RESPONSIBILITY CENTERED MANAGEMENT AT

INDIANA UNIVERSITY BLOOMINGTON

1990-2000

May, 2000

RCM REVIEW COMMITTEE, 1999-2000

Name Department

Dan Amonett GSO Coordinator

John Bingham IUSA

Ann Bristow Libraries

Jerry Dorsey Dean of the Faculties

Sheryl Fisher Education

Kirsten Gronbjerg SPEA

Gary Hieftje Chemistry

Michael McGerr History; LAMP

Michael Metzger Business

Tony Mobley HPER

Charles Nelms Academic Support & Diversity

Eugene O'Brien Music

Judith Palmer Vice President & Chief Financial Officer

Lauren Robel Law

Al Ruesink Biology

Neil Theobald Co-Chair, Education

Maynard Thompson Co-Chair, Budgetary Administration &

Planning

David Zaret Sociology/COAS

Table of Contents

Executive Summary i

1. The Historical Context 1

Policies and Procedures Used Before RCM: Pre-1990 1

Design and Implementation: 1990-1996 1

The 1996 Review and Implementation of Recommendations 3

2. Methods of the 1999-2000 Review 6

3. Findings of the Review 7

Positive Comments 7

Negative Comments 8

4. Recommendations 15

Proposed Modifications 15

5. Concluding Comments 20

Attachments

1. Appointment letter A - 2

2. RCM Review Committee A - 3

3. Announcement of review A - 4

4. Individuals and groups interviewed A - 5

5. Interview protocol A - 7

6. Total operating state appropriation FY76 through FY00 A-12

7. Student headcount by school and student level Fall 95 through Fall 99 A-13

8. Student credit hours by school and student level FY96 through FY00 A-14

9. Undergraduate credit hours by school (graph) A-15

10. Graduate and professional credit hours by school (graph) A-16

11. Expenditure budgets and credit hours by school FY96 through FY00 A-17

12. Budgeted expenditures per actual credit hour (graph) A-18

13. Academic FTE credit hours by school FY96 through FY00 A-19

14. Credit hours per academic FTE by school (graph) A-20

15. Professional and biweekly staff FTE Fall 95 through Fall 99 A-21

16. Increases to school and support RC budgets FY95 through FY00 A-22

Appendix

Assessment allocations, algorithms and parameters FY00

RCM REVIEW 1990-2000

i

Executive Summary

Report of the RCM Review Committee

Indiana University Bloomington

May, 2000

In the fall of 1999 a Committee was appointed by Vice President and Chancellor

Kenneth Gros Louis to review the policies and procedures of the financial planning,

budgeting, and financial administration system known as Responsibility Centered

Management. The Committee investigated the perceptions of RCM by soliciting

comments from faculty and others and by interviewing those individuals and

constituencies whose views were broadly representative of campus opinions and who had

insights and experience regarding RCM. The Committee also collected information and

data to help in determining the impact of the implementation.

The Committee heard many positive and some negative comments. In many

cases it was clear that comments on the general financial health of IUB were mixed with

comments on RCM.

The dominant findings of the Review are:

Units with rapidly growing student enrollments do not have the resources to

meet instruction needs because of the lag in fee income distribution.

The IUB version of RCM as a budgeting/management system works well.

RCM provides incentives for units to monitor their performance with a goal of

increasing efficiency and effectiveness.

RCM makes units aware of student interests and needs and students have

benefited from improved course availability.

The transparency of the budgeting process under RCM has enabled good use

of scarce financial resources.

RCM creates a tension between the desire to uphold quality and to maintain

student enrollments.

The Chancellor does not have adequate resources to sustain and enhance

quality and to fund the campus ‘common good.’

The flexibility of RCM has provided an environment in which units can get

deeply into financial trouble before remedial action is taken.

There is concern that the system may be one factor causing an erosion of the

spirit of collegiality and cooperation that has been such a valuable aspect of

academic life at IUB.

There are many misperceptions and much misinformation about RCM.

RCM REVIEW 1990-2000

ii

Based on its findings, the Committee made a number of recommendations

including the following:

The current version of RCM be maintained with modifications.

The resources available to the Chancellor for support of initiatives to sustain

and enhance quality and to support the campus ‘common good’ be increased

over three years from 1.5 percent of state appropriation to 2.5 percent.

Instructional fee income attribution be modified to provide more timely

support to rapidly growing units and to support courses taken by students not

included in the official first week census data.

The Chancellor's fund has a specific priority to foster inter-unit cooperation.

The Campus Budget Office should monitor unit financial performance and

work with the unit administration to achieve financial goals. If financial

problems emerge, there should be timely intervention to identify and resolve

those problems.

Finally, it is recommended that the Office of Budgetary Administration

and Planning continue to monitor the RCM process and consult with the Deans

Advisory Committee and the Budgetary Affairs Committee regarding additional

modifications. There should be another comprehensive review not later than the

2004-05 academic year.

RCM REVIEW 1990-2000

1

Responsibility Centered Management at

Indiana University Bloomington

Report of the RCM Review Committee

May, 2000

1. The Historical Context

In September, 1999, Kenneth R. R. Gros Louis, Vice President for Academic

Affairs and Bloomington Chancellor, appointed a Committee to review the Bloomington

Campus version of Responsibility Centered Management (RCM). The Chancellor's

Charge to the Committee is appended as Attachment 1. When RCM was introduced in

1990, it was anticipated that the system would evolve through modification, and that has

been the case. During the 1995-96 academic year, a previous RCM Review Committee

analyzed the system and made a number of recommendations that were implemented

beginning in 1997. The Bloomington Campus now has the experiences of nine full fiscal

years, and it is appropriate again to evaluate the policies and procedures that underlie our

financial planning and management. This report identifies and clarifies the strengths and

weaknesses of the present version of RCM and suggests possible modifications.

Policies and Procedures Used Before RCM: Pre-1990

Prior to 1990, Indiana University Bloomington used a traditional centralized fiscal

management system that attributed all state appropriations, student fees, and other

income to campus-level accounts. Each year, the campus held a series of budget

conferences with each instructional unit and the major academic and administrative

support units. During these conferences, each dean or director presented a plan for the

next year, and requested funds from campus-level accounts to support these initiatives.

In response, the campus allocated resources to each unit for salary adjustments, financial

aid, general supplies and expenses, travel, equipment, and so on. These allocations were

guided by the operating budget approved by the Legislature, especially in the areas of

compensation and special initiatives, and by the advice of the Budgetary Affairs

Committee and the Chancellor's staff. Units were required to use the resources for the

specified purpose; reallocation of funds within units required approval from campus-level

budget officers. Thus, the Chancellor’s Office exercised control over both the total

resources available to each unit and the way these resources were used.

Design and Implementation: 1990-1996

In 1987, President Thomas Ehrlich initiated discussions to decentralize the

budgeting system for IU. The system that was developed was initially called

Responsibility Center Budgeting and later changed to Responsibility Centered

RCM REVIEW 1990-2000

2

Management. President Ehrlich's goal was to develop a system guided by three basic

principles:

all costs and income attributable to each school and other academic unit

should be assigned to that unit;

appropriate incentives should exist for each academic unit to increase income

and reduce costs to further a clear set of academic priorities; and

all costs of other units should be allocated to the academic units.

The system was developed with the active participation of faculty, the Budgetary

Affairs Committee, deans, campus level administrators, and system level administrators.

Dr. Edward Whalen, Director of the University Budget Office, provided general

leadership in the process. Preliminary drafts of policies and procedures were widely

discussed during spring of 1988 and the 1988-89 academic year. Until implementation of

RCM, budgets continued to be constructed in the traditional manner; however, costs and

income were attributed in shadow budgets in RCM format in 1988-89. The original

intention was for both IUPUI and IUB to shift to the new budgeting system on July 1,

1989. However, in the fall of 1988 a review of progress toward implementation indicated

that there were compelling reasons to defer implementation at IUB until July 1, 1990.

IUPUI proceeded with implementation on July 1, 1989.

In the spring of 1990, budget construction for 1990-91 proceeded as usual with

the construction of expenditure budgets for all units using all anticipated resources.

Then, anticipated student fee was attributed to instructional units and other income was

attributed to the units generating that income. The costs of non-instructional units were

allocated to the instructional units using the algorithms developed over the preceding two

years, and state appropriation was allocated to instructional units to provide balanced

budgets for each unit. Two aspects of the implementation are especially important and

deserve repeating for emphasis.

First, the original allocation of state appropriation was set by the difference

between each unit’s income and expenditures. Therefore, units with higher instructional

costs relative to income (e.g., Law, Music, Optometry, SLIS) received a larger share of

the state apportionment to account for these differential costs. This practice continues

with these four units receiving significantly more funding per credit hour produced than

do other units. (Attachments 11 and 12). Second, at the time of transition, resources were

provided to instructional units to cover all assessment costs.

Accompanying the introduction of RCM, there was a shift in emphasis from

planning for the next year only to a multi-year planning horizon. For the last decade,

units have been expected to develop budget plans for one year in some detail and for two

or three years in greater generality. In particular, units may, and frequently do,

accumulate unexpended funds and unbudgeted income in a reserve account at year end

(June 30), and expend these reserves over a period of several years. These plans are

discussed with the deans regularly to determine progress and revisions, and they provide

the setting for the annual budget conferences each winter.

RCM REVIEW 1990-2000

3

At the time of implementation it was anticipated that the system would be a

dynamic one in which the campus would discover better ways of handling some things

and not all of the results would be quite as intended. That was the case, and the campus

made a number of changes in the early 1990s. For instance, at implementation the

campus attributed undergraduate fee income by student residence classification; in the

second year the campus shifted to an allocation process in which undergraduate fee

income is pooled and allocated to the instructional units by the fraction of credit hours

taught without regard to residency status. The expectation has always been that RCM at

Bloomington is a dynamic system that will continue to evolve.

