University Annual Budget Process

Below is a university’s process for developing an annual budget. It takes six months to create a fiscal year budget, when the actual value-added time is probably less than two weeks. It is a mind-numbing batch-and-queue process that wastes people’s time and whose owners never think to improve.


FY 2017 BUDGET CALENDAR

  • November 2015–Mid-January 2016 – Discussions at the department, school and division level of needs in relation to strategic goals with prioritization of needs within the division.
  • Mid-January – Mid-February 2016 – Preparation of presentation by division head.
  • February 18, 2016 – Presentation by division head to Budget Committee for formative input.
  • Late February 2016 – Budget Committee deliberations and feedback to division heads and President.
  • First Week of March 2016 – Preparation of presentation by division head based on formative input from Budget Committee.
  • Mid-March 2016 – Presentation by division heads to President, Chief Financial Officer and Budget Officer.
  • Early April 2016 – Preliminary feedback to division heads on FY 2016 expenditures and FY 2017 requests.
  • Late April 2016 – Initial formulation of Spending Plan Request created.
  • TBD – Review and approval of budget plan by Board of Regents

People do not like to engage annual budgeting because it takes a long time, is filled with re-work, and is generally an uncertain and unpleasant activity. And, the budget that one finally receives is usually different from the input provided months earlier and misaligned with the resources that are actually necessary to get the work done. In public higher education, budgets are often flat from one year to the next, so the entire budget process should take no more than a few hours.

Think about the resources that are expended in creating a budget. It requires the thousands of labor hours of the highest paid faculty, staff, and administrators. And at the end of the process, what has been produced? A document. Nothing of actual substance has been created.

As I am sure you can guess, my view is that these highly paid people should engage in kaizen instead. The first kaizen should focus on improving the budgeting process – reducing cycle time by 90 percent – and then continuously improve that process thereafter. There should be dozens of multi-day administrative and academic kaizens each week on campus, so that people learn continuous improvement, leaders engage lower-level people to learn what they do, and make substantive improvements that favorably impact students, payers, employers, faculty, and staff.

Kaizen is a far better use of human beings’ time on earth than creating budgets using a batch-and-queue process that is largely unchanged for a decade or more.

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