses (facilities, general and academic overhead)academic overhead)

Unspent funds at end of year are allowed to Unspent funds at end of year are allowed to drop to a unit “reserve”drop to a unit “reserve”

Allocation Methodologies

RC Unit RevenuesRC Unit Revenues

Direct revenues - fees, sales of goods/services, Direct revenues - fees, sales of goods/services, gifts, grants/contracts, endowment incomegifts, grants/contracts, endowment incomeAllocated revenues:Allocated revenues: Undergraduate net tuition - based on share of Undergraduate net tuition - based on share of

weighted credit hours taught over prior two years. weighted credit hours taught over prior two years. Weights are based on historical average Weights are based on historical average expense per credit hourexpense per credit hour

Graduate tuition - based on enrollmentGraduate tuition - based on enrollment State Appropriations (30%) - based on faculty State Appropriations (30%) - based on faculty

salariessalaries Indirect Cost Revenue - based on actual indirect Indirect Cost Revenue - based on actual indirect

costs earnedcosts earned


RC Unit ExpensesRC Unit Expenses

Direct Expenses - salaries, wages, fringe benefits, Direct Expenses - salaries, wages, fringe benefits, supplies, other direct expenses.supplies, other direct expenses.

Allocated expenses (overhead):Allocated expenses (overhead): Facilities Services (maintenance, utilities, Facilities Services (maintenance, utilities,

housekeeping, R&R) - based on net square feet housekeeping, R&R) - based on net square feet General Administration (President, Research, Finance General Administration (President, Research, Finance

& Administration, Student Affairs) - based on prior year & Administration, Student Affairs) - based on prior year revenues and personnel expensesrevenues and personnel expenses

Academic Affairs (Provost, Registrar, Financial Aid Academic Affairs (Provost, Registrar, Financial Aid Office, Admissions) - based on prior year revenues and Office, Admissions) - based on prior year revenues and personnel expensespersonnel expenses


ReservesUnder RCM, unspent funds at year end are automatically added to the School/College fund balance. This required a change in Board of Trustee policy.

RC units are obligated to meet an agreed upon minimum fund balance level (initially 1% 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 approval.

Unit reserves reduce dependence on limited central reserves


“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 inflatedRC Unit FY01 Original Budget

"Old"Budget System RCM

Direct revenues 1,000,000$ 1,000,000$ UNH budget allocation 19,000,000$ Allocated revenue 27,000,000$ Balancing adjustment 2,000,000$ Total revenues 20,000,000$ 30,000,000$

Direct expenditures 20,000,000$ 20,000,000$ Allocated expenditures 10,000,000$ Total Expenditures 20,000,000$ 30,000,000$

Net -$ -$




2.2. Allocation MethodologiesAllocation Methodologies

3. Results thus far3. Results thus far4. 5 year review4. 5 year review

Student AccessStudent Access

Improving access to classes for first year Improving access to classes for first year studentsstudents

College-based open houses to attract College-based open houses to attract undeclared studentsundeclared students

Reviewing courses and curriculum to improve Reviewing courses and curriculum to improve the student experiencethe student experience

College based student retention effortCollege based student retention effort

Results

Space UtilizationSpace Utilization

Colleges transferring ”college controlled” Colleges transferring ”college controlled” classrooms to Registrar’s Office to be classrooms to Registrar’s Office to be available for University useavailable for University use

Review of lab utilization and the Review of lab utilization and the reassignment of lab space at COLSA reassignment of lab space at COLSA and CEPS and CEPS

Results

Impact on Service UnitsImpact on Service Units

Service units have become more Service units have become more accountable and responsive to customeraccountable and responsive to customerneeds:needs:

Facilities – cost reduction efforts and service Facilities – cost reduction efforts and service provider agreementsprovider agreementsLibrary – periodical budget/allocation reviewLibrary – periodical budget/allocation reviewCIS – Customer focus groups and Strategic Plan CIS – Customer focus groups and Strategic Plan that focus on servicethat focus on serviceBudget increases for the Central Administration Budget increases for the Central Administration is lower than Colleges and Research Units.is lower than Colleges and Research Units.

Results

Better ManagementBetter Management

Managers at all levels discussing financial Managers at all levels discussing financial impacts of decisions – direct and indirectimpacts of decisions – direct and indirect

Decisions being made with the long term Decisions being made with the long term in mind vs. short termin mind vs. short term

Decisions aligning with goals in strategic Decisions aligning with goals in strategic planplan

Use of all funds not just general fundUse of all funds not just general fund

More communication at all levels of More communication at all levels of managementmanagement

Results



2. Allocation Methodologies2. Allocation Methodologies

3. Results thus far3. Results thus far


TimelineTimelineDec. 2004 – April 2005 – open discussions with Dec. 2004 – April 2005 – open discussions with all RC units on RCM all RC units on RCM

April 2005 – August 2005 – Data accumulation April 2005 – August 2005 – Data accumulation and review structure developmentand review structure development

August 2005 – January 2006 – Subcommittee August 2005 – January 2006 – Subcommittee review and Steering Committee review and Steering Committee recommendationsrecommendations

February 2006 – Central Budget Committee February 2006 – Central Budget Committee Review and President decisionReview and President decision

July 1, 2006 – Implementation of changesJuly 1, 2006 – Implementation of changes

ParticipationParticipation

Steering Committee and 7 subcommitteesSteering Committee and 7 subcommittees

17 meetings and 2 open forums for 17 meetings and 2 open forums for information gathering/feedback. 2 open information gathering/feedback. 2 open forums for initial recommendations. forums for initial recommendations.

Employee Type # % of TotalLibrary/Tenure/TT Faculty 27 48%Research/Clinical Faculty 5 9%Deans 7 13%Staff 17 30%Total 56 100%

Review ResultsReview Results

RCM works well for UNH and should RCM works well for UNH and should remain as budgeting toolremain as budgeting tool

Enhance communications in some areasEnhance communications in some areas

Allocation formulas changed to create Allocation formulas changed to create better incentives/more alignment with better incentives/more alignment with Academic PlanAcademic Plan

Elimination of hold harmless allocation and Elimination of hold harmless allocation and review of assessment funded unitsreview of assessment funded units

RCM should be reviewed again in FY11RCM should be reviewed again in FY11

More InformationMore InformationThe RCM review report and other information The RCM review report and other information

on RCM can be found at the UNH RCM on RCM can be found at the UNH RCM Website at Website at www.unh.edu/rcm

david proulx, assistant vice president for financial planning and budgeting email:...

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