Budget Allocation Approach History

Where does the budget deficit come from?

Planning Process

The budget work unfolded in three phases.

In the first phase, the working group discussed the unique nature of Penn State and essential factors that needed to be kept at the forefront of conversations and decision-making. This led to the creation of a guiding set of principles for the project. 

In the second phase, the group followed decision points related to higher education finance and budgeting to develop a test model. Relevant data were input into the new model to identify outcomes. The working group adjusted the model to better reflect its guiding principles and create a workable first draft.

In the final phase, the draft model was presented to key stakeholders for questions and feedback, which was discussed and adapted into the final model.

Sunrise on the Old Main lawn
students walking

The New Model

The new data-driven budget model creates a clearer picture of the University’s overall revenue and costs and will help to better inform spending priorities and investments to support Penn State’s mission and values. The previous budget was based on an incremental model where the same allocation was distributed each year with slight changes. Over time, the origin of an incremental model is often lost, and it is unclear whether the base budget is still relevant, appropriate, and based on current data. While the previous model has served the University well, it is an outdated method that many institutions have moved away from.