Fiscal Reform at UCLA
The Clash of Accountability and Academic Freedom

By Wellford W. Wilms, Cheryl Teruya, & Marybeth Walpole

In 1991, UCLA was jolted by a multimillion-dollar budget shortfall-fallout from changes in the world economy that had begun 20 years earlier and had slowly been working their way through the California economy. It was the first in a series of budget reductions that by 1994 would total more than $150 million. Unlike previous budget shortfalls, which had always been temporary and were recouped in later years, the short falls of the 1990s represented permanent losses of public funds. For one of the first times in UCLA's 75-year history, there was simply not enough money to go around, and there was no choice but to make deep cuts in the operating budget.

Some university leaders, however, saw opportunity in the turmoil caused by the shortfalls. The crisis represented a chance to ask and answer difficult questions about campus priorities. Ultimately, some hoped, the dire financial straits would lead to rethinking the university's core processes (teaching and research) and how they could be better matched to the demands of a rapidly changing society.

But trying to gain consensus on these questions generated conflict between the administration and the faculty. The conflict, in turn, revealed the outlines of the powerful academic subculture that usually remained submerged beneath the surface of day-to-day life. These beliefs and values, shaped by 75 years of steady expansion, had served the university well by protecting it from interference by external political pressure.

But now, in a period of constrained resources and rapidly changing societal expectations, the very insularity of the academic core became a potential liability. Much of the new behavior re quired of the university came into direct conflict with its academic members' most cherished beliefs and values. It soon became abundantly clear that altering this large public institution would be far more complex and difficult than had originally been envisioned.

In the past, UCLA's administrators had met temporary shortfalls by spreading resources (and the pain) thinly but evenly. But at the close of 1991, they were faced with a deficit of such magnitude that drastic action had to be taken.

Across the country today, state legislatures are calling upon universities to redirect their teaching and research to match the needs of society. In California, such demands (that is, measuring faculty teaching time, linking research to economic growth, and harnessing the cost-saving capacity of information technology) are putting new pressure on the administrative core of the university.

But as the university has attempted to respond, it has be come evident that successfully aligning such new demands with the expectations of the academic culture has become one of the greatest challenges facing academic leaders today. The question is whether large universities will be able to respond quickly enough to these new demands to retain the public trust. Or, will changes be imposed upon them by impatient policy leaders? UCLA's experience sheds new light on these questions.

THE GOOD OLD DAYS

Until the early 1990s, most members of the UCLA academic community, like their colleagues in other large research universities, had been well insulated from the world around them. By most standards, they had lived quite well. Except for temporary downturns, resources had grown steadily each year since 1975, and by 1990 UCLA had become an economic powerhouse with an annual budget of $1.8 billion.

While students were important beneficiaries of the university's growing power and prestige, its 3,000 faculty members were arguably the biggest winners. Most professors had always enjoyed unparalleled freedom to pursue their own intellectual interests, and newcomers were quickly socialized into a culture of comfort and privilege. Perhaps reminiscent of the university's medieval roots, professors often referred to teaching and research as a "priestly" occupation. For many years it had been an exalted self-image that was protected by powerful traditions of tenure and academic freedom.

It seemed as though resources were always available. Generous research and travel grants, sabbatical leaves, administrative support, Xeroxing, Federal Express, telephones, faxes, and computers were taken for granted in most departments and came to be regarded as entitlements. The annual budget process, where funds were mysteriously distributed by the chancellor behind closed doors, was of little interest to most professors.

In the lap of such abundance, few faculty members really knew-or cared-how resources were actually distributed. Professors who tried to understand UCLA's antiquated accounting system so they could manage their research grants learned that its monthly ledgers were unintelligible and hopelessly unreliable. There were few means by which faculty members could be held fiscally accountable.

Large cost overruns on research grants were commonplace, but they were routinely dismissed by an administrative wave of the hand. Only after some invisible spending limit was crossed were eyebrows ever raised. By 1991, three generations of faculty members had been socialized into this safe and permissive world where they remained largely oblivious to the economic realities around them.

REALITY STRIKES

Suddenly, that would change in 1991, as a $19 million reduction in state spending forced the first deep and permanent cut in UCLA' s budget. There was little reliable cost information to help begin to set new priorities, and even more important, the university lacked an established decision-making structure to help administrators and the faculty reach consensus on what was to be done. UCLA had been built on the assumption of continuous growth, and having to make choices between competing claims had never been in the minds of its founders.

