Budgeting for an Academic Department at a State University: Can You Believe the Numbers?

Abstract

Determining the fate of an academic department: a case in university budgeting. The case involves an academic department with a chronic budget deficit. The upper administration wants to close the department or its bachelor’s program, believing that such action would save money. The problem is the university’s budget system. It treats all academic departments as cost centers without understanding that the static cost budget bears no relationship to the real costs of departments and fails to consider that departments generate revenues that would disappear in their absence. Because base budgets were set years ago and never realigned with changing needs, this department consistently runs a deficit. The case requires an ability to sort out relevant information and to deal with uncertainty. It demands that the student recognize that calculated and printed “results” are not sacred and that they may be wrong and misleading. It also illustrates the utter failure of budgets to plan and control when they are not established in a realistic manner.

This case was prepared for inclusion in Sage Business Cases primarily as a basis for classroom discussion or self-study, and is not meant to illustrate either effective or ineffective management styles. Nothing herein shall be deemed to be an endorsement of any kind. This case is for scholarly, educational, or personal use only within your university, and cannot be forwarded outside the university or used for other commercial purposes.

2024 Sage Publications, Inc. All Rights Reserved

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Resources

Table 1: Fall 2008–Spring 2009 Resident (In-State) Tuition and Fees. Amounts are per semester. Fees cannot be avoided.

Undergraduate Tuition & Fees

Graduate Tuition & Fees

# of Credits

Tuition

Fees

Total

# of Credits

Tuition

Fees

Total

1

239.00

171.00

410.00

1

357.00

201.00

558.00

2

478.00

171.00

649.00

2

714.00

201.00

915.00

3

717.00

171.00

888.00

3

1,071.00

201.00

1,272.00

4

956.00

171.00

1,127.00

4

1,428.00

201.00

1,629.00

5

1,195.00

171.00

1,366.00

5

1,785.00

201.00

1,986.00

6

1,434.00

490.00

1,924.00

6

2,142.00

475.00

2,617.00

7

1,673.00

490.00

2,163.00

7

2,499.00

475.00

2,974.00

8

1,912.00

490.00

2,402.00

8

2,856.00

475.00

3,331.00

9

2,151.00

490.00

2,641.00

9

3,213.00

475.00

3,688.00

10

2,390.00

490.00

2,880.00

10

3,570.00

475.00

4,045.00

11

2,629.00

490.00

3,119.00

11

3,927.00

475.00

4,402.00

12

2,868.00

965.00

3,833.00

12

4,284.00

950.00

5,234.00

13

3,107.00

965.00

4,072.00

13

4,641.00

950.00

5,591.00

14

3,346.00

965.00

4,311.00

14

4,998.00

950.00

5,948.00

15

3,585.00

965.00

4,550.00

15

5,355.00

950.00

6,305.00

16

3,824.00

986.00

4,810.00

16

5,712.00

971.00

6,683.00

For each additional credit add $239.00

For each additional credit add $357.00

Exhibit 1: Budget of the School of Social Work

Budget of the School

Up to date as of April 10. (fiscal year ends June 30)

Base Budget

Current Budget

YTD Actual Expenditures

Encumbrances

Budget Variances

Notes from major items

revenues

fees

(6,000)

(6,000)

(7,289)

1,289

Course fees

other

(77,760)

(93,332)

15,572

Shared curriculum fees & Salary transfer from College

total

(6,000)

(83,760)

(100,621)

16861

faculty salaries

559,994

613,994

457,750

106,250

49,994

Course buyouts (grants)

adjuncts

47,646

47,646

86,333

24,667

(63,354)

Additional adjuncts

classified wages

61,820

61,820

48,862

13,381

(423)

prof wages

58,560

58,560

45,461

13,626

(527)

total salaries/wages

728,020

782,020

638,406

157,924

(14,310)

benefits

309,512

333,272

268,131

66,328

(1,187)

total compensation

1,037,532

1,115,292

906,537

224,252

(15,497)

memberships

4,219

4,219

6,700

(2,481)

conference and accreditation fees

postage

1,025

1,025

887

138

printing and copy

531

531

3,341

(2,810)

leasing

1,452

(1,452)

supplies and materials

800

800

7,364

51

(6,615)

Chairs and desks replaced

travel

2,477

2,477

29,743

340

(27,606)

Extra travel for grant writers

equipment

6,137

(6,137)

telephone

3,543

3,543

4,880

340

(1,677)

maintenance of equip

1,200

1,200

2,936

(1,736)

total operating expenses

13,795

13,795

63,440

731

(50,376)

net expenses

1,051,327

1,129,087

969,977

224,983

(65,873)

net revenues & exp

1,045,327

1,045,327

869,356

224,983

(49,012)

Deficit is through April only. An increase in it is anticipated

Note: Amounts in brackets are positive (additional money available) except in the budget variance line. There they are negative amounts.

You can download a copy of this exhibit here:

Exhibit 1 (in Excel)

Assignment Solution

You can download a copy of the assignment solution here:

Assignment Solution (in Excel)

This case was prepared for inclusion in Sage Business Cases primarily as a basis for classroom discussion or self-study, and is not meant to illustrate either effective or ineffective management styles. Nothing herein shall be deemed to be an endorsement of any kind. This case is for scholarly, educational, or personal use only within your university, and cannot be forwarded outside the university or used for other commercial purposes.

2024 Sage Publications, Inc. All Rights Reserved

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