What is Decentralized Budgeting?
There are several different budget models applied within institutions of higher education. While the fundamental methods are similar, each is unique because it reflects the mission and strategic investments of an institution. There is a robust body of literature dedicated to describing these financial models and detailing the experience and implications (Curry, 1996; Curry, Laws, Strauss, 2013; Priest, Becker, Hossler and St. John, 2002; Salamon and Strauss, 1979; Strauss and Curry 2002; Theobald and Thompson, 2000; Whalen, 1991).
Temple University's decision to implement a decentralized budget model was influenced by the model's ability to:
- Incentivize schools and departments to strive for excellence in teaching, research & service;
- Emphasize transparency and access to information that can lead to significant efficiencies & streamlinings,
- Decentralize responsibility and involve more faculty in budget and planning decisions;
- Allow for changes in response to concerns as they are recognized;
- Encourage multi-year strategic planning, aligning resources with top priorities.
Frequently Asked Questions:
Current examples of similar budget models in public higher education:
Colleges 'Unleash the Deans' With Decentralized Budgets (Feb. 9, 2015) by Scott Carlson, The Chronicle of Higher Education (may be locked to subscribers only)
University of Michigan's University Budget model- conceptual basis for the model 1998-2000 and revised in 2008
Dubeck, L. Beware Higher Ed's Newest Budget Twist. The NEA Higher Education Journal, Spring 2007
Greer, D.G. and Klein, M.W. (2010). A new model for financing public colleges and universities. On the Horizon. Vol. 18 (4): 320-336
Texas Tech Revenue Enhancement and Allocation (REA) Task Force Reports on Benchmark Institutions and RCM (2008). In June 2009, Texas Tech hired Dr. Jon Strauss to serve as both interim dean of Engineering and the chair of the RCM Council. Texas Tech presentation at NACUBO - RCM: The good, the bad and the ugly
Portland State University (2011) Financial Futures Taskforce Report
Douglas C. Wager, Professor and Chair, Department of Theater
"...it can empower academic leaders of colleges and schools to guarantee that their budgets will follow rather than lead their academic mission. By coupling responsibility with real meaningful and consequential authority, RCB can generate powerful incentives for deans and managers to accomplish their missions in ways that promote institutional objectives, rewarding success and creating strong incentives to think and operate entrepreneurially. The success of the (budget) model is predicated on the desire of a university to place the full force of its human and financial resource in the service of its academic priorities."
Jonathan A. Scott, Associate Professor of Finance
" In recent years, Temple has implemented a number of steps towards a full RCM model: enrollment-based budgeting, decentralized summer school budgets to schools and colleges, surplus carryovers, and expanded auxiliary programs that stand on their own bottom line. To close the loop, all revenue (primarily tuition), indirect costs (e.g. space, computing), and the Commonwealth’s contribution to Temple’s operating budget need to be allocated to the “responsibility centers” (think schools and colleges). While these allocations are a non-trivial exercise, Temple has made these allocations of indirect costs for many years through the Full Revenue and Expenditure and Evaluation System reports (at least as far back as the early 1990s). Thus from a pure operational perspective, most of us are likely to see no immediate change. However, the process for RCM implementation could have an immense influence on Temple’s future and thus should be of intense interest to all of us."