Like other big research universities, UCLA also suffered from a specialized and hierarchical administrative structure- a holdover from the bureaucratization of the 1950s and 1960s-disconnected from a fundamentally egalitarian faculty structure in which members of the academy operated with virtual autonomy. In the past, administrators had met temporary shortfalls by spreading resources (and the pain) thinly but evenly. But at the close of 1991, they were faced with a deficit of such magnitude that drastic action had to be taken.

To help meet the large budget shortfall, between 1991 and 1993 university leaders implemented a series of phased budget reductions to reduce staff, create early retirement incentives for faculty, and cut some academic programs. But even these efforts were not enough to stop the flow of red ink.

Facing another multimillion-dollar budget shortfall in 1994, the chancellor and a small committee of faculty and administrative leaders created a plan to eliminate or reconfigure four of UCLA' s professional schools. In a dramatic move that took even the affected deans by surprise, the Chancellor announced on June 4, 1993, that the schools of Nursing, Public Health, Social Welfare, Information Studies, and Architecture and Urban Planning would cease to exist.

In their place, a new School of Public Policy would com combine Urban Planning with Social Welfare and a Department of Policy Studies. Architecture was slated to merge into the School of the Arts, Information Studies into Education, and Nursing and Public Health into Medicine. Subsequent negotiation preserved the schools of Nursing and Public Health, but the other elements of the Professional Schools Restructuring Initiative (PSRI, as it came to be known) remain in force today.

Because the restructuring had to be done quickly, the analysis leading to it had been conducted rapidly. While the top leadership of the Academic Senate had been part of the discussions, its own budget committee voted against the initiative. When the senate ultimately voted for the restructuring, its leaders were branded as "sellouts" to the administration.

Coupled with the shock of the decision itself, long-standing tensions between the faculty and the administration (that dated back to the loyalty oath controversy that had rocked the University of California in the early 1950s) became strained. The PSRI process deepened suspicions that, as was the case in the 1950s, the administration had abandoned fundamental academic values for the sake of political or economic expediency.

The lesson was not lost on UCLA Chancellor Charles E. Young who knew that, for now at least, the extraordinary growth of the California economy had subsided. Young knew that the time had come to begin to restructure the university so that it could respond to the immediate changes and position it self to adapt to rapidly changing fiscal realities.

RESPONSIBILITY CENTER MANAGEMENT

The answer was a complete transformation of UCLA's information and decision-making systems to push decision making to the school or department levels, where costs and revenues could be managed to meet academic priorities. Young, who seemed to carry the entire history of UCLA's budgets in his head, admitted that not much was known about the sources and uses of funds and of costs of space and administration.

"The true resource flows within the university are obscured and our ability to make fully informed resource allocations is weakened accordingly," he acknowledged. "We lack well-defined incentives for academic entrepreneurship (or resources development) and for banking resources for planned future investment. Our financial information system does not adequately support dynamic financial management, or make accountability for fiscal performance clear."

Young's administration was convinced that there was no choice but to make the flow of funds visible, understandable, and manageable, and to devise new analytic tools so administrators and faculty leaders could align UCLA's increasingly scarce resources with core academic priorities.

In 1994, Young and his top staff decided to begin by pushing decisions about costs and revenues down to individual academic and administrative units where deans would now have sufficient information and authority to make choices. By giving individual units fiscal control, "internal markets" would be created to allocate increasingly scarce resources. Because resources would follow a set of carefully articulated incentives that highlighted the university's core mission in teaching, research, and public engagement, top university administrators assumed that deans and department chairs would respond by redesigning teaching and research to be more responsive to changing external demands.

UCLA's developing model drew heavily on the philosophy of Responsibility Center Management (RCM) that was being tried at Indiana University, the University of Southern California, the University of Michigan, the University of Pennsylvania, and others. For two years between 1994 and 1996, groups of administrators benchmarked UCLA against other universities, while other groups, led by external consultants, analyzed how to implement this fiscal decentralization.

Three academic units-the Graduate School of Education and Information Studies, the Division of Physical Sciences, and the Anderson Graduate School of Management-were chosen as "simulation sites" to test how RCM might actually work in practice. A small group of researchers carefully documented the process as it unfolded.

As the outlines of Young's plan became known, academic leaders realized that resources would be allocated in entirely new ways, creating new winners and losers, and a heated debate began: How could some disciplines be favored over others? On what basis would choices between them be made? Who would make these decisions? What would happen to disciplines that could not produce revenue?

