Information

Modernization Goals

Advance the university’s mission through greater alignment of financial resource allocation decisions and the Blueprint for Success
Ensure that program quality and long-term sustainability are considered alongside short-term financial gains
Promote local decision making, accountability, and financial sustainability; improve the campus community’s institutional fiscal literacy
Develop a process to pilot innovative and entrepreneurial activities with a process for measuring success and sunsetting those that are not are financially viable or do not meet a critical institutional need
Achieve greater transparency and accountability across the university for fiscal decision making
Create a system that allows for predictable financial modeling based on enrollment trends
Support high-quality, mission-critical programs that may not be financially self-supporting while also incentivizing greater efficiencies
Establish and fund core (base) university services to minimize the administrative burden of chargebacks

Current Budget Model

In 2018, Boise State implemented Bronco Budget 2.0 (BB 2.0), an incentive-based budget model for academic revenue units (i.e., colleges). This model employs a formula-based approach that computes marginal annual changes across several key indicators: student credits hours (both graduate and undergraduate), undergraduate majors, and undergraduate degree graduates (for domestic and international students). The BB 2.0 revenue comprises a portion of a college’s budget, along with decision-based subventions, and other instructional support funds such as those utilized for graduate assistants. The model covers Base Funds only (i.e., appropriated funds) and does not include academic degree programs funded through alternative means, such as self-support or online fees.

For campus units outside of academic colleges – administrative and support units, research, and auxiliary areas – the current practices are largely based on an approach called incremental budgeting. That is, budgets are based on historical practices and budget requests are prioritized (approved or denied) through the University’s annual budgeting process. The same practices are generally in place for additional funding requests from academic areas. The annual process is primarily concerned with approval of Base Fund requests that are managed centrally as part of position control, but may require use of one time funding.

What is an RCM?

Responsibility Center Management (RCM) budgeting is a decentralized financial management model that assigns responsibility for revenues and expenditures to a “Responsibility Center (RC)” within a university. Examples of RCs in a university setting include colleges and auxiliary units, such as student housing or athletics. RC’s are distinguished from administrative and support units since they generate a significant portion of the institution’s revenues and are therefore responsible for a portion of attributable expenses.

The underlying premise of RCM is that the model entrusts RC leaders with more control of financial resources and enables localized decision-making (e.g., at the college level rather than centrally). This approach aims to align financial accountability with decision-making authority, promoting greater transparency, efficiency, and entrepreneurial spirit within the university community.

Frequently asked questions

This section will be regularly updated as the initiative progresses. The answers provided are based on current information and may change as new data and perspectives are added to the knowledge base. Additional questions will be added as we collect feedback from the university community.

Why is Budget Modernization Needed?

What is it that we are trying to change? What problem are we trying to solve by implementing a new RCM-style budget model?

Boise State is fortunate to have a strong and sure financial footing, and we want to make sure we can sustain it. Doing so requires us to have a model that balances our revenues and expenses. The budget model we use does not make the pie of available funds any larger or smaller but changes how the slices are distributed.

There are many areas of the university that will continue to increase in cost, including utilities, insurance, construction/repair, technology, and other essential components of our infrastructure. Boise State relies heavily on tuition and state funding, which means we must have a budget model that allows for flexibility in order to adapt to changing conditions if and when necessary.

A primary objective of the initiative is to expand and improve the existing budget model to account for costs (expenses) in addition to revenue for the entire university. This approach will incorporate previously excluded academic programs (such as online and self-support), will identify expected levels of service for administrative areas (which primarily operate under a budget approach called incremental budgeting), and will improve on the design of our current model (i.e., carry forward lessons learned from Bronco Budget 2.0).The vision is to align the university under a single budget approach sometimes described within higher education as “all funds, all areas” budgeting.

While there are predictions of an enrollment decline nationally, we are in a thriving city in a thriving region, and we are likely to have relatively mild impacts from this demographic shift. Even so, we need a model that ensures sustainability when facing impacts we can anticipate and those we cannot. Boise State is financially healthy, and we want to keep it that way.

Why are we undertaking this initiative now?

Because the university is in sound financial shape, now is the optimal time to implement a new model; it is much more difficult for institutions to successfully adopt new budget models during financially difficult times.

How will the new budget model support the University Strategic Plan, Blueprint for Success? How will it be aligned with our values and strategic goals?

