Budget Organization Models

Courtesy of Administrators' Institute presentation by Don Woolston, University of Wisconsin-Madison, and Lori White, San Diego State University.

Definition of Terms

Incremental Budgeting: A budgeting system where the budget for the current fiscal year becomes the base for incremental allocations for the next fiscal year.  In its purest form it involves making only limited changes in the organization's revenue levels and distribution of resources from one year to the next.  (Assumes that all departments/programs should continue at minimum at the level of the previous year.)  Tends to be the most typically used type of budget in higher education. 

Zero based budgeting: Each organizational unit is required to analyze all costs and justify every budget element; no budget component is assumed to be part of a continuing base budget.  This method is designed to put every category of expenditure on equal footing at the outset, the new along with the established.

Formula based budgeting: Departmental budgets are based on some pre-determined formula.  For example, for X students, you receive funding for X advisors or counselors, X support staff, X amount of office space, etc.

Responsibility Centered Budgeting: Each unit is financially responsible for activities and held accountable for expenditures.  If a deficit occurs the deficit must be made up the following year form allocated budget resources.  If the unit has excess income over expenses the unit is permitted to carry-forward the surplus for reallocation.

Program Budgeting: A budgeting system which seeks to more effectively manage fiscal resources by identifying and prioritizing institutional goals and providing funding toward those programs which best support the institution's goals and objectives. 

Budgets and Financial Management References

Barr (2002). The Jossey-Bass Academic Administrator's Guide to Budgets and Financial Management. Jossey-Bass: San Francisco. 

Annotation: This is a particularly good budget "nuts and bolts" primer. 

Barr, Keating and Association (1985). Developing Effective Student Services Programs. San Francisco: Jossey-Bass.

Mayhew, L.B., (1979). Surviving the Eighties: Strategies and Procedures for Solving Fiscal and Enrollment Problems.  San Francisco: Jossey-Bass.

Muston, R. (1980). Resource Allocation and Program Budgeting.  New Directions for Student Services, No. 9.  San Francisco: Jossey-Bass.

Vandament, W.E. (1989).  Managing Money in Higher Education.  San Francisco: Jossey-Bass.

Wooddard, D.B., Jr., Editor (1995).  Budgeting as a Tool for Policy in Student Affairs.  New Direction for Student Services, No. 70.