RESTRUCTURING FOR UNCERTAINTY

In 1994, John Curry was hired from the University of Southern California (USC)-where he had spearheaded the implementation of Responsibility Center Management-to become UCLA's administrative vice chancellor. Young wanted Curry to lead the new effort, but to steer clear of the problems that USC had encountered. Once Curry's appointment was announced, faculty leaders realized that Young was serious about developing RCM. Rumors began to circulate about the "disaster" that had occurred at USC. There were allegations that unregulated competition for scarce resources had pitted large, powerful departments against smaller ones. Critics pointed to the fact that USC's library school had been closed and the budget of its highly regarded music department slashed. Worse, some UCLA faculty leaders were convinced that Young and Curry were out to strip the faculty of its power.

An e-mail from a disgruntled USC professor circulated rapidly among UCLA faculty members heightening suspicions. "At USC," the professor wrote, "the approach seems to be a way for central administration to retain nearly all of the control they had before while finding ways to discipline us financially when we do not make at least as much as we cost." A palpable sense of anxiety began to emerge in conversations between faculty members whose leadership was now on full alert.

Within a few months, Curry had hired Change Integrated Systems, a consulting firm with an impressive record of developing sophisticated financial and information systems in private industry, though its staff had no experience with universities. These consultants would guide UCLA's top management through two years of planning while RCM would be simulated in three academic units. On July l, 1996, the plan called for the entire campus to run parallel tests tracking RCM against traditional systems to fine-tune the new system. On July 1, 1997, the entire campus was scheduled to go "live."

Young established a Transition Steering Committee, consisting of top administrators and academic leaders, to guide the effort. But the real work-constructing a model to allocate funds from the central administration to departments, developing the hardware and software, and "rolling out" the new system-would be done by a Principles and Strategies Committee, comprising about 15 administrators and headed by Curry.

In June 1995, Curry organized a campuswide meeting of UCLA officials and faculty leaders, with representatives of Indiana University and the University of Michigan to help place UCLA's emerging model in the context of what had been done elsewhere. He was also busy visiting department executive committees to sell his vision and to calm growing nervousness among the faculty. Curry told one faculty executive committee:

We're a big, powerful organization. By Fortune 500 standards, we'd be number 255. But UCLA is complex and it can't be understood from the central office. To understand ourselves economically we're going to need much more information. And, as we understand our costs, we will also begin to understand our programs. The deans are key because when they engage the faculty in planning, the system works wonderfully. But if they do it in smoke-filled back rooms, it doesn't. The cost of information is huge, but we have no choice and it's going to take a colossal overhaul.

But Curry's argument did not convince these doubting faculty leaders. At the next meeting of the same faculty executive committee, members voiced their apprehensions. One asked, "It seems like there are pedagogical implications of RCM. Shouldn't we form a committee to study it?" There was a murmur of agreement. Another professor, clearly annoyed, spoke next: "I want to be part of the process, but I have no expertise. I don't know how to administer an educational institution, and, honestly, I don't want to think about it. I don't have time. We're being turned into accountants!" There were nods of agreement. Another professor exclaimed, "This is the first I've heard about a new vision for UCLA. What vision? You have to motivate me!" A professor sitting next to him grumbled an aside, "Operation Shinola! A Nation of Shopkeepers!" Laughter broke out. A veteran faculty member tried to soothe the growing anxiety:

I don't think RCM's the most wonderful thing that's entered my life and I wouldn't be out in front of the parade with my hand raised. But from what I can see about the fiscal realities around us, I'm downright enthusiastic. Pragmatism takes over from idealism. Shouldn't we try to understand RCM before we attack it?

As the 1994-95 academic year came to a close, there was still no agreement among faculty leaders about the value of RCM or their role in its implementation. Meanwhile, the Principles and Strategies Committee began meeting in weekly planning sessions. In a sudden move, John Curry left UCLA in August 1995 to become chief financial officer at nearby Cal Tech. (Andrea Rich, UCLA's executive vice chancellor, had also resigned a few months earlier to take another job.) To some faculty leaders, Curry's departure was evidence of the Chancellor's lack of seriousness, causing new rumors that RCM was just a passing fad. Others continued to worry about how it would be implemented and what role, if any, the faculty would play. A member of the Academic Senate's Council on Planning and Budget confided:

Curry's gone, Andrea's gone, so it's the Chancellor and the consultants. Basically, the faculty's out of the loop-we're just marginal players. Officially I've not been informed of anything. Everything's being done behind closed doors and in secret. The faculty are not being consulted.

