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Strengthening Internal Accountability by Avoiding Fantasy Documents in Responsibility Center Budgeting

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Title: Strengthening Internal Accountability by Avoiding Fantasy Documents in Responsibility Center Budgeting
Language: English
Authors: Harris, Nathan F.
Source: New Directions for Higher Education. Sum 2022 (198):63-74.
Availability: Wiley. Available from: John Wiley & Sons, Inc. 111 River Street, Hoboken, NJ 07030. Tel: 800-835-6770; e-mail: cs-journals@wiley.com; Web site: https://www.wiley.com/en-us
Peer Reviewed: Y
Page Count: 12
Publication Date: 2022
Document Type: Journal Articles
Reports - Research
Education Level: Higher Education
Postsecondary Education
Descriptors: Accountability, Research Universities, Public Colleges, Budgeting, Educational Finance, Models, Decision Making
DOI: 10.1002/he.20442
ISSN: 0271-0560
1536-0741
Abstract: Higher education scholars often investigate the policy mechanisms of external accountability, but rarely explore institutional mechanisms of internal accountability. This chapter, which reports select findings from an in-depth case study of institutional budgeting at an American public research university, examines an underexplored mechanism of internal accountability -- annual budget reviews. The findings illustrate that the university's budget review often constitutes a fantasy practice that affirms the institution's commitment to fiscal prudence as much as scrutinizes budgetary decisions in academic units. The findings reveal opportunities to strengthen budget reviews at institutions that have adopted decentralized budget models such as Responsibility Center Budgeting.
Abstractor: As Provided
Entry Date: 2022
Accession Number: EJ1355014
Database: ERIC
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  Value: <anid>AN0160178811;ndh01jun.22;2022Nov15.05:02;v2.2.500</anid> <title id="AN0160178811-1">Strengthening internal accountability by avoiding fantasy documents in responsibility center budgeting </title> <sbt id="AN0160178811-2">INTRODUCTION</sbt> <p>Higher education scholars often investigate the policy mechanisms of external accountability, but rarely explore institutional mechanisms of internal accountability. This chapter, which reports select findings from an in‐depth case study of institutional budgeting at an American public research university, examines an underexplored mechanism of internal accountability – annual budget reviews. The findings illustrate that the university's budget review often constitutes a fantasy practice that affirms the institution's commitment to fiscal prudence as much as scrutinizes budgetary decisions in academic units. The findings reveal opportunities to strengthen budget reviews at institutions that have adopted decentralized budget models such as Responsibility Center Budgeting.</p> <p>Across the world, higher education institutions confront intensifying accountability pressures (Hazelkorn et al., 2018). The dominant policy narrative asserts that institutional performance can improve by optimizing resource allocation (Dougherty et al., 2016; Huisman, 2018). In response, governments have adopted accountability practices such as performance funding that align public expenditures with performance benchmarks (Hazelkorn et al., 2018; King, 2015). Despite the prevalence of these practices, scholars offer mixed evidence that external mechanisms improve institutional outcomes (Dougherty et al, 2016; Hillman et al., 2015; Ortagus et al., 2020). By contrast, scholars and policymakers often ignore internal mechanisms for promoting accountability (Enders et al., 2013; Trow, 1996; Vidovich, 2018). External accountability focuses on securing resources from external stakeholders, whereas internal accountability focuses on diagnosing and rectifying shortcomings with institutional practices (Burke, 2005; Huisman & Currie, 2004; Kelchen, 2018).</p> <p>Despite its centrality to institutional performance, budgeting has been overlooked as a mechanism for promoting internal accountability, which is surprising given the emergence of Responsibility Center Budgeting (RCB) and Responsibility Center Management (RCM). These decentralized budgeting practices devolve authority to deans in academic units, anchoring budgeting closer to where institutions generate revenues and incur costs, which offers increased transparency (Austin & Jones, 2018; Fethke & Policano, 2019). This devolution of authority situates academic deans as the chief academic and budgetary officers for their units and senior central administrators such as provosts as the chief guardians of institutional budget models. To monitor budgetary outcomes in units, central administrators leverage mechanisms such as annual budget reviews, which involve deans writing budget reports and meeting with provosts in budget conferences (Curry et al., 2013; Vonasek, 2011).