Budgeting for an Academic Department at a State University: Can You Believe the Numbers?

INTRODUCTION

You are the senior accounting faculty member in the business school and your dean, Dean Weller, is asking for help. She is very discouraged after a midyear budget meeting with the Vice President of Finance. The college's Department of Social Work has a large budget deficit, and because of this the VP is inclined towards closing the department entirely or closing its bachelor's program. The department's deficit is the worst in the university and has been so for several years. Weller met with Josh Reynolds, Director of the Department of Social Work, nine months ago, asking him to do his best to reduce expenditures, but Reynolds said then that it wasn't possible - they were down to the bone. The dean has already had to transfer funds from another department to cover the non-base-budgeted salary of a faculty member. The college will also have to cover the final deficit, which means that the other three departments of the college, operating within their budgets, will find any surplus proportionately depleted. Dean Weller tells you that, from a budgetary viewpoint, the college would be better off without Social Work, but that she does not understand what is really going on. The deficit is obvious, but Reynolds says the department is booming - there are plenty of students. She asks you to analyze this situation. Visit the department and talk to Director Reynolds. Find out what you can, collect data, and report back as soon as possible. You have access to the budgetary information she has and all other possibly relevant information, including student credit hours and price of tuition. Make the case for or against the Vice-President's inclination.

REQUIRED:

As requested by Dean Weller, you are to assess the financial situation of this department and present your results in a way convincing to the vice president of finance. You will have to make several assumptions - please indicate them clearly. The dean would like to use your information at the next budget meeting. Your information should be presented clearly so that a nonfinancial person will understand. Make recommendations and present them in an appropriate format. Understand that given the current budget system, your college will be better off if the department is closed because all the expenditures of that department will be removed from the books of the college and the deficit will disappear. BUT, will the university benefit? You may assume that if a program is closed, the university can lay off faculty people without penalty. You do not need to consider facility costs such as maintenance or depreciation.

Note: In the world of non-profits, the word "expenditure" is used instead of "expense."

1) What contribution is the unit making currently, both financially and otherwise?

2) What effect will the closing of the department have on the university?

3) What effect will the closing of the bachelor's program have on the university?

4) Overall, what is the problem? Why does this department look so bad financially?

Attachment:- Assignment.rar