IFAS Faculty AssemblyMarch 3, 2011
Dr. Joe JoyceExecutive Associate Vice President
Institute of Food and Agricultural SciencesUniversity of Florida
RCM
http://www.hr.ufl.edu/training/rcm/index.html
What is RCM?
Responsibility Center Management, or RCM, is a budgeting philosophy that decentralizes decisions and financial authority/responsibility to academic leadership – that is, to the college deans and their faculty who are in a position to understand the impact of resource use and related decisions.
RCM is designed to encourage academic units to take greater responsibility for revenue generation and spending decisions – promoting “entrepreneurial thinking.” It can also support growth even when government funding is limited.
University of Illinois-Urbana ChampaignSouthern Illinois UniversityMarquette UniversityAmerican UniversityUniversity of California at Los Angeles
(UCLA)University of ToledoClemson UniversityHarvard UniversityWashington University of St. LouisIndiana University of PennsylvaniaMercer UniversityCalifornia Institute of Technology (Caltech)Vanderbilt UniversityDuke University
Auburn UniversityClarkson University (considering)Purdue UniversityTemple UniversityUniversity of OregonUniversity of PennsylvaniaUniversity of Southern CaliforniaUniversity of TorontoWest Chester University (PA)Central Michigan UniversityUniversity of IowaUniversity of AlaskaMcGill UniversityRensselaer Polytechnic Institute
Other RCM Universities
How does RCM compare to our current budget model?UF currently uses an incremental budgeting process, which means that central UF administration provides funds to colleges and administrative areas based primarily on historic spending.
Central authority for
financial planning,
execution, and control
Budgets based on past
allocations
Changes are gradual and
occur over time as circumstances
warrant and resources allow
How does RCM compare to our current budget model?RCM uses a formula to allocate state appropriations based on Student Credit Hours (SCHs), enrollment, and other factors. Colleges/auxiliaries keep surplus funds and all entrepreneurial revenue generated.
Instruction:Student Credit
Hours
Entrepreneurial Activities:Research
Self-Funded Classes
Auxiliaries, etc.
Strategic Direction
Deans have more info (increased
transparency) and control over their
budget
Overall effect:
Improved outcomes
for UF
Can use limited
resources more
effectively to support priorities
With RCM:
Let’s define some key concepts as they relate to RCM
Colleges, auxiliaries, and certain centers are considered Responsibility Centers (RCs). Responsibility Centers generate revenue and incur costs. The appropriate dean, director, or vice president is accountable for both.
IFAS is a Responsibility Center
ResponsibilityCenter
SupportCenter
Support Centers are administrative units that tend to generate little or no revenue, but do incur costs. Managers of these areas are accountable for costs – and value of services provided. Support Centers will be funded via assessments to each Responsibility Center.
Let’s define some key concepts as they relate to RCM
Each year, Support Centers will explain their value and services to a Budget Review Council to justify their budget requests. This council will be composed of 12 to 15 representatives from colleges, VP areas, and the Faculty Senate, with rotating membership. Every five to six years, each Support Center will go through a “zero-based” budget review in front of this council.
Let’s define some key concepts as they relate to RCM
Budget ReviewCouncil
Certain areas receive funding directly from the state. These Direct-Funded Units are neither Responsibility nor Support Centers. For these units, state-appropriated funds will be provided directly. They will receive their budgets going forward, which will change if they receive new state funding or budget reductions.
Let’s define some key concepts as they relate to RCM
Direct-FundedUnit
Center of Excellence Regenerative Health Biotechnology HybridChief Financial Officer and Vice President Support CenterCollege of Agricultural and Life Sciences Responsibility CenterUniversity Press of Florida Direct Funded Center
http://cfo.ufl.edu/rcmc/RCMMatrixDetail.pdf
Hybrid: Unit has both Responsibility Center and Support Center functions.Support Center: Unit is an administrative unit that provides support
services university-wide.Responsibility Center: Unit earns revenue from student credit hours
and/or entrepreneurial activities.Direct Funded Center: Unit is appropriated State Appropriations outside
student credit hour model.
Key concepts: What are Student Credit Hours (SCHs) and enrollment?
Enrollment
# of students accepted and enrolled in a
college regardless of where they are
taking classes
Total SCH
# of credit
hours for classes
# of students in classes
Five weightings will be used for each college’s SCHs: Lower level, upper level, graduate I, graduate II, and graduate III.