Despite fears of being marginalized, or perhaps because of them, William Schopf, a geology professor who served as chair of the Academic Senate's Council on Planning and Budget, had become very active. Schopf was convinced that RCM was coming whether the faculty liked it or not, and that it should be used to improve educational quality. Moving quality to the center of the debate was also a strategic move, which if it worked, would put the faculty in a central role in RCM's development. But Schopf had reservations:

This is UCLA's third try to decentralize and the faculty has no vested interest. A poll at USC showed the faculty doesn't give a damn about RCM. There's nothing they can gain. There's lots of emphasis on educational quantity, but there's no way to guarantee quality. The consultants are making all the decisions and the faculty's not involved. There have to be ways to protect the core values of this university-not like the experience at Penn or Indiana. I love this place and I sure as hell don't want to see it become Cal State Westwood!

In his enthusiasm, Schopf became a spokesman for his vision of a new movement built around RCM, which he called "Quality Focused-Responsibility Center Management," or "QF-RCM" as it became known for a short time. Schopf drafted papers with elaborate formulae to guide the distribution of funds and for incentives to promote high-quality scholarship. Finally, in August 1995, he wrote a letter to Academic Senate Chair Charles Lewis, in which he defined a new role for the senate to oversee and regulate its development. But Schopf's fervent advocacy of QF-RCM caused some council members to distance themselves from the initiative. Whatever hope the council had of becoming partners in implementing RCM, it would have to wait.

GIVING FORM TO THE VISION

Immediately upon Curry's resignation, Young appointed Sam Morabito, an associate vice chancellor who headed UCLA's finance and business enterprises, to take over the day-to-day responsibility for RCM. Morabito would chair the Principles and Strategies Committee and report to the Transition Steering Committee led by the chancellor. A no-nonsense, businesslike man, Morabito was well aware of the huge responsibilities that had been handed him. At his first meeting as the operating leader of RCM, Morabito described his vision to the 13 administrators and consultants seated around a large oval table in the RCM offices in Westwood overlooking the UCLA campus. After welcoming everyone, he assured them that the Chancellor was deeply committed to making RCM a reality:

As you know, Curry just announced his resignation. I want to assure you that the Chancellor's no less committed. He will be taking up much of the leadership for this effort and he's personally engaged. We just can't run a $1.8 billion operation like ours the way we have been doing it. The technical part of RCM is simple-technical, financial management. Information's the only controversial part because data will become public. But this is a public institution and there's no doubt in my mind we'll get this done.

Next, Morabito shifted to the more complex problem of how to develop a new value of fiscal accountability:

The bigger issue is socialization, cultural change. How do we bring this about? How do we put each tub on its own bottom? Some units have been doing it for years, but how do we socialize the others-especially in just one year? The new budget process will be important to our success. It must reward good fiscal and strategic plans, and it must convince the others that they just can't spend themselves into oblivion any more and expect help. There's a lot of gray in the picture, a lot of ambiguity. We've never been through something like this before and we're going to have to feel our way.

Over the coming months, Morabito, the consultants, and the UCLA administrators analyzed and debated about how funds would be allocated from the central administration to the units; how charges for space, libraries, and other services would be allocated; and how the hardware and software needed to run the new information systems would be configured. Morabito knew that the planning and implementation process had to be flexible and that the individual units would have to adapt the new financial tools to their own environments. The Graduate School of Education and Information Studies, for instance, was planning a highly decentralized process where faculty, staff, and students would have a say in the budgeting process. The Anderson Graduate School of Management, and Physical Sciences, however, were planning to limit decision-making to the deans and department chair levels. Morabito wanted to produce a definitive implementation plan for the campus but did not want to create a "cookbook." The planning process was remarkably open, and stakeholders participated in the weekly meetings and worked on individual task forces. But there was confusion about what role the faculty should play. There was general agreement that the faculty had to be involved in some way, but the specifics were hard to resolve. First, the tasks facing the committee were daunting and time was passing rapidly-a large chart showed that only 105 days remained until the consultants were scheduled to depart and everything had to be in place. Second, there was a distinct feeling that faculty members might fail to grasp the practical realities that the committee was grappling with, and that by inviting more than a few hand picked members the process would become politicized, wasting valuable time. Worse, it might stall altogether. Third, it was unclear who could speak with authority for the academic community. Someone had heard that the Senate Council on Planning and Budget wished to be included in the process, but there were disagreements over whether this meant Chairman Bill Schopf or the entire council. Glyn Davies, an assistant vice chancellor who worked hard behind the scenes to support the effort, reported:

Bill Schopf represents the senate and he's been working on a model that we've seen, but to be honest I don't know how far it's gone. Look, we've really got to bring the senate on board because right now, we're working in parallel with them and we need to bring both efforts together.

