The Philosophy and Psychology of Institutional Budgeting PDF

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by Peter A. Facione., Strategic consultant and writer, and former academic department chair, dean and university provost.

Budgeting at too many colleges and universities amounts to muddling from one year to the next. This is a poor enough way to function in good times; it can be fatal to an institution in bad economic times. Even when the national economy is strong, few worthy of being called leaders in higher education are genuinely satisfied with their institution’s budget process. Many faculty, administrators, presidents, and trustees believe that too much valuable time and energy is consumed in a budget process that, in the end, seems to achieve nothing other than extending the status quo for another year. People with institutional vision lament lost opportunities. Many smart, dedicated, and responsible people become frustrated that major questions of genuine long-term importance to the future of the institution continue not to be adequately addressed. It is axiomatic that all systems are perfectly designed to produce exactly the results being attained. If the budgeting process at your institution is working well, you are fortunate. Perhaps your institution is already applying the philosophical and psychological principles described in this paper.

There are five essentials:

  • Involve people whose authority derives from responsible expertise.
  • Understand human decision-making risks, and guard against them.
  • Address questions of long-term importance to future of the institution.
  • Root out budget implementation practices that have negative results.
  • Structure positive budget incentives for all levels of the organization.

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