The financial environment in which the campus operated in the early 1990s

presented a serious challenge to the implementation of RCM at Bloomington. In the five

years prior to implementing RCM, state appropriations (excluding fee replacement)

increased from $101 million to $141 million, an inflation-adjusted increase of over 17%.

During this time FTE enrollments increased by 6%, from 28,277 in the fall of 1984 to

30,084 in the fall of 1989. Thus, the state appropriation per FTE grew by over 10%

(inflation adjusted) in the five years prior to the implementation of RCM.

In the first five years after implementing RCM, state appropriations for higher

education in Indiana—mirroring a pattern throughout the U.S.—remained essentially flat

in nominal terms and dipped sharply in inflation adjusted terms (see Attachment 6).

During these five years, state appropriations (excluding fee replacement) increased by 1.1

percent in nominal terms. During this period prices inflated by 14.7 percent and

consequently, state appropriation actually fell by over 13% in inflation-adjusted dollars.

During this time FTE enrollments continued to climb, reaching 31,158 in the fall of 1995.

As a result, the state appropriation per FTE dropped by almost 17% in the initial five

years of RCM.

Although the increase in enrollments and increases in instructional fees provided

additional resources, the financial constraints created by the large decline in the

purchasing power of state appropriation created widespread apprehension across campus.

In addition, as a part of the policy of President Ehrlich there were significant

reallocations from non-instructional units to instructional units. RCM became the

‘lightning rod’ for much of the discontent about the financial difficulties facing the

campus and its largest RC, the College of Arts and Sciences. Apprehension spread that

this new budgeting approach was transferring resources from non-instructional units to

instructional RCs and mechanically reallocating scarce resources among instructional

RCs on the basis of student enrollment patterns while not providing a sufficient role for

academic judgements about the quality of these courses.

In the fall of 1995, a committee was appointed by Vice President Gros Louis to

review RCM and formulate recommendations for modifications to the system.

The 1996 Review and Implementation of Recommendations

The report produced by the 1996 Review Committee strongly endorsed the

continued use of RCM. While it admitted that “the Review Committee encountered

diverse views about RCM”, it found that “RCM is a planning/budgeting/management

RCM REVIEW 1990-2000

4

system that is working reasonably well, that most of the elements should be kept, and that

what is needed are some modifications to make it work even better.”

The 1996 Review Committee made three major recommendations and several

other recommendations to improve RCM. The major recommendations were:

establish a Chancellor's Discretionary Fund by allocating up to 1.5% of the

state appropriation to the Chancellor to preserve and enhance quality and

leverage campus priorities,

institute a two-year weighted average lag between enrollments and fee income

distribution to "smooth income flows," and

introduce incentives for recruiting non-resident undergraduates.

Chancellor’s Discretionary Fund

Among the negative perceptions of RCM that were received most often by the

1996 Committee was that “less discretionary money now exists at the campus level for

meeting the ‘common good’ needs of all.” Prior to the implementation of RCM, each

year the Chancellor allocated a portion of the incremental resources to achieve campus

goals that involved several units or the entire campus. Under the initial version of RCM,

though, the Chancellor did not have access to such discretionary resources.

The Committee viewed this “as a shortcoming” and recommended that “each year

the Chancellor have resources that can be allocated to leverage campus priorities to

achieve campus-wide goals.” These resources should be generated by “allocating 1-1.5%

of state appropriation to [this purpose].” According to the report, “the campus chancellor

has a major role to play in leading the campus and promoting a shared vision.” To

address this problem, the Chancellor’s Discretionary Fund was proposed as a way to

provide resources for the Chancellor to “nurture and reward quality undertakings” and

“leverage campus priorities.” According to the report, “units receiving resources from

this fund would have special accountability responsibilities since it is essential that the

resources be used to enhance quality and not circumvent the usual incentive structure of

RCM.”

Since 1997, the Chancellor’s Discretionary Fund has been used each year in three

primary ways: (a) to enhance or maintain quality, (b) to provide units with additional

academic investment funds, and (c) to stimulate inter-unit cooperative ventures and

initiatives. Although each year the initial allocation to the CDF was 1.5 percent of state

appropriation, a portion of that has been allocated to the College and schools on a

proportional basis as general support for the academic mission. In addition, a portion of

the CDF has been used to fund campus priorities such as the Library and research

initiatives. The fund has intentionally not been used to address budget difficulties that

have resulted primarily from the actions or inactions of a particular school. In making

these allocations, the Chancellor has sought the advice of his usual advisory groups.

RCM REVIEW 1990-2000

5

Two-Year Lag in Attributing Tuition Income

Initially, tuition income under RCM was allocated according to the distribution of

credit hours in the current year. Thus, deans had to budget and hire faculty based upon

enrollment projections. When enrollments fell short of expectations, deans found it was

too late to alter hiring plans and when enrollments exceeded projections, RCs found

themselves scrambling to find instructors for extra sections. Thus, in 1991 the campus

moved to moderate this situation by distributing the current year's income based on the

previous year's enrollments by RC. In essence this removed one part of the uncertainty

for the deans. Previously, there had been uncertainty about both the amount and

distribution of instructional fee income. With the revision, the distribution was known

and only the amount remained unknown prior to the beginning of the fall semester.

The 1996 Review Committee received many comments that “even this one-year

lag does not provide units with enough latitude to alter teaching plans.” In response, the

Committee concluded “that enrollment shifts should be moderated” and recommended

that the tuition distribution be based on the averaged student course enrollment numbers

of the prior two years. The Committee argued that a two-year lag

provides more opportunity than at present for a unit to make teaching plans with a

realistic budget estimate, yet it does not isolate a unit too much from the urgency

to reduce costs by cutting sections when student numbers fall, nor does it ask a

unit with increasing student enrollments to wait too long before receiving the

appropriate increases in resources.

Since 1997, undergraduate instructional fee income has been distributed

according to the fraction of undergraduate credit hours taught in the preceding two years.

At the same time, assessments that depend upon undergraduate credit hours were

adjusted in the same way (i.e., units experiencing enrollment shifts have their

assessments adjusted at the same time the income change is recognized).

Distributing Incremental Non-Residential Instructional Fees

Initially under RCM, instructional RCs received the higher tuition paid by the

non-resident students they enrolled. In 1992, this original configuration was changed so

that all resident and non-resident undergraduate tuition went into a common pool and was

distributed according to the total student credit hour numbers in each unit. The

adjustment to remove the fee attribution differentiation between resident and non-resident

students was accompanied by a shift in state appropriation so that each unit was “revenue

neutral.” The reasoning behind this change was that teaching non-resident students

"costs" a unit the same amount as teaching the same number of resident students.

At the urging of President Brand, the 1996 Review Committee sought a

compromise position that would provide “appropriate incentives” for units to attract non-

resident students. These non-resident students, it was argued, “frequently select a

university largely on the basis of quality of a specific academic program.” As a result

since 1997, in the event that the campus has incremental fee income resulting from

additional non-resident students, those instructional responsibility centers that have

RCM REVIEW 1990-2000

6

increased their proportion of non-resident students share in that incremental income. All

other undergraduate fee income continues to be pooled. Thus, additional funds have

gone to those units whose percentage of non-resident student numbers increased.

Other Recommendations

Several other recommendations involved assessments in general and the

assessments for specific non-instructional units. The report endorsed the general

assessment methodology, but recommended changes in several cases. The recommended

changes have been implemented.

Among the negative perceptions of RCM that the 1996 Committee reported

receiving most often was “units paying the bills [instructional units] don’t have enough

control over the way the non-instructional units are managing their operations.” As a

result, the Committee concluded, “Although the general philosophy of using assessments

to support non-instructional units should be maintained, there may be areas in which fee-

for-service arrangements are appropriate.” This proposal has been discussed, but

implementation is complex. Issues such as the loss of economies of scale in essential

services and the lack of genuine alternatives for the user have constrained progress. Also,

there have been two university wide initiatives focused on assessing the costs of

administrative and other non-academic services. The first, a Task Force on Efficiency

and Cost Reduction led by vice presidents Gerald Bepko and Terry Clapacs and Vice

Chancellor Trudy Banta, submitted its report in the fall of 1998. In a cover letter to the

Trustees President Brand commented that “we can be reasonably satisfied that the cost of

operations at Indiana University is well within the range of costs that are typical at

American Universities.” The second is the initiative launched early this year: a Review

of Nonacademic Administrative Services. In his charge to the Task Force, chaired by

vice president Judy Palmer, President Brand described the goals of the review as: “The

primary purpose of this review is to recommend the means by which these

[administrative] services can be provided more cost effectively and without loss of

quality – or even better, with increased quality.”

2. Methods of the 1999-2000 Review

This report is based on data covering enrollments, financial resources, allocations

of state appropriation, and assessments. These data are collected and described in the

attachments.

In addition, the report is informed by committee discussions of the issues raised in

33 interviews conducted with deans, directors, members of advisory and policy

committees, and others who play an active role in administration and in formulating

policy at IUB. These discussions focused on what these individuals believed the campus'

financial management system should try to achieve and the success of RCM in meeting

these goals. The protocol for these interviews is contained in Attachment 5. Committee

members also interviewed administrators and faculty representatives from four other Big

Ten universities that implemented, or considered implementing, RCM type systems. A

RCM REVIEW 1990-2000

7

list of individuals whose comments helped inform the Committee is appended as

Attachment 4. In addition, the review committee widely distributed a notice of the

review (included as Attachment 3) and held a public meeting to solicit comments and

suggestions from faculty, staff, and students. Written reports of each interview and of the

public meeting were circulated to the Committee.

3. Findings of the Review

Considering the level of contentiousness exhibited in some campus discussions of

RCM, the committee finds the breadth of consensus expressed about the success of RCM

to be striking. Clearly, significant differences remain in the perceptions of the impact of

RCM, with individuals speaking at the public meeting being particularly critical.

