The University Record, December 12, 1995

More questions about the U's VCM program answered

Editor's Note: This is one in a series of periodic columns on questions about VCM, value centered management, the new approach to budgeting that will be implemented July 1. Questions are welcomed from all Record readers and should be sent to Jane Elgass, 412 Maynard St. 1399, 747-1841; fax 764-7084; e-mail jrelgass@umich.edu; or Robert Holbrook in the Provost's Office, 3080 Fleming Administration Building; 763-1282; fax 764-4546; e-mail rsh@umich.edu.

How will the size of the central administration be controlled under VCM?

Ultimately, the answer will be the same in the future as it has been in the pastby the provost and the other officers acting as the Committee on Budget Administration. What will be new, however, is that the central administration's role as a provider of services to academic and auxiliary units will be explicit. This is much more than a cosmetic change, as it will create a new customer-provider environment within which active dialogue can occur relating to quality, quantity and cost of services.

Under VCM the differential "Provost's Allocation" will probably result in a much more visible transfer of resources from activities that generate substantial revenue to those that do not. Won't this lead to increased resentment on both sides?

One characteristic of a university that distinguishes it from a profit-making organization is the very high degree of cross-subsidization among units. Many, if not most, of the things a university does cannot "pay for themselves," and hence rely on a "subsidy" from another source. Some of the things we value most generate little or no revenue, and, indeed, it is the high value we place upon them that justifies their support. It may be only human that some resentment might arise among units with respect to the flows of resources among them, but if these flows are a reasonable reflection of the University's values, that resentment should be minimal. The question does help emphasize how important it will be that the allocation of these resources among units be preceded by discussion and accompanied by an explanation.