What is RCM?

By Craig Chamberlain

Different universities have used different variations of the responsibility
center management approach - each taking into account its own culture,
traditions and structure - but these are the basic principles, according to
Walter Tousey, associate vice chancellor for academic affairs:
 * Campus revenues should be distributed to units (or responsibility centers)
   which produce a quality "end product" relevant to the university's mission
   - in teaching, research or public service.
 * The dollars distributed to these responsibility centers should vary
   predictably with the quantity of the end product.
 * All campus units should know the cost of all goods and services provided
   to them by campus service units.
 * Campus leadership provides the vision and the values that define the
   campus and determine its future.

RCM is intended to:
 * Give units more control over revenue and costs.
 * Decentralize decision-making, moving it to the level where the information
   is available to make reasonable judgments.
 * Facilitate budget analysis within academic units and provide incentives
   for units to plan initiatives that fit within the university's mission.
 * Provide a framework for considering all funds in financial planning.

Among the things that RCM is not intended to be, according to Tousey:
 * A substitute for strong management. Campus administrators still are
   required to make policy decisions and set goals that will chart the
   institution's future. The system also places a new emphasis on management
   at the college and department levels.
 * A system that grants each unit full authority and responsibility for its
   financial operations. This approach, characterized as "every tub on its own
   bottom," has been used at Harvard University, but the school has attempted
   to shift away from it.
 * A formula-driven approach that removes the need for judgment from
   decision-makers.
 * A corporate approach that shifts all emphasis to the bottom line.
 * A solution to all funding problems.

Among the universities that already budget within an RCM framework or are
actively considering a change to it:
   Cornell University
   Indiana University
   Ohio State University
   University of California, Los Angeles
   University of Oregon
   University of Pennsylvania
   University of Southern California
   University of Toronto