However, when individuals who work most closely with RCM were asked whether RCM

has facilitated or impeded them from meeting their goals, there was nearly universal

agreement that RCM has succeeded well, but that modifications are needed to make it

work even better. The primary areas in which modifications were sought were:

Strengthening the role of the Chancellor's Discretionary Fund in sustaining

and enhancing quality and in supporting the campus ‘common good,’

Refining the rationale used to attribute instructional fee income among

responsibility centers,

Simplifying the assessment system used to fund non-instructional units, and

Responding to budgetary problems in responsibility centers.

Positive Comments

The following features were mentioned most often in interviews and letters as

being beneficial results of the RCM system:

The Chancellor's Discretionary Fund

The Chancellor's Discretionary Fund has provided the opportunity to allocate

base funds over time to sustain and enhance quality.

RCM encourages more attention to mutually advantageous partnering

opportunities.

Attribution of Undergraduate Instructional Fee Income

The percentage of out-of-state students has edged up in recent years because

of increased academic quality and growing scholarship funds—both in part a

product of the RCM environment.

RCM encourages units to review inefficient or outdated programs, including a

consideration of reduction or elimination, and when possible reallocate

resources to higher priorities.

RCM REVIEW 1990-2000

8

Assessment System

The assessment system has helped non-instructional units strengthen their

administrative structure to create the best services for the best price. It also

allows non-instructional units to discuss and to determine more effectively

what they should be doing and for whom.

The assessment system encourages responsible (i.e., not uncontrolled) growth.

When a unit increases enrollments and faculty relative to other units, it is

charged higher assessments.

Other Issues

RCM leads to greater transparencies in budgets. This has allowed the campus

to better allocate its scarce resources in a time when the state appropriation

plays a declining role in the resource base. It is the "size of the pie" that is the

problem; RCM simply "slices up this pie."

Under the previous system, deans and directors typically spent all funds

allocated during a year even if those expenditures might not be the highest

priority for the unit in the long run; budget conferences were totally focused

on expenditures with the various units requesting funds to support projects,

positions, and other activities. Under RCM, there is much more focus on

planning, income generation, innovation, and entrepreneurship.

RCM provides incentives for schools to monitor their performance with an

eye toward increasing the efficiency and effectiveness of their operations.

RCM makes units aware of student enrollments and the importance of

meeting student needs.

Negative Comments

Arguments commonly made by critics of the RCM system include:

The Chancellor's Discretionary Fund

The Chancellor does not have adequate resources to fund quality improvement

initiatives.

RCM rewards the strong and creates the need for special attention to units that

have limited revenue potential but are important to the mission of the campus.

The autonomy of individual units raises the question of whether the sum of

the individual parts creates a strong university. The RCM system appears to

demand accountability only to the bottom line for each unit, not to the campus

or university. A more effective mechanism is needed to insure that the

priorities and agendas of individual units support the campus plan and goals.

RCM REVIEW 1990-2000

9

Attribution of Undergraduate Instructional Fee Income

Instructional fee income smoothing, while providing planning time for units

with declining enrollments, creates difficulties for rapidly growing Schools.

RCM presupposes a linear relationship between student enrollments and

instructional expenditures that does not exist. In addition, RCM does not

sufficiently account for the tremendous disparity in the cost of instruction per

student credit hour across disciplines.

Assessment System

The mechanics of assessments need to be simplified and better targeted to

actual service usage.

Non-instructional units are insufficiently accountable for the use for their

income—those who are subject to market discipline are not sympathetic to

those who are not.

Units with Financial Problems

The flexibility provided by RCM allows units to “get into financial trouble

earlier and [into] more serious trouble” than under a traditional budgeting

system. There is a need for stronger fiscal oversight so that the campus

becomes involved more quickly in identifying and resolving financial

problems.

Other Issues

RCM creates a tension between the desire of both faculty and administrators

to uphold quality and to maintain student enrollments. There is not

necessarily a direct relationship between academic quality and student

enrollments.

Units that perceive they have benefited from RCM are its supporters; those

who have been hurt oppose it.

The Chancellor's Discretionary Fund

The establishment of the Chancellor’s Discretionary Fund after the last review

was universally supported in the interviews. It "has been great" and is described as "a

good and necessary idea." The Chancellor’s Discretionary Fund is the campus' most

potent safeguard against a "Balkanized" campus. Yet, many worry that "the greater good

of the campus is probably not central enough, even with the Chancellor’s Discretionary

Fund." These informants believe that "there needs to be more funding available for the

fund." Interviews with financial officers and faculty from other Big Ten universities

operating in an RCM environment indicate that it is common for universities to hold a

larger percentage of funds for central allocation than has been done here.

A concern expressed about an increase in this fund was the impact such an

allocation would have on already strained unit budgets. When RCM was implemented, it

RCM REVIEW 1990-2000

10

was assumed that annual increases in state funding would provide sufficient new revenue

each year to permit both reasonable increases to the units and reasonable amounts for the

Chancellor’s use. However, state funding has not increased as anticipated. After

significant declines in inflation adjusted state appropriation per FTE during the initial five

years of RCM, state appropriations (excluding fee replacement) have stabilized in the last

five years and are up slightly in inflation adjusted terms. This small increase, though,

has not been sufficient to relieve an extremely tight budget squeeze facing many

instructional units.

While there may be occasions when it is appropriate to use these resources for a

broader set of purposes, the committee endorses the basic principle that the CDF should

be used to reward quality and to leverage campus priorities. Thus, the committee is

concerned that in two of the four years that the Chancellor’s Discretionary Fund has

existed, significant proportions of the Fund has been used to make across-the-board

allocations to help units offset the budgetary constraints they face. The use of these one-

time funds to cover base costs is weakening the CDF's ability to serve campus-wide

initiatives for the “common good.”

Attribution of Undergraduate Instructional Fee Income

In the late 1990s, the Bloomington campus experienced large shifts in

undergraduate enrollments among units and significant growth overall. Interviews with

deans of units with declining or stable student enrollments suggest that the practice of

"enrollment smoothing" has succeeded in providing their units with the opportunity to

accommodate these shifts to a reasonable extent.

Enrollment smoothing, though, has created serious financial difficulties for units

with sustained growth in student enrollments. The dean of a unit that had experienced

"explosive enrollment growth" explained, "the lagging of revenue increases means that

the unit must educate many more students without sufficient money to pay for new

classes." These units bear the cost of providing instruction for additional students in the

present year but must wait two years before fully receiving the increases in resources.

For units with long-term enrollment increases, this is a particularly difficult situation

since they continually face the higher costs of staffing more sections.

Currently, units with rapidly growing enrollments can access several one-time

funding sources to meet these costs. These sources range from tapping their own reserve

funds to negotiating a short-term loan from the campus to requesting additional funding

from the Chancellor’s Discretionary Fund. Each of these steps, though, only moderates

the impact of large, long-term enrollment increases. The consensus of individuals

interviewed for this review is that IUB should provide more timely adjustments in the

income generated by changing undergraduate enrollments.

A narrower issue that emerged from the interviews was the current status of

second-eight-week courses for undergraduates. The current income attribution formula

uses official credit hour counts from the end of the first week of classes to determine the

distribution of credit hours taught, which in turn determines the distribution of

instructional fee income. The majority of students in second-eight-week courses register

RCM REVIEW 1990-2000

11

after the first week and, thus: (a) are not included in the official credit hour data, and (b)

generate no revenue for the responsibility center providing the instruction. Second -

eight-week courses impose costs, though, on the units providing this instruction.

Since most late registrants for second-eight-week courses are paying a flat fee,

their presence in these courses does not generate additional revenue for the campus to

share with these units. However, there is evidence that the availability of second-eight-

week courses provides real benefits to students and to the campus as a whole by

permitting students who have dropped other courses during the semester to maintain a

course load that allows them to qualify for financial aid and to make progress toward

their degrees. These are important considerations in student retention.

Based on recommendations of the 1996 Review Committee, the campus has

provided incentives for units to attract non-resident students. The current committee

endorses the continuation of incentives for recruiting non-resident undergraduates since

the attractiveness of a unit to non-resident students may be seen as an indication of the

program’s quality.

Assessment System

Under the model of RCM established in Bloomington, non-instructional units

receive most of their operating budgets from instructional units via assessments.

Interviews uncovered four concerns with this assessment system. First, the assessment

algorithm was almost universally viewed as "cumbersome and very difficult to

understand on the part of the average person dealing with budgets." Second, deans of

instructional units complained that the assessment levels generated by this algorithm have

increased dramatically in recent years. Third, several informants question if assessments

are the proper funding mechanism for all non-instructional units. Fourth, related to the

assessment levels is the issue of how much accountability non-instructional units should

provide to instructional units for the funds received.

During the last nine years, the assessment mechanism has been adjusted

frequently in an attempt to make the fluctuations in assessments seen by the instructional

units represent reasonable changes in response to actions that they have taken (e.g.,

increasing faculty, decreasing credit hours). Possibly as a result, there is often a sense of

mystery about why assessments have changed from year to year. One dean states,

"RCM's weakness is a lack of transparency in assessments," while another reports, "the

bottom line (is that) the budget office must be fully trusted since there is a lack of

understanding on the assessment calculations."

The difficulty in understanding assessments and their impact on the ability of

academic deans to accomplish their goals is exacerbated by the fact that some of the

expenditures in non-instructional units directly benefit academic responsibility centers.

For instance, financial aid, library acquisitions, and academic equipment expenditures

may be made through non-instructional units, but they are directly related either to

income generation or the academic mission of the instructional units.

RCM REVIEW 1990-2000

12

As Attachment 16 shows, once adjustments for these expenditures are made, the

increases in support unit costs can be better understood. In 1999-00 (FY2000), the

budgets of non-instructional units increased by $19.7 million or 9.4%. Over one-half of

this increase is created by: a $3.5 million increase in the system service charge, a $3.4

million increase in undergraduate financial aid and a $3.0 million increase in debt

service. Included in the system service charge increase is (a) $1.9 million in technology

funding that included state revenue to pay for it (i.e., it was revenue-neutral), and (b) a

fee courtesy arrangement cost of $690,000 that was simply an accounting change that

shifted costs from the RCs to the university; no new costs were incurred. When you

adjust the system service charge for these two exceptions, the increase falls to $900,000

or 4.3%.