</p> <p>The literature in higher education, however, offers few insights about annual budget reviews, particularly as a mechanism for promoting accountability. To address this gap, the following chapter reports select findings from an in‐depth case study that examined how academic deans shape strategic priorities during the annual budget review at Sprawling University, a pseudonym for a prominent American university. Sprawling University offered a rich context for the larger study because of its RCB model bestows considerable authority over academic and budgetary decisions to deans and reputation for fiscal management amidst intensifying pressures. Specifically, this chapter captures the perspectives of deans, unit administrators (e.g., associate deans, finance directors), and administrators in the provost's office, exploring vulnerabilities with the budget review, which is the institution's primary mechanism for budgetary accountability. To explore these vulnerabilities, I apply the concept of "fantasy documents," which are planning practices that serve symbolic functions as much as instrumental functions (Clarke, 1999). The analysis offers fresh insights that could enhance internal accountability by exploring the structural, cultural, and political realities that shape accountability mechanisms in RCB models, particularly underlying assumptions that provosts and deans possess the managerial skills and sensitivities to fulfill their budgetary responsibilities.</p> <hd id="AN0160178811-3">LITERATURE REVIEW</hd> <p>This chapter draws from three literatures—literature in higher education on budgeting and accountability as well as literature in organization theory on decoupling. In this section, I discuss insights of these literatures that anchored my investigation of budget accountability.</p> <hd id="AN0160178811-4">Responsibility center budgeting</hd> <p>Many American universities have replaced centralized, incremental budget models such as Central Administrative Management (CAM) with decentralized, revenue‐centered models such as Responsibility Center Budgeting (RCB) or Responsibility Center Management (RCM) (Deering & Lang, 2017; Fethke & Policano, 2019). In CAM models, budgetary authority mostly resides with senior central administrators such as provosts who determine and distribute budget allocations to units, while deans implement institutional initiatives and administer and distribute allocated funds throughout their units (Curry et al., 2013; Vonasek, 2011).</p> <p>In RCB models, institutions devolve budgetary authority, anchoring decision‐making closer to where units generate revenues and incur expenses, which aims to increase efficiency and transparency (Deering & Sa, 2018; Kosten, 2016). Deans lead as chief executives who assume control of academic and budgetary planning within their units, advancing their unit's mission while balancing its budget (Fethke & Policano, 2019; Justice, 2019). This devolution of authority also recasts the role of central administrators in institutional budgeting. In RCB models, provosts retain authority over certain policies, including projecting key parameters such as reallocation targets, but mostly monitor academic and budgetary outcomes in units (Fethke & Policano, 2019). The primary mechanism for budget monitoring is annual budget reviews, which involves deans writing budget reports that detail their unit's fund balances, strategic priorities, and fiscal projections, and an annual budget meeting with the provost (Curry et al., 2013; Justice, 2019).</p> <hd id="AN0160178811-5">Internal accountability in higher education</hd> <p>Despite their stated purpose, annual budget reviews remain an underexplored accountability mechanism in higher education. The issue of accountability underscores answerability to stakeholders (Burke, 2005; Trow, 1996). Historically, scholars and policymakers have emphasized external accountability, exploring the effects of governmental authorities aligning public expenditures with institutional performance (Hazelkorn et al., 2018; Huisman, 2018; King, 2015). In the United States, governors and legislatures have long pursued policies that link funding to key outcomes such as graduation rates and retention rates (Deming & Figlio, 2016; Dougherty et al., 2016; Powell et al., 2012).</p> <p>By contrast, scholars and policymakers often overlook mechanisms for promoting internal accountability, which explores the extent to which institutional practices advance academic missions (Enders et al., 2013; Huisman & Currie, 2004; King, 2015; Vidovich, 2018). Internal accountability entails conducting evaluations to identify opportunities for improving institutional performance, including addressing weaknesses with core practices and processes that enable teaching and research (Burke, 2005; Graham et al., 1995; Kelchen, 2018; Trow, 1996). Senior administrators, especially presidents and provosts, assume critical roles in designing institutional reviews, including developing reports and feedback loops that can inform and refine core practices (Burke, 2005; Trow, 1996).