ifas faculty assembly march 3, 2011

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.


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.


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.


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.


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


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


Goes to CollegeTeaching the Class


30 Percent Based on

Enrollment


SCHs are Weighted Based on Cost of Instruction of the Class


30 Percent Based on

Enrollment

Based on Number of Students Enrolledin College. Also Weighted



30 Percent Based on

Enrollment

State Appropriations – Tuition

Tuition DistributionPer College


30 Percent Based on

Enrollment


Goes to College Teaching the Class.SCH Weighted


30 Percent Based on

Enrollment


Based on Students Enrolled.Not Weighted


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).

http://www.hr.ufl.edu/training/rcm/index.html

QUESTIONS?

ifas faculty assembly march 3, 2011

Documents

responsibility centers

university of illinois

certain centers

greater responsibility

entrepreneurial revenue

current budget model

revenue generation

budget requests