Undergraduate financial aid is an investment made by IUB to generate additional

tuition revenue that the campus would not receive in the absence of this investment.

Thus, in a very real sense, the $3.4 million increase in undergraduate financial aid is less

an increase in “non-instructional unit expenditure” than it is a “cost of doing business”

for instructional units. Once adjustments are made for uncontrollable increases (e.g., debt

service, utilities) and activities that are related to the academic mission of the

instructional units, the budget increase for non-instructional units increase in 1999-00

(FY2000) falls to $6.5 million or 5.9%.

This increase in non-instructional unit budgets is still nearly triple the inflation

rate (as measured by the CPI) for the fiscal year. Informants contend that growing

assessment levels, over which the schools have little or no control (e.g., 18-20 benefit

contingency, reserve replenishment, university tax), have weakened RCM. In addition, a

sense exists that "tough choices that need to be made [about "whether some of these

things should be funded at all"] . . . may be delayed or avoided through the device of

continually increasing assessments."

A third concern expressed was whether assessments are the proper funding

mechanism for all non-instructional units. Several informants believe that RCM should

be changed to "fund the operation of certain campus-wide services (the Library for

example) by taking funds costs "off the top" and distribute to schools only those dollars

over which the Dean has a reasonable degree of control." The problem with having these

resources flowing through the Schools’ budgets, according to this view, is that this

system creates the illusion that these operations are taking money away from the schools.

The committee developed and reviewed a variety of different assessment

approaches. Following a meeting with individuals from the Provost’s Office at the

University of Michigan, which uses a ‘flat tax’ to fund non-instructional units, the

committee discussed the desirability of using a similarly simplified system at IUB. The

committee also reviewed steps other Big Ten universities have taken to fund some

activities (e.g., Libraries) ‘off-the-top.’ The view of the committee remains that the

current assessment mechanism, while complex, allows RCs to track the financial support

they are providing to non-instructional units and tie the level of support to their faculty

size or enrollments.

An additional concern is the issue of how much control the instructional units

should be able to exert over non-instructional units to which they pay their assessments.

RCM REVIEW 1990-2000

13

Some instructional units believe "there is no mechanism by which academic RC units,

which generate income for the campus, can exert pressure for accountability on units

supported by assessments." Directors of non-instructional units sometimes feel that RCM

limits the strength and quality of non-academic units that rely on assessments.

At a broader level, some observers charge that the current assessment system

creates tensions across campus since it "encourages attention to costs and performance in

the RCM units, but not necessarily in those units supported by assessments. . . .While

some of these units have developed strong measures of accountability, others have not,

with some evidence of sluggishness, inefficiency, and an institutional culture that is not

receptive to incentive structures."

Units with Financial Problems

The interviews indicate a concern that the campus has not moved quickly and

strongly enough to require units with financial problems to address them. In a

particularly visible case, a dean questioned, “whether RCM was only for some and not

for others.” The sense is that the current system depends too much on actions of Deans to

take the initiative to address financial problems or to respond to campus suggestions and

recommendations. Some believe the campus needs to be more intrusive when problems

emerge.

Other Issues

The committee actively sought, and thoughtfully considered, criticisms of RCM.

The overriding message of critics, as perceived by the committee, is that IUB is not as

fiscally sound under RCM as it was previously. One task the committee faced, therefore,

was determining if, and how, the implementation of RCM has contributed to a decline in

campus welfare.

The perception of a large majority within the committee is that RCM was not the

catalyst for many of the problems for which it is blamed. Rather, both RCM and what is

perceived as a decline in campus welfare result from the same social and economic

trends. The campus’ implementation of RCM was driven by a desire for greater

flexibility that would allow schools to more rapidly respond to a changing higher

education environment. This environment included historic economic changes and much

greater subject specialization than had prevailed in previous decades. Changing

enrollment patterns, such as a dramatic shift in majors from liberal arts to professional

schools, are nationwide phenomena that are driven by similar economic and subject area

changes. As one respondent commented, “changing enrollment patterns, and resulting

loss of collegiality, are driven by parents and students not RCM.”

Clearly, the debate around RCM has sapped the morale of a sizable segment of

the faculty. According to one critic, “the students want degrees, not quality;

administrators say that student credit hours are what counts. This rhetoric creates the

perception that we've lost our integrity." Interview comments from those informants who

are most knowledgeable about RCM reflect a view that strongly diverges from the

RCM REVIEW 1990-2000

14

perception that RCM provides incentives for diluting the academic quality of courses.

These individuals emphasize that the difference with RCM is not that it is enrollment-

driven—“the university budgeting system has always been enrollment-driven”—the

difference is that authority for fiscal decisions has been decentralized. This

decentralization has made the same budgetary decisions “more transparent.”

Another critic called for the committee to provide “a concrete sense of what RCM

means and what it has done. What are its benefits? How has the better planning that it

supposedly provides improved the quality of the campus?” One of the most difficult

tasks this committee faced was uncoupling the impact of RCM from the impact of

sharply reduced (in inflation adjusted terms) state support and huge shifts in enrollment.

A large majority within the committee concludes that RCM facilitated the ability of the

campus to navigate through a decade that would have been even more difficult otherwise.

RCM means that schools are responsible for their own budgets. Thus, it has changed the

focus of deans from accounting for a fixed amount of revenue that had to be spent in

ways decided at the campus level to planning for how they would finance programs

managed at the school-level. In an era of diminished state support and rapidly shifting

enrollments, a large majority within the committee believes the campus benefited from

placing financial authority in the hands of those administrators who are closest to the

action. RCM ‘improved the quality of the campus’ by allowing those who can best

assess the threats and opportunities facing a school to develop the school budget. This

encourages more risk-taking by individual units, more customer awareness, and more

attention to partnering opportunities that can be to mutual advantage.

Another issue that the committee wrestled with at length was a widely-held view

that an unlevel playing field exists for COAS because they have not extended the RCM

principles down to the departments. According to this view, COAS effectively operates

under the old budgetary system while other schools have been able to respond to student

needs in a more efficient way. While there is evidence that, at least in some cases, units

which extend the incentive structure of RCM into sub-units, benefit from that decision,

the committee believes that each unit needs to determine its own ‘best way.’ Specific

difficulties the committee perceives in ‘driving RCM down to the department level’ are

greater variability in enrollments, the lack of personnel in departments to provide

financial management services, greatly differing costs of instruction, and a lack of

department visibility. However, there is value in deans continually reassessing the

internal financial management structures of their schools and adjusting to changes in the

environment when appropriate.

While the committee concurs with observers who highlighted the downside of the

high profile RCM has on campus, we do not believe the system should be renamed in

order to "eliminate the target, which will eliminate the problem." The next section

outlines a series of recommendations that we believe will improve the ability of RCM to

better distribute resources to facilitate campus goals. Changing the name of the

budgeting system might lessen its role as ‘lightning rod’ but would create other public

relations problems that the committee believes the campus should avoid.

RCM REVIEW 1990-2000

15

4. Recommendations

Finding 1: RCM as a budgeting/management system works well.

Recommendation 1: A large majority of the Committee recommends that the current

version of RCM be maintained, although with modifications.

Rationale 1: The Committee found a broad consensus among policy makers that RCM

provides incentives for units to monitor their performance with a goal of increasing

efficiency and effectiveness. It makes units aware of student interests and needs and

students have benefited from improved course availability. In addition, the transparency

of the budgeting process under RCM has enabled good use of scarce financial resources.

However, the Committee also found a perception among some faculty and staff that RCM

creates a tension between the desire to uphold quality and the incentive to maintain

student enrollments. This perception is a basis for concern that the system may be one

factor causing an erosion of the spirit of collegiality and cooperation that has been such a

valuable aspect of academic life at IUB.

Proposed Modifications

The Chancellor's Discretionary Fund

Finding 2: The Chancellor's Discretionary Fund is an important source of support for

quality enhancements and the primary mechanism for maintaining a proper balance

between School autonomy and the common good. However, the funds currently

available for academic investment are inadequate to achieve its goals. To address this

problem, the share of the state appropriation allocated to the Chancellor’s Fund should be

increased. This task is difficult, though, in view of the budgetary reality of identifying a

source of these additional funds that does not have an unacceptable impact on the

instructional units.

Recommendation 2a: The Fund should be continued and renamed the Chancellor's Fund

(CF).

Rationale 2a: The term ‘discretionary’ implies that the distribution of this fund operates

outside the normal budgeting process. Both the Budgetary Affairs Committee and the

Dean’s Advisory Committee advise the Chancellor on how these funds should be

allocated. Since this fund is the primary vehicle for supporting new investments and

campus-wide priorities, the committee believes the campus should highlight its

importance by using the term Chancellor’s Fund.

RCM REVIEW 1990-2000

16

Recommendation 2b: The impending drop in the temporary rate of increase in the

University Tax used to fund the hospital merger provides an opportunity to increase the

Chancellor's Fund. The 7 percent increases in this charge are planned to end in 2001-02,

and although no funds will be released, this should be viewed as an opportunity to

increase the CF. Specifically, the percentage of state appropriation allocated to the

Chancellor's Fund should be increased on the following schedule:

2001-02 1.8%

2002-03 2.1%

2003-04 2.5%

Rationale 2b: The autonomy provided to instructional units by RCM raises the

possibility that what the deans view as best for their individual units will be mistaken for

what is best for the campus. The Chancellor’s Office has a vital role to play in taking a

broader view of the situation than is available to individual deans and pursuing the larger

interest of IUB. The committee is concerned that the present CDF funding level of 1.5%

of state appropriation, which is the lowest percentage ‘held back’ among Big Ten

universities operating with an RCM financial model, limits the ability of the Chancellor’s

Office to appropriately undertake campus-wide initiatives or pursue a central agenda. In

addition, individual units lack access to adequate investment funds for important

initiatives that may pay for themselves in the long run, but require up-front financing.