</p> <hd id="AN0160178811-6">"Fantasy" documents</hd> <p>Paradoxically, institutional reviews can undermine as well as bolster internal accountability. Documents such as performance reports can exacerbate rather than reconcile vulnerabilities in organizations (Hull, 2012; Power et al., 2021). Organizational theorists have long investigated how documents establish formal objectives and delineate responsibilities within organizations, but reports can bifurcate formal policies from enacted practices (Hull, 2012; Meyer & Rowan, 1977; Power, 2021; Selznick, 1949). This decoupling allows organizations to signal commitments to rational planning, which inspires confidence and secures legitimacy from stakeholders; with this buffer of goodwill, organizations can then bypass inspection, allowing managers to preserve existing practices (Bromley & Powell, 2012; Meyer & Rowan, 1977). This practice tends to occur in organizations with ambiguous technologies such as universities that distort inferences about cause and effect between organizational inputs and outputs (Birnbaum, 1988; Meyer & Rowan, 1978; Rowan & Miskel, 1999; Weick, 1976).</p> <p>The concept of "fantasy documents" embodies this organizational reflex to decouple espoused and enacted realities. "Fantasy documents" encompass planning practices that serve symbolic as much as instrumental functions (Clarke, 1999). Typically, fantasy documents normalize environmental ambiguity and detail complex contingencies within and across organizations, signaling to stakeholders that senior managers understand—and can control—vexing problems (Clarke, 1999; Morse, 2004). By chronicling and charting complexity, fantasy documents can imperil organizations by propagating overconfidence. In extreme cases, fantasy documents specify elaborate contingencies for addressing large‐scale disasters such as emergency plans for surviving nuclear war (Clarke, 1999). This extreme case illustrates the pitfalls of fantasy documents—normalizing convoluted if not absurd assumptions, which conflates intricate planning with increasing the plausibility of planning outcomes (Clarke, 1999).</p> <hd id="AN0160178811-7">RESEARCH CONTEXT—SPRAWLING UNIVERSITY</hd> <p>The study presented in this chapter derives from a larger research project that explored how academic deans shape strategic priorities during a university annual budget review. With case studies, researchers investigate the how and why of unexplored phenomena and embrace organizational context (Bogdan & Biklen, 2007; Eisenhardt & Graebner, 2007; Yin, 2017). The data for this study was collected from interviews with three groups: deans, administrators in their colleges (e.g., finance directors, associate deans), and central administrators in the provost's office. In interviews, I asked administrators to describe their participation in the annual budget review as well as their perceptions of budgetary accountability at the institution. I pledged anonymity to participants, creating pseudonyms as famous novelists for every dean (e.g., Dean Austen, Dean Conrad). Table 1 summarizes background data on the deans and Table 2 describes the budget situation for each college.</p> <p>1 TABLEBiographical backgrounds of the profiled deans</p> <p> <ephtml> <table><thead><tr><th>Dean</th><th>Sex</th><th>Disciplinary Background</th><th>Key Experiences</th></tr></thead><tbody><tr><td>Dean Austen</td><td>F</td><td>Soft/Applied</td><td>Dean, peer university; Associate Dean, peer university</td></tr><tr><td>Dean Conrad</td><td>M</td><td>Hard/Applied</td><td>Dean, peer university; Department Chair, Sprawling U</td></tr><tr><td>Dean Huxley</td><td>M</td><td>Soft/Pure</td><td>Dean, several peer universities</td></tr><tr><td>Dean Joyce</td><td>M</td><td>Soft/Applied</td><td>Associate Dean, Sprawling U</td></tr><tr><td>Dean Stowe</td><td>F</td><td>Soft/Pure</td><td>Research Director, peer university</td></tr><tr><td>Dean Swift</td><td>M</td><td>Hard/Applied</td><td>Department Chair, Sprawling U and peer university</td></tr></tbody></table> </ephtml> </p> <p>2 TABLESummary unit budget profile for the profiled deans</p> <p> <ephtml> <table><thead><tr><th>Dean</th><th>Descriptive Budget Profile</th><th>Approximate College Budget</th></tr></thead><tbody><tr><td>Dean Austen</td><td>Emerging from Deficit</td><td>> $US50M</td></tr><tr><td>Dean Conrad</td><td>Approaching Deficit</td><td>$US25M – $US50M</td></tr><tr><td>Dean Huxley</td><td>Emerging from Deficit</td><td>< $US25M</td></tr><tr><td>Dean Joyce</td><td>Investing Surplus</td><td>< $US25M</td></tr><tr><td>Dean Stowe</td><td>Investing Surplus</td><td>< $US25 M</td></tr><tr><td>Dean Swift</td><td>Balancing Budget</td><td>> $US50M</td></tr></tbody></table> </ephtml> </p> <p>Sprawling University's decentralized character resembles many research universities. Over the 1990s and 2000s, Sprawling implemented and refined a RCB model—the Campus Budget—that bestows budgetary authority and autonomy to academic deans in colleges. A senior central administrator touts decanal authority as a strategic advantage, explaining,</p> <p>One of our real strengths ... we have, with respect to strategic issues, a very decentralized model. We give a lot of discretion to the deans ... the best way to run a college of music is probably very different from the best way to run a college of medicine.