Revenue center management at the University of Southern California: A case study

Amir Rahnamay-Azar, University of Pennsylvania


American colleges and universities now find themselves in a quandary: costs are escalating, funding resources are flat and consumers expect even more of higher education but voice concerns about affordability. Concurrently, they expect academia to remain pure, free of any business-like characteristics. In short, there is an anticipation that universities will remain preeminent for quality but unsullied by successful industry practices. They are to go forth and be fiscally prudent, but not in a way which places economics before academics. This is no small challenge. Nor is it anything new. Educational institutions have struggled for decades to better manage resources without becoming so bottom-line focused that they impair their mission of providing the best of academia. Innovative efforts to maintain a balance between quality and cost date back over 35 years. While many colleges continue to use systems of centralized provost-focused control to achieve their goals, others looked to decentralized programs. Leaders at the University of Pennsylvania (Penn) became vanguards in developing what became known as responsibility center management (RCM). The University of Southern California (USC) pursued a similar solution on a limited basis in 1977 and, in 1982, RCM was rolled out on a university-wide basis. The program, adapted from Penn's model, has continued to evolve, undergoing several significant changes. This is a study of the evolution of RCM at USC and the impacts of changes made this past decade: a centralization of the teaching of undergraduate general education courses, a newly developed plan for financing and construction of facilities and modifications to indirect cost pools. It might appear that these are moves away from RCM toward a centralized system. In truth, they are further hybridization of a system which is inherently an amalgamation. While the system in place at USC is slightly right of center on the spectrum of centralization/decentralization, it is still RCM at work. Indeed, it is perhaps a refined version of RCM with the strengths of pure decentralization and neutralization of alleged pitfalls.

Subject Area

Education finance|Higher education

Recommended Citation

Rahnamay-Azar, Amir, "Revenue center management at the University of Southern California: A case study" (2008). Dissertations available from ProQuest. AAI3311548.