Thus, the committee recommends that the campus increase the CDF from 1.5% of state

appropriation to 2.5% to enable the Chancellor’s Office to pursue a broader campus

mission and more adequately fund quality improvement initiatives.

Finding 3: While RCM has been cited as a barrier to creating and sustaining cross-

disciplinary, integrated programs across Schools, the Committee finds the reality to be

very different. By making costs and benefits much easier to quantify, RCM fosters cross-

disciplinary, integrated projects across Schools..

Recommendation 3: Given the importance of cross-disciplinary work, the Chancellor’s

Fund should adopt as one of its specific priorities the provision of incentives to further

foster cooperation across units .

Rationale 3: In the current academic environment, where much interesting and

important work is being done in areas that are at the boundaries of traditional disciplines,

the campus must continue to pay close attention to stimulating partnering opportunities

across Schools. The Chancellor’s Office is in a unique position to see across disciplinary

boundaries in ways that units may not. Thus, resources from the Chancellor’s Fund

should be used to foster cooperative ventures across units that can advantage both the

units and the campus.

RCM REVIEW 1990-2000

17

Attribution of Undergraduate Instructional Fee Income

Finding 4: The RCM instructional fee income attribution methodology should provide

timely access to income generated by changing undergraduate enrollments.

Recommendation 4: Undergraduate instructional fee income should be distributed on

the basis of the distribution of credit hours taught in the previous year.

Rationale 4: The 1996 RCM Review Committee sought to limit the effects of shifts in

student enrollments by using an average of the last two years’ enrollments to allocate

undergraduate tuition. While this practice of "enrollment smoothing" has succeeded in

providing units with more stable budgets, it has created serious financial difficulties for

units with sustained growth in student enrollments. These units bear the cost of

providing instruction for additional students in the present year but must wait two years

before fully receiving the appropriate increases in resources. Based on the advice of the

Dean’s Advisory Committee, the Review Committee recommends returning to a one-year

lag in attributing revenue. The goal of this change is to provide more timely adjustments

in the income generated by changing undergraduate enrollments.

Finding 5: The availability of second-eight-week courses provides significant benefits to

students.

Recommendation 5: Late registrations for second-eight-week courses should be

included in attributing undergraduate instructional fee income. The shift should be

phased-in with second-eight-week credit hours weighted 0.3 in 2001-02 (FY02), 0.5 in

FY03, and 0.75 in FY04.

Rationale 5: While late registrants (after the first week of the semester) to second-eight-

week courses frequently generate no revenue, they impose costs on the units providing

this instruction. Because the availability of second-eight-week courses permits students

who have dropped other courses during the semester to maintain a course load that allows

them to qualify for financial aid and to make progress toward their degrees, the

availability of these courses is an important consideration in student retention. As such,

these courses should be included in attributing undergraduate instructional fee income.

Assessment System

Finding 6: The assessment system is perceived as excessively complex.

Recommendation 6a: The current method of indirect assessments should be continued.

Recommendation 6b: Assessment data provided to campus policy makers should

include a clear explanation of how the assessments are determined and how the funds are

used. Significant changes in non-instructional unit expenditure levels should be

explained.

Rationale 6: Much of the complexity of the current assessment system is caused by

indirect assessments. In order to fully account for the cost of non-instructional units,

other non-instructional units are assessed to pay for their services. For example, the

RCM REVIEW 1990-2000

18

Library is charged an assessment to pay a portion of the costs of UITS. However, all

costs of the Library, including such assessments, are included in the Library assessment

charged to instructional units. The committee believes that the value of more

comprehensive data available to instructional units by the indirect assessment process

outweighs the disadvantages created by its complexity.

Non-instructional units currently provide these explanations in their annual budget

conferences. This information should be shared widely with campus policy makers.

Finding 7: Health insurance for Student Academic Appointees (SAAs) is appropriate for

direct charge.

Recommendation 7: Graduate student (SAA) health insurance should be supported as a

direct charge (funded outside the assessment system). The charge should be assessed as a

benefit charge on graduate student stipends. The change should be implemented in a

revenue neutral manner.

Rationale 7: Graduate student health insurance is a cost of doing business for

instructional units and is more appropriately included in their benefit charges.

Finding 8: The current Library assessment mechanism does not allow independent

verification of how the assessment is determined.

Recommendation 8: The Library assessment should be distributed on the basis of total

budgeted expenditures. The transition should be made revenue neutral by assigning

different weights to each unit so that the final result is identical to what units would have

paid without a change in the Library assessment. In subsequent years, these new weights

should be used to distribute the Library assessment among RCs.

Rationale 8: The current Library assessment mechanism is based on “assigned”

personnel, materials, and space costs. This recommendation allows instructional units to

better understand the basis for their Library assessment.

Units with Financial Problems

Finding 9: Since the last review, there have been several instances in which units

encountered financial problems. The reasons varied, and - while in any individual case

were not directly attributable to RCM - may have been exacerbated by the environment

of distributed decision making inherent in RCM. The campus should become involved

more quickly in identifying and resolving such problems.

Recommendation 9: The Campus Budget Office should be proactive and intervene

quickly when budgetary problems are identified. The campus should work with deans to

identify and address problems in a timely manner, and verify compliance with the

planned responses. In the most extreme cases, this will involve constraints on the

school’s freedom to make financial decisions.

RCM REVIEW 1990-2000

19

Rationale 9: The units experiencing financial problems would have experienced

budgetary difficulties under the previous budgetary system. However, under the previous

system, the Campus Budget Office would have become involved much earlier and to a

much greater extent. RCM is intended to create autonomy for deans. While greater

autonomy creates greater risk, it does not alter the campus’ responsibility to provide

fiscal oversight. A large majority within the Committee applauds the autonomy provided

by RCM; it recognizes the risks, though, and urges the Campus Budget Office to become

involved more quickly, and more intrusively when necessary, in identifying and resolving

financial problems.

Finding 10: As the leadership of responsibility centers changes, individuals who have

not had experience with RCM may find challenges in planning and implementing

financial decisions in this system.

Recommendation 10: The Campus Budget Office should continue and enhance RCM

mentoring for all incoming deans. It should also continue and augment in-service

workshops to upgrade the skills of school-level budget officers and other appropriate

administrators. Among other topics, these workshops should (1) build the capacity for

program budgeting and reporting, and (2) focus on campus income distribution policies

so that (a) schools can appropriately incorporate these policies in their planning, and (b)

the policies generate the incentive effects the campus intends.

Rationale 10: Autonomy presupposes financial sophistication. The Campus Budget

Office must ensure that appropriate financial sophistication exists in all RCs.

Other Issues

Finding 11: The successive decisions to keep the impact of accounting changes “revenue

neutral” by creating unit specific weights, but not equalizing them over time, also means

that whatever inequities were built into any previous accounting system are not

addressed, at least not in any systematic fashion.

Recommendation 11: The committee endorses the reactivation of the RCM Oversight

Committee, with the initial task of reviewing all “revenue neutral” changes.

Rationale 11: Units that had external funding to cover operating costs or very low

student faculty ratios before RCM had these features built into their share of state

appropriations (negatively in the former case, positively in the latter). A similar situation

may be created in library assessments by Recommendation 8.

Finding 12: RCM continues to be misunderstood by a broad segment of faculty and staff.

This lack of information leads to problems because people tend to distrust what they

don’t understand.

Recommendation 12: The Campus Budget Office and the Budgetary Affairs Committee

should meet with faculty and others to increase understanding of what RCM means, how

it compares with the previous system, its ramifications, its positive and negative aspects,

RCM REVIEW 1990-2000

20

and how the campus has attempted to keep the positive aspects while correcting the

negative aspects.

Rationale 12: The committee experienced the same disjuncture as the 1996 RCM

Review Committee. Those who are most knowledgeable about RCM generally believe

that it works reasonably well. Those who are operating with less complete information

are much more critical. If IUB is to build broader support for its modified form of RCM

and address the on-going unease about its merits, more must be done to increase and

broaden understanding of the system and how it enables the achievement of the academic

values of the campus.

5. Concluding Comments

In 1996, when the previous review was conducted, IUB was the only university in

the Big Ten using Responsibility Centered Management. In 2000, the Universities of

Illinois, Michigan, and Minnesota also budget using their versions of RCM, and several

other large state universities are in various stages of planning and implementation.

Decentralized planning and decision making are now widely recognized as offering great

benefits in higher education.

Primary among these benefits is the ability to address budgetary problems at the

level closest to the action, where the information needed to respond to opportunities and

cope with problems is most complete. An example cited repeatedly in our interviews is

the reaction of deans to the inevitable mismatch between class sections scheduled and

student enrollments. Only a school or college dean has the information to fully assess the

implications of adding or deleting a section. The dean understands the costs and benefits

from both academic and financial perspectives.

The RCM process also makes the budget more transparent to all involved and

offers an opportunity for responsiveness to the needs of students and faculty. Information

available to the deans, and through them to the school and college policy committees, and

the Budgetary Affairs Committee gives a full picture of resources and needs. Each unit

has the responsibility of weighing the alternatives and making an informed decision on

which of the unit priorities are most important.

While other Big Ten universities have moved to embrace various versions of

RCM, it has continued to be controversial within the faculty at IUB. There continue to be

concerns about the apparent focus on the “bottom line,” an emphasis on “quantity” over

quality, and a tendency to balkanize the campus. In addition to these concerns, which

were expressed in 1996 as well, a number of those interviewed for this review expressed

a concern that RCM has led to the financial squeeze facing the College and the School of

Music. Each of these events was complex and resulted from a variety of decisions and

the RCM environment may have delayed campus awareness of problems. Also, unit

responsibility for generating the income assumed in budget construction, especially

graduate fee income, contributed. However, to a large extent, problems with

expenditures could have occurred in any budgeting system.

