Running Head: AU CASE STUDY

Budget Case Study: Alpha University

Samantha Sonkowsky
University of Wisconsin, La Crosse

Budget Case Study: Alpha University

Budget Case Study: Alpha University

Due to the downfall of the economy, institutions of higher education are now in great
competition for both federal and state funds as well as institutional resources. The economic
impact at Alpha University (AU) has resulted in a 2% budget cut of state funding per student,
higher costs for employee benefits and an increase of cost for utilities. Along with the cut the
university is also working to setting a legal claim. Its projected that the combination of the two
will lead to about a $7 million budget deficit for the following year (Barr &McCellan, 2011).
Budget Deficit Strategy
It is now the job of the budget committee at AU to devise strategies, outline priorities,
and provide recommendations to the President at AU for the upcoming budget cut they will all
soon face. The following questions will be addressed throughout the budget cut process (pp. 189190): (1) What criteria will we used in setting priorities? (2) What political or internal campus
dynamics exist that may influence decisions? (3) What mandates exist that must be funded? (4)
What adjustments would you make in the requests? (5) How would you prioritize the revised
requests? and (6) What strategies would you employ to find the funds to meet Alpha Universitys
needs and aspirations?
Criteria for Setting Priorities
In setting the criteria, the budget committee believes all budget priorities must be aligned
with the AU institutional mission, values, and beliefs. With its students being at the core of AUs
mission to provide an academic, professional, and personal environment that stimulates growth
and integrity in their students becoming global citizens, it is imperative to make decisions that
best foster this mission. The budget committee would like to propose the use of a targeted
reduction strategy. This strategy rests on the premise that some activities are central to the

Budget Case Study: Alpha University

institutional purposes whereas others are desirable but less necessary (p. 172). Each budget cut
or allocation will in some way impact our students and we must make these necessary decisions
based on necessities rather than desires with reference to curricula, services, support, activities,
and other offering.
Political and Internal Influences
When looking at the political or internal dynamics that could influence budget reduction
decisions, the budget committee must take all stakeholders into consideration. The key
stakeholders at AU are the faculty, staff, administration, students, and those who make
contributions to the university. A main political and internal concern these stakeholders face is
the fluctuation in state funding from year to year. It could become challenging to predict how
much or how little funding AU will or will not receive. An internal concern is the pressure to
maintain and increase enrollment as more students equals more tuition dollars which is a main
funnel for university operations, salaries, and fringe benefits. Currently AU, has a modest
endowment, is dependent on mandatory fees to provide many student services (recreation,
intercollegiate athletics, health service), is able to retain the enrollment, and has a modest
research program that has been remarkably successful (p. 187). Another political concern would
be how much to invest into research endeavors and how much to invest in instruction. Neither
precede one another however, research could result in future revenue and grant funding.
Necessary Mandates
Healthcare. The budget committee identified a few mandates that must be funded or
must receive an increase in funding. First, there must be an increase in health insurance costs.
With the rising costs of healthcare premiums have increased as well, the estimated cost for
the institutional share would be $650,000 (p. 187). No matter the classification of the employee,

Budget Case Study: Alpha University

AU should continue to pay into health insurance costs in order to provide equal benefits to all
deserving individuals
Title IX support. Next, with the mandated appointment of Title IX officers at all public
institutions and the current complaint received related to womens intercollegiate sports, it is
suggested we allocate funds totally around $450,000 in the first year and $300,000 the following
year to ensure an increase in supporting AU womens athletics.
Energy Usage. Additionally, funds must be allocated within the budget at AU with rising
costs of natural gas. Assuming AU uses the same amount of natural gas next and taking into
consideration the rising costs of fuel, AU ought to budget $400,000. It is proposed that the
university look into energy efficiencies within the campus in order to reduce operational costs in
anticipation for the increased cost of natural gas.
Addressing Requests
The budget committee has received around $14 million budget increase requests for the
upcoming year. In years past, AU has experienced revenue growth and was still unable to meet
all budget increase requests. Knowing this, it will not come as a surprise to most that their
increased budget requests will be either be denied or only partially approved. With the current
budgetary climate looking quite dismal, the budget committee hopes senior leadership will find
creative ways for departments to collaborate, co-fund, and find creative ways to offer more to
students with fewer resources. The budget committee has identified a few revisions for submitted
budget requests from the department of Academic Affairs, Business Affairs, and new
programming.
Academic Affairs. With the demand for more instructors for necessary core classes, we
suggest the Academic Affairs unit look into partnerships with local community or technical

Budget Case Study: Alpha University

college that offer similar core courses. Additionally, we question the cost difference of who is
hired for the proposed increase in positions? Will they be faculty? Full-time? Part-time?
Adjunct? Lecturer? With regards to offering a required freshman seminar we have concerns as to
degree progression and the possibility of a partnership with area high schools to fulfill this posed
preparatory need.
Business Affairs. With reference to the increase in post mailing expenses, we suggest the
Business Affairs unit analyze the commitment and dependency of the increase use of technology
with the proposed digital migration. Will it be more cost effective and how realistic is it to erase
post mailing completely? If eliminated, the institution could save $27,000 annually, but we
foresee an increase in the technology budget.
New Programming. AU is currently focused on already established programs. With
struggling to keep current programs running it is unlikely AU will be able to take on the risk of
funding new programming. We ask that those proposing new programs revisit their requests and
devise an outline of program outcomes, learning outcomes, goals, and results to be submitted to
the budget committee for further review.
Prioritizing Requests
The budget committee will prioritize revised requests based on their alignment with the
institutional mission, values, goals, and beliefs. It will also take into consideration the impact the
proposed budget increases will have on AU students, staff, and faculty. If a budget increase is
approved, it may not exceed more that 5% of a departments established budget. Budget request
revisions must be received in a timely manner and on an agreed upon due date. All revisions
submitted after a given due date will not be reviewed or considered.
Funding Strategies

Budget Case Study: Alpha University

It is imperative that AU researches new and innovative sources of revenue in order to

fulfill AUs needs and aspirations. Previously mentioned, the budget committee plans to use a
targeted budget reduction approach.
Research grants. With being a recognized research institution an additional source of
funding could be conducting area corporate or organizational research in exchange for grant
funding. This could strengthen the institutions research department and perhaps organizations
and companies would donate necessary equipment to carryout the research.
Cooperative initiatives. Another funding strategy to explore is to implement a cooperative
enrollment initiative with neighboring states to offer tuition reductions for out-of-state students
in order to be received as an attractive option for students wishing to attend a four-year
institution in the area.
Reduce energy. Reducing energy usage could decrease institutional operational costs.
Offer incentives for saving energy to departments and reduce campus wide energy usage during
the weekends, holidays, and breaks in building with little to no use on non-operational days.
Summary
This budget deficit strategy proposal outlines the current budgetary climate, addresses
concerns, and offers suggestion to combat the follow budget reduction Alpha University will face
in the upcoming fiscal year. It is the mission of the budget committee to carefully consider all
budget items and budget increase proposals with offering the opportunity to revise. It is the
mission of the budget committee to stay true to the institutional values and uphold its mission,
with keeping the growth of our students in mind and at the core of our work and what we do.

Budget Case Study: Alpha University

7
References

Barr, M.J., McCellan, G.S., (2011). Budgets and financial management in higher education. San
Francisco, CA: Jossey-Bass.g