Optimizing Institutional Budget Models

Strategic Lessons for Aligning Incentives and Improving Financial Performance

Topics: Academic Affairs, Budgeting, Administration and Finance, Budget Models and Cost Allocations, Debt Management, Facilities and Operations, Space Utilization, Revenue Enhancement, Tuition and Fees, Library, Research Enterprise, Strategic Planning

Common Metrics for Major Expense Categories

Other institutions have successfully adopted similarly simple approaches to cost allocation. Typical metrics used to allocate major categories of institutional costs are listed here.

Charging units a tax on the revenue they generate is the most common approach, followed by charging units based on the share of faculty they employ or students they teach.

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Diminishing Returns to Complexity

Lesson 3: Incorporate Performance Targets into Budget Allocations