The University Record, November 19, 1997
Editor's Note: This is a brief summary of the presentation onvalue-centered management (VCM) made Nov. 17 to Senate Assembly by ProvostNancy Cantor [View the complete text].
From the Office of the Provost
I start with the proposition that the ability of the University to accomplish its academic missions depends on the ability of faculty and students to undertake three general forms of commitments:
These are readily concretized by considering the benefits to faculty and students of opportunities to participate in the life of a first-class department or cutting-edge research project; moving then to the excitement generated when a discipline is challenged in collaborations that cross traditions (be they in jointly taught courses, research, performances or community-service learning projects), and ending with the expansiveness provided by those opportunities that are held in common for the whole University (from the library to the football stadium to Hill Auditorium).
In its current form, the University's budget system (value-centered management, or VCM) is superb in promoting work related to the first type of commitment, but has weaknesses that need to be remedied if we are to assure the continuation of Michigan's distinctive strength as a place that welcomes collaborative work and encourages widespread attention to the University as a whole.
I am proposing four sets of actions relevant to our budgeting and our budget systems, all of which will enhance our ability to perform the University's fundamental missions of teaching, research, service and creative expression.
1. I propose to change the name of the resource allocation system and budget model that we use from "VCM" to "the budget system and the budget model." Budgets are instruments of management; they are but one of many, and it is impossible for budgets that use automatic allocation mechanisms to articulate fully the purposes of the University. There are areas in which fairly automatic modes of resource allocation work well, and there are areas that require deliberation and even politics in the service of wise choices and good management. The name VCM, and the rhetoric that has surrounded its implementation, have stressed the automatic relative to the deliberative. We should be explicit that a budget system helps us to make choices, but does not itself make them.
2. I will do what needs to be done in order to assure that the budget system's automatic incentives in opposition to collaborative work are countered, in both research and teaching, and to assure that the location of these collaborations be dictated by the intellectual merits, not by automatic rules regarding who gets financial credit for what. I do not yet know what financial resources will be required to accomplish these goals, and I have no interest in proposing formal programs-"central initiatives"-with formal application mechanisms. Rather, I want to assure my colleagues on the faculty and in the deans' offices that I am prepared to reallocate in the service of collaboration and the University as a whole and that I want to hear about their best ideas in both teaching and research.
3. Starting with this year's budget cycle, I intend to adopt a multi-year budget process. We will work with the schools and colleges to develop long-term plans in which the provost's allocation for each unit is articulated with the units' abilities to general support from external sources. These plans should be flexible-although more concrete in the near years than in the out years. They will reflect the high priority we place on supporting valuable activities that cannot be self-supporting and the high priority we at Michigan place on giving due consideration to the consequences for the broader University community of units' activities.
4. Finally, in order to generate the resources needed to accomplish these goals, and to make the budget system simpler and more transparent, I am seriously considering changing the budget model so that central service units, which are already budgeted by the Provost, are no longer attributed as cost items in the budgets of schools, colleges, research and auxiliary units. This change will provide strong incentives to the provost and chief financial officer, in collaboration with other executive officers, to evaluate the performance of centrally budgeted units and to realize cost savings from those units. I confidently expect the schools and colleges to hold our feet to the fire in reducing these costs, as such reductions constitute a potential source of flexible resources for academic initiatives that does not require allocations among the academic units. With respect to this last set of changes, we recognize the possibility that we may not have fully thought through all the consequences. Therefore we suggest a period of reflection and discussion through the semester, at which time we need to get on with the work of developing next year's budget.