Budget Management Strategies for Higher Education: Overcoming Funding Constraints Report (Assessment)

Introduction

Budget cutting has become one of the challenges that many organizations face, including education institutions. As a result, managing capital and operational budgets has become one of the major challenges that leaders in higher education institutions encounter in their day-to-day life (Brock 109).

In the last decade, public funding in higher education has been shrinking. As such, many institutions have put budget-balancing strategies at the top of institutional leadership agendas in many colleges and universities. In the light of the increasing budgetary constraints, many institutions are slowly adopting the “doing more with less” strategy where they gradually put in place cost-cutting strategies to operate effectively in the highly unpredictable funding environment (Newman, Couturier, and Scurry 23). The budgetary deficit issues are dire in non-profit education institutions that depend entirely on state funding.

To ensure that an organization can maintain its programs, it is important to put in place strategies for ensuring that the institution can sustain its operations without going under or compromising its goals. Even a 10% budgetary cut calls for drastic changes in how an organization operates. The cut requires stakeholders to scale down their activities or devise new approaches to raising the deficit. As the Program Chair for Developmental Education, this report recommends five strategies that the department should consider following the planned 10% budgetary costs. Such strategies will be important in ensuring that the department continues to deliver on its mandate without comprising the quality of learning that students should receive.

Strategy 1: Increasing Enrolment and Charging Some Fees

It is important to note that the current department does not charge its students any fees. In this case, the department is very dependent on funding from the university. Such a situation leaves the department highly vulnerable to any changes in its budgetary allocation. Consequently, this situation can seriously affect its running and ability to provide quality education to students. Further, it can lead to serious challenges, especially among the staff members, who have to be paid promptly while at the same accessing the required resources to support their role as lecturers. However, despite the need for new funding strategies or reduction of expenditure to adjust to the expected budget cuts, it is important for the institution to guarantee affordability in line with its desire to ensure that the courses are accessible to all people.

The first strategy that the institution should consider is an increase in enrolment and introduction of fees for students. Increasing enrolment is one of the most used strategies in higher education institutions that are in the process of addressing budgetary deficits. Now, increasing the number of students in the already constrained environment without a requirement for fees will lead to augmented costs of hiring new lecturers to cover the amplified workload. It is for this reason that an introduction of fees to students will be an important plan that corresponds with the increase in enrolment.

However, the institution is focused on ensuring that the courses that are provided in the department are offered at affordable costs. Indeed, the plan is in line with the desire to ensure affordability where the department can offer the courses free of charge. To guarantee affordability, the increased enrolment will ensure that the cost is shared among the students, hence keeping the fees at a reasonably priced range. For instance, increasing the enrolment from two to three thousand students and charging each learner only $200 will raise $600,000, which can effectively help to lessen or totally cover the deficit that has been occasioned by the 10% budgetary costs. The raised amount will also be adequate to cover the recruitment of additional lecturers to address the increased number of students in the department.

The strategy will disadvantage many students who have accessed learning services free of charge for a long time. The assumption that many students can afford the new fees may not be true. Therefore, it may lead to some students being locked out of the courses due to constraints of raising the amount. The strategy is also likely to affect the scheduling of lessons due to the increased number of students. In this case, lecturers are likely to experience augmented workload at no extra pay. This situation may not be a popular result. At the institutional level, it is important to ensure that the new charges meet the set guidelines and policies that govern the determination of the learning charges according to the relevant education institutions.

Strategy 2: Cutting Costs by Limiting Enrolment

It is imperative to note that the department at the institution does not currently require students to pay any fees to access the offered courses. It is also worth recognizing that the number of students who are allowed in the department has been determined through the consideration of various factors such as the availability of resources, the sitting capacity, number of lecturers, and most importantly, the availability of financial resources to support the staff members or purchase the necessary class environment resources. Using the same considerations, the second proposed strategy involves limiting the enrolment of students into the department.

Limiting the enrolment rate is a major strategy used by learning institutions that do not require students to pay fees for their tuition (Bok 52). Such institutions operate on strict budgets that are financed through external sources such as the state or other financial sources (Bok 53). Reducing the number of students means that the university can cut the costs incurred per student, especially in the area of teaching, where the lecturers are paid in terms of the number of units they teach or the number of students they teach. Further, the reduction in the number of students will lead to less expenditure on student support services and resources that the university purchases to support student learning. Another important outcome for the reduction in enrolment is the need to reduce the number of lecturers or renegotiate the expected remuneration due to the lower number of students. This strategy can also lead to a reduction in costs.

