Enfranchising Faculty in the New Budget Reality
Building transparency and campus-wide literacy around university finances
David Attis, Managing Director, Research
Faculty members often have limited visibility into university finances and budget processes. As a result, many campuses suffer from broad disagreement and even mistrust around the financial, operational, and strategic choices that leaders make, slowing progress toward institutional goals.
We studied the most common budget misunderstandings that administrators cite among their faculty members, and uncovered four key lessons to help you give faculty firsthand exposure to institutional financial planning and resource management. Download the report to learn how to improve transparency and understanding by providing context and illustrating budget trade-offs, or scroll down to explore each strategy individually.
Prove context
Share the larger economic pressures behind resource allocation decisions clearly with faculty. Faculty members typically lack a larger perspective through which to view allocation decisions, often leading to misunderstanding and conflict with administrators. Providing both industry-wide and institutional context for budget decisions can help academic leaders build buy-in among faculty. It can also help build trust between faculty and the administration as it demonstrates leadership’s dedication to transparency.
Key elements of the annual budget explanation
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Narrative tone
The annual budget explanation is written for an audience of faculty largely unfamiliar with university-wide budget decisions. A narrative structure, providing the historical context of decisions that led the institution to the current day, avoiding accounting jargon, and focusing on the impact of decisions can be helpful to keep faculty engaged with the text.
Definitions
Whenever accounting terms (e.g., ‘restricted funds’) are used, provide definitions and examples to ensure the reader understands the real-world application of the information. Faculty may assume that some categories (e.g., unrestricted expense) consist largely of administrative costs; clear definitions and examples should help institutions mitigate these concerns.
Visualizations
Resist the impulse to include all relevant data, especially in spreadsheet format. Visualize necessary data in easy-to-analyze charts and graphs. Examples of useful visualizations include:
- Budgeted revenue and expenditure vs. actual revenue and expenditure
- Allocation of net revenue to college and divisions vs. central university
- Historical tuition increases
Economic context
Explanations of the larger economic issues facing higher education, of which faculty are often unaware, should be included throughout the document to contextualize the difficult decisions institutions can be forced to make.
Sensitivity
When pressures on the institutional budget filter down to the faculty level, they affect workload, course offerings, scheduling, and career paths. Wherever possible, the budget explanation should be sensitive to the impact of budget decisions on faculty life and offer gratitude for cooperation with budget sustainability measures.
Illustrate trade offs
Even with an enhanced understanding of the institution’s financial circumstances, faculty members won’t always fully comprehend the impact that their budget requests will have downstream. Limited increases in salary or faculty lines, for example, can dramatically increase an institution’s year-over-year expenses.
Good ideas have unforeseen outcomes. For instance, how do we deal with a 10% fall in enrollment? Cut the football team? Increase marketing? Raise tuition?
Demonstrate to faculty how financial decisions rarely occur without secondary effects and complicating factors through budget scenario explorers or interactive sessions to explain how the close interdependence of financial metrics. Faculty members who grasp trade-offs of strategic decisions are more likely to thoughtfully engage with administrators in considering strategic initiatives.
Build trust
Moving forward, administrators must not only contextualize budget decisions for faculty, they must also proactively build trust. If institutions are to make substantial changes to their budget and business models, faculty and administrators will need to work together.
Unfortunately, at many universities, institutional leaders lack truly “shared” governance. The central administration develops strategic plans internally and although faculty leaders are informed of initiatives, their role is more operational than consultative.
The lack of transparency in these communications creates a feeling of “top-down” leadership, which does not cultivate cooperation. Moreover, not allowing faculty greater access to the strategic financial process removes the opportunity for high-potential, aspiring leaders to be heard and cultivated. Their lack of access to the decision-making process can dissuade them from pursuing leadership positions and leave them unprepared should they acquire one.
"“I hear my colleagues say all the time that the faculty hold all the power, that they ultimately control all the actions taken. But I’m 100% sure the faculty feel the opposite way. They see us as the all powerful, holding the purse strings, and not giving them a say in the decisions we make here.”
"VP for Finance
Public Research University
Create agency
Giving faculty the perspective to understand and cooperate with strategic administrative decisions is important, but the final imperative for enfranchising the faculty is to build the agency of those faculty leaders and department chairs on the front lines of academic decision making.
At larger institutions, deans and department chairs make some of the most important decisions regarding strategic direction and the allocation of resources. One study concluded that 80 percent of institutional decisions take place at the departmental level, and yet chairs often lack experience or training in making financial and program management decisions.
Top 5 new priorities for chairs during their tenure
1. Department Planning
2. Financial Matters
3. Cost-Effective Program Delivery
4. Cross-Department Partnerships
5. External Partnerships
Giving faculty the perspective to understand and cooperate with strategic administrative decisions is important, but the final imperative for enfranchising the faculty is to build the agency of those faculty leaders and department chairs on the front lines of academic decision making.
At larger institutions, deans and department chairs make some of the most important decisions regarding strategic direction and the allocation of resources. One study concluded that 80 percent of institutional decisions take place at the departmental level, and yet chairs often lack experience or training in making financial and program management decisions.
This lack of expertise can impede the smooth functioning of departments. Chairs might struggle to manage funds strategically, think about the mix of faculty members during hiring, or consider the funding climate when deciding how many doctoral students to admit. Many unsustainable decisions at the department level can be avoided by offering preemptive training to department leaders.
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