A. The Both/Ands of Resource Allocation
- Brake and accelerate simultaneously
- Rely on both the ethical and legal imperatives of a fiduciary
- Set expectations for hard and necessary tradeoffs
University leaders rarely face clear-cut choices in the budget and resource allocation process. More commonly, they navigate “both/and” realities that demand speed and restraint, innovation and tradition, in investments and curtailments. At every turn, the president’s fiduciary responsibility requires balancing legal and ethical imperatives with institutional mission. Hard tradeoffs are unavoidable: expanding a high-demand program may require downsizing another, or investing in technology may delay facility upgrades.
Modeling candor and courage, leaders must set the expectation that budget and allocation conversations will be difficult but necessary. Leaders must ensure that resource allocations are done in responsible, principled ways, preparing all the while for decisions that are not uniformly satisfactory to members of the community.
B. The Three “Ends” of Resource Allocation— Mission-Alignment, Long-term Institutional Sustainability, and Student Success
- Financial stewardship responsibilities
- Reinforce institutional viability over departmental preferences
- Align strategic priorities with resource realities
- Take some calculated risks with contingency plans ready to go
- Mission alignment, institutional sustainability, and student success as the guiding lights
- Make decisions through the institutional purpose lens
- Put and keep students first
- Plan for the long term not merely the short term
Every budget decision should advance at least one of three ends: mission alignment, long-term sustainability, or student success. Financial stewardship means looking beyond immediate pressures to ensure that today’s choices bode well for future sustainability. This involves prioritizing innovations with mission fidelity and maintaining traditions with a positive student impact.
The changes adopted and the history preserved should jointly support student learning and achievement. By using these three ends as touchstones, leaders reinforce clarity in decision-making, allow for measured risk-taking, and demonstrate that difficult tradeoffs ultimately serve the institution’s higher purpose and enduring excellence.
C. The Principles and Processes of Budgeting and Resource Allocation
- Performance-based allocation principles
- Make data-driven decisions
- Reward individuals and departments that are constructive
- Decide which financially unstable programs will be sustained as “loss leaders” and which will be paused or sunsetted
- Transparent decision-making processes
- Provide criteria and rationale early and clearly
- Engage constituents with appropriate experience and expertise
- Share and document final decisions
The process by which budget and resource decisions are made is as important as the outcomes themselves. A student-centric performance-based allocation framework, grounded in data and mission alignment, ensures that resources support programs with strong recruitment, retention, and reputational outcomes. Such a framework still allows for measured support to struggling areas that are mission essential.
Transparency throughout the process is critical. Leaders should clearly communicate criteria and rationales broadly while working closely with stakeholders who are equipped to offer input and recommendations. Leaders at all levels can and should be cooperative without ceding any decision-making authority that comes with their particular position. Describing and documenting the process and the outcomes build trust, reduce speculation, and promote accountability.
D. The Philosophies That Undergird Resource Allocation
- “Fair” resource allocation
- Define what “fair” means in this context
- Be clear: in resource allocation, like in DEIJ, “fair” is not the same as “equal.”
- Consider some quantitative models for “fair” distribution
- The legal philosophy of fiduciary duty
- Underscore duties of care, loyalty, and obedience
- Act in the institution’s overall best interests rather than the interests of a few departments
The budget and resource allocation process is shaped by two essential philosophies: fairness and fiduciary duty. In budgeting, like in DEIJ, fair does not necessarily mean equal. “Fair,” from a budget perspective routinely means allocating according to mission priorities and the potential for return. It does not mean making across-the-board cuts or equal investments. Mathematical models of various sorts can augment the DEIJ-like principle to ensure that some quantitative measure help to distribute resources in reasonable and rational ways.
Equally vital is the fiduciary framework: the duty of care, loyalty, and obedience. In assuming these required duties, presidents act in the institution’s best interests, not those of individual departments or vocal stakeholders. Accordingly, presidents must put institutional sustainability over Department A’s and B’s aspirations even though faculty and staff in A and B may be disappointed that their departmental interests are secondary to the interests of the “whole.”
Together, these models and philosophies keep leaders grounded in principle while navigating the competing pressures of limited resources, diverse needs, and institutional responsibility.