RCM REVIEW 1990-2000

21

Independent of what budgeting system is used, IUB faces a number of major

financial challenges. Several of the individuals interviewed pointed to the declining role

of state appropriations as a major problem for the university. In the last decade, the total

operating state appropriation per FTE has fallen from $6,300 to $5,300 (in 1999 dollars).

At the same time, as noted earlier, the costs of operation, including assessments, have

grown markedly. The campus faces an enormous challenge in raising faculty salaries to

competitive levels and funding benefit costs, including the cost of the 18-20 program.

While the state appropriation and 18-20 costs are not aspects of the RCM system, the

Committee believes it is important to acknowledge them as major structural factors that

every unit will have to manage.

RESPONSIBILITY CENTERED MANAGEMENT AT

INDIANA UNIVERSITY BLOOMINGTON

1990-2000

ATTACHMENTS

May, 2000

RCM REVIEW 1990-2000

A-1

Table of Contents

1. Appointment letter A - 2

2. RCM Review Committee A - 3

3. Announcement of review A - 4

4. Individuals and groups interviewed A - 5

5. Interview protocol A - 7

6. Total operating state appropriation FY76 through FY00 A-12

7. Student headcount by school and student level Fall 95 through Fall 99 A-13

8. Student credit hours by school and student level FY96 through FY00 A-14

9. Undergraduate credit hours by school (graph) A-15

10. Graduate and professional credit hours by school (graph) A-16

11. Expenditure budgets and credit hours by school FY96 through FY00 A-17

12. Budgeted expenditures per actual credit hour (graph) A-18

13. Academic FTE credit hours by school FY96 through FY00 A-19

14. Credit hours per academic FTE by school (graph) A-20

15. Professional and biweekly staff FTE Fall 95 through Fall 99 A-21

16. Increases to school and support RC budgets FY95 through FY00 A-22

RCM REVIEW 1990-2000

A-2

Attachment 1

Appointment Letter

To: Neil Theobald and Maynard Thompson

From: Kenneth R. R. Gros Louis

Subject: RCM Review

Date: September 13, 1999

This memo will confirm your appointments as co-chairs of a Committee to review the

Bloomington Campus version of RCM. In a time when there are expanding goals and

expectations for IUB and constrained resources, it is crucial that we have a financial

management system which provides appropriate incentives and which stimulates the

effective use of resources. We adopted RCM with this in mind.

When RCM was introduced, it was anticipated that the system would evolve through

modification, and that has been the case. A few modifications were made soon after

implementation, others in response to recommendations of the Deans Advisory

Committee and the Budgetary Affairs Committee, and several in response to

recommendations of the 1995-96 review. It has been four years since that review and

about three years since the implementation of recommendations coming from the

review. It is appropriate to again evaluate the system that underlies our financial

planning and management.

There are many matters to be considered, and the Committee should determine how best

to proceed to achieve the general objectives. The following topics may serve as a useful

starting point for the discussion:

the goals of the IUB version of RCM and the system designed to achieve

those goals,

$ impact of RCM on campus culture and the support of Acommon good,@

$ possible implications of RCM over the long term,

$ opportunities to enhance the likelihood that IUB is more than Athe sum of

its parts,@

$ results of the 1995-96 review and the changes introduced in response to

the recommendations of that committee,

$ experiences at other universities which considered RCM type systems,

why various decisions were made and the results,

$ appropriate modifications.

By copy of this memo I am asking those on the attached list of Committee members to

conduct the review. The Committee has my full support, and if there are ways I can

assist your work, please let me know. Many thanks.

Attachment

RCM REVIEW 1990-2000

A-3

Attachment 2

RCM Review Committee

Name Department

Dan Amonett GSO Coordinator

John Bingham IUSA

Ann Bristow Libraries

Sheryl Fisher Education

Kirsten Gronbjerg SPEA

Gary Hieftje Chemistry

Michael McGerr History; LAMP

Michael Metzger Business

Tony Mobley HPER

Charles Nelms Academic Support & Diversity

Eugene O'Brien Music

Lauren Robel Law

Al Ruesink Biology

Neil Theobald Co-Chair, Education

Maynard Thompson Co-Chair, Budgetary Administration &

Planning

David Zaret Sociology/COAS

RCM REVIEW 1990-2000

A-4

Attachment 3

Announcement of Review

To: Faculty and Staff

From: RCM Review Committee

Subject: Review of RCM

Date: September 27, 1999

Vice President Gros Louis has appointed a committee to review the Bloomington

Campus version of Responsibility Centered Management (RCM). When RCM was

introduced in 1990, it was anticipated that the system would evolve through

modification, and that has been the case. During the 1995-96 academic year, a previous

RCM Review Committee analyzed this system and made a number of recommendations

that were implemented beginning in 1997. We now have the experiences of nine full

fiscal years, and it is appropriate again to evaluate the system that underlies our financial

planning and management. This review will seek to identify and clarify the strengths

and weaknesses of the present version of RCM and suggest possible improvements.

As part of its work, the Review Committee will interview deans, directors,

members of advisory and policy committees, and others who play an active role in

administration and in formulating policy. In addition, we are interested in comments

and suggestions from other faculty and staff. You are welcome to write, e-mail (please

include RCM in the subject line of your message), or call any member of the Committee

by December 15, 1999. To make an appointment, please call Twanette Newton in the

Budgetary Administration and Planning Office, 855-3565, e-mail: tnewton, or contact

either of the co-chairs of the Committee. Members of the Committee are:

Name Department e-mail phone

Dan Amonett GSO Coordinator damonett@indiana.edu 5-8747

John Bingham IUSA jdbingha@indiana.edu 5-4872

Ann Bristow Libraries bristow@indiana.edu 5-8028

Sherrie Fisher Education safisher@indiana.edu 6-8011

Kirsten Gronbjerg SPEA kgronbj@indiana.edu 5-5058

Gary Hieftje Chemistry hieftje@indiana.edu 5-2189

Michael McGerr History; LAMP mmcgerr@indiana.edu 6-4671

Michael Metzger Business metzger@indiana.edu 5-9308

Tony Mobley HPER mobley@indiana.edu 5-1561

Charles Nelms Acad. Support &

Diversity nelms@indiana.edu 6-5700

Eugene O'Brien Music obriene@indiana.edu 5-5541

Lauren Robel Law lrobel@indiana.edu 5-4140

Al Ruesink Biology ruesink@indiana.edu 5-5555

Neil Theobald Co-Chair, Education theobald@indiana.edu 6-8397

Maynard Thompson Co-Chair, Budgetary thompson@indiana.edu 5-3565

Administration &

Planning

David Zaret Sociology/COAS zaret@indiana.edu 5-2761

RCM REVIEW 1990-2000

A-5

Attachment 4

Individuals and Groups Interviewed

Dean, College of Arts and Sciences

College of Arts and Sciences Policy Committee

Dean, School of Business

School of Business Budgetary Affairs Representatives

Dean, School of Education

School of Education Budgetary Advisory Committee

Dean, School of HPER

School of HPER Budgetary Affairs Committee

Dean, School of Journalism

School of Journalism Policy Council

Dean, School of Law

School of Law Policy Council

Dean, SLIS

Dean, School of Music

School of Music Policy Committee

Dean, School of Optometry

School of Optometry Policy Committee

Dean, School of SPEA

School of SPEA Policy Committee

Dean of University Libraries

Bloomington Library Faculty Council

President Myles Brand

President, IU Foundation

Vice President, RUGS

Vice President, UITS

Vice Chancellor for Diversity and Academic Services

Vice Chancellor for Enrollment Services

Vice Chancellor for Student Affairs

Dean of Faculties

Dean, School of Continuing Studies

Director, Medical Sciences Program

Director, School of Infomatics

RCM REVIEW 1990-2000

A-6

Director, University Budget Officer

Director, Physical Plant

Alliance of Distinguished Ranks Professors

Budget Officers

President, Indiana University Student Association

Group interview: Bursar and Registrar

Group interview: Women's Affairs, Affirmative Action

Group interview: Business Affairs, IUPD, Space Management,

Telecommunications, Radio & TV

Budgetary Personnel at the Universities of Illinois, Michigan, and

Minnesota and The Ohio State University

RCM REVIEW 1990-2000

A-7

Attachment 5

Interview Protocol

1. How familiar are you with RCM? How have you come into contact with it?

2. What is your understanding of the incentives provided by RCM?

3. What do you perceive to be the strengths of RCM as a mechanism for distributing

resources?

Strengths Priority

4. What do you perceive to be the weaknesses or flaws in RCM?

Weaknesses/Flaws Priority

RCM REVIEW 1990-2000

A-8

5. What are your unit's 2 or 3 major goals? For each goal, does RCM facilitate or

impede you in meeting this goal? If RCM facilitates meeting this goal, how? If RCM

impedes your unit, what could be done to improve it? Could you provide an

example?

Units Goals

Where appropriate, please consider excellence in:

Instruction Research and

scholarly activities

Service

For each goal, does RCM

facilitate or impede you in

meeting this goal?

If RCM facilitates meeting

this goal, how?

If RCM impedes your unit,

what could be done to

improve it?

Could you provide an

example?

RCM REVIEW 1990-2000

A-9

5 (continued)

Other Unit Goals

For each goal, does RCM

facilitate or impede you in

meeting this goal?

If RCM facilitates meeting

this goal, how?

If RCM impedes your unit,

what could be done to

improve it?

Could you provide an

example?

RCM REVIEW 1990-2000

A-10

6. In addition to your unit's goals, are there campus-level or system-wide goals that this

review should take into consideration? For each goal, does RCM facilitate or impede

the campus or system in meeting this goal? If RCM facilitates meeting this goal,

how? If RCM impedes the campus or system, what could be done to improve it?

Could you provide an example?

Campus/System Goals

For each goal, does RCM

facilitate or impede you in

meeting this goal?

If RCM facilitates meeting

this goal, how?

If RCM impedes your unit,

what could be done to

improve it?

Could you provide an

example?

