Assessing the Role of RCM in Decision-Making about Discontinuing Academic Programs and Restructuring Academic Units

Abstract

The path of growth and development for many American colleges and universities is to add new programs, majors, minors, departments, institutes, and centers to their academic portfolios in order to meet new demands and pursue new knowledge. Their source of funding is primarily through raising tuition rates and increasing non-tuition financial resources, including fundraising campaigns, endowments, and auxiliary services. The option rarely taken is scaling back or even eliminating old academic programs to make room for new ones. Historically, there has been little incentive to reduce academic programs. Student demand for higher education has been virtually insatiable and institutional capacity for implementing high tuition rate increases has been virtually unlimited. However, as a result of increasing economic pressures in recent years, the American higher education business model has been severely challenged and will likely need to be modified to ensure the stabilization of its financial underpinnings going forward. The specific issue that is examined in this study is the decision-making process that colleges and universities use in determining which academic programs to eliminate, consolidate, or reorganize. A particular focus of the research is the role that Responsibility Center Management (RCM) plays in the program closure and reorganization decision-making process and how institutions that use RCM differ from those that do not. RCM is a financial management model which allocates all direct and indirect revenues as well as direct and indirect expenses to individual academic units. The model identifies which programs are generating surpluses, deficits, or break-even results, and how they all look in combination with one another in forming the overall cross-subsidy profile of the institution. The research for this study includes a qualitative comparison case study analysis using three cases, all of which are private universities that have decided to discontinue or reorganize academic programs--one that uses RCM, one that does not use RCM, and one that uses a hybrid combination of RCM and non-RCM. The study evaluates the advantages and disadvantages of each approach. [The dissertation citations contained here are published with the permission of ProQuest LLC. Further reproduction is prohibited without permission. Copies of dissertations may be obtained by Telephone [phone]. Web page: http://www.proquest.com/en-US/products/dissertations/individuals.shtml.]