There was also a change in the leadership of the Academic Senate and no one knew what role its new chairman, medical school professor Charles Lewis, planned to play. Finally, some thought that deans and the provost, who held academic appointments, could represent faculty interests, though in their departments they were regarded more as administrators than academics.

The discussion continued for several weeks without resolution. In truth, any reservations aside, no one really knew how to engage the faculty, and during the rapid start up, no one seemed to want to spend the time figuring it out. While each administrator had been part of the "UCLA culture," and each had worked with faculty members, few had ever been part of the powerful academic subculture that remained mysterious and largely impenetrable.

There was, however, growing frustration due to all the confusion and the failure to engage faculty early in the process. Given the administration's silence, some academic leaders began to suspect the worst. Davies warned the committee, "We have to do something about the problem because everyone's convinced the administration has a draconian plan up its sleeve." Despite the warnings, the issue went unresolved for weeks until Morabito decided to invite two members from the Council on Planning and Budget to join the meetings.

The Principles and Strategies Committee continued to meet each Friday to coordinate the growing number of decisions that were being made. The model that specified how funds would be allocated to units grew increasingly complex and contentious as the implications of the decisions that were being made filtered out to the campus. The process had to be documented so that the final model could be communicated to the faculty and administrators when the fall term commenced.

Also, it was rumored that the Chancellor was planning to step down sometime in the not-too-distant future, a rumor that worried other administrators because his memory for financial details was legendary. In the 27 years that Young had been Chancellor, very little had ever been committed to paper. Morabito wanted to make sure that the decisions being made were documented. "I want this model on the shelf, on paper, so anyone can reconstruct it and know why we did what we did," he insisted.

Bit by bit, parts of the system were implemented in each of the three simulation sites during the summer of 1995, though deadlines had begun to slip and pressures mounted. "It's like re-wiring your house while the lights are on!" Davies quipped about trying to revamp the system while it ran full tilt. To make matters worse, once the consultants left at the end of December 1995, the full weight of implementing the system would fall entirely on UCLA.

As efforts to implement RCM in the three simulation units were intensified in 1996, the going became increasingly rough. Although the technical side of RCM was linear and understandable, the human side was not. As the authors followed RCM in the academic units where it was being tested, it became evident that new behavior and beliefs required by RCM were often at cross-purposes with the powerful but largely invisible academic culture. But the conflict, and how it was resolved, yielded important insights into leading successful large-scale organizational change.

A CLASH OF CULTURES

RCM produced barely a ripple as it was introduced into the Anderson Graduate School of Management, a mirror image of the business world itself. AGSM faculty members took little notice of any changes and remained largely unconcerned. After all, many of the RCM principles-the decentralization of cost and revenue control-had been in use in the Anderson School for at least a decade.

But faculty members in the other simulation units, the Division of Physical Sciences and the Graduate School of Education and Information Studies, reacted with suspicion and hostility to the business principles they were being asked to embrace. To many, the new language of "customers," "products," "outputs," and "markets" was offensive. An education professor complained, "Talking about students as customers is obnoxious. I mean they aren't customers. They're students. That kind of language just doesn't belong in an educational institution."

Most faculty members had been sheltered from the realities of finance by a sharp division of labor. University executives and a small army of administrators had always conducted business transactions-fund-raising, marketing, and financial planning. But in today's environment this arrangement, well-intentioned as it was, revealed a distinct downside: many faculty members were unaware of the financial crisis facing the campus.

Focus groups conducted among faculty members two years earlier had foreshadowed an astonishing lack of awareness. "We're number one," a professor proclaimed. "If nothing's broken, there' s no need to fix it." "There' s no crisis here," exclaimed another. Two years later, when budget cuts began to penetrate the academic core, many faculty members believed the crisis had been manufactured by the administration to gain control. An Academic Senate leader confided, "This is just the beginning. RCM will strip the faculty of any power we have." A physics professor worried, "This shift to a corporate culture will allow the administration to tax us to get us to do things they want us to do."

