A Mechanism for Budgeting Faculty Support Services: Ask the Deans.

Faculty support services make up a very significant share of university operating budgets. Incremental-like budgeting continues to be a central component of the budgeting process for these services, even for some universities that use responsibility centre budgeting (RCB). Incremental budgeting has well-known incentive problems, such as March Madness spending. Although RCB has been successful in the generation of revenue, it has been less successful in managing faculty support services costs. The focus here is to develop a new approach using established economic theory. Under the proposed mechanisms, a rational and self-interested dean cannot do better than accurately report the benefits of a university-provided service so that the efficient amounts are provided. The right mechanism depends on the nature of the faculty support service [ABSTRACT FROM AUTHOR]