Question

What are some best practices for managing budget opportunities (in higher educaton)? Describe these practices.

Answer 1

The six budget-related practices or budget models utilized in higher education includes: Incremental Budgeting, Activity-Based Budgeting, Zero-Based Budgeting, Centralized Budgeting, Responsibility Center Management and Performance-Based Budgeting.

Incremental Budgeting: The allocations under this method are based upon the funding levels of the previous year. The model is attractive to institutions of higher education because it is simple to implement, giving stability in the budget, and allows units and institutions to plan multiple years into the future, due to the predictability of the mode

Activity-Based Budgeting: It refers to providing awards financial resources to institutional activities that can provide the highest return (in the form of increased revenues) for the institution. Adoption may involve development of fund source groupings; implementation of an activity-based campus budget allocation process; designing budget processes whereby leaders of campus use activity taxonomy and allocation plans for the alignment of resources to institutional strategic objectives; and development of activity groupings for budgeting, in coordination with leaders of the campus

Zero-Based Budget: It is an effective approach of controlling for unnecessary costs. As divisions and departments do not automatically receive a certain sum each year, all money allocated to a unit has a motive, keeping discretionary and waste spending to a minimum.

Centralized Budgeting: Under this method all decision-making powers to be in the hands of upper level administration. This is an appropriate approach to navigate difficult financial circumstances because the powers invested in top administrators to make tough decisions for the university as a whole.

Responsibility Center Management: The method is designed to support the achievement of academic priorities within an institution, and permitting for a budget which closely follows such priorities. It delegates operational authority to schools, divisions, and other units within educational institution, thus permitting to prioritize their academic missions. Each division receives all of its own revenues and income, including the tuition of its enrolled students. Thus the units effectively compete for students.

Performance-Based Budgeting: The method awards funds based on performance, which is determined by a defined number of outcomes standards. These are usually imposed on public systems of education as a result of greater accountability demands