These weightings are based on historical expenditure analysis (FY 09/10) of what it costs to teach classes in each college:
• Number of personnel engaged in academic activity and salary cost
• Actual state-appropriated expenditures
• Number of SCH by level
Here are some additional key concepts
WeightedCost of Delivery
Key concept: What is weighted cost of delivery?The process used to determine weighted cost of delivery was non-judgmental, based on historical percentage of university state budget.
However, any funding biases in the past were brought forward since historical data were used.
To control for that, weightings were then compared with other schools:
• For example, universities in Ohio, Texas, and other Florida publics.
The weights were then adjusted accordingly.
Here are some additional key concepts
Base Student Allocation refers to the value assigned to one student credit hour (SCH) with a weight of 1.00 – that is, it provides a baseline associated with a 1.0 weighting.
• 1 Lower Level SCH = $109.77 (BSA)
BSA is then used to calculate how much of state appropriations the colleges will receive through RCM.
The end result is the allocation of state‑appropriated funds.
Base Student Allocation
(BSA)
Key concept: What is the Base Student Allocation (BSA)?
If your college’s lower level SCH weighting is 10, then, for each lower level SCH, the college will receive state appropriation dollars of $1,097.70.
SCH Weighting BSAState
Allocation1 1 109.77 (1 × 1 × 109.77 =) $109.771 10 109.77 (1 × 10 × 109.77 =) $1,097.702 10 109.77 (2 × 10 × 109.77 =) $2,195.40
Here are some additional key concepts
With RCM, there also is a strategic fund available that is designed to support new or key initiatives. This central fund is funded by tuition increases as well as the University’s Pepsi fund, logo fund, etc. It is used at the discretion of the President.
StrategicFund
There are five basic components associated with revenue under RCM
State Appropriations
Entrepreneurial Activities
Contracts and Grants
Endowment Earnings and Gifts
Material & Supply (M&S)and Equipment Use Fees
Total College Revenue
Let’s look at these revenue components more closely
State Appropriations
Includes:• General Revenue• Lottery• Tuition
State Appropriations – General Revenue and Lottery
Per College
70 Percent Based on Student Credit Hours (SCH)
30 Percent Based on
Enrollment
State Appropriations – General Revenue and Lottery
Goes to CollegeTeaching the Class
70 Percent Based on Student Credit Hours (SCH)
30 Percent Based on
Enrollment
State Appropriations – General Revenue and Lottery
SCHs are Weighted Based on Cost of Instruction of the Class
70 Percent Based on Student Credit Hours (SCH)
30 Percent Based on
Enrollment
Based on Number of Students Enrolledin College. Also Weighted
State Appropriations – General Revenue and Lottery
70 Percent Based on Student Credit Hours (SCH)
30 Percent Based on
Enrollment
State Appropriations – Tuition
Tuition DistributionPer College
70 Percent Based on Student Credit Hours (SCH)
30 Percent Based on
Enrollment
State Appropriations – Tuition
Goes to College Teaching the Class.SCH Weighted
70 Percent Based on Student Credit Hours (SCH)
30 Percent Based on
Enrollment
State Appropriations – Tuition
Based on Students Enrolled.Not Weighted
70 Percent Based on Student Credit Hours (SCH)
30 Percent Based on
Enrollment
CALS UpdateRCM, SCH• CALS 09-10 = 123,139 SCH, ~9.3% of UF• Weighted SCH ~ $$
Grad programs generate ~20% of credit hours but >50% of budget
Tuition, teaching Weight SCH Weighted SCHUG lower 1.56 31,412 49,003UG upper 2.65 68,480 181,472Grad I (MS) 9.36 10,701 100,161Grad II (PhD) 12.99 12,546 162,972
FY 2010-11 RCM SCH RevenuesCollege of Agricultural and Life Sciences
Lower Upper Grad I Grad II Grad III TotalSCH 33,043 67,927 10,699 12,168 0Weight 1.56 2.65 9.36 12.99 0.00BSA-State Approp. 70% 27.30 27.30 27.30 27.30 27.30State Appropriation 70% Teaching Allocation 1,406,331 4,917,594 2,733,021 4,315,716 0 13,372,662