However, the strategy is likely to affect various stakeholders in the institution in different degrees. Firstly, a reduction in the enrolment leaves students as the first casualties of the strategy. In this case, the students who would have been trained at the facility will have to look for other institutions to their disadvantage. Secondly, teachers are the second biggest casualties in the strategy. A reduction in the number of students means that teachers are likely to be required to renegotiate their terms of services. The negotiation may come with reduced salaries. In the worst-case scenario, some teachers are likely to be laid off since they may be in excess of the number of lecturers that the institution is likely to consider adequate for the reduced number of students. Lastly, the institution may experience various repercussions for the reduced number of students. In this case, this department offers remedial teaching for students to attain the required tests to enroll in the main courses in the institution. The reduced number of students implies that it may achieve reduced income from the fees that the higher number of students would have provided to the institution once they join their main courses upon passing their units at the department.

Concisely, while the strategy offers important approaches to addressing the budgetary deficit, it may lead to a reduced income for the university in the long term due to the reduced number of students joining the main courses once they complete their units.

Strategy 3: Terminating Contracts of Support and Teaching Staff

Institutions of higher education incur costs in various programs and activities that they undertake. These areas of spending include salaries, research and development, facilities, and administrative costs among others. According to McMahon, salaries and employee benefits are the largest single area of expenditure in many learning centers (12). Indeed, salaries and employee benefits can account for 25% to 85% of all the expenditure that such institutions incur. It is for this reason that many budgetary cutting strategies are focused on this segment of expenditure (McMahon 12). As a result, the third proposed strategy is the termination of contracts of support and teaching staff members.

The termination of contracts for staff members will result in immediate reprieve to the constrained budget. For instance, terminating the contract of one teacher will result in saving $40,000, which will go to other programs in the department. Terminating the contract of some staff members will also result in additional savings that will go a long way in ensuring that the institution addresses its budgetary deficit problems. Further, the department can reduce the number of its permanent teaching staff members and increase the add-on staff members. Such individuals are not entitled to many benefits that the permanent staff members enjoy. Hence, the strategy will result in more saving for the department and the institution. Further, their contracts can be terminated without the institution incurring unnecessary costs such as the severance overheads that are evident in permanent staff members.

Although the benefits of the strategy are evident as discussed, the plan also raises various concerns and repercussions to stakeholders. Firstly, for students, a reduction in the number lecturers means that they will have to face challenges in accessing personalized assistance. The situation will effectively reduce the quality of the learning they achieve. The second impact is that the targeted staff members will face premature termination of their contracts, and hence a negative outcome for them. However, on the positive side, the recruitment of new adjunct staff members will create new employment opportunities. At the institutional level, terminating the contracts of staff members prematurely may lead to various challenges. For instance, the decision may be challenged in court. This move may attract more costs for the institution. Further, terminating the contracts of staff members requires the provision of severance benefits, which may be high for the institution. However, since the severance costs are a one-time payment, the institution is likely to achieve positive returns in the long term.

The above strategy is very important when an organization is seeking to put in place long-term solutions to its budgetary problems. The human resource operations take a large percentage of an institution’s spending. Hence, putting a good strategy in place to address the problem can result in long-term benefits that will ensure that the organization does not have unsustainable expenses.

Strategy 4: Introducing Tuition Fees for the Current and New Students

The sustainability of free education or learning is dependent on the availability of funding sources to cater for the missing income that would have been obtained from fees (Zierdt 345). When such sustainability is not possible, it is important for institutions and departments of education to rethink their strategies (McMahon 23). Presently, the department is facing major challenges in its budgeting following the expected 10% reduction in the allocations that the institution is going to make. As such, the fourth strategy is the introduction of tuition fees for the current and new students.

The strategy differs from the previously suggested strategy for increasing enrolment and introducing fees by the fact that it suggests the adoption of full fees without any subsidies to students. In this case, the current enrolment will not be increased or reduced. However, students will be required to pay full fees as guided by various policies and fees recommendation by the state’s educational authorities. The department will shift the burden of financing the department to the students. With more than 2000 students in the department, requiring them to pay for the services offered will be an easy and effective approach to raising fees. Such a move will ensure that the department is self-sufficient and hence eliminating the need for funding from external sources.

