Much has been written about academic department chairs who come into their administrative positions with no formal training and essentially must learn on the job. This oversight is particularly critical at this time, when the future shaping of higher education will depend on the leadership of academic departments to adapt and respond to change of many types. Help with chair preparation is a well-recognized need and is vigorously addressed by conferences, workshops (from nationally sponsored to institutionally generated), webinars, books, and periodicals, like this one, that can provide assistance, guidance and advice on a number of vexing challenges that chairs routinely face.

Some of these are typical, long-standing responsibilities (faculty evaluation, dealing with difficult people, faculty development), while others are of a more recent vintage (assessment, online courses and programs, diversity, compliance issues). In a recent follow up survey of department chairs (Gmelch, et al., 2017) budget and finance remained on the list of areas where chairs require assistance. Fiscal acumen by chairs will become increasingly important as the traditional sources of funding continue to disappear and as the need for innovative solutions grows. First, however, chairs must understand the basic budgeting process at their institutions.

Conferences typically offer few sessions on budget and finance relative to the topic examples listed above. Perhaps it is because of the concern that the audiences would find the sessions boring or because colleges and universities should be making decisions on what to do or spend on higher principles rather than the financial bottom line. The real reason may be that those in a position to offer this help don’t know where to begin because of the wide array of budgeting systems in play in our institutions. Everything from historical budgets that are increased or decreased by increments based on the available pool of dollars, to budget hearings held to hear requests (aka “the begging system”), to formula-based budgeting with and without built-in incentives, to systems where no budgets are provided, and chairs must make individual requests for items or services, are found among our institutions.

There is also the question of the appropriate level for a conference session on budget and finance. How much do the faculty in most disciplines know about their own department budgets? Chairs can, and should, share budget information with faculty but most of what they reveal is not fully absorbed because faculty regard it as situational information, i.e., as something they are interested in only when it impacts them. For example, how much budget savvy would one expect of a French literature scholar, whose only fiscal needs and requests have been for conference travel, who becomes chair of the English department? How much budget expertise can be expected of an assistant professor who is appointed chair? Certainly, there are members of our faculties who are curious and engaged enough to ask/consider budget questions, but they get pulled away for periods of time by their faculty work and often forget some of the basics.

Taking these factors into account, this article initiates budget training for all standard types of budgeting systems by proposing a series of questions that a candidate for a chair position might ask during the interview. Alternatively, new chairs may also benefit from raising these questions early in their administrative appointments. The questions are very basic, but the answers lead to other questions, both on-the-spot and later, as sophistication in the finances of the institution grows. One could look at this as Budgeting 101.

Question #1: Where do the dollars that comprise my department’s budget come from?

This question seeks the primary source (the answer is not the provost, the upper administration, or the budget office!) of department dollars. The obvious answers are tuition and the state appropriation (for publics) or endowment (for privates). For many of our disciplines, there is also income from course fees (for lab and studio courses, online courses, and co-curricular activities such as tutoring, mentoring, etc.). Finally, professional programs or schools on campus may have program fees charged to students that reflect the increased cost of academic program delivery (e.g., engineering costs more than humanities). Beyond fee income, institutions with research programs generate grant overhead. Chairs of departments that generate these types of income should be assured that the dollars, from at least most of them, are reflected in their budgets at consistent levels over time. It is essential to be aware of these budget parameters because their yields are under local control, making them places where they could improve programming and help the bottom line of the department’s allocation.

Question #2: How is my operating budget determined?

This is a list of contributing elements to the annual allocation. In schools where budgets are historically derived, the dean, presumably the budget setter, may not know the original drivers. In systems like this, operating budgets are usually adjusted by plus or minus amounts each year with an occasional large addition to accommodate a new cost (e.g., a new academic program). Asking this question in systems like this may result in a reconsideration of the model being used such that all budgeted dollars are accompanied by a justification for their allocation and that all units are treated equitably. It is challenging to retrofit a random system to quantitative one, but it can be done and will require some resources to avoid creating losers among the departments.

Assuming that the answer to Question #2 is more detailed than X (the budget last year) + two percent, the information may be helpful in changing the behavior of the unit in ways that are in keeping with campus, school, and department priorities. For example, budget rewards for the growth in school majors stimulates recruitment efforts. Likewise, the growth in credit hours (income) could be part of budget equation, thus stimulating student recruitment and retention. Chairs who have this information are now in a better position to make decisions and investments that avoid losses, serve their constituents, and generate additional resources.

Question #3: Who pays for what?

A budget of $2 million is not necessarily superior to one of $1 million if the department must pay for adjuncts, graduate student support, new faculty start-up and space charges under the larger budget. It is critical that the new chair get a firm sense of these responsibilities at the outset so that the annual budget can be set with an estimate of the department’s potential costs for each. For example, some institutions hold adjunct pay at the school level and departments must make a written request for dollars to pay for each section. This is done presumably to make certain that resources are not squandered by decisions to offer too many low-enrolling sections. This is a time-consuming system, where preparing the list of sections to be covered with justifications and dealing with the inevitable appeals because of the launch of a new course with anticipated low enrollments or student demand for additional section(s) can fray relationships between deans and chairs. Other institutions include adjunct pay in department budget allocations and will periodically adjust the amount to take into account overall full-time faculty number, enrollment growth, and compensation increases. This empowers chairs to make decisions around whether a low enrolling course should be run, or whether the resources might be better invested somewhere else, assuming this part of the budget is fungible. This approach is built on trust among the dean, chair, and students that the best decisions are made, and it reduces administrative overhead and potential conflict.

Costs associated with graduate students in disciplines where they are traditionally supported by stipends, fee remission, and health insurance is another area where the new chair must know who pays for what. This one can be very complex with campus resources also involved and many split cost arrangements.

Question #4: How do I make sense of the budget reports?

College/university budget accounting reports can be daunting for novices and can, on occasion, make even those who see them regularly scramble to identify a rarely used expense code. Using just personnel costs and excluding full-time faculty and staff, there will be codes for grad students (under a different title, of course), adjuncts, hourly student workers, supplemental pays, etc. You don’t have to go it alone! Most departments have or share an assistant who does hiring and budget transactions. This person knows how to interpret these reports. Go over the report together and ask this person to prepare a monthly statement of your key items labeled in terms you readily understand.

The questions listed above should provide the new chair with the basic information on the sources of academic income, how the dean establishes department budgets, what items the department must pay for, and how to read monthly budget reports. The responses to each of the first three beg follow-up questions, some of which are implied in the text. These could very well come up in the pre-appointment meeting with the dean or might arise later. They include references to incentives/rewards for generating new resources and driving improvement, flexible budgets, chair-dean trust, and fungible resources. These questions along with inquiries regarding the personnel component of the department budget and strategies for “making the pie bigger” rather than “arguing for a bigger piece of the pie” will be discussed in subsequent articles.

This article first appeared in Academic Leader on June 1, 2018. © Magna Publications. All rights reserved.


Gmelch, W., Roberts, D., Ward, K., and Hirsch, S. (2017) A Retrospective View of Department Chairs: Lessons Learned, The Department Chair, 28(1), 1-3.

N. Douglas Lees, PhD, is associate dean for planning & finance, professor, and former chair of biology, in the School of Science at Indiana University-Purdue University Indianapolis.