Budgetary devolution as an aid to university efficiency

Abstract

This paper describes a method of allocating resources within a university which provides departments with a built-in incentive to the efficient use of those resources. Present allocation systems based on norms such as the staff: student ratio, incorporate no such incentive. The method we propose involves firstly the creation of a budget for each recognizable academic unit, the size of the budget being related to the unit's student load by a published formula; and secondly, the devolution to academic units of much greater responsibility in the spending of their budgets on different items, thereby giving them a direct interest in the economical use of costly resources. We argue that initially such a system should be introduced on a pilot basis in selected subjects in a few universities and that the budgets should be designed to cover all recurrent items of expenditure.1 We finally consider the implications of budgetary devolution on the planning process within universities and on the methods by which funds are provided by the government to the universities.