Lower Upper Grad I Grad II Grad III TotalSCH 48,181 71,015 11,239 12,004 0Weight 1.56 2.65 9.36 12.99 0.00BSA-State Approp. 30% 11.93 11.93 11.93 11.93 11.93State Appropriation 30% Enrollment Allocation 896,288 2,247,073 1,254,773 1,860,872 0 6,259,006
Teaching Allocation Percent70%
Enrollment Allocation Percent30%
FY 2010-11 RCM REVENUESAppropriations - 70% Teaching $13,372,662
Appropriations - 30% Enrollment $6,259,006
Tuition - 70% Teaching $13,659,198
Tuition - 30% Enrollment $6,486,899
Student Services & Library (add back) $7,332,782
Miscellaneous Add Backs $308,638$284,759 $593,397
Graduate Student Fellowship $2,503,736
UG Differential Tuition $251,468
Budget Cuts & Recalls ($348,477)($569,517) ($917,994)
Waivers ($4,212,096)Uncollected Tuition ($230,824)Total State Revenue $45,098,233
FY 2010-11 RCM REVENUES (continued)Total State Teaching Revenue $45,098,233
Non-State RevenueEntrepreneur Activities $13,423,863
Contracts & Grants $89,174,250
Endowment Earnings & Gifts $9,566,113Total Non-State Revenue $112,164,226
Total Revenue – CALS $157,262,459
Research & Extension RevenueState Appropriation $130,631,590
Total IFAS RCM Revenue $287,894,049
Expected expense components
Info Technology
Total Assessments
General AdminHSC Admin
Student Services AdminFacilitiesLibrary
Sponsored Project Admin
University Support UnitsBudget for 2011 - $274.6 M
FY 2010-11 Support Unit Overhead Expenditure Rates
Facility $9.17/unweighted square foot
General Administration 7.39%
Information Technology 3.74%
Sponsored Projects Administration 8.25%
Space/Facilities AssessmentsSpace Type Weight
Lab
Classroom
Office
Other
2.75
1.50
1.25
1.25The current, unweighted cost per square foot is $9.17.
For example, if 100 square feet of lab space is being used by an RC, such RC would incur a cost of $2,522 (9.17 x 100 square feet x 2.75 weight).
RCM Overhead Assessments for 2011 Fund 103
Amount Fund 101 Fund 103 Fund 211 CYFWD TOTALInformation Technology $1,857,743 $1,676,712 181,031$ $1,857,743
General Administration $3,679,660 3,221,603$ $458,057 $3,679,660
Student Services $2,910,106 $2,910,106 $2,910,106
Facilities $4,627,750 $3,134,026 1,493,724$ $4,627,750
Library $4,422,676 $3,638,982 783,694$ $4,422,676
Sponsored Projects Administration $4,528,689 4,528,689$ 4,528,689$
Bond Payment $383,410 $383,410 $383,410Sub-Total $22,410,034 $14,581,429 $383,410 4,528,689$ 2,916,506 $22,410,034
Information Technology $525,480 $525,480 $525,480
General Administration $818,730 $818,730 $818,730Sub-Total $1,344,210 $1,344,210 $1,344,210
Total $23,754,244 $14,581,429 $1,727,620 $4,528,689 $2,916,506 $23,754,244
Base + Salary Savings + Grad Fellowships$7.5 million
Base + Salary Savings
Base
Base
Base
Grad Fellowships$2.3 million
To 22 GraduatePrograms
Salary Savings$0.3 million
To Depts by request & negotiation,for temporary teaching
Unit Operating$1.5 million
Depts~70%
RECs~30%
Matching Assistantships$3.0 million
Depts~80%
RECs~20%
CALS Operating$0.4 million
Income, SHARE & Endowments$0.2 million
Recruiting15%
Events, meetings8%
Alumni,Career 15%
Comp lab7%
Travel4%
Study Abroad2%
Stu Travel5%
Pubs3%
Awards, grants18%
Other5%
DE18%
Carryforward
CALS Budget95%+ goesto units
y = 174.22x + 19099R² = 0.6024
0
20000
40000
60000
80000
100000
120000
140000
160000
0 100 200 300 400 500 600 700 800 900
CALS Student Headcount v. Operating Allocation
y = 6.9095x + 19315R² = 0.6504
0
20000
40000
60000
80000
100000
120000
140000
160000
0 5,000 10,000 15,000 20,000
CALS SCH v Operating Allocation, 2009
BOG Minimum Graduate Levels
ProgramMinimum/Year
(5 year Average) CALS
B.S.
M.S.
Ph.D.
6
4
3
2
5
1
References• Introduction to Responsibility Center Management (RCM
100 - online course designed and developed by UF Training & Organizational Development in collaboration with the Office of the Vice President and Chief Financial Officer - located at: http://www.hr.ufl.edu/training/rcm/index.html).
• Whalen, Edward L. (1991) Responsibility Center Budgeting: An Approach to Decentralized Management for Institutions of Higher Education. Indiana University Press, Bloomington, IN.
• UF RCM Manual (TBP).
• UF Annual Budget Book (TBP).
QUESTIONS?