Resource Management Model Review Implementation Plan

1 Resource Management Model Review Implementation plan RMM Review Implementation Work Group Dave Biedenbach, Office of the President Pam Elliott Cain, Office of the Senior Vice President for Business and Finance Kathy Jones, Office of the Senior Vice President for Student Affairs Miles Lackey, Office of the President Ellen Rasmussen, Office of the Senior Vice President and Provost February 27, 2013. RMM Review Implementation plan Executive Summary In September of 2012, President Leath appointed our work group to Review each of the recommendations or key points that were presented in the Resource Management Model (RMM) Review Committee's May 2012.

2 Report. Over the past several months, the work group met six times and completed the Review of the recommendations in mid-January. The work group concluded that the issues that were addressed by the RMM Review Committee's recommendations pertained not only to changes to the RMM, but also to the budget planning and development process, and other issues that are peripheral to the RMM or the budget process. A listing of each of the recommendations and the work group's responses to these recommendations are provided in Appendix A of this report. Changes to the Resource Management Model There were fourteen recommendations from the RMM Review Committee that were directly related to the Resource Management Model - three recommending no changes and eleven recommending changes.

3 Of the eleven recommended changes, the work group recommends implementing three. The changes will be made during the FY2014 budget development process and the impact of these changes will be a budget-neutral transaction for all Resource units. Issues have been raised over the past several years regarding the differences between the RMM's Resource unit financial and data reporting structure, and the university's organizational structure. A majority of the differences between the two structures are seen as adding little value to the overall budget planning and decision-making process, and considered burdensome for administrators and administrative processes.

4 Although the RMM Review Committee did not recommend changes to address these issues, the work group recommends implementing several changes to the RMM Resource unit structure during the FY2014 budget development process. The impact of these changes will also be a budget-neutral transaction for all Resource units. Issues related to budget planning and development process There were twenty-nine recommendations made by the RMM Review Committee that do not require any changes to the RMM structure, but are more related to the university's budget planning and development process. Some of these recommended changes have been made, or are currently in the process of being made.

5 Particularly, the changes are to the budget advisory committee structure, and to the process for establishing priorities used to guide budget planning. At the conclusion of the FY2014 budget development process, administrators and budget advisory committees will be asked to assess whether the changes that were made resulted in a more effective budget planning process. Issues that are peripheral to the RMM and budget development process There were four recommendations made by the RMM Review Committee that relate to issues that are peripheral to the RMM and to the budget development process. The issues raised in the recommendations pertain primarily to employee and policy issues.

6 Some of these changes have been addressed, particularly with the recent commitment by the university to invest in enhancing managerial reporting tools. 1 RMM Review Implementation plan Changes to the Resource Management Model There were fourteen recommendations from the RMM Review Committee that were directly related to the RMM. Two recommended no changes to the tuition revenue distribution methodology and one recommended no change to the 15% distribution of facilities and administrative cost recovery (IDC) revenue to principal investigators. The remaining eleven recommended changes to the RMM revenue and cost allocation methodologies.

7 Changes to the Revenue Distribution and Cost Allocation Methodologies The following are three changes recommended by the RMM Review Committee that will be made to the RMM. revenue distribution and cost allocation methodologies during the FY2014 budget development process. The impact of each of the changes will be budget-neutral transactions for all Resource units. Eliminate the Instructional Support Fund. Starting FY2014, the state appropriations used for this fund will be absorbed into each of the colleges' Resource Management Fund on a dollar-for-dollar basis. Discontinue the practice of fully-costing or cross-allocation of costs between the Administrative Service Centers (ASCs).

8 Because these central facility and administrative costs are effectively pass-through . costs for the ASCs, this practice is seen as adding very little value to the overall budget planning and decision-making process. Starting FY2014, only the direct budgets of the ASCs will be allocated to the Resource Responsibility Centers (RRCs). The changes in allocated costs to the RRCs will be offset, dollar-for-dollar, with the reallocation of the Resource Management Fund. Change the weighting for staff FTE from a weighting of two to a weighting of one for the cost allocation metric used to allocate the Library expense pool. This is seen as a more appropriate proxy for the utilization of the Library's resources.

9 The change will result in shifting of the allocation of ASC expense pools between the RRCs. The changes in allocated costs to the RRCs will be offset, dollar-for-dollar, with the reallocation of the Resource Management Fund. The remaining eight recommended changes should not be implemented. The four recommended changes to the IDC revenue distribution Model should not be implemented. The recommended changes would have required fairly significant changes to administrative process and systems that support the distribution. The costs of making these changes outweigh any perceived benefits. o Combining the 45% Research Overhead and the 10% Administrative Unit components of the distribution Model would reduce the financial incentive for a unit to administer a grant.

10 The purpose for the 10% distribution to the administering unit is to ensure that a portion of the IDC revenue aligns with the efforts and costs associated with administering a grant or contract award. o Distributing the 10% Administrative Unit component to multiple units is seen as an administrative burden for distributing a relatively small amount of revenue (approximately $3 million of revenue annually). o Federal agencies require that the university spends a certain level of IDC revenue on research infrastructure. Changing the IDC distribution percent for funding research infrastructure to a fixed 15%, therefore, could potentially create a shortage in the amount of research infrastructure funding that is required by federal agencies.