IFAS Faculty Assembly
March 3, 2011
RCM
Dr. Joe Joyce
Executive Associate Vice President
Institute of Food and Agricultural Sciences
University of Florida
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.
Other RCM Universities
University of Illinois-Urbana Champaign
Southern Illinois University
Marquette University
American University
University of California at Los Angeles
(UCLA)
University of Toledo
Clemson University
Harvard University
Washington University of St. Louis
Indiana University of Pennsylvania
Mercer University
California Institute of Technology (Caltech)
Vanderbilt University
Duke University
Auburn University
Clarkson University (considering)
Purdue University
Temple University
University of Oregon
University of Pennsylvania
University of Southern California
University of Toronto
West Chester University (PA)
Central Michigan University
University of Iowa
University of Alaska
McGill University
Rensselaer Polytechnic Institute
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
With RCM:
Deans have
more info
(increased
transparency)
and control
over their
budget
Can use
limited
resources
more
effectively
to support
priorities
Overall
effect:
Improved
outcomes
for UF
Let’s define some key concepts as they relate to RCM
Responsibility
Center
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
Let’s define some key concepts as they relate to RCM
Support
Center
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
Budget
Review
Council
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
Direct-Funded
Unit
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.
Center of Excellence Regenerative Health Biotechnology
Chief Financial Officer and Vice President
College of Agricultural and Life Sciences
University Press of Florida
Hybrid
Support Center
Responsibility Center
Direct Funded Center
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.
http://cfo.ufl.edu/rcmc/RCMMatrixDetail.pdf
Key concepts: What are Student Credit Hours (SCHs)
and enrollment?
# of
credit
hours for
classes
# of students
in classes
# of students
accepted and
enrolled in a
college regardless
of where they are
taking classes
Total
SCH
Enrollment
Here are some additional key concepts
Weighted
Cost of
Delivery
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
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
(BSA)
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.
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
1
1
109.77
1
10
109.77
2
10
109.77
BSA
(1 × 1 × 109.77 =)
(1 × 10 × 109.77 =)
(2 × 10 × 109.77 =)
State
Allocation
$109.77
$1,097.70
$2,195.40
Here are some additional key concepts
Strategic
Fund
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.
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 College
Teaching 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
State Appropriations – General Revenue and Lottery
Based on Number of Students Enrolled
in College. Also Weighted
70 Percent Based on
Student Credit Hours (SCH)
30 Percent
Based on
Enrollment
State Appropriations – Tuition
Tuition Distribution
Per 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 Update
RCM, 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
UG lower
Weight
1.56
SCH
31,412
Weighted SCH
49,003
UG upper
Grad I (MS)
Grad II (PhD)
2.65
9.36
12.99
68,480
10,701
12,546
181,472
100,161
162,972
FY 2010-11 RCM SCH Revenues
College of Agricultural and Life Sciences
Teaching Allocation Percent
70%
SCH
Weight
BSA-State Approp. 70%
State Appropriation
70% Teaching Allocation
Lower
33,043
1.56
27.30
Upper
67,927
2.65
27.30
Grad I
10,699
9.36
27.30
Grad II
12,168
12.99
27.30
Grad III
0
0.00
27.30
1,406,331
4,917,594
2,733,021
4,315,716
0
Total
13,372,662
Enrollment Allocation Percent
30%
SCH
Weight
BSA-State Approp. 30%
State Appropriation
30% Enrollment Allocation
Lower
48,181
1.56
11.93
Upper
71,015
2.65
11.93
Grad I
11,239
9.36
11.93
Grad II
12,004
12.99
11.93
Grad III
0
0.00
11.93
896,288
2,247,073
1,254,773
1,860,872
0
Total
6,259,006
FY 2010-11 RCM REVENUES
Appropriations - 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
Graduate Student Fellowship
$2,503,736
UG Differential Tuition
Budget Cuts & Recalls
Waivers
Uncollected Tuition
Total State Revenue
$593,397
$251,468
($348,477)
($569,517)
($917,994)
($4,212,096)
($230,824)
$45,098,233
FY 2010-11 RCM REVENUES (continued)
Total State Teaching Revenue
$45,098,233
Non-State Revenue
Entrepreneur Activities
$13,423,863
Contracts & Grants
$89,174,250
Endowment Earnings & Gifts
$9,566,113
Total Non-State Revenue
$112,164,226
Total Revenue – CALS
$157,262,459
Research & Extension Revenue
State Appropriation
Total IFAS RCM Revenue
$130,631,590
$287,894,049
Expected expense components
Info Technology
General Admin
HSC Admin
Student Services Admin
Facilities
Library
Sponsored Project Admin
Total Assessments
University Support Units
Budget 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 Assessments
Space Type
Weight
Lab
2.75
Classroom
1.50
Office
1.25
Other
1.25
The 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
$458,057
$3,679,660
Information Technology
Fund 101
$1,676,712
General Administration
$3,679,660
$ 3,221,603
Student Services
$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
$
$4,422,676
Sponsored Projects Administration
$4,528,689
$383,410
$22,410,034
$14,581,429
Fund 211
TOTAL
$1,857,743
Amount
$1,857,743
Bond Payment
Sub-Total
Fund 103
Fund 103
CYFWD
$ 181,031
$2,910,106
$383,410
$383,410
783,694
$ 4,528,689
$ 4,528,689
$ 4,528,689
$383,410
$22,410,034
2,916,506
Information Technology
$525,480
$525,480
$525,480
General Administration
Sub-Total
$818,730
$1,344,210
$818,730
$1,344,210
$818,730
$1,344,210
Total
$23,754,244
$14,581,429
$1,727,620
$4,528,689
$2,916,506
$23,754,244
CALS Budget
Base + Salary Savings + Grad Fellowships
$7.5 million
Grad Fellowships
$2.3 million
95%+ goes
to units
To 22 Graduate
Programs
Base + Salary Savings
Salary Savings
$0.3 million
To Depts by request & negotiation,
for temporary teaching
Unit Operating
$1.5 million
Depts
~70%
Base
RECs
~30%
Base
Matching Assistantships
$3.0 million
Depts
~80%
RECs
~20%
Base
Carry
forward
CALS Operating
$0.4 million
Income, SHARE & Endowments
$0.2 million
Recruiting
15%
Study Abroad
2%
Stu Travel
5%
Comp lab
7%
Events, meetings
8%
Travel
4%
Alumni,
Career 15%
DE
18%
Awards, grants
18%
Pubs
3%
Other
5%
CALS Student Headcount v. Operating Allocation
160000
140000
120000
y = 174.22x + 19099
R² = 0.6024
100000
80000
60000
40000
20000
0
0
100
200
300
400
500
600
700
800
900
CALS SCH v Operating Allocation, 2009
160000
140000
120000
y = 6.9095x + 19315
R² = 0.6504
100000
80000
60000
40000
20000
0
0
5,000
10,000
15,000
20,000
BOG Minimum Graduate Levels
Program
Minimum/Year
(5 year Average)
CALS
B.S.
6
2
M.S.
4
5
Ph.D.
3
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?