Case
Teaching Notes
Supplementary Resources
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.
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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.
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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