One of the more interesting things I’ve discovered as I have become more directly involved with institutional budgeting is how complex it is, and how the same amount of money can be both immense and small at the same time.
I suspect we do our budgets in about the same way as most other private colleges and universities, at least at the macro level. We project enrollments, discount rates, and tuition revenue. We calculate fixed expenses and evaluate and prioritize new projects and existing budget lines that may turn out to be optional. We close some lines and open others.
Generally speaking, each year’s budget comes from a planning process that lasts about three years. We keep a running budget projection three years out so that we can evaluate budgetary moves both in terms of their immediate impact and their longer-term implications. Care in making those three-year projections has mostly kept us out of difficulty over the current period of economic instability.
This budgeting process is relevant to hiring because we keep an eye on our overall operating budget, the great majority of which is, in fact, personnel costs. As I’ve written recently, we are planning to make a large number of new hires this year, possibly up to 14. With salary and benefits, the budget for these positions, should we fill them all, is pretty close to a million dollars.
Our overall operating budget is in the low-$40-million range. Thus, all of these new hires, which would substantially reshape the institution for years to come, amount to just over 2 percent of the overall budget. This is the paradox of institutional budgets—on the one hand, that million dollars looks like an immense amount of money, but on the other, as a percentage of the whole budget, it’s simply not very much.
This paradox is why careful analysis of needs and priorities is so important to the running of an institution. If we were compelled to cut a million dollars from our basic budget, it would hurt. We probably wouldn’t have to cut staffing, but we would certainly have to undertake a stringent examination of every open position, and we’d lose a lot of the amenities that make our institution a pleasant place to work. In that regard, a million dollars is a lot of money.
It’s also a lot of money when we consider the possible impact of making 14 new faculty and administrative hires who could potentially make a huge difference in the university’s future. Most of the positions involved are replacements for colleagues who are retiring, and so we are looking at a significant generational change. Some of them involve some restructuring of programs, and that, too, has an obvious impact on our operations long into the future.
But in the overall budget picture, a million dollars simply isn’t that much money. Even so, a figure like that is the margin between just getting by and thriving, so it grows in significance all out of proportion to its percentage of the total budget. Those of us who have responsibility for that budget, I assure you, think about this every single day as we make financial decisions.

