2- Budget Project

Week9 Budget Project: It would be nice to think that each administrative unit might have complete control over its finances, allocations, and funding sources. However, as our discussion will undoubtedly highlight, this is often not the case. Therefore, this project asks you to respond to external mandates, make budget-related decisions, and then explain and defend your rationale for the choices you make. Beginning with the “budgeted amounts” posted as a spreadsheet in Blackboard (the spreadsheet used Barr and McClellan, 2018, p. 74 as a starting point.), respond to two scenarios. (You must respond to both.)

Scenario 1: A permanent budget cut of 15% over two years with no corresponding increase in revenue. You may choose how to allocate the 15% (i.e., 7.5% each year, 5/10,15/0, etc.), but at the end of the second year, your total budget must have moved from $2,007,000 to $1,706,000. Where would you cut? Why? What would be the ramifications of each decision? If you reduce a number, you must discuss that change. In other words, you must cut, and you do not have the option to say, “we’ll increase enrollment to cover it.”

Scenario 2: A budget cut of 30%, moving your budget from $2,007,000 to $1,405,000. This time, the cut must happen for the next fiscal year, but it will be reversed in two years. In other words, this scenario represents “austerity measures” that many institutions have enacted in light of COVID-19 and dropping enrollments. What would you cut? How would you communicate these cuts to faculty, staff and students? What strategies would you try to increase revenue and perhaps shorten the duration of the cuts? How would you pay for—or rationalize—the cost of those strategies?

Although the scenario is a bit artificial, I am looking for realistic and reasoned responses to these two scenarios. In other words, simply saying “we’ll cut all fringe benefits” is not an option—especially in light of new healthcare mandates. As you are considering your cuts, be sure to factor in the impact your decisions may have on employee morale, student learning, student services, and overall effectiveness. Your submission should include both a table of the original and resulting budgets as well as a narrative description of your defense and rationale.
You will submit: (1) a table of the original and resulting budgets (this can be submitted in either Word or Excel and (2) a Word document (please do not type your narrative in Excel) that outlines your defense and rationale. Please be specific. If you indicate that you are cutting $30,000 from the salary budget, how will you accomplish this? Will you eliminate one position? Will you reduce hours? Will you enact a salary cut? Provide detail for every cut you are proposing.