Issue link: http://www.e-digitaleditions.com/i/61380
-School Budget donations, funds fromtuition—we often lose track of the whole," saysMatkin. "Most insti- tutional accounting systems try to account for those funds separately, which canmake it dif- ficult for a business school dean to put all that money together in a clearly drawn budget." Matkin recommends that schools set up what he calls "comprehensive budgets," which "Business schools get somany different kinds of funds—funds fromthe state, funds from outline all aspects of a school's fiscal operations. A comprehensive budget shows all sources of income and denotes what sources fund what part of the operations, from one-time expenditures for special projects, to variable expenses such as scholarships and mainte- nance, to fixed expenses such as faculty salaries. "A dean's salary, for example, is a single amount, but it may be funded in part by state subsidies and in part by tuition,"Matkin explains. Different functions are performed with combinations of funds. Creating a comprehensive budget and reporting system puts it all together to show a school's true financial situation. Such holistic budgeting may not prevent the inevitable problems of restricted fund- ing—a school may have a plethora of funds for entrepreneurship, while it struggles to find the money to hire a star to its faculty. But a comprehensive budget makes it clear where money is available and where fund-raising efforts may need to be redoubled. scholarships, the better it can balance its aspirations with its capabilities. In the end, those numbers hold the answers to what a school can and cannot do. "Hammering out a viable Balancing Aspirations with Reality A central question revolves around how a school estimates its budget requirements for the coming one, two, even five years in a volatile market. Should an administration estimate according to its goals, which may be too optimistic? Or should it estimate conservatively, according to past failures, which may be too pessimistic? "If you're aggressive and don't make it, you have to spend your year cutting back," says Lucie Lapovsky, president ofMercy College in Dobbs Ferry, New York, and a consultant in financing for higher education. "If you budget conservatively, you may miss important initiatives and sources of revenue." The more a school understands the true costs of its programs, from staples to salaries to planning can make the scarcest resources fulfill even the loftiest missions. by Tricia Bisoux BizEd MAY/JUNE 2004 27