THE MODEL IN PRACTICE: RCM EXPENDITURE OUTCOMES AT U.S. PUBLIC UNIVERSITIES

Over the past two decades, public universities have faced increasing financial pressure amid fluctuating state appropriations and a growing dependence on tuition revenue. In response, many institutions adopted Responsibility Center Management (RCM) budget models to enhance financial accountability and operational efficiency. Despite widespread implementation, limited empirical evidence exists to assess whether RCM achieves its stated goal of improving cost control.

This quantitative study used panel regression analysis and institutional data from the Integrated Postsecondary Education Data System (IPEDS) from 2018 to 2023 to examine whether universities operating under RCM differ from non-RCM universities in overall expenditures, functional spending categories, and natural expense classifications. The conceptual framework of academic capitalism guided the interpretation, emphasizing how market-based reforms shape institutional financial behavior.

Findings revealed that RCM universities increased total expenditures at a significantly higher rate and spent more per additional dollar of state appropriations than non-RCM peers. RCM institutions spent more over time than their non-RCM peers in public service, salaries and wages, and other natural expenses, while also maintaining higher baseline spending in instruction, research, academic support, student services, institutional support, benefits, and maintenance operations. Spending in student services, auxiliary operations, benefits, and maintenance declined over time across all institutions regardless of budget model.

These results offer new insight into the financial outcomes of RCM models and decentralized budgeting, contributing to broader discussions on the effectiveness of market-driven reforms in higher education. The study’s findings have implications for institutional leaders and policymakers considering budget model changes. As universities navigate questions of affordability and resource allocation, this research underscores the need for fiscal responsibility and accountability.