The University Record, September 25, 1995

QUESTIONS, ANSWERS ON VCM

Editor’s Note: This is the first in a series of periodic columns on questions about 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, 747-1841; fax 764-7084; e-mail: jrelgass@umich.edu; or Robert Holbrook in the Provost’s Office, Room 3080, Fleming Administration Building; 763-1282; fax 764-4546; e-mail: rsh@umich.edu.


It is called value centered management, but how does VCM assure that management decisions are truly centered on values?

By itself, VCM does not guarantee that good decisions will be made. Decisions are made by people, and it is the quality of the University’s leadership, at all levels, and their continued dedication to the values of this institution, that will determine the quality of those decisions.

What VCM will do is permit more decisions to be made at a lower level in the organization, closer to where the action is located, and it will help all decision-makers improve the quality of their decisions by providing them with greatly improved information on the full effects of those decisions. As decision-making authority is delegated, it will be more important than ever that the values of the University are well-defined and widely shared. Processes designed to facilitate this are already under development.

How will VCM affect me?

This is a difficult question to answer, because the effect of VCM is likely to depend on the unit where you work. Deans and vice presidents will have considerable flexibility in deciding how to implement VCM within their units, and we anticipate considerable variation, at least in the early years. You may wish to seek more specific information about your own unit’s plans.

Generally speaking, we do not expect to see many abrupt changes as a result of VCM, since it will take some time for unit leaders to begin to respond to the new opportunities VCM will present.

How will a unit’s budget allocation change under VCM?

In the past, a unit’s budget was largely independent of its enrollment and research activity. One of the most important changes that will accompany VCM is that the budget of an academic unit will be related to its enrollment. When more students enroll and more tuition is earned, that tuition will be channeled to the units where it can help cover the costs of that additional instructional load.

The same thing can be said of funded research, where the recovered indirect cost will go directly to the unit where the research is carried out. The provost and the Committee on Budget Administration will continue to play an active role in budget allocations, but only as a supplement to the unit’s own efforts in instruction, research, fund-raising and other activities.

Many units are not “money makers.” Won’t they lose out under VCM?

While VCM does provide individual units with greater responsibility for their own resources, the well-being of the University as a whole will continue to be of prime importance. The plan for VCM explicitly recognizes that units differ in their ability to earn revenue, and it includes new sources of funds that can be used to help balance the budgets of those units that need it. One of the most important roles played by the provost and the Committee on Budget Administration in VCM is to determine the appropriate central support for each unit. This decision will be of critical importance in determining the shape of the University of Michigan in the years to come, and values must be central to this decision. “Making money” is not one of those values.