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Budget Planning – Different Strategy for Budget

The following is a case study discussion on budgeting strategies for a medium-sized state university. It explores ways in which to deal with the budget cut as well as ways of utilizing the available resources within the stipulated budget. To understand this project, the following is the background information about the organization. The Strategies include ways to cut costs or to increase revenue. In some of the strategies, there is an assumption that this is a one-time cut, and that funding levels may return to normal in the following year after the cut in costs. However, two of the strategies assume that the cuts will be permanent (Head, 2005).

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Background information

The budget is a for medium-sized university department of education. The department has four full-time faculties with ten courses per year, with adjuncts teaching the rest. The full-time faculty each makes $40,000 per year including benefits. Adjunct payment for one course in reading or writing is $1,500, while for math it is $1,800 since it is harder to hire people who can teach math. Currently, the existing courses use normal classrooms, and not computer labs hence there is no additional costs for computer laboratory or equipment. It is also imperative to note that since this is a remedial class the students do not pay tuition fees. The department receives funds from the main department.

The dean has communicated that, due to state budget cuts, the department must cut 10% of the budget next year. The dean has requested five possible strategies for dealing with this cut, and the analysis of how each strategy will affect the education department, the staff, the students, and the institution.

Strategy one

The first strategy to cut costs will involve cutting the number of units that are taught in force the unit costs. Each year, the unit costs for the department accrue to each of the course taught in the department. There are four courses offered in the department namely math 001, Mathematics 002, Writing 001, Reading 001. Either the full-time faculty or adjuncts teach each of these courses. From the analysis of mathematics 001, adjunct teaches fifteen sections in both the fall and in spring whereas the full-time faculty teaches eight sections both in the spring and in the fall. To cut the budget by 10%, in mathematics the fifteen sections can be added to the full-time faculty, where the full-time faculty will have to teach more students and the department has to lay off the adjunct. This may have repercussions such as an increased number of students handled by faculty as well as fatigue on some of the full-time faculty who would have to handle more sections than they did previously. This will affect the enrolment levels of the students negatively as it may reduce the enrolment of the students. It may also lead to the resignation of the full-time faculty who may feel overworked.

Strategy 2

The second strategy involves reducing the number of full-time faculty and increasing the number of adjunct teachers. This is because the adjunct teachers teach sixty units out of the one hundred units for which they are paid $105, 000. The full-time faculty teaches forty units for which they are paid $160, 000. This implies that the full-time faculty receives a flat rate of $4000 for each of the units they teach. To cut the budget cost the department can lay off one of the full-time staff or make them work under the adjunct conditions where they are paid as per the section that they teach. This will see the department saving $15,000 for the math courses and &25,000 for the reading and writing courses. This will reduce the budget in the department but it will have repercussions for the university in that it will have to pay compensation fees to the full-time staff for violating the agreed working terms and conditions, which is a breach of contract. It may result in an impasse between the faculty and the institution that may result in wasted learning hours thereby affecting the students negatively (Meisinger, 1994).

Strategy 3

The third budgeting strategy may involve communicating to the staff concerning the budget cuts and the likely implication they may have on the staff (O’Brien, 2011). This may prepare the staff to adjust themselves by preparing to teach more sections for the enrolled number of students. The full-time faculty may opt to teach ten more sections for both fall and the spring in a scenario where the budget cut is not continuous and it is for one year. This will mean that the full-time staff will teach forty extra sections out of the one hundred sections. This leaves the department with fewer sections for the adjunct department where the adjunct will teach five units for reading, five units for writing, and ten sections for mathematics. This means that the faculty will cut its expenses by over $62000, which is even far above the ten percent budget cut estimate. This will give funds to the department to use during the next year thus relieving the full-time staff from overwork. This plan will only affect the adjunct staff negatively as they will receive a reduced amount of money. However, because their work is part-time and they do not operate under permanent work conditions they may relax for that period until the following year when the normal budget operations will apply. This will not affect enrolments or the institution negatively. It will affect the full-time staff by overworking them and by temporarily reducing the workload of the adjuncts (Head, 2005).

Strategy 4

The fourth strategy is on cutting the number of sections taught in the department by reviewing the curriculum and coming up with fewer sections to be taught. This will reduce the unit costs of the faculty, which means that the faculty has to teach lesser courses. For instance, mathematics has seventy sections that are taught in the fall and in the spring. When revised, these sections can be reduced to fifty sections, which will reduce the budget by $36, 000 that is a figure above the ten percent budget cost. This strategy is beneficial because it will be a collective decision and none of the staff members will lose out completely because of the mentioned changes. The enrollment will not be affected (Khosrow, 2006).

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Strategy 5

The other strategy is that of increasing the student s enrollment by over ten percent. The current enrollment of students who have enrolled for these courses is 2000. The unit cost per student is $132.5 and therefore, when the enrollment goes up it means that the funds will be increased by $26, 500. This means that with an increased enrollment the budget will remain the same. However, it will mean that the full-time faculty will have to teach an increased number of students than the current number enrolled in their classes. The benefit of this strategy is that none of the staff members will lose their job or a part of their income due to the budget cut. The department will only need to create more awareness about the courses in order to have an increased number of students enrolled in the courses. It will not affect the institution and the students negatively (Khosrow, 2006).

Recommendations

The fifth strategy is the best strategy over other strategies because it does not affect the current budget in any way; it only increases the enrollment of the students in the courses. The other strategies involve cutting the number of units and the number the adjunct and the full time faculty, which may result in bad reputation for the organization especially if it lays off the full time faculty who are unemployed on permanent terms. This strategy may involve marketing and increasing awareness of the necessity of the courses provided by the department of education in order to increase enrollment. An increased enrollment justifies, increases the budget allocations, and does not result in cutting the budget when there is an increase in enrollment of the students. Though the students do not pay directly for these courses in the tuition fees, an increased enrollment increases the fund allocated to the department due to increased unit costs (Arseneau, Manuel, Sargeant & Walsh, 2002).

Conclusion

Budgeting strategies are imperative as they ensure that the organizations resources are well utilized even when there are limitations on what to spend. It ensures that the resources get used as per the costs attached to each unit. Communicating upcoming changes as a result in budget cut is imperative to prepare the staff for changes in advance rather than effecting changes abruptly affecting the institution, the students, and the faculty negatively. Communication may involve the faculty in coming up with the best ideas of handling such changes.

References

Arseneau, B., Manuel, R., Sargeant, K., & Walsh, J. (2002). Show me the money: Paper presented at the annual meeting of the league for innovation in the community college. Boston, MA: ERIC Document Reproduction Service No. ED 466745.

Head, S. (2005). The new ruthless economy. Budget, work and power in the digital age. Oxford: Oxford UP

Khosrow, M. (2006). Emerging trends and challenges in cutting budgets. London: Idea Group Press.

Meisinger, R. (1994). College and university budgeting: An introduction for faculty and academic administrators. Washington, D. C.: National Association of College and University Business Officers.

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O’Brien, J. (2011). Budget. New York: McGraw-Hill, Irwin Publishers.

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