Meisinger (1994) identifies two participant role types that are present in every budget development process: the “spender” or advocate role and the “cutter” or restraining role.  There is a purpose and necessity for each role even though the opposing nature of the two roles can easily lead to conflict in the budget development process.  The polarity of these two roles is particularly evident in times of fiscal uncertainty or restrictions.

The interests, priorities, behaviors and responsibilities of participants in each role are different. In reality, there is more of a continuum of roles from “spender” to “cutter”.  Rarely does one find groups of participants who display pure characteristics of one role or the other.  However, it is useful to analyze the budget development process through the lens these roles provide.

The “spender” or advocate role at Lane is typically played by division heads, department directors, and the unions.  Each of these groups has an interest in acquiring more resources for department/division needs and for employee compensation.  The role of the spender is to meet as many needs as possible. Advocates will apply pressure to find and release every possible resource for spending. Advocates often describe themselves as concerned for meeting the needs of students.

The “cutter” or restraining role at Lane is typically played by the vice presidents, the president and the budget office.  The role of the “cutter” is to ensure fiscal responsibility and prudent management of resources.  Cutters resist the built-in pressures of every organization to expand and thereby increase spending.  Cutters are those typically held responsible for the overall policies and fiscal performance of the college.  Cutters usually describe themselves as concerned for the long-term fiscal health of the college.

Both spenders and cutters are necessary in the college-wide budget development process.  The college should be spending as much of its available resources as possible to meet the educational needs of students and the community; after all, that’s our mission.  The college should be keeping employee wages and compensation as high as possible; we have a social responsibility to employees as well as the need to attract and retain highly qualified faculty and staff.  Likewise, the college should be prepared to meet most financial contingencies and should be minimizing financial risk; we live in an uncertain world and must be ready for its challenges.  The college should be applying as much effort to cost containment and cost efficiency as to budget increases; it is a fact of life that the supply of money for public education is limited.

Because of the inherent nature of these roles, misunderstandings and conflicts can, and often do, develop between participants playing the two roles.

• Spenders accuse cutters of not having the best interests of students (or employees or the community) in mind and worrying more about “management needs”.  Cutters accuse spenders of having selfish interests based on department or union priorities instead of college priorities.
• Spenders accuse cutters of being too conservative.  Cutters accuse spenders of being fiscally irresponsible at worst or not understanding how to properly manage the finances of the college at best.
• Spenders accuse cutters of “hiding” money.  Cutters accuse spenders of offering simplistic budget solutions that do not take into account the complexities of managing an institutional budget.

In a shared governance environment however, continuing confrontations resulting from role polarities can be extremely counter-productive in the budget development process.  In a public institution, the budget development process has pre-determined deadlines which legally must be met.  Prolonged confrontations shorten the time available to reach realistic shared solutions that meet the interests of all parties.  It is for this reason that many colleges choose not to share budget development decisions.

Solutions for budget development in a shared governance context are usually framed in terms of sharing power and authority.  Usually cutters are those who have the formal authority in the college, e.g., the president and vice presidents.  Sharing power and authority in the budget development process would seem to be a matter of negotiation and consensus building or finding the right “balance” between interests of the cutters and the spenders.

But cutters typically resist this kind of shared governance solution that relies on college wide negotiation and consensus. Often spenders interpret this resistance by cutters as not wanting to “give up the power” that they have to make budget decisions. But this explanation ignores one fundamental reality of organizational decision making.

Up to this point in this paper, I have tried to take a balanced approach to role conflict in the budget development process.  I have tried to be as objective and neutral as I can in describing the interests of spenders and cutters.  However, now I must shift my perspective and write from my biases as a vice president and as the chief financial officer of the college.

The one fundamental reality that is often ignored in the pressure to move to shared institutional budget development is accountability. The formal and informal structures of accountability associated with hierarchical bureaucracy still predominate.  The resistance on the part of cutters to shared budget development comes from this mismatch between a new governance model and an old accountability structure.  It does not matter who in the institution makes budget decisions; if the result is a serious financial problem the CFO will be held accountable.  This accountability is not “blame” for creating the problem but the responsibility for developing and implementing strategies to fix the problem and keep it from happening again, and the responsibility to provide answers to higher authorities such as the Board or the Legislature.

The formal role of the chief financial officer is to safeguard the financial health of the college.  That role is shared to some extent with the president, other vice presidents and the Board.  But can that role, and the accountability that goes along with it, be shared with faculty, classified staff and division/department heads? What formal structures do we need to build in order to truly share budget development decisions and accountability for those decisions?  What knowledge and expertise must every participant in the process have in order to share accountability for budget decisions? Until we are able to satisfactorily answer these questions, I am reluctant to let go of the power I have in the budget development process.

This is not to say that budget development must be a centralized process.  Shared governance principles can be used to reach the best possible budget decisions.  Disagreement and conflict are inevitable when we try to share in a decision where some of the participants have formally prescribed roles and accountabilities.  But much can be done to move toward a more shared model while realizing that the accountabilities of some participants is a constraint. 

It is imperative that participants make special efforts to understand each other’s interests and each other’s roles.  Some other key ingredients to sharing budget decisions are:

• Clear direction from the Board on ground rules for the budget development process;
• Open financial books and clear financial information;
• Agreement on institutional financial strategies and principles;
• Frequent communication among all participants.

References

Meisinger, Richard J., Jr. College and University Budgeting: An Introduction for Faculty and Academic Administrators (2nd Edition). 1994: National Association of College and University Business Officers, Washington, D.C.