Responsibility Center Management (RCM) wont bring revolutionary change to the University, predicts Oscar A. Barbarin.
But it should give individual units and the University more authority to make rational decisions about how to deploy human and financial resources, Barbarin told Senate Assembly members last Monday.
Barbarin, professor of social work and of psychology and chair of the Advisory Committee on University Budgets (ACUB), said RCM also should give units the autonomy and flexibility they need to support activities they value.
RCM is necessary, according to Barbarin, because of revenue constraints, due to a decline in state support coupled with escalating benefit costs.
Barbarin said the University has several choices: seek new revenues, reduce expenditures, or deploy existing resources more effectively.
Under the existing budget management process, incentives may not reward revenue enhancement or cost containment, Barbarin noted. For example, a department that attracts more students may not get any benefit from that growth, only a heavier work load.
When resources are constrained, knowledge of the cost of an activity is important to good management. Often managers dont know the cost of their decisions, he added. Units are in the best position to make academically sound tradeoffs between costs and benefits of activities.
Key components of RCM, Barbarin said, include:
Decentralized at the level of academic units, the University has a history of using RCM-type initiatives. Barbarin cited:
Other examples, he said, include M-Quality, unit assessments, partnership agreements and all-funds budgeting, tuition grants passed to units for direct management, tuition revenues fed back to some units by special arrangement, and distribution of utility costs to auxiliary units.
Barbarin assured his colleagues that RCM doesnt mean: survival of the fittest; the bean counters are taking over; or the loss of academic values.
It also is not a solution to poor management or lack of decision-making, Barbarin said.
Moving in the direction of RCM poses risks, he admitted, including placing new demands on academic leadership.
Faculty and units no longer will be sheltered from the downside of decisions they make. RCM could lead to further erosion of a sense of community and development of the myth that units are fully self-supporting, Barbarin said.
It also could threaten academic values if decisions are driven solely by financial incentives, he added.
The risks of not changing are real, too, according to Barbarin. They include: greater central control over unit decisions and stagnation and erosion of quality rather than healthy and stable growth.
RCM will affect faculty, he predicted, because decision-making will be shifted to units, which will then be accountable for action and inaction. Faculty will need to be more informed and willing to participate.
We will need to transcend our personal interests to become more solicitous of unit, school and University interests, he concluded.
Assembly members asked a number of questions, including whether units would be able to decide how much administration they want to buy.
Barbarin said administrative costs should be open to scrutiny but he doesnt see RCM resulting in a weakening of central administration.
Chemistry Prof. Thomas M. Dunn asked if the U-M Hospitals will be included in the RCM system.
They are part of the University. They give a lot and they take a lot, Barbarin said. That is a matter for discourse.
ACUB has not discussed the U-M Hospitals involvement in RCM, he said. More has to be done, Barbarin added, to inculcate the idea that the classics are important to the Medical School and that social work is important to engineering.
RCM will be implemented in stages, with the first components beginning during the next fiscal year, Barbarin explained.