E. Individual Interests vs. Institutional Wellbeing in Resource Allocation
- Faculty and staff interests vs. institutional wellbeing
- Build trust through honest communication
- Manage to disappointment while maintaining engagement
- Acknowledge the sacrifice needed at times
- Protection of student programs and services is paramount
- Set and achieve ambitious retention and graduation rates for
- Allocate resources with the above in mind
- Focus more on long-term sustainability than short-term wins
When budgets tighten, presidents encounter heightened tensions between faculty, staff, and students, each with legitimate but competing interests. No employee wants their retirement benefits to be cut or their health insurance premiums to increase. But if the institution is running a deficit budget, cutting these expenses is typically more defensible than cutting student programs and services in recruitment, retention, and graduation. Particularly when the least worst choice needs to be made, honest and consistent communication helps constituents see that the tradeoff was not between “good” and “bad” but between “bad” and “worse.”
At times, faculty, staff, and administrators may need to make very personal sacrifices to keep the university positioned for the long term. When this occurs, it is constructive and healthy for faculty and staff to air their disappointments and angst internally with their supervisor and the university leaders. But “airing dirty laundry” externally (in the press and with the public) can easily backfire. Drumming up negative media coverage and spotlighting disappointing decisions can quickly and negatively affect enrollment. If enrollment goes down, deeper cuts and further reductions to the things employees justifiably value are likely to occur.
F. The Communication and Engagement during Resource Allocation
- Proactive and transparent approach
- Expose the context in which the decisions are embedded
- Communicate early and often about potential changes
- Solicit feedback before decision is made and provide updates once it is finalized
- A constructive place for conflict
- Recognize not hide conflict
- Create space for respectful disagreement
- Establish and enforce “civil” engagement rules
When resource cuts or reallocations are on the horizon, silence breeds distrust. If faculty, staff, or students first hear about reductions through the rumor mill, a news article, or a broadcast email, leaders lose credibility. To maintain credibility, presidents should unearth the financial context/position early, pinpoint the challenges, outline the financial pain points behind them, and invite structured feedback from those with expertise and experience before decisions are finalized. Not every opinion will shape the outcome, but stakeholders should feel heard.
Conflict—over benefit cuts, program consolidations, or tuition adjustments—will emerge. To manage it productively, leaders might create some type of discussion opportunity complete with a set of ground rules. A neutral facilitator could be invited to lead the discussion and enforce the ground rules, acknowledging all the while the emotional impact of the situation. The goal of such forums is not to reach consensus but to demonstrate respect and engender trust when decisions are hard and outcomes are painful.
G. Shared Governance and Data Utilization Should be Parts of the Resource Allocation Process
Proactive and transparent approach
- Develop a Budget or Resource Allocation Process that leverages Shared Governance
- Clear governance structures and decision authority
- Advisory committees vs. decision-making bodies
- Balancing consultation with timely action
- Evidence-based resource allocation models
- Activity-based costing and performance metrics
- Regular budget reviews and adjustments
- Hybrid models combining traditional and performance-based funding
Shared governance works best when everyone knows who advises, who recommends, and who decides. Presidents should invite faculty, staff, and student leaders into budget conversations but be transparent about the boundaries of advisory versus decision-making authority. Without this clarity, consultation can slide into gridlock and participants should be informed that this is not a direct democracy where everyone gets a vote that is tallied at the end. It is common, even best practice, for the president to establish a university budget advisory council that reviews data and provides input. At some universities, this committee also makes recommendations regarding allocations. Almost always, however, the final budget and allocation decisions are made by the president and approved by the full board. Making these roles explicit gives stakeholders a voice without creating false expectations of unanimity or consensus.
Data-driven budgeting strengthens shared governance by grounding conversations in facts rather than perceptions. A president may decide to use cost-center-based budgeting, student-centric performance metrics, and/or trend analyses to shape decisions about difficult tradeoffs. Presidents can reinforce accountability by scheduling regular budget reviews that adjust for enrollment, revenue, and expense shifts. Hybrid models—blending traditional allocations with performance-based funding—help institutions adapt to changing realities without abandoning mission-centered commitments. When evidence frames the discussion, resource allocation becomes less about politics or personalities and more about aligning dollars with impact. This disciplined approach models fiscal responsibility while preserving stakeholder trust in institutional decision-making.
H. Conclusion: Leadership Through Complexity
- The courage required for transparent leadership
- Building institutional resilience through fair but difficult decisions
- The invitation for ongoing dialogue and understanding
Resource allocation is one of the president’s most complex and consequential responsibilities. It requires courage to make transparent choices, resilience to withstand criticism, and wisdom to align finite resources with infinite needs. By balancing fairness with fiduciary duty, presidents model principled leadership that reinforces both mission and builds community. Stressful tradeoffs are inevitable, so addressing tensions head on rather than glossing over helps those with different perspectives get a sense for what others are thinking and feeling.