</p> <p>Similarly, an internal memorandum extols decentralized budgeting, asserting, "academic leadership closest to the particular circumstances make the best decisions concerning those circumstances." Dean Joyce, for example, appreciates that the budget model affords "substantial ... independence" from the provost's office, while Dean Conrad described it as "a great way to run a university" because deans understand unit issues better than the provost.</p> <p>Deans possess substantial autonomy, but the provost retains authority over important levers as the steward of the budget model. The provost serves as the university's chief academic officer and chief budget officer, which enables the institution to focus limited resources on pressing academic priorities. An administrator in the provost's office argues, "that linking ... allows the provost to make decisions about resource allocation that really improves the way that the institution functions and how it invests its resources." An internal report characterizes the provost as leading academic and budgetary planning, even if deans retain "a lot of latitude" in implementing priorities.</p> <p>This alignment of academic and budgetary planning has been tested in recent decades. Sprawling University has grappled with stagnant state appropriations and fluctuations in federal research funding. In response, the institution has reallocated many millions of dollars in expenditures to key academic priorities. Despite this triumph, the future portends intensifying pressures. Notably, the Board of Trustees has become less tolerant of annual tuition increases. Administrators across the institution question the extent to which the provost's office can continue to fund special initiatives or rescue units in deficit. Earlier cost savings emphasized reallocating funds to key priorities, but recent efforts focus on securing supplemental resources to fund core activities such as financial aid and faculty salaries. In response to these pressures, numerous administrators sound a common note—"we can't do this forever."</p> <p>Amidst heightened fiscal stress, the annual budget review at Sprawling University has assumed increased importance. The annual budget review includes two primary mechanisms—a budget report and a budget conference. The budget report summarizes key initiatives and fund balances, representing the closest thing to an annual report for each college. The report is the primary artifact of the budget review and the foundation for the budget conference. In this meeting, the dean of each college, often along with unit administrators such as finance directors, meets with the provost and administrators in the provost's office to discuss the budget reports of their colleges. A senior central administrator describes the budget report as "very important" and the budget review as "the most important time in the year for taking a global look at how the college is doing, all aspects."</p> <hd id="AN0160178811-8">EXPOSING BREAKDOWNS IN BUDGETARY ACCOUNTABILITY</hd> <p>Despite Sprawling University's reputation for fiscal prudence, the experiences of numerous administrators illustrate that internal accountability with RCB models can prove elusive. Central administrators champion cost containment and reallocation to academic initiatives, but administrators describe numerous provosts as tolerating fiscal mishaps. In fact, budgetary blunders anchored the narratives of numerous deans. After several years, Dean Huxley discovered that his college had accumulated a deficit, which stemmed from his predecessor overspending on financial aid; and this multi‐million‐dollar deficit slipped past his predecessor, the unit's former finance director, and a former provost. Dean Stowe inherited a sizable surplus because her predecessor had acquired funds from numerous provosts for programs that were stockpiled as uninvested reserves. Dean Conrad accumulated a million‐dollar deficit in the dean's office, which numerous provosts never pushed him to rectify. Dean Austen inherited a <emph>massive</emph> budget deficit that neither her predecessor and the college's former finance director nor the provost's office detected in time to stave off. These deficits ranged from a million dollars to several millions to <emph>many</emph> millions of dollars. Administrators portray a complicated portrait of budgetary accountability, specifically identifying two primary frustrations about the annual budget review—provosts exhibiting indifference about the budget review and provosts failing to press for budget reforms in units.