Ideologically, many faculty members were contemptuous of business and held corporate values in low regard. One professor described a recent conversation with a vice chancellor: "Every time I talk to him, he talks about money and a marketing plan. This is not a business. I'm simply not enthusiastic about participating in board room culture." Another professor said:

I don t want us to become accountants or entrepreneurs. Assoon as we do, we'll start thinking about things in different ways-"my money, your costs." We'll have to use a different vocabulary, and I'm not sure we can handle the change.

Other faculty members were concerned that harsh business practices would surely follow RCM, irrevocably altering university life. A survey of one unit revealed that more than a quarter of the faculty felt that RCM would lead to staff layoffs. One professor described his fears: "In the future we may become just like business-greater reliance on part-time workers and job sharing. I see a much less comfortable world than the one we've been used to."

What had happened was the boundary that had historically protected the academic community from the outside world had now become blurred. There was a great apprehension that RCM and its supporters would run roughshod over cherished academic values and reduce the university to a business. "This number-crunching," exclaimed one worried professor, "will begin to drive decision-making. This administration thinks we're a business that just happens to be education."

Bill Schopf had been right. Even worries over RCM' s business language made it clear that fears about eroding educational quality were at the center of debate. In the days of bountiful resources, faculty members could follow their own interests and, within reason, do what they wanted.

But by 1996, RCM's focus on cost and revenue control threatened to shift the focus away from high-quality education to whatever the market would bear. One professor explained, "My fear is that we'll be driven too much by things that generate money. We're a university, and we should be driven only by our research interests."

SHARED GOVERNANCE AND A LACK OF TRUST

Beneath the debate over educational quality were deeper tensions about power: Who would decide how resources would be allocated in the new RCM environment? Since 1920, University of California campuses had practiced "shared governance," a means of defining and balancing academic and fiscal responsibility between the faculty and administration. Under the University of California' s plan, the faculty (represented by the Academic Senate) had final authority over curricular decisions, while the administration held ultimate budget authority. The key idea of shared governance was that each side was obliged to consult with the other before making final decisions.

Many faculty members worried that under RCM, administrators would be able to allocate funds unilaterally. One physics professor said, "Central administration has made it nearly impossible to calculate the dollar value of anything they do. It's fudged deliberately, so you can't tell what's what about overhead."

For their part, faculty members had always been accorded an exalted status because of traditions of tenure and academic freedom, and because they were in charge of the university's core functions of teaching and research. But the resulting "separate-but-not-equal" status produced an unmistakable void between the two sides, often making it hard to achieve the spirit implied by "shared governance." More often, as was the case in UCLA's 1992 restructuring effort, differences between the two sides were resolved through the use of power as if the two were adversaries.

Since the 1950s, mistrust had become the shadow side of shared governance. Then, in the heat of anti-communist hysteria, the president of the university and the regents demanded that faculty members sign loyalty oaths or face dismissal. Understandably, the unilateral use of power produced a deep cleavage between the two sides. It also sent a message to faculty members that administrators could not be trusted.

Under the pressures of RCM, similar tensions surfaced that threatened fundamental academic values. By 1996, the tensions had become palpable. Faculty members and administrators often talked about each other in derisive ways. To faculty, administrators were often characterized as thinking only about money, while administrators often joked privately about faculty members, describing them as lazy incompetents whose jobs were protected by tenure. One professor described her feelings:

I came up through the ranks. There's been a decline in respect given to faculty by staff. I'm tired of being treated as a pest. They think we're slothful, that we don't put in a full day's work. But I do. I work hard and I am productive. Autonomy means you don't punch a timecard.

Many of the same conditions that had produced mistrust between the faculty and administration also created mistrust between faculty members themselves. In one department's faculty executive committee, the chair passed out confidential papers showing how much individual faculty members had spent on Federal Express, phones, Xeroxing, and clerical support. Such figures had never before been compiled. Executive committee members grew silent as they carefully read and compared each others' expenditures. Soon a heated argument broke out. "Why does he get to spend so much on international phone calls?" one professor asked indignantly. "I didn't spend close to that amount." Another faculty member said he wanted to investigate some faculty members' charges that seemed abnormally high. An assistant professor asked, "The only information I want right now is how much support are others getting? Is this fair?" The chair suggested posting the charges on a monthly basis in a public area to make the process transparent. "Visual accountability is important if we're going to become self-policing and aware," he said. "If we post faculty accounts in the mail room, it'll take care of itself. Maybe we should post faculty salaries as well." There was a moment of nervous eye contact and smiles between committee members just before another member changed the subject directing it back to the issue of what the cost figures mean. "Is high spending bad?" she asked? A professor tried to join both threads of the discussion by asking:

If you post what people spend, what if they want to post their vitae also so everyone can see what they've produced? Posting confidential information and sharing it at an executive meeting aren't the same things. I'd like any sharing to be more discreet instead of opening it up to students and strangers.

