University of New Hampshire – RCM John Griffith Marilyn Hoskin PART I Experience with Decentralized Budgeting at the College Level Marilyn Hoskin Why was change seen as desirable at the C by jlj15604


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									University of New Hampshire – RCM
John Griffith
Marilyn Hoskin

PART I: Experience with Decentralized Budgeting at
the College Level
Marilyn Hoskin

Why was change seen as desirable at the College level?
   Strong perception that Liberal Arts was subsidizing other units
   Departments liked the idea of budget transparency
   Departments wanted to experiment with revenue increasing ideas
   Ability to roll over funds was a big plus

How did the College participate in Developing the Model?
   Faculty participated in the Steering Committee, Working Groups
   College faculty meetings held to explain model basics
   College provided mock spreadsheets for understanding revenues/
    Expenses at departmental levels (the reality factor)
   Departments given: Primers on RCM Basics
       - Templates for Grant breakdowns
       - Formulas for “break even” calculations
   Dean constantly involved in formula process (the pest factor)

What has the College’s Experience Been: (Positive):
   Predictability with relative certainty (Budget prep, expenses, revenue)
   Real differences in programs have become apparent
    (leading to class/assignments changes)
   Departments have developed new sources of revenue (esp. Grad level)
   College’s size and centrality (both large) assured relative stability
    in key components of revenue
   In good times, College could build up sizable reserves
What has the College’s Experience Been: (Negative):
 Some instances of intercollegiate poaching (new courses)
 Some instances of units milking the system in unanticipated ways
   (changing titles, funding status)
 The downside of transparency: inter-departmental monitoring

 Despite educational blitz, most faculty agnostic (best case) or negatively
  naïve (not good case) or negatively naïve yet aggressive (worst case)
 The greater the reliance on state appropriation, the greater the impact of
 flat or negative funding from this source (unequally felt)
 The greater the reliance on tuition revenue, the greater the risk of negative
 impacts of tuition increases (financial aid, loss of students)

PART lI: RCM 101
John Griffith

Why change the budget model?
 Incentives for planning, cost effectiveness and revenue generation
 Local responsibility and authority
 Flexibility to match revenue streams with changing program demands
 Attentiveness to all categories of money Accountability at all levels of

 Rigid resource allocation process
 Involvement of institutional leaders in budgetary detail
 Mystery and mistrust surrounding UNH finances
 “Use it or lose it” mentality

 Create incentives for good management
 Fairness/Simplicity
 Unit plans must align with University’s mission and strategic plan
 Smooth transition – no redistribution of resources
 Credible governance mechanisms required to prevent unhealthy internal
How the model works
RCM Allocation Principals:
 RCM Principals/formulas apply to the RC unit level
 RC units receive all revenue and are responsible for all expenditures
  generated by their activities
 RC units carry forward excess funds from one year to next and manage
  reserves at the unit level
 Each RC unit determines how to manage RCM within their unit
 RCM is not a cost accounting model but rather a general incentive/ allocation

Process for coming up with the model
   Steering Committee
        - Composition: 7 Administrators, 1 Dean, 3 faculty
   12 Working Groups
        - Composition: 14 Administrators, 8 Deans, 16 Faculty
   Briefings and Discussions
        - University-wide open forums
        - College-wide faculty meetings
        - PAT/OS/EE Councils
        - Research Advisory Council
        - Faculty Senate and committees
        - Chancellor’s financial staff
        - USNH Board of Trustees Planning Committee
   Site Visits
        - Indiana University, University of Minnesota, Central Michigan

Keys to success
   Senior management Support
   Time to explore all options and address challenges (3 years)
   Local financial managers are key for units to be successful
   Continuous and open communication
   Great working relationship Between Provost Office and VP Finance and
    Administrations office.
   Fulltime analyst

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