RCM REVIEW 1990-2000

A-11

7. On the basis of recommendations from the 1996 RCM Review Committee, the

Bloomington campus (a) established a Chancellor's Discretionary Fund by diverting

up to 1.5% of the state appropriation to the Chancellor to reward quality and

leverage campus priorities, and (b) instituted a two-year weighted average lag

between enrollments and distributions to "smooth income flows" and implemented

differential distributions based on non-resident students. In addition, the 1996

Review Committee proposed the concepts of shifting the funding of non-

instructional units from assessments to fee-for-service (e.g., paying BEST for

assessment forms). Are you aware of these changes? How successful have each of

these changes been? Should these initiatives be changed in any way?

Recommendation Assessment Suggestions for changes

Chancellor's Discretionary Fund

Distribution of undergraduate

fees

Shift to fee-for-service

8. If RCM is to be retained, what should be the local unit of financial decision-making

(i.e., campus, school, department, individual faculty)?

9. Are you familiar with the pre-RCM financial management system? If so, what are

your perspectives on its value relative to RCM?

10. Are you aware of successful alternatives to RCM? If so, please describe.

RCM REVIEW 1990-2000

A-12

Attachment 6

Total Operating State Appropriation

(Excludes Fee Replacement)

Fiscal Year Operating Appropriations

Change

1975-76 $59,719,774

1976-77 $61,943,266 3.72%

1977-78 $63,771,906 2.95%

1978-79 $69,021,152 8.23%

1979-80 $74,420,277 7.82%

1980-81 $82,792,569 11.25%

1981-82 $82,719,941 -0.09%

1982-83 $81,601,544 -1.35%

1983-84 $93,638,633 14.75%

1984-85 $100,600,215 7.43%

1985-86 $108,397,681 7.75%

1986-87 $116,387,502 7.37%

1987-88 $122,280,462 5.06%

1988-89 $132,124,068 8.05%

1989-90 $140,971,645 6.70%

RCM Implemented

1990-91 $150,365,734 6.66%

1991-92 $149,939,859 -0.28%

1992-93 $146,717,910 -2.15%

1993-94 $147,539,362 0.56%

1994-95 $146,897,274 * -0.44%

1995-96 $152,016,003 3.48%

1996-97 $159,005,903 4.60%

1997-98 $165,496,107 4.08%

1998-99 $170,812,639 3.21%

1999-00 $174,423,616 ** 2.11%

Operating appropriations include any supplemental appropriations and new degree program start-up funds, and exclude Knox County match. *Includes $35,300 which was added after July 1. **Excludes special state appropriation for technology.

RCM REVIEW 1990-2000

A-13

Attachment 7

Student Headcount by School and Student Level

Fall 95 Fall 96 Fall 97 Fall 98 Fall 99

Undergraduate Headcount (includes Non-degree)

A&S/Grad 6,121 5,496 6,198 6,151 6,184

Bus 2,867 3,071 3,372 3,696 3,890

Educ 1,951 1,957 1,950 1,988 2,028

HPER 1,022 1,096 1,096 1,054 1,003

Jour 537 534 510 503 544

Law - - - - -

SLIS - - - - -

Music 900 907 1,026 1,029 937

Opt 31 21 10 19 11

SPEA 660 543 547 556 644

MedSci - - - - -

Univ Div 11,874 11,968 11,320 11,809 12,239

Other 1,414 1,391 1,306 1,288 1,284

Campus 27,377 26,984 27,335 28,093 28,764

Graduate/Professional Headcount

A&S/Grad 4,171 4,111 3,967 3,837 3,779

Bus 565 593 588 630 643

Educ 536 540 532 527 538

HPER 281 256 228 203 202

Jour - - - - -

Law 616 669 670 665 659

SLIS 233 222 263 304 291

Music 687 738 736 711 704

Opt 280 284 290 296 303

SPEA 311 301 325 333 318

MedSci 2 2 1 - -

Univ Div - - - - -

Other - - 2 1 -

Campus 7,682 7,716 7,602 7,507 7,437

Total Headcount

A&S/Grad 10,292 9,607 10,165 9,988 9,963

Bus 3,432 3,664 3,960 4,326 4,533

Educ 2,487 2,497 2,482 2,515 2,566

HPER 1,303 1,352 1,324 1,257 1,205

Jour 537 534 510 503 544

Law 616 669 670 665 659

SLIS 233 222 263 304 291

Music 1,587 1,645 1,762 1,740 1,641

Opt 311 305 300 315 314

SPEA 971 844 872 889 962

MedSci 2 2 1 - -

Univ Div 11,874 11,968 11,320 11,809 12,239

Other 1,414 1,391 1,308 1,289 1,284

Campus 35,059 34,700 34,937 35,600 36,201

RCM REVIEW 1990-2000

A-14

Attachment 8

Student Credit Hours by School and Student Level

FY95-96 FY96-97 FY97-98 FY98-99 FY99-00

Undergraduate Credit Hours

A&S 511,226 493,823 485,036 498,849 510,877

Bus 94,557 108,703 121,877 127,979 128,874

Educ 44,850 44,704 45,205 46,538 47,065

HPER 55,220 53,045 53,425 56,356 55,887

Jour 9,357 9,095 8,848 9,070 8,977

Law - - - - -

SLIS 535 849 805 786 844

Music 37,549 39,987 41,608 41,911 41,523

Opt 1,174 935 920 960 663

SPEA 22,983 20,245 19,041 21,212 25,649

MedSci 8,478 7,886 8,233 7,685 7,018

Group Total 785,929 779,272 784,998 811,345 827,377

Graduate/Professional Credit Hours (includes G901)

A&S 51,281 49,590 47,571 45,728 45,723

Bus 18,729 19,199 19,140 20,944 20,809

Educ 19,777 20,164 20,332 19,847 20,735

HPER 7,049 6,237 6,021 5,436 5,549

Jour 1,048 1,138 1,070 1,066 1,237

Law 17,872 19,246 19,644 18,706 18,497

SLIS 5,068 4,774 5,553 5,972 5,426

Music 12,323 12,377 12,286 12,087 11,355

Opt 11,549 11,823 12,132 12,350 12,517

SPEA 7,589 7,993 8,366 8,399 8,104

MedSci 378 237 302 343 369

Group Total 152,663 152,777 152,416 150,876 150,321

Total Credit Hours

A&S 562,507 543,413 532,607 544,576 556,600

Bus 113,286 127,902 141,017 148,922 149,683

Educ 64,627 64,868 65,537 66,385 67,800

HPER 62,269 59,282 59,446 61,792 61,436

Jour 10,405 10,233 9,918 10,136 10,214

Law 17,872 19,246 19,644 18,706 18,497

SLIS 5,603 5,623 6,358 6,758 6,270

Music 49,872 52,364 53,894 53,998 52,878

Opt 12,723 12,758 13,052 13,310 13,180

SPEA 30,572 28,238 27,407 29,611 33,753

MedSci 8,856 8,123 8,535 8,028 7,387

Group Total 938,592 932,049 937,413 962,221 977,697

RCM REVIEW 1990-2000

A-15

Attachment 9

Undergraduate Credit Hours

-

20,000

40,000

60,000

80,000

100,000

120,000

140,000

160,000

180,000

FY95-96 FY96-97 FY97-98 FY98-99 FY99-00

-

25,000

50,000

75,000

100,000

125,000

150,000

175,000

200,000

225,000

250,000

275,000

300,000

325,000

350,000

375,000

400,000

425,000

450,000

475,000

500,000

525,000

550,000

A&S

Business

HPER

Education

Music Jour SPEA

MedSci

RCM REVIEW 1990-2000

A-16

Attachment 10

Graduate & Professional Credit Hours

-

10,000

20,000

30,000

40,000

50,000

FY95-96 FY96-97 FY97-98 FY98-99 FY99-00

Arts & Sciences

Business

Education

Law

Optometry

Music

SPEA

SLIS

HPER

RCM REVIEW 1990-2000

A-17

Attachment 11

Expenditure Budgets and Credit Hours by School

FY95-96 FY96-97 FY97-98 FY98-99 FY99-00

Expenditure Budgets

Law w. Library 8,678,297$ 8,810,794$ 9,281,839$ 9,656,467$ 10,063,054$

Law Library 2,136,862$ 2,204,154$ 2,310,947$ 2,404,228$ 2,459,980$

Opt w. Clinic 5,308,726$ 5,566,584$ 5,775,182$ 6,467,572$ 6,818,586$

Opt Clinic 1,211,448$ 1,211,448$ 1,212,534$ 1,284,680$ 1,349,043$

A&S 107,718,524$ 109,815,256$ 111,916,732$ 115,902,797$ 121,364,452$

Bus 24,934,364$ 27,244,837$ 30,220,593$ 33,029,719$ 37,754,431$

Educ 14,435,958$ 14,964,123$ 15,454,078$ 16,436,955$ 17,547,846$

HPER 10,446,560$ 10,664,202$ 10,571,156$ 10,764,540$ 11,575,469$

Jour 2,600,133$ 2,706,616$ 2,768,082$ 2,774,277$ 3,100,539$

Law w/o Library 6,541,435$ 6,606,640$ 6,970,892$ 7,252,239$ 7,603,074$

SLIS 1,984,342$ 2,145,707$ 2,165,793$ 2,443,134$ 2,556,512$

Music 17,117,843$ 17,829,216$ 18,628,824$ 19,698,476$ 20,605,902$

Opt w/o Clinic 4,097,278$ 4,355,136$ 4,562,648$ 5,182,892$ 5,469,543$

SPEA 7,790,706$ 8,121,883$ 8,290,646$ 8,822,112$ 9,273,665$

MedSci 1,498,617$ 1,469,218$ 1,471,228$ 1,655,801$ 1,469,260$

Group Total 199,165,760$ 205,922,834$ 213,020,672$ 223,962,942$ 238,320,693$

FY Actual Credit Hours (including G901)

