Growing the Pie? The Effect of Responsibility Center Management on Tuition Revenue

Jaquette, Ozan; Kramer, Dennis A.; Curs, Bradley R.

doi:10.1080/00221546.2018.1434276

“…3 As noted by Deering and Lang (2017, p. 1) much less than half of the world's universities use a version of RCB, but more than half of the top 50 universities in the THE ranking use a version of RCB. Jaquette, Kramer, and Curs (2018) conclude that RCB leads to more revenue for adopters. Another important empirical question would be whether RCB leads adopters to higher academic quality (e.g.…”

Section: Contact Informationmentioning

confidence: 81%

“…There is much written about the logic behind RCB, implementation experience, and the historical assessment of its performance (e.g. Curry, Laws, & Strauss, 2013;Jaquette, Kramer, & Curs, 2018;Priest, Becker, Housler, & St. John, 2002;Whalen, 1991). The logic is summarized by the management maxims provided by Whalen (1991) in chapter 2 and Curry, Laws, and Strauss (2013, p. 51).…”

Section: Introductionmentioning

confidence: 99%

Responsibility Center Budgeting as a Mechanism to Deal with Academic Moral Hazard

Myers

¹

2020

Canadian Journal of Higher Education

0

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Universities face inherent informational asymmetries. These make university budgeting prone to various challenges including moral hazard. The last forty years has seen some large research- intensive universities move from centralized incremental budgeting to decentralized Responsibility Center Budgeting (RCB). It is assumed that a faculty chooses a level of costly effort in generating revenue for the university. The level of faculty effort is not observable by the central administration. When there is no revenue uncertainty or when the faculty is not risk averse, pure RCB is best from the perspective of the administration. The intuition is that pure RCB fully aligns financial responsibility with academic authority, that is, it makes the faculty the residual claimant. Once the faculty is risk averse, partial RCB is optimal. Partial RCB provides a balance between providing the right incentives to the faculty and the university reducing the revenue risk faced by the faculty.

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“…1) much less than half of the world's universities use a version of RCB, but more than half of the top 50 universities in the THE ranking use a version of RCB. Jaquette, Kramer, and Curs (2018) conclude that RCB leads to more revenue for adopters. Another important empirical question would be whether RCB leads adopters to higher academic quality (e.g.…”

Section: Contact Informationmentioning

confidence: 81%

Responsibility Center Budgeting as a Mechanism to Deal with Academic Moral Hazard

Myers

¹

2019

CJHE

View full text Add to dashboard Cite

Universities face inherent informational asymmetries. These make university budgeting prone to various challenges including moral hazard. The last forty years has seen some large research- intensive universities move from centralized incremental budgeting to decentralized Responsibility Center Budgeting (RCB). It is assumed that a faculty chooses a level of costly effort in generating revenue for the university. The level of faculty effort is not observable by the central administration. When there is no revenue uncertainty or when the faculty is not risk averse, pure RCB is best from the perspective of the administration. The intuition is that pure RCB fully aligns financial responsibility with academic authority, that is, it makes the faculty the residual claimant. Once the faculty is risk averse, partial RCB is optimal. Partial RCB provides a balance between providing the right incentives to the faculty and the university reducing the revenue risk faced by the faculty.

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“…While our results provide insights into the use of cross-subsidization throughout universities, we are also aware of related arguments about moving away from broad use of crosssubsidization towards more "business-like models" which can undermine public goods at institutions (like libraries) and value revenue-generating fields over fields that produce greater social benefits (like the humanities and liberal arts) (Newfield, 2016). Research has indicated that this shift has led to increased reliance on tuition revenue, out-of-state students, institutions placing greater emphasis on private fundraising, or preferring investments in fields of study that have been shown to be revenue generating (Author, 2021;Cheslock & Gianneschi, 2008;Jaquette, et al, 2018;Jaquette, 2019;Jaquette & Curs, 2015). For example, "cash cow" masters' degree programs have increased in fields like Masters' in Business Administration and not in non-revenue generating fields (Jaquette, 2019).…”

Section: Discussionmentioning

confidence: 99%

TV Networks for College Sports: Implications for Institutional Subsidies

Delaney

¹

,

Kearney

²

2021

Preprint

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University athletics because of its reporting structure, regulation by the NCAA, and relationship to the academic enterprise of institutions, provides a unique look into postsecondary institutional behavior. Using a difference-in-difference design, this study tests the introduction of new television networks dedicated to college sports on institutional subsidy levels for athletics. Overall, our findings show that institutions are responsive to the introduction of new college-sports-dedicated television networks. When considering institutions in the Power Five athletic conferences, we find an average decline in subsidy levels of approximately $1.2 million. When considering different types of subsidies, we find significant declines in direct subsidies and student fees, but no significant change for indirect subsidies.

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Growing the Pie? The Effect of Responsibility Center Management on Tuition Revenue

Cited by 18 publications

References 18 publications

Responsibility Center Budgeting as a Mechanism to Deal with Academic Moral Hazard

Responsibility Center Budgeting as a Mechanism to Deal with Academic Moral Hazard

Responsibility Center Budgeting as a Mechanism to Deal with Academic Moral Hazard

TV Networks for College Sports: Implications for Institutional Subsidies

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