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Central Washington University RCM/ABB Journey
RCM – ABB what are they and why are we here? Management philosophy designed to support the achievement of academic priorities within an institution, and allows for a budget which closely follows those priorities. Significant changes in the higher education landscape—decreased state funding, increased student price sensitivity resulting in limited tuition rate increasesand rising costs of salaries—have been major contributing factors in the migration to RCM models across the country, often leading to implementation of incentive or activity based models.
CWU Recognized budget challenges in advance. Forecasts predicted that costs would exceed revenue in the near future. Universities across the country were experiencing the same dilemma. Evaluation of the budget structure and creating an environment that promoted revenue generation led to the implementation of RCM
Planned Benefits • The RCM model promotes: • Encouragement and reward for revenue generation and cost effectiveness • Intentional decision making in budget planning • Change the nature of decision making at the University, College and Department levels • Alignment of revenues and expenses • Greater transparency regarding sources and use of institutional resources • Enhanced ability to plan with greater control of future resources • Accountability of operation and administrative units • Facilitation of conversations surrounding institutional priorities and the strategic plan • Translation of strategic goals into management and operating plans
4 Years from Planning to Implementation Progression of the Model: • Tabletop (Excel) model. Used to model data, evaluate performance factors and impacts to the colleges. Initial model had four performance factors. • Student Credit Hour (SCH) – 80% • Majors – 10% • Pre Majors – 5% • Graduation Ratio – 5% • All State 149revenue was subject to the distribution • All university and academic overhead costs were distributed by the same percentage as the revenue • 3 Year rolling average
Current Model • Performance Indicators simplified: • SCH – 70% College of Instruction • Majors – 30% College of Major (defaults to College of Instruction if none) • Shared Governance • Other updates: • Waivers follow the student – (Currently being re-evaluated) • Facilities costs allocated based on controlled space • Allocation reduced to 3 quarters (spring, fall & winter) vs. 3 years • Budget forums and town halls
Governance Structure established to support RCM/ABB • President’s Budget Executive Committee • Budget Allocation Sub-Committee • Space & Equipment Budget Sub-Committee • Tuition waiver Budget Sub-Committee • CWU System Budget Sub-Committee • State Funded Capital Sub-Committee Link to CWU RCM Presentations: http://www.cwu.edu/budget/resources-0
Budget Allocations Year over Year The allocations reported do not include transfers from other funds or the Provost.
Next Steps • Continue to communicate and review potential improvements to the model • Develop reporting at the department level to support decision making. Prepare to post revenue, allocated costs and subvention at the department level. • Work with deans and college committees to understand department level data, reports and impacts to the budgeting process. • Fine tune budget forums and town hall meetings to effectively educate the community.
Benefits Realized • Course fill rates improved • Utilization of WLU improved • Intentional budgeting and awareness of decision’s impact to budget • Space utilization improved, increased control given to Registrar • Summer session projected net profit increase 25% • Subvention requirements dropped in second year by 38%, with one unit’s subvention rate being approximately 50% less than year 1
Lessons Learned • Communication: The first two years, “Heads went up and down, but we were all talking different languages.” • Being cognizant of terminology that can be offensive or cause fear. • Presenting the data in a format that was understandable to all. • Continued refreshing of the data and the model frustrated people. • Lack of exposure and expertise to existing financial models on campus caused a lack of understanding for the change.