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the market and can charge higher rates for their services than other academic disciplines," he says. "They have the ability to generate revenues and surpluses." A Budget That Makes Sense In the end, budgets must do five things to be effective, Whalen asserts. They must be based on short-term and long- term plans; they must be flexible, able to increase or decrease in response to changing opportunities and priorities; they must be based on realistic estimates of available funds; they must be supervised throughout the year and adjusted in response to changing circumstances; and, finally, they must balance income and expenditure. Johnson of IUPUI agrees that such a short-termand long- term approach to budgeting helps a business school weather nearly any storm. "There's always the potential for crisis in higher education. In fact, it's always in some sort of crisis," says Johnson. "For business schools,most of these crises have been opportunities—corporate scandals and the call for trans- parency and ethics, for example. Crisis simply means that business schools have to be very nimble in adjusting their offerings, such as marrying full-time faculty with part-time faculty who are already working in the world." Furthermore, says Laposvky of Mercy College, the best begins with looking outward to the market, not inward to internal demands. "In France," saysGrange ofGrenoble, "we refer to the two e's, les etudiantes and l'enterprise, and the two i's, the internal and the individual."When a business school's budget is based on internal politics and individual objectives, it isn't in line with what its students, donors, and corporate stakeholders value. As a result, its failure is all but assured, Grange argues. A school that bases its fiscal decisions on the needs of its students and community, however, will be much more likely to meet its objectives, avoiding catastrophe along the way. There's no question that business schools are under great critically even when revenues are flowing to prepare for less prosperous times. "In good times, schools often spend their increased revenues, rather than build these funds into their base," Lapovsky notes. "These are the times, however, when they should look for special programs that can be discontin- ued or areas that could be outsourced, for example." Ultimately, balancing a school's resources with its mission time to make budgets more efficient isn't necessarily during an economic crisis. Administrators should view their budgets pressure to expand their markets, upgrade their facilities, hire the best faculty, and add new programs to keep up with the pace of their peers. Still, it's important to remember that the winners of this race won't necessarily be those who spend the most. The business schools that eventually survive and thrive, even during times of economic uncertainty, will undoubtedly be those that spend best. ■z BizEd MAY/JUNE 2004 31