The budget modernization initiative aligns to Goal 4 of the University’s Strategic Plan, Blueprint for Success, to “create a transparent, centralized business operations model that responsibly uses university resources, supports collaboration, and promotes consistency across individual campus units.”

A new budget model will help support all goals of the Blueprint for Success by increasing transparency in financial decisions and build/enhance trust on campus. Transparency will help us better understand how strategic decisions are made, helping us prioritize initiatives for student success, research, innovation, and community engagement, which are goals of Blueprint for Success.

Executive leadership will continue to balance opportunities to advance all five goals against available funding. Most RCM style budget models have a centrally held reserve from which strategic priorities are funded. We expect to have centrally held reserves and a transparent mechanism that will be used to advance the Blueprint goals and objectives.

What is RCM?

What is a Responsibility Center Management (RCM) budget model?

Responsibility Center Management (RCM) budgeting is a decentralized financial management model that assigns responsibility for revenues and expenditures to a “Responsibility Center (RC)” within a university. Examples of RCs in a university setting include colleges and auxiliary units, such as student housing or athletics. RC’s are distinguished from administrative and support units since they generate a significant portion of the institution’s revenues and are therefore responsible for a portion of attributable expenses.

The underlying premise of RCM is that the model entrusts RC leaders with more control of financial resources and enables localized decision-making (e.g., at the college level rather than centrally). This approach aims to align financial accountability with decision-making authority, promoting greater transparency, efficiency, and entrepreneurial spirit within the university community.

How does RCM budgeting differ from traditional budgeting methods?

Traditional budgeting methods often rely on incremental or formula-driven approaches, which allocate resources based on historical spending patterns or predetermined ratios. In contrast, RCM budgeting emphasizes a data-driven approach, linking resource allocation to actual activity levels, such as student enrollment, credit hour production, research expenditures, sales and services, and external funding.

In their 2013 book, Curry, Laws, and Strauss illustrate fund flows through traditional vs. RCM budget models. In a traditional model, revenues from state appropriations, tuition and fees, and other sources flow into a central university fund and then are allocated to schools and colleges and administrative units as expense budgets. In an RCM model, revenue flows instead to the areas that generate the revenue (e.g., schools and colleges generate credit hours which generates revenue, housing generates revenue through room and board, etc.) and then funds are allocated to administrative units and other central university operations using methods determined by the given institution.

What are the key benefits of implementing RCM budgeting?

RCM budgeting offers several potential benefits for universities, including:

Increased transparency and accountability. Units have a clearer understanding of their financial situation and are held responsible for managing their resources effectively.
Enhanced stewardship of funds. Units are incentivized to make informed financial decisions that align with their strategic goals and priorities.
More resource decisions made locally (e.g., at the college level) vs. centrally.
Supports integrated and informed budget planning.
Incentives for entrepreneurship. RCM encourages units to explore new revenue streams and develop innovative programs and services.
Data-based foundation for resource allocation that accounts for both revenues and expenditures and is guided by institutional values and goals.
Reduction of unnecessary administrative costs (e.g., chargebacks and other unnecessary internal transfers)

What are some of the challenges associated with implementing RCM budgeting?

Implementing RCM budgeting requires careful planning, communication, and training to ensure a smooth transition from traditional methods. Potential challenges include:

A need for intentional design to allow institutional leadership the flexibility to make central investments to advance strategic priorities and/or the common good.
Barriers to the shift in financial management responsibilities, including resistance to unfamiliar practices. These may require additional time allowances for adapting to the new approach.
The complexity of implementation and management of the new model. Establishing a robust system for collecting and analyzing financial data is crucial for effective RCM implementation.
Developing and maintaining relationships and ongoing communication between central administration and responsibility center leaders to foster trust and connection.
Decentralization leading to duplication of programming and services if not implemented correctly.
Ensuring fairness and equity. The budget model should be designed to allocate resources equitably across different units while also recognizing variations in their activities and contributions.

Overall, RCM is a valuable budgeting approach that can be used to improve resource allocation and decision-making in higher education. It is important to keep potential challenges in mind when integrating the specific needs of Boise State into the overall model design.

Process / Goals

Is there a known “best” model that we are hoping to adopt?

No, there is no known “best” RCM model for higher education institutions. Most institutions adapt theoretical models and adjust them so they can meet specific institutional needs. While Boise State has and will continue to consider other institutions for examples (both of what to do and what not to do), we intend to develop a model that is unique to Boise State.