</p> <hd id="AN0160178811-9">Provosts exhibiting indifference about the annual budget review</hd> <p>Administrators, especially those in units with surpluses, criticized the provost for failing to explore substantive issues in annual budget conferences. Notably, Dean Stowe has come to discount the annual budget review. With her unit reporting a surplus, the provost displays disinterest during budget conferences. "Nothing ever happens at our meeting." The budget conference never has "any consequential end," despite the "formality and structure" of the budget review. "Every year, [the unit's finance director] who comes with me, wants me to be all prepped and I'm usually prepped to the t—and I never get asked anything that's even challenging." Dean Stowe cannot recall the provost ever posing penetrating questions about the college's budget. "I've never had a time where [the provost] sat and said 'it looks like you did something different than you said you were going to do.' I'm prepared to talk about that, but I've never been asked."</p> <p>Due to these frustrations, Dean Stowe challenged the provost about the purpose of the budget review. "I confronted [the provost] about the budget meeting ... I said 'does anybody actually care what's happening with the college's budget?' I come in, I tell you things, everybody always looks at me and says 'fine, fine.'" She recalls the provost's response as, "we need to do due diligence, we want you to be successful, but [the college] doesn't have the same worry that [the liberal arts college] or [the engineering college] has ... my responsibility is for the whole university." She acknowledges the provost's point—the enrollment of other units dwarfs her college's enrollment—but felt "nonplussed" by the provost's "candor." Dean Stowe concluded that the provost would not interrogate the college's fiscal or strategic direction as long as she did not make a "horrific mistake."</p> <p>This frustration was echoed by administrators in colleges with even small surpluses. In particular, administrators in Dean Swift's unit characterize the budget review as a missed opportunity because the provost only asks several questions during the budget conference. One associate dean explained, "We go through all this effort, collecting all this information. We put it down. We send it to them. Then they may ask you a few things." This administrator quipped, "I guess ... when the news is good, there is not much to talk about." The unit's finance director echoes this annoyance about the budget conference, questioning why the provost did not explore upcoming construction projects, which total millions of dollars, despite emphasizing classroom utilization as a priority during the discussion.</p> <p>Similarly, finance directors in other colleges questioned whether provosts even understand budgets in the colleges. One finance director offers a biting critique of the budget review, calling it "totally pointless" because provosts rarely probe "exact figures" from the budget report. Too often, provosts ask "inexact" questions during budget conferences—"so, tell me what's happening in [the unit]?" By asking vague questions, provosts invite "diatribes" from deans "about all of the things happening in the college." During this administrator's tenure, most provosts have not scrutinized the fiscal or strategic decisions of deans; and this passivity makes deans "even less accountable" because they realize "nobody is monitoring what's really happening" in their colleges. Another finance director echoes this concern about accountability. "Deans get to make decisions with no checks and balances, whatsoever." This administrator referenced deficits in numerous units as evidence that the provost's office could strengthen its monitoring practices. "There have been train wrecks here ... and guess who has to sweep it up? The Bank of the Provost." These failures illustrate the need for provosts to ask "specific questions" during the budget review. Otherwise, deans will regurgitate 'formulaic' answers.</p> <p>Curiously, administrators in the provost's office articulate similar apprehensions about accountability, conceding that the budget review has become too symbolic. One administrator, for example, argues that the budget conference has been "more show than substance for many years." Administrators in the provost's office hoped that provosts held deans more accountable by analyzing unit budgets (in some detail) and asking specific questions of deans. One administrator argued, "You meet with [the dean and the finance director] and you go through ... dig into the data and say, 'this is what I see happening—were you aware?' Sometimes they're not." The provost's office possesses little influence over budgetary decision‐making in units apart from demonstrating vigilant curiosity. One administrator in the provost's office acknowledges, "you're just there to provide guidance," adding, "we really don't have any ability to go in