Dec 20, 2012
From staff reports
At the Dec. 10 Faculty Senate meeting, John Day, associate provost for academic budget and planning, provided an hour-long overview of work being done on the draft Responsibility Centered Management (RCM) budget model.
According to Day, the goal of the presentation was to review the principles that drive the calculations in the model and to seek input on the extent to which they provide appropriate incentives for growth while avoiding unintended consequences.
Day began his presentation by discussing the guiding principles and the academic quality indicators that form the foundations of the draft RCM budget model. Guiding principles include creating "a simple and transparent budget process driven by the goals of financial predictability, and stability" and supporting "strong academic governance that promotes collaboration across units and builds on the strengths of the university." Academic quality indicators range from maintaining an appropriate mix of full-time faculty to preserving support for interdisciplinary programs.
Day then discussed the differences between the current incremental budgeting model and the proposed RCM model. One of the key differences Day stressed is that the new model reveals the underlying economics of university finances. He suggested that using an RCM approach will provide greater transparency when it comes to revenue generation and costs.
The next part of the presentation outlined how revenues—undergraduate tuition and nonresident fees and state support for instruction (SSI) payments—are slated to be allocated to colleges under the draft RCM budget model.
In the draft model, colleges will receive revenue tied to credit hour generation. Day explained that the state's SSI calculation takes into consideration the fact that some disciplines are more expensive to teach than others, and that introductory-level classes tend to be less expensive than senior- or master's-level ones.
Using actual FY13 SSI earnings, Day stepped through the calculations per credit hour, per student used by the state, illustrating the earnings-to-student ratios of the disciplines for which the University receives funding. When the University calculates how much each college should receive in SSI dollars, it will use a similar weighted student credit hour approach.
"The cost of instruction varies by discipline because of class size constraints, costs of faculty, costs of labs and equipment, but we charge the same tuition for all courses," Day said. "Weighting removes the penalty for high-cost disciplines."
An additional factor is being proposed for the distribution of tuition and fees. In the draft model, undergraduate tuition and nonresident fees are allocated 85 percent by credit hours taught and 15 percent by the number of majors enrolled. If all tuition were allocated by credit hours, Day said, colleges would have a perverse incentive to offer their own service courses such as writing and math, which would be inefficient and ineffective.
Graduate tuition will be neither averaged nor weighted, Day said, because most graduate tuition is waived.
Discussion of the draft model and the degree to which it strikes the appropriate balance between academic quality and financial incentives will move to colleges in spring semester. Day indicated that deans will begin reviewing the model with their faculty and staff.
Day's presentation also contained a timeline for RCM implementation and a set of frequently asked questions.