Do these models only work at R1 institutions or are there examples of R2 institutions that have successfully implemented RCM-like budget models?

Yes, there are R2 institutions that have some version of RCM budgets: University of Vermont and the University of Toronto (Canada), as well as other public institutions like Southern Illinois and the University of Alaska have some version of RCM budgets.

As part of the pre-planning process, the facilitation team contacted over 30 institutions about their RCM budget approach, including multiple R2 institutions. Two institutions were selected for site visits based on their history and development with RCM-style budget models. Due to unforeseen circumstances with the planned third institution (University of Vermont), virtual meetings were held instead with their selected institutional leadership. Teams of six members of the Boise State Pre-Planning Advisory Committee visited the University of Minnesota and University of Virginia in the summer of 2023. Information shared from these two institutions is available in the “resources from visited institutions” folder of the Google Drive, which is accessible to Boise State employees.

What happens with Bronco Budget 2.0?

Bronco Budget 2.0 will continue until the new model is deployed. As part of the discovery process, we will evaluate Bronco Budget 2.0 for what worked well, what did not work well, and will document any unintended outcomes so they can be taken into consideration during the budget model creation phase. It should be noted that the evaluation encompasses the BB 2.0 model and methods and is not an evaluation of colleges or programs.

Is this another system implementation (i.e., are we doing the Oracle system implementation all over again)?

No. The budget modernization process intends to leverage existing tools and systems already in use on campus and there may be enhancements or improvements to the ways we are currently using these systems. There are no plans to change technology systems as a result of budget model modernization. There may be future needs for infrastructure improvements that impact the budget model.

Is it possible as a University that we decide not to pursue the RCM? (e.g., if in the discovery process things don’t look as we’d hoped)?

No. Boise State already uses a version of RCM with BroncoBudget 2.0. Executive leadership decided to explore a more robust and more expansive implementation of an RCM-like budget approach. The goal is to align the University under a single budget approach sometimes described within higher education as “all funds, all areas” budgeting. We are committed to modernizing our budget process while continuing to use an RCM approach. We will tailor the approach to Boise State’s unique circumstances, needs, and opportunities.

How can we be informed, ask questions, and share our feedback on the budget modernization process? Is there a form on the budget modernization website?

Widespread stakeholder engagement is vital for this process, and the Planning Advisory Council (PAC) will be utilizing a variety of methods for collecting input. These potentially will include:

general and personnel-specific listening sessions
monthly updates and discussion with the three campus governance bodies (faculty senate, professional staff association, and ACE)
posting minutes of PAC meetings
posting monthly summaries of PAC activities
regular updates at Academic Leadership Council and other leadership meetings
communications via the Campus Update and other newsletters
email updates from the executive sponsors
other options that are still being explored.

We do not currently have a feedback form but will consider that as a possible avenue for gathering input. Specific questions and comments can be sent to BudgetModernization@boisestate.edu.

Why does the University want to hire a consultant for this initiative? What will they do?

Updating the budget model of the university is a large undertaking. In addition to internal resources dedicated to the project, a consultant will offer subject matter expertise, provide supplemental resources (i.e., additional capacity solely focused on the project), and provide us with an outside and informed perspective. During Phase 1, the scope of work of the consultant is focused on the following.:

Project initiation and project management
Change facilitation and communication plan
Stakeholder engagement, data collection, and analysis / discovery
Roadmap for decisions and key considerations

The consultant will not make decisions about what our model will look like; rather, they will advise and guide us on the types of decisions that need to be made and those decisions will be made internally.

Areas of Concern

As a department/unit that brings in no funds/tuition and doesn’t sit within a college, I’m concerned about the impact this will have on departments like mine.

Through this process, we hope to gain clarity about what is needed to support the academic enterprise and develop strategies to ensure that those areas are resourced appropriately.

I am concerned about how this will impact other things that we know are crucial to student well-being that may already be underfunded.

Not everything the university does is expected to generate revenue or break even; some of the important work we do serves as an expression of institutional values and priorities. As part of the budget modernization process, the university will be intentional about providing centralized funding for support programs and services.

How do we implement a decentralized RCM-style budget model and avoid duplication?

The model will provide parameters that clarify what various RCs and administrative units are uniquely positioned to do and principles that provide guardrails for potentially duplicative efforts. Leaders will be expected to act in the best interest of the university, first and foremost by leveraging available resources and services and avoiding unnecessary duplication of programs and services.