Responsibility Center Management (RCM)
Institutions of public higher education have felt economic strains in recent years, and Temple University is no exception. The Commonwealth of Pennsylvania was once a major underwriter of public higher education, but significant financial pressures in the state have resulted in declining support. The decline in public dollars has put increasing pressure on tuition. At the same time, our board has resolved to make affordable access Temple's highest priority.
Temple University's decision to implement a decentralized budget model was influenced by the model's ability to
- allow for changes in response to concerns as they are recognized;
- decentralize responsibility and involve more faculty in budget and planning decisions;
- emphasize transparency and access to information that can lead to significant efficiencies and streamlining;
- encourage multiyear strategic planning, aligning resources with top priorities; and
- incentivize schools and departments to strive for excellence in teaching and research.
Based on these themes and the thoughtful consideration of the Steering Committee, Temple developed a set of guiding principles to help us frame RCM. These principles will guide the process throughout its life in all circumstances irrespective of changes in its goals, strategies or leaders.
Temple's guiding principles were developed by faculty and staff in 2012–2013 to structure the process and decision-making, irrespective of changes in goals, strategies or leaders. The community helped to define these five guiding principles as follows.
- Mission-driven: In order to support the university’s mission of providing an excellent education at an affordable cost, Temple’s budget practices must contain appropriate incentives to support academic quality and efficiency. Certain priorities, initiatives or activities that are central to the overall university mission may require the financial support of the revenue centers. The budget model recognizes that Temple’s primary mission is to support its teaching and research enterprise first, and its goals and success supersede those of the individual units and revenue centers.
- Align authority with responsibility and accountability: The closer the point of an operating decision is to the point of implementation, the better the decision is likely to be. Realign the authority for making decisions with their financial outcomes. Authority to make decisions should be pushed down to the revenue centers along with the responsibility or accountability for such decisions.
- Fairness: The budget model should be consistent, predictable and transparent. Considers a student-focused approach to the delivery and funding of services to ensure equitable access to services and facilities while allowing for schools/colleges to offer additional services to their students.
- Encourage innovation, entrepreneurship and efficiency: Create and introduce financial incentives to encourage and recognize appropriate risk taking and efforts to enhance revenue or reduce expenses. Support and reward units for interdisciplinary collaborations and discourage unnecessary internal competition.
- Simplicity: The budget model, including the allocation of revenues and indirect expenses, should be simple to understand, explain and maintain.