Action Plan Objective 2: Sustainable Finances

Resource Management Model

Should We Change?

In the spring of 2014 the provost suggested that the university’s senior leadership begin a process to investigate alternative budget models that could help to both simplify and clarify the management of the institution’s resources. Given the current resource pressures that are being faced by universities across the continent, it was also suggested that this discovery process should highlight methods that could reward and also foster new revenue generation opportunities.  

In response to these suggestions, the university's senior leadership team, with the support of deans, formed the Resource Management Steering Committee (RMSC) in mid-2014 to explore the merits of employing responsibility centred management (RCM) at the University of Alberta.

Current Model

The University of Alberta currently uses an incremental budget model. In incremental budgeting, budget managers use their budgets from last year as a starting point, which they then adjust to meet the conditions of the current year. The people who prepare budgets, ranging from the manager of grounds services to the deans and vice-presidents, each refer to the incremental changes in the amount of money available from last year to this year. They use this information to help decide which specific things they can do this year. In this model, a gap, based on history and habit rather than actual data and current academic priorities, can form between the resources available and the costs of programming.

The 2016 - 17 institutional budget is being planned using the current model.

Learn More in Budgeting 101

Responsibility Centred Management

RCM provides decision-makers at the faculty and unit level with transparent, enhanced resource information and greater accountability and authority. It strives to make the decentralized structure of a university function as effectively as possible by directly linking together academic authority and financial responsibility. 

In most universities today, academic authority is decentralized across faculties, departments, and programs, while financial responsibility remains in the centre. As a result, academic decisions can be made without a clear idea of the financial consequences.

RCM is a method based on the idea that if there is a clearly defined, agreed-upon set of rules, transparent access to reliable and current data and information, and clear lines of accountability, universities will be better able to set and achieve academic priorities. 

The university is only exploring this option. No decision has been made. The final report of the Resource Management Steering Committee (RMSC) has been completed and presented to the president and is now available to the university community. The RMSC has found that a change to a resource management model based on RCM has the potential to benefit the university, and that further study would be appropriate. For example, a modelling exercise would need to investigate how many dollars would flow to each faculty based on actual data, and what formulas might work to ensure there were adequate resources to fund strategic initiatives on behalf of the whole institution. To help answer these and other questions, the steering committee has struck a working group to generate financial models that will enable us to answer numerous “what if” questions based on numerous variables. You can learn more about the modelling working group here.