Home > Educational Leadership, Higher Education > Managing Budget Fluctuations: Institutional Approaches to Budget Reductions

Managing Budget Fluctuations: Institutional Approaches to Budget Reductions

By Margaret J. Barr and George S. McClellan

The institution has several alternatives available when implementing a budget reduction. This section describes issues influencing an institution’s choice of approach and discusses various strategies commonly employed by institutions in considering and implementing budget reductions.

Time, Information, and Risk Tolerance

Three issues will influence the institution’s approach to budget cuts. They are time, information, and risk tolerance by the institution and the institutional governing board.

The first issue to be addressed is, how much time is available to institute cost savings measures and budget cuts? That is a critical question, for if the reduction must be made in the current fiscal year then the strategies used will be entirely different than if the institution has two or three years to confront a fiscal problem. If a careful plan of cost reductions can be implemented over several years, the results will be much less painful than if the reduction must be made in the current operating budget fiscal year. Goldstein (2005) urges institutions to routinely plan for budget reductions. Although that is a rational approach to the situation, unfortunately, most often budget managers must respond very quickly to an institutional fiscal problem.

Continued at: http://cgi.stanford.edu/~dept-ctl/cgi-bin/tomprof/postings.php

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