The University Record, October 9, 1995


Editor’s Note: This is one in a series of periodic columns on VCM, the new approach to budgeting that will be implemented July 1, 1996. Questions are welcomed from all Record readers, and should be sent to: Jane Elgass, 412 Maynard St. 1499; fax 764-7084; e-mail:; or Robert Holbrook in the Provost’s Office, Room 3080, Fleming Administration Bldg.; 763-1282; fax 764-4546; e-mail:

Can VCM be implemented for part of the University while leaving the remainder on the current budget system?

In principle such an approach would be possible, but only at the cost of many of the advantages of VCM. It is important that every administrator pay careful attention to costs while being alert to revenue opportunities consistent with the unit’s mission. VCM provides strong incentives in these directions, and a partial implementation would mean that only some units would have the opportunity to respond to those incentives, and important opportunities could be lost.

In fact, most of the schools and colleges already have special arrangements in place that mimic many of the attributes of VCM, so it will be only a final step from where we are to VCM. Taking this final step will be much easier if every unit participates.

What impact will VCM have on interdisciplinary programs?

One of the most important attributes of the University of Michigan is the strength of its interdisciplinary programs, and the importance of such programs will only increase in the years ahead. The members of the team that developed the design for VCM recognized that people might fear that VCM would discourage faculty members from attempting to build alliances with colleagues from another unit. As a consequence the team gave considerable thought to the safeguards that could be erected to assure that these alliances might be protected and strengthened.

With the strong support of the Provost, the team proposed the formation of a VCM Oversight Committee, a group of 12 faculty members from across the University, whose task it would be to monitor the effects of VCM on our academic values. Included within this would be the effects on the strength and vitality of interdisciplinary programs. Evidence of a systematic bias against such programs by an administrator would be cause for concern by the Oversight Committee, and ultimately by the Provost. Neither the current budget system nor VCM have any built-in encouragement for interdisciplinary work. Under both systems the encouragement must ultimately come from the ideas and interests of the faculty and from the administrators who control resources and their ability and willingness to look beyond the short-term economic effects to the long-term values of the institution.

What measures will guard against a unit deciding to make inappropriate curricular changes simply in order to gain additional students and tuition revenue?

Inter-school arguments about curricular matters have occurred in the past, and they have typically been dealt with in an ad hoc fashion. VCM will certainly add an important new element to the discussion, and the Implementation Team agreed that a more systematic approach must be taken in the future.

The VCM Oversight Committee will be urged to watch for and comment upon any evidence of this sort of activity. It is likely, however, that it will be the deans of other schools who will first become aware of new efforts to attract students. A mechanism has been put in place that calls for advance notice of any curricular change that will have an adverse impact on another school, and calls for mediation and provostial involvement if necessary.

Will units ignore resident students while trying to attract higher paying non-resident students?

The design for VCM calls for undergraduate tuition to be calculated for revenue purposes as an average of the rates actually paid. Thus, the tuition revenue associated with an undergraduate student will be independent of that student’s residency status, and there will be no incentive to bias admissions toward non-residents.

Although the same averaging approach could be used at the graduate and professional levels, the Implementation Team proposed that actual tuition be used for these students. The Team members recognized that this could bias admissions toward non-residents, but ultimately decided that the great weight program directors place on the quality of their applicants would outweigh any revenue implications in the admission decision. In this area, as in many others, the team members chose to put their faith in the leadership of individual units and to believe that academic values will continue to guide decisions, as in the past.