University Budget ModelsSession Chair:

Marsha Weinraub

Breakout Session 1, Madero ACOGDOP Annual Meeting

San Antonio, TXFebruary 20, 2015

23/26/2014

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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

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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 2015

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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.3/26/2014

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• 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

2015-2 COGDOP 2015

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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 AidAllocated Costs: Support Unit Funding

TU Strategic Fund

Available Resources

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Assessments? Costs taken off the top of tuition income

17 % of undergrad tuition Financial Aid UnG2.5 % of graduate tuition Financial Aid Grad

4.9 % of tuition Plant fund

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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

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Cost DriversThe 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

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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

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More Support Centers with Allocated Cost Drivers

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Facilities Management Faculty Affairs Financial

ServicesGeneral

AdministrationHuman

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

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More Support Centers with Allocated Cost Drivers

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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

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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 AidAllocated Costs: Support Unit Funding

TU Strategic Fund

Available Resources

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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 instructionMay create larger class sizes, heavier teaching loads, etc.May create pressure for more online courses

• Flat undergrad enrollment may lead to Adversarial relations among collegesCompetitive relations across departments

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RCM Opportunities?

Development of innovative undergrad and grad programs, those likely to attract enrollments

May encourage college to clarify prioritiesMoves college to be more attentive to studentsMore effective story to bring to potential donorsMay encourage unique collaborations among

colleges

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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?3/26/2014

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Critical things to think about as our universities continue using RCM? Other types of budgets?