Budget Modernization

Frequently Asked Questions

Why are we changing our approach to budgeting at the University of Toledo?
The current incremental budget model, which primarily rolls academic budgets forward year after year (adding or subtracting some small percent) does not align resources to expanding programs or strategic initiatives at either the College or University level. Recognizing the challenges that incremental budgeting presents to an institution, the University has recognized the need to shift to a more strategic approach to resource allocation.

What is Incentive-Based Budgeting, or Responsibility Center Management (RCM) as commonly referred?
Incentive-based budgeting and RCM is a management philosophy designed to align budget allocations with university goals and objectives by decentralizing several components of the University’s budget authority.

In today’s environment, a truly ‘RCM’ budget is a selective term. RCM is a seldom used philosophy and is an extreme form of decentralized budgeting where each unit is expected to cover all of its costs. The University of Toledo is not considering that path, but rather, UToledo is exploring a modern approach to building a decentralized budget.

The goal of an incentive-based budget is to delegate aspects of the University’s operational authority to colleges, divisions and other units, allowing them to align their goals with the University's central vision: Discovery, Teaching, Clinical Practice and Service.

These decentralized models result in increased transparency and empower local leadership to make data-driven decisions.

In an incentive-based budget model, a framework is created to direct funding to the units generating the revenue, then charges are assessed to cover the unit’s share of centrally borne expenditures like administrative and common service and support.

What is the goal of an incentive-based model?
The primary goal is to incentivize units to make data-driven decisions that support the unit’s and University’s overall strategic plan. Units are empowered to take greater ownership over their revenues and expenses to drive tactical growth and spur innovation. While non-revenue generating units are encouraged to focus on service delivery and effectiveness.

How do funds flow in an incentive-based model?
There is no one-way to create an incentive-based model. However, the majority of incentive-based models utilize an all-funds approach to allocate revenue like tuition and state appropriations to the units that are generating activity (e.g. credit hours) across campus. These activity-generating units then are levied an administrative unit allocation using determined metrics (e.g. headcount) to help cover the University’s operational costs. Specific details as they relate to UToledo’s model funds flow will become available as the project advances.

How are decisions for this project going to be made?
UToledo leadership has identified a steering committee, based on nominations, comprised of academic deans, faculty and administrative leadership to help guide the University through this transition. This committee will meet frequently over the next several months and will deliver a formal recommendation to Provost Karen Bjorkman and EVP for Finance Matt Schroeder. Final approval regarding a shift in budget practice will be given by President Gregory Postel. The steering committee will regularly engage with other members of the UToledo community to provide additional insight to the group. This is not a closed process and will involve those across all parts of our University.

How was the Steering Committee selected? Who is on it?
President Postel and his leadership team has asked steering committee members to serve based on interest, breadth of knowledge and backgrounds, and ability to allocate a significant amount of time to this project over the next several months. The Steering Committee membership is listed below.

  • Brenda Grant (co-chair), Associate VP for Academic Finance
  • Sabrina Taylor (co-chair), Assistant VP Budget & Planning
  • Ben Barros, Professor, Dean of College of Law
  • Mohammad Elahinia, Chair of MIME Department, Distinguished University Professor and Director of MIME Strategic Initiatives
  • Mike Dennis, Associate VP for Finance and Treasurer
  • Jamie Fager, Senior Business Manager, Natural Sciences & Math
  • Charlene Gilbert, Interim Vice President for Diversity and Inclusion; Dean, College of Arts & Letters
  • Margaret (Miggie) Hopkins, Professor of Management, John B. and Lillian E. Neff College of Business & Innovation
  • Gary Pollack, Dean, College of Pharmacy & Pharmaceutical Sciences
  • Bryan Pyles, Senior Associate Dean Admin & Finance, College of Medicine & Life Sciences
  • JD Smith, Professor of Astronomy, Department of Physics & Astronomy

How long will it take for UToledo to shift its approach to budgeting?
Industry experience tells us these types of shifts take at least 18 months to implement. The first six months will largely be focused on model exploration and design. This is where initial methodology will be considered and evaluated by the steering committee and institutional stakeholders. Once the model has been designed, the University will shift into a parallel year that includes infrastructure development tasks such as establishing model governance committees, creating an annual budget development timeline, and developing updated operating policies and procedures. This parallel year will also focus on the need for increased reporting in order to support resource allocation decisions.

Have other universities done this?
Many universities, both private and public, use some form of an incentive-based (RCM) budget model. It was developed and has evolved over some 45 years since the University of Pennsylvania became the first higher education institution to implement RCM in 1974. Of our peer set, the following use an incentive-based model methodology:

  • Ball State University
  • Bowling Green State University
  • Kent State University
  • Miami University
  • Ohio State University
  • Ohio University
  • University of Alabama at Birmingham
  • University of Cincinnati
  • University of Memphis

Is UToledo partnering with an external firm to help us through this process?
Yes, the University has chosen to partner with Huron Consulting Group to help us through this process. Huron has helped more than 50 colleges and universities work through similar questions related to resource allocation, budgeting and planning.

How can I be engaged throughout this process?
UToledo will be setting up a variety of channels to allow individuals to be involved. In addition to select stakeholder meetings, UToledo and Huron will host campus-wide forums to inform the UToledo campus about project progress and answer any outstanding questions. Questions? Please visit the key initiatives webpage and fill out the form at the bottom.

Last Updated: 6/27/22