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A Model for Planning the Transition to Equilibrium of a University Budget

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  • David S. P. Hopkins

    (Stanford University)

  • William F. Massy

    (Stanford University)

Abstract

Five-year projections of university expense and income items are incorporated into a model requiring long-run financial equilibrium (LRFE) at the end of the planning period. LRFE means that both budget levels and growth rates are in balance. The "transition to equilibrium" model consists of a set of simultaneous linear equations that are solved for an estimate of the amount of budget base reductions needed to achieve LRFE five years later. The model was applied at Stanford University, the resulting $10.2 million budget adjustment target was accepted, and now (two years later) more than 85 percent of the needed changes have been implemented.

Suggested Citation

  • David S. P. Hopkins & William F. Massy, 1977. "A Model for Planning the Transition to Equilibrium of a University Budget," Management Science, INFORMS, vol. 23(11), pages 1161-1168, July.
    • Handle: RePEc:inm:ormnsc:v:23:y:1977:i:11:p:1161-1168
    DOI: 10.1287/mnsc.23.11.1161
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    Cited by:

    1. Johnes, Jill, 2015. "Operational Research in education," European Journal of Operational Research, Elsevier, vol. 243(3), pages 683-696.
    2. Massy, William F. & Zemsky, Robert, 1997. "A utility model for teaching load decisions in academic departments," Economics of Education Review, Elsevier, vol. 16(4), pages 349-365, October.

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