Structuring and Transitioning to Impactful Gainsharing

This study outlines two options for structuring a gainsharing program as well as strategies to help institutions transition to a more strategic budget surplus policy while minimizing pushback.

Current approaches to unit budget surpluses creating resource misalignment

Management of unit budget surpluses represents a significant opportunity to reallocate resources at most colleges and universities. Many institutions utilize a 100% carry-forward policy, where units retain all year-end surpluses.

However, this often results in units accumulating massive reserves while the center struggles for funds. Conversely, other institutions manage unit budgets with a use-it-or-lose-it approach that pulls all year-end surpluses to central administration. This policy often creates a perverse incentive for unit leaders to spend down the balance of their budget at the end of the year to avoid losing funds.