Deans, department heads and directors heard about progress being made on the UA's new budget model during a recent presentation by Provost Andrew Comrie.
Responsibility Centered Management, or RCM, is designed to make the UA's budgeting process more transparent, more decentralized and more closely aligned with goals outlined in the UA's Never Settle strategic academic and business plan.
A steering committee and nine subcommittees have been working to share information and gather feedback from deans, assistant and associate deans, vice presidents and Responsibility Unit Business Officers, who are representatives from each of the colleges and units identified as Responsibility Centered Units, or RCUs.
The committee has also developed a draft budget forecasting model. This tool, along with other updates, was shared during the open house presentation on Dec. 18.
You can view Comrie's presentation in its entirety by clicking here.
In the meantime, here are the "three T's" you should know about RCM.
The UA currently uses an incremental, or centrally allocated, budget model. In this model, funds flow from central administration down to the colleges, support units and facilities, as depicted in this diagram.
Under RCM, the UA's central budget will still be separate from the college, support unit, facilities and auxiliary budgets, although all components feed into one another, as shown in this diagram.
"It (the diagram) gives you a sense of how the money flows," Comrie said. "It simultaneously belongs to everybody, and yet the system helps to cover its own costs, and everyone can see where the revenues are going to come in ... where the costs are assigned, and how they flow between the major constituent parts of the model."
Comrie explained that RCM is essentially a budgeting tool that will help campus units make better-informed budgeting decisions.
"RCM is simply a tool," Comrie said. "It is a restatement of our budget."
The RCM steering committee has developed an initial budget forecasting model that is now available on the RCM website. This instrument, which is essentially a comprehensive pre-populated spreadsheet, allows users to create models to forecast how changes in one area will affect others under RCM.
Deans and their business offices have been experimenting with the forecast model since late fall to become familiar with it.
The model has three main components: an "assumption" section where steering committee decisions related to revenue and expense flows are depicted; an "input variables" section where users input forecasts of various elements, such as credit hours, revenue assumptions and program fees; and a "reports" section that displays the results of the assumptions and inputs.
RCM is expected to replace the UA's current incremental budgeting system starting in fiscal year 2016. This year's budget was based on the incremental system, and unit activity this year will affect next year's budget under RCM.
Starting this summer, the steering committee will work to implement budget process changes to prepare for the transition to RCM. The committee will also monitor the impacts of assumptions modeled using actual fiscal year 2015 data, work to improve campus data systems and monitor effectiveness and efficiency of the RCM implementation.
In addition to gathering feedback from those using the new budget forecasting tool, the RCM steering committee is preparing to make additional recommendations in March.
Members are also exploring how to establish and integrate governance to ensure the principles of RCM are included in campus decision-making processes. In addition, a committee will also be established to review RCM and make recommendations for changes three years after its implementation.
"It (RCM) will adapt," Comrie said. "Adaptability is key."