After an extended discussion, the idea of making cost information-or salaries-public was rejected because of the difficulty in interpreting it, and the conflict that would likely ensue.

BALANCING INDIVIDUALISM WITH THE COLLECTIVE GOOD

Like faculties everywhere, UCLA's faculty is largely a community of individualists who are rewarded for their own achievements. Except for some of the physical sciences, where research collaboration is a tradition, most faculty members work alone. Such isolation stems partly from the fact that academic work can be intensely creative and does not lend it self easily to joint effort. In some cases, even within disciplines, divergent beliefs about what represents "truth" can lead to factionalism and isolation.

The university incentive system also promotes individualism. Promotions are based on candidates' individual contributions, making it difficult to evaluate individual contributions to collaborative publications. In the course of promotional reviews, candidates are required to define their individual contributions to jointly authored papers. New assistant professors are usually counseled to write and publish only sole-authored papers.

Nevertheless, the popular view portrays academic life as collective. Nothing could be further from the truth. Although tenure creates lifelong relationships, and decisions are made only after consultation and committee deliberation, the fact is that beneath this surface, academic life is highly individualistic and autonomous. "We are a community of scholars connected only by a common parking lot," one professor joked.

THE LIMITS OF ACADEMIC DECISION-MAKING

Implementing RCM required that individuals transcend their own interests and work collectively for a larger good. But the specter of having responsibility for resource allocation decisions produced a growing anxiety. Many faculty members in the Division of Physical Sciences and the Graduate School of Education and Information Studies worried that RCM would force them to think like businessmen-that is, reducing every thing to "What's in it for me?"

In truth, administrators had made most large resource allocation decisions (in consultation with the faculty) for years. Steadily increasing budgets and the separation of duties spelled out by shared governance insured that faculty members would be insulated from harsh businesslike decisions. Specialization made sense to most faculty members, who avoided such decisions because they were trained for something else.

More importantly, most balked at the idea of making decisions without having complete information-a condition that is rarely present in day-to-day decision-making. Making matters worse, RCM required that important resource allocation decisions would have to be made quickly on the basis of incomplete information. A professor in physical sciences echoed the worries of others:

We will become 'reactive" and not consider side effects. It's scary that RCM is being implemented without more information. Administrators don't think about it, and I'm scared that no one knows the full consequences of RCM. If there are terrible consequences, no one will be accountable.

Further, few faculty members were experienced in making important decisions. Only rarely did academic decisions ever result in significant resources being taken away from one activity for another. Instead, academic leaders had been able to sidestep conflict by financing new initiatives from ever-expanding resources. Even if the faculty wanted to step into this new role, there were few standards upon which to base decisions. In fact, many faculty members believe that all knowledge is equal. In one faculty meeting about closing the School of Nursing, a heated argument broke out about whether there was any way to make such a weighty decision. A veteran professor spoke for many others:

Who is to say whether a unit of nursing is worth more or less than a unit of biology, or physics, or education? Who is to be the judge of such an unanswerable question~? I feel that all knowledge is equal, and woe be the day when we start letting administrators weigh one against the other.

Whether his viewpoint was a deeply held philosophical position, or whether it was simply a strategy to escape the conflict that would surely be generated by pitting one discipline against another, is debatable. But it revealed reasons for which the faculty could not agree on a unified position to help the university live within its budget. In June 1996, the academic year came to a close. Next, the plan called for RCM to be implemented fully for one year-a "shake-down" it was called. Still the faculty resisted. One department chair implored his faculty executive committee to examine RCM carefully before agreeing to its full implementation. The chair said:

How can I put this delicately? We're about to endorse the destruction of our sense of mutual interest. I saw it this week in setting up budgets where every negotiation was about "Who's going to pay for it?" Relationships between departments should be cooperative. But mark my words, under RCM, they are going to become competitive. The danger before us is losing sight of our academic mission and the resulting breakdown of collegiality. What's missing are incentives for cooperation. If we don't insist, it's going to be a disaster.

This was the most important question of all: shorn of traditional values, disrupted from ordinary decision-making rules, and facing a new environment, what is a university for? How should it differentiate itself from the other forms of social organization, many of which are more adaptive to changing conditions?