However, despite the advantages of the proposed strategy, it is likely to lead to several repercussions to stakeholders. Firstly, the strategy will drastically affect students who will now be forced to pay the cost of their education in the department. Further, since the strategy proposes that students will pay the fee without receiving any subsidy from the institution, the fee will be high and possibly not easy for many of the students to pay. As such, the strategy is likely to be a concern in terms of the affordability of the course and hence a major challenge to the department. In addition, it may lead to a reduced enrolment rate of students in the department, which may leave the department with its deficit, hence seriously affecting its operations. Secondly, the strategy is a reprieve to teachers and staff members since they may not be laid off or their terms renegotiated. The institution will save important resources and redirect the funding that is intended for the department to other important activities in the institution.

However, it is important to weigh the other strategies before the adoption of this strategy because of its implications for the affordability and accessibility of education. Further, the strategy may have negative impacts on the enrolment, hence leading to more problems in the access of finances in the department. However, if the strategy will be implemented without the repercussions discussed above, it will provide a long-term and sustainable solution to the budgetary constraint challenges that the department is currently facing.

Strategy 5: Merging Individual Courses to Reduce Personnel Cost

The number of courses that are provided by a department or an institution of education is an important determinant of the cost that is incurred in offering the courses satisfactorily (Thompson and Bekhradnia 45). It is common to have units that are closely related in the same course. Hence, this situation implies a duplication and unnecessary expenditure that goes towards the delivery of the courses. In the process of making a curriculum more manageable, many institutions merge individual units. Apart from making the curriculum accessible and less bulky, the merging of courses is an important cost-cutting approach that can also be adopted by cash-strained institutions. In this case, the fifth strategy that is proposed for the education department is merging of its courses.

The current curriculum requires students to embark on writing and reading Math 1 and 2 to complete the curriculum satisfactorily. However, as it stands, the curriculum shows that some units can be merged to form a single course. For instance, reading and writing can be merged into one unit. Further, Math 1 and Math 2 can also be merged to form another course. The merging of the courses proposed above will lead to only two units, which will be a significant cut in the personnel costs. For instance, reducing the courses to two will imply that the lecturers in the previous courses will be reduced to at least two. Such number would lead to saving of approximately $80,000, which is a significant cutback.

However, despite the saving that will be achieved in the merging of courses, various issues will arise from such a move. Firstly, the issue of whether the new curriculum will be acceptable in the institution as guided by the various educational authorities will arise. Therefore, it is important to ensure that the institution collaborates with the relevant authorities when adopting the strategy. Concerning the staff members, fewer courses mean that some lecturers will have to be laid off since their positions will be automatically redundant. The students will have to adapt to the increased content per unit for the fewer units. Further, the institution may lay off the existing tutors and recruit new and qualified ones to handle all the content in the merged courses.

Recommendation

From the above strategies, the strategy that is highly recommended is the increase in enrolment and charging students some fees. The strategy is the best since apart from helping the department to raise the required deficit amount, the increase in the number of students indicates that the burden of fees is shared. Hence, students will not be exposed to high-fee requirements that can lead to discontinuation or lack of enrolment into the classes. Further, the strategy will not lead to laying off staff members. Hence, it will guarantee their employment status.

Conclusion

The strategies proposed above have shown the various approaches that the department can use to address its budget deficit. The strategies include introducing tuition fees for the current and new students, terminating contracts of support and teaching staff, cutting costs by limiting enrolment, merging individual courses to reduce personnel cost, and increasing enrolment and charging some fees. Each of the strategies has its repercussions as it has been discussed. The strategy that requires an increase in enrolment and charging students some fees has been recommended.

Works Cited

Bok, Derek. Universities in the Marketplace: The Commercialization of Higher Education, New Jersey, NJ: Princeton University Press, 2009. Print.

Brock, Thomas. “Young adults and higher education: Barriers and breakthroughs to success.” The Future of Children 20.1(2010): 109-132. Print.

McMahon, Walter. Higher learning, greater good: The private and social benefits of higher education, Baltimore, MD: JHU Press, 2009. Print.

Newman, Frank, Lara Couturier, and Jamie Scurry. The future of higher education: Rhetoric, reality, and the risks of the market, New York, NY: John Wiley & Sons, 2010. Print.

Thompson, John, and Bahram Bekhradnia. The Government’s Proposals for Higher Education Funding and Student Finance: An Analysis, Oxford: Higher Education Policy Institute, 2010. Print.

Zierdt, Ginger. “Responsibility-centred budgeting: An emerging trend in higher education budget reform.” Journal of Higher Education Policy and Management 31.4(2009): 345-353.Print.