The university has been considering various methods of changing the budget system at Ohio State University  -- and in the past, proposals have referred to "Incentive-Based Budgeting," "Responsibility-Centered Management" and various other phrases.

Q&A by me on Budget Proposals

A. Will anything change?     My guess is that change is likely (and the Chicago Bulls will win this year's NBA championship.)  IF no ground swell of opposition develops (and I observed only a few concerns expressed at the April 30 forum) and President Kirwin accepts the specific proposals, it is possible that a new system could be put in place by July 1, 1999.  A year later than that is more likely.

B. What will change?    We will see more incentives for "efficient" behavior built into revenue generation and costs, and the changes may have impacts on individual faculty behavior, as well as college and department decisions.

Examples:
(i) If a faculty member teaching a personal finance class has a demand of 400 students, what incentive is there for letting everyone in?  Not much, and in fact, the closed course funding system gives some incentives for closing out students.  Under "incentive" budget structures, the college would receive more money for 400 students (exactly how much more is not clear.) Assuming that a dean did not keep all of the money, the department would benefit from letting all of the students into the course.

(ii) A department has no incentive for giving up space under the current system.  (Typically, a dean has to pressure a department to give up space.)  Under an incentive system, the department could sell or rent out space.

C. Are there dangers in proposed new systems?   Yes.  A number of concerns have been expressed, including course poaching, lowering of standards, and other opportunistic behavior that might be against university goals.

Examples:
(i) POACHING: We might stop requiring our students to take introductory economics in the economics department, and start offering similar courses. We would get extra revenue that we could use to hire instructors, and we still might have extra revenue to send administrators on cruises.  {Not that such a thing would ever happen!}

The governance structure for course and curriculum change approval should provide some protection, but scrutiny would be more important than ever.

(ii) LOWERING OF STANDARDS: In addition to the possible lowering of standards implied by the previous example, we might decide to give everyone at least a C, as the extra enrollment could be used to hire more faculty, support more graduate students, and to send more faculty to conferences at Disney World.

It is not clear that there are mechanisms in place to inhibit this type of behavior.

(iii) OTHER OPPORTUNISTIC BEHAVIOR: This is a far-fetched example, but a dean could require all faculty to share desks in a common room, and rent out the offices to another college.  The extra money could be used for luxuries for the dean.  This would be fine, however, if it furthered university goals.