HARNESSING THE FORCES OF CHANGE

By the fall of 1996, it was becoming clear that the initial thrust of RCM had failed to make much of an impact on UCLA's core academic processes (though it had a profound impact on how administrative work was done). Deep mistrust between the faculty and the administration, combined with the conflict of values, made RCM a natural target for disgruntled faculty members. At the root of the problem, the focus on money, in the absence of anything else, was placing the soul of the university in jeopardy. A member of the Committee on Planning and Budget, chemistry professor Richard Weiss, put it succinctly:

When I read Whalen's book, I realized the biggest problem was, "Do not embark on RCM if you don't have an academic plan." The academic implications are simply not being addressed, and while members of the faculty still are involved in the process, I'd be the first to admit our involvement is not as great as it should be. What we're doing is like building an ocean liner and saying, "We'll worry about it sinking when it begins to sink"; but by then, of course, it's too late.

The administration took heed. Clearly, if RCM were to be implemented forcefully without engaging the faculty to re-examine the university's mission and priorities, mistrust between the two sides would only be magnified. Worse, if conflict became the norm, university leaders would miss a critical opportunity for real change.

In April 1997, Chancellor Charles Young, who had announced his retirement, wrote a long memorandum to faculty and administrative leaders.

This is a timely moment to take stock. One of the most important things we have learned is that RCM cannot be implemented "off-the-shelf." It is not a concept that moves easily from the corporate world to a university setting. Nor can it be transferred from one research university to another without great care and attention to the culture of each institution.

But academic leaders remained unconvinced. A month later, an influential Academic Senate Committee, comprising faculty executive committee chairs, reported widespread disaffection with RCM:

Most faculty reactions are probably best characterized as perplexed, uncertain, or uninterested. Several chairs reported that their faculty still were not sure what RCM was; they were even less sure how it would affect them-if it would affect them at all....Many doubted that much would actually happen. They pointed to the Chancellor's retirement, the likelihood that a new Chancellor would want something different, the lack of concrete development of RCM, and a history of little rather than substantial change in anything at UCLA.

In a companion report, the Senate Council on Planning and Budget took a more reasoned position, noting that RCM was still evolving and changing. Its report spelled out the Academic Senate's responsibility to continue to monitor RCM's development and its impact.

THE PROMISE OF STRATEGIC PLANNING

By mid-1997, it had become abundantly clear to UCLA's administrative leaders that RCM, by itself, would only polarize the faculty and administration and miss the opportunity for real change. Some new course of action that took faculty objections into account had to be found.

A year earlier, independent of RCM, the administration had begun to develop a new model of academic planning with the Academic Senate. It would not be traditional strategic planning, but rather a system that would reward schools and departments for demonstrating their responsiveness to changing external needs while managing their revenues and expenses.

It would also provide incentives for deans to bring chairs and faculty members and other stakeholders into the planning process at the department level (and provide penalties for deans who did not). Budget hearings would become more open, enabling the Chancellor to discuss allocation decisions with a broad range of academic and administrative leaders, avoiding the secrecy that had historically surrounded the process.

THE JURY IS OUT

It is still too early to tell whether or not UCLA's new planning model will help generate productive debate and consensus about the university's mission and priorities. Making matters less predictable, the impact of Chancellor Charles E. Young's retirement and the arrival of the new Chancellor, Albert Carnesale, is not yet evident.

Nevertheless, much has been learned from the initial change effort with RCM. What became clear by the end of 1996 is that RCM had become a target for everything imagined to be wrong with the university-from shrinking budgets to inadequate services. But as one professor said, "You can call it whatever you like, 'RCM' or 'Charles Dickens.' The reality is that it is only a fiscal accountability scheme that will become commonplace on university campuses because financial pressures demand it."

It is now easy to see that the RCM experience accomplished much more than just re-engineering UCLA's information and fiscal systems. It sent a signal to campus leaders that the focus had to shift from dollars and cents to the much larger question of how the university can best serve society, if momentum to transform the university is to be sustained.

Now the question is whether the same forces that created RCM can be harnessed to develop a new theory of the university in contemporary society-one that is shared by stakeholders, administrators, and faculty alike. So far, the quest for such consensus has proven elusive. And we have learned that trying to transform a university through fiscal accountability alone will surely encourage faculty members to blind themselves to outside demands and weave their own cocoons more snugly as time runs out. Our best bets are that by using the forces of change to bring all stakeholders to the table, the institution's cultural inertia can be overcome to produce a renewed vision for the 21st century.

UCLA Graduate School of Education & Information Studies

pbe: 11Sep96

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