Planning for a decentralized budget model
Evans, Stuart Thomas
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Designing and planning for a new budget model at a college or university requires commitment from leaders throughout the organization. Leaders must spend a significant amount of time on research, strategy development, and negotiating the guiding principles of the redesign. Creating arenas where differences among the community members are surfaced and compromises can be reached is a critical component of successful organizational change in higher education. The University of Virginia’s early planning and development for a new decentralized budget model illustrates how one public institution approaches these issues. Their new model incorporates the basic tenants of Responsibility Center Management. The early planning and design efforts focused on researching peer institutions that adopted similar models to inform decision makers about the various approaches to RCM and the potential drawbacks of adopting the model. This study identifies the importance of strong financial reporting, transparency in the budgeting process, leadership and project management, and appropriate communication to the entire community about the budget redesign. The study also discusses one approach to differential tuition and the political limitations of raising undergraduate tuition at a public institution.