A&S 562,507 543,413 532,607 544,576 556,600

Bus 113,286 127,902 141,017 148,922 149,683

Educ 64,627 64,868 65,537 66,385 67,800

HPER 62,269 59,282 59,446 61,792 61,436

Jour 10,405 10,233 9,918 10,136 10,214

Law 17,872 19,246 19,644 18,706 18,497

SLIS 5,603 5,623 6,358 6,758 6,270

Music 49,872 52,364 53,894 53,998 52,878

Opt 12,723 12,758 13,052 13,310 13,180

SPEA 30,572 28,238 27,407 29,611 33,753

MedSci 8,856 8,123 8,535 8,028 7,387

Group Total 938,592 932,049 937,413 962,221 977,697

Expenditure Budget per Credit Hour

A&S 191$ 202$ 210$ 213$ 218$

Bus 220$ 213$ 214$ 222$ 252$

Educ 223$ 231$ 236$ 248$ 259$

HPER 168$ 180$ 178$ 174$ 188$

Jour 250$ 264$ 279$ 274$ 304$

Law 366$ 343$ 355$ 388$ 411$

SLIS 354$ 382$ 341$ 362$ 408$

Music 343$ 340$ 346$ 365$ 390$

Opt 322$ 341$ 350$ 389$ 415$

SPEA 255$ 288$ 303$ 298$ 275$

MedSci 169$ 181$ 172$ 206$ 199$

Group Total 212$ 221$ 227$ 233$ 244$

RCM REVIEW 1990-2000

A-18

Attachment 12

Budgeted Expenditures per Actual Credit Hour

$150

$175

$200

$225

$250

$275

$300

$325

$350

$375

$400

$425

FY95-96 FY96-97 FY97-98 FY98-99 FY99-00

Ex

pe

nd

itu

re p

er

Cre

dit

Ho

ur

Optometry

Law

Music

SLIS

Journalism

SPEA

Education

Business

A&S

Med Sci

HPER

RCM REVIEW 1990-2000

A-19

Attachment 13

Academic FTE and Credit Hours by School

Full-Time Faculty and Lecturers**

Fall 1995 Fall 1996 Fall 1997 Fall 1998 Fall 1999

A&S 840.5 838.5 824.2 802.2 776.2

Bus 122.5 132.5 143.0 144.0 153.0

Educ 107.0 106.0 106.0 105.0 104.0

HPER 56.5 60.0 57.0 59.0 54.0

Jour 22.0 22.0 23.0 23.0 21.0

Law 39.0 40.0 40.0 42.0 42.0

SLIS 18.0 19.0 18.0 17.0 15.0

Music 120.0 119.0 123.0 127.0 132.0

Opt 21.0 19.0 19.0 21.0 21.0

SPEA 46.5 47.5 50.0 50.0 47.5

MedSci 12.0 12.0 11.0 14.0 14.5

Group Total 1,405.0 1,415.5 1,414.2 1,404.2 1,380.2

Actual Credit Hours

FY95-96 FY96-97 FY97-98 FY98-99 FY99-00

A&S 562,507 543,413 532,607 544,576 556,600

Bus 113,286 127,902 141,017 148,922 149,683

Educ 64,627 64,868 65,537 66,385 67,800

HPER 62,269 59,282 59,446 61,792 61,436

Jour 10,405 10,233 9,918 10,136 10,214

Law 17,872 19,246 19,644 18,706 18,497

SLIS 5,603 5,623 6,358 6,758 6,270

Music 49,872 52,364 53,894 53,998 52,878

Opt 12,723 12,758 13,052 13,310 13,180

SPEA 30,572 28,238 27,407 29,611 33,753

MedSci 8,856 8,123 8,535 8,028 7,387

Group Total 938,592 932,049 937,413 962,221 977,697

Credit Hours per Faculty FTE

FY95-96 FY96-97 FY97-98 FY98-99 FY99-00

A&S 669 648 646 679 717

Bus 925 965 986 1,034 978

Educ 604 612 618 632 652

HPER 1,102 988 1,043 1,047 1,138

Jour 473 465 431 441 486

Law 458 481 491 445 440

SLIS 311 296 353 398 418

Music 416 440 438 425 401

Opt 606 671 687 634 628

SPEA 657 594 548 592 711

MedSci 738 677 776 573 509

Group Total 668 658 663 685 708

**Full-Time Faculty and Lecturers include all tenure-related appointments to faculty and

lecturer status: tenured, tenure-track, and convertible to tenure-track. Included are those

appointees to whom we have a full-time commitment, whether on leave without pay or a

partial leave. [Source: Dean of the Faculties]

RCM REVIEW 1990-2000

A-20

Attachment 14

Credit Hours per Academic FTE

250

350

450

550

650

750

850

950

1,050

1,150

FY95-96 FY96-97 FY97-98 FY98-99 FY99-00

Cre

dit

Ho

urs

HPER

Business

A&S

SPEA

Educ

Opt

Med Sci

Jour

Law

SLIS

Music

RCM REVIEW 1990-2000

A-21

Attachment 15

Professional and Biweekly Staff FTE

Fall 95 Fall 96 Fall 97 Fall 98 Fall 99

Professional Staff FTE

A&S 170.14 170.84 180.03 175.40 173.78

Bus 51.76 54.85 59.61 64.00 74.50

Educ 30.83 29.95 28.95 29.40 29.95

HPER 17.74 18.09 22.40 23.70 23.86

Jour 5.67 7.23 7.12 7.30 7.57

Law 8.87 10.87 11.87 10.90 11.87

SLIS 3.00 3.00 2.00 2.00 2.00

Music 15.00 14.00 17.71 20.70 23.97

Opt 6.13 6.13 7.13 7.10 7.13

SPEA 19.25 19.25 19.95 20.20 20.00

MedSci 2.56 2.56 3.00 2.00 2.00

Group Total 330.95 336.77 359.77 362.70 376.63

Biweekly Staff FTE

A&S 244.35 235.52 230.26 224.20 220.02

Bus 67.14 69.75 76.75 78.80 80.50

Educ 43.89 45.14 40.84 40.90 41.58

HPER 32.05 32.55 30.00 31.10 31.10

Jour 4.75 3.75 4.31 4.50 4.50

Law 30.75 28.75 29.75 30.80 31.25

SLIS 3.00 3.00 3.00 3.00 3.00

Music 46.50 49.50 50.50 51.50 53.00

Opt 36.30 35.80 36.80 35.80 40.00

SPEA 30.27 30.02 30.12 28.50 29.37

MedSci 3.70 3.70 3.00 2.00 2.00

Group Total 542.70 537.48 535.33 531.10 536.32

RCM REVIEW 1990-2000

A-22

Attachment 16

Increases to School and Support RC Budgets

Budgets July 1994 July 1995 July 1996 July 1997 July 1998 July 1999

Schools 196,592,380 5.6% 207,653,654 4.0% 215,995,643 3.7% 223,986,754 2.9% 230,429,419 6.6% 245,537,589

Support RCs 167,784,694 4.6% 175,491,231 5.1% 184,441,371 7.2% 197,713,838 5.8% 209,086,047 9.4% 228,822,157

Campus Total 364,377,074 5.2% 383,144,885 4.5% 400,437,014 5.3% 421,700,592 4.2% 439,515,466 7.9% 474,359,746

Schools 196,592,380 5.6% 207,653,654 4.0% 215,995,643 3.7% 223,986,754 2.9% 230,429,419 6.6% 245,537,589

Supports Adj. 99,512,863 2.6% 102,141,305 3.6% 105,865,368 2.6% 108,621,746 2.8% 111,614,039 5.9% 118,161,408

Adjustments** 68,271,831 7.4% 73,349,926 7.1% 78,576,003 13.4% 89,092,092 9.4% 97,472,008 13.5% 110,660,749

Campus Total 364,377,074 5.2% 383,144,885 4.5% 400,437,014 5.3% 421,700,592 4.2% 439,515,466 7.9% 474,359,746

**Adjustments:

UG Financial Aid 6,996,846 5.9% 7,410,731 12.8% 8,357,241 39.5% 11,658,090 14.8% 13,380,551 25.4% 16,776,164

Library Acquisitions 5,082,844 5.5% 5,361,985 5.0% 5,630,085 5.0% 5,911,085 3.1% 6,096,085 10.1% 6,711,785

RUGS Acd Eq & RFF 3,681,388 7.0% 3,940,460 3.5% 4,079,389 3.2% 4,209,187 7.1% 4,509,187 15.5% 5,209,187

CDF - - - - 1,849,015 63.6% 3,024,087

Reserve Replenishmt - - - - 2,000,000 10.0% 2,200,000

Strategic Directions - 1,704,981 49.6% 2,550,981 0.0% 2,550,981 12.7% 2,875,981 0.0% 2,875,981

Student Tech Fee 4,423,280 9.6% 4,846,715 18.8% 5,760,000 0.0% 5,759,620 2.0% 5,874,752 3.3% 6,068,420

IU Foundation Fee 914,519 11.2% 1,017,291 4.0% 1,057,983 69.2% 1,790,257 3.0% 1,843,965 3.5% 1,908,504

Sys Serv Charge 13,344,371 10.4% 14,734,879 11.9% 16,486,208 24.1% 20,457,718 6.4% 21,774,226 16.2% 25,297,223

Fuel & Utilities 14,314,226 3.0% 14,745,379 5.1% 15,499,787 4.6% 16,219,716 3.1% 16,719,716 2.0% 17,050,716

Debt Service 19,514,357 0.4% 19,587,505 -2.2% 19,154,329 7.2% 20,535,438 0.1% 20,548,530 14.6% 23,538,682

Total Adjustments 68,271,831 7.4% 73,349,926 7.1% 78,576,003 13.4% 89,092,092 9.4% 97,472,008 13.5% 110,660,749

a $1.9M related to Pooled Benefits; $1.4M in Univ Initiatives funded through special state appropriation. With adjustments, increase is 4.07%.

b $690K related to Fee Courtesy; $1.9M for Tech Funding funded through special state appropriation. With adjustments, increase is 4.3%.

a b