Incentives in the Budget Model

     One of the goals of RCM is to provide financial incentives to colleges for achieving their goals.   In the current budget model, central administration allocated budget expenditures to all colleges, over which the deans had control.  To gain a budgetary increase, colleges had to compete with each other over the limited amount of new funds available.   

     The RCM budget model provides colleges with an ability to grow its own funds.  RCM empowers deans by providing them greater control over the revenues and expenditures that accompany the operation of their college.  Colleges that increase their enrollment through recruitment or retention initiatives will have the ability to retain a portion of the funding and use it to address college priorities that are consistent with the overall academic plan.

     The example below demonstrates how effective recruitment, enrollment and retention efforts can lead to increased funding for a college. College “A” boosted enrollment over the course of three years by 60 students.    The RCM enrollment is calculated based upon a “three-year rolling average” to account for dramatic enrollment increases and declines.  A “rule of thumb” to follow when calculating revenue is that each additional student brings about $10,000 per year in revenue to the university.  Assuming that the increased enrollment took all its courses in the college, the college would be able to earn more revenue from its overall enrollment growth. 

     College “B” kept enrollment steady and experienced a reduction in the amount of money available for reinvestment ($98,235). Both colleges were subject to the same 3% yearly increase in departmental expenses, academic overhead, and administrative overhead.