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.