Responsibility-Centered Management (RCM): Friend or Foe?

Abstract

RCM has become a popular choice among college and university presidents as they seek ways to allocate tighter budgets. The direct linking of tuition revenue with student credit hours has been looked upon favorably due to its simplistic and objective approach to revenue allocation. In this paper, we use a simple numerical example to measure RCM budgets assuming revenues are assigned to colleges based on various levels of student credit hours and majors. We found that the college with the largest increase (decrease) in budget from assigning revenues based on student credit hours would have a huge decrease (increase) when revenues are assigned using majors.

Keywords: Responsibility-centered, RCM, Budgeting

JEL Classification: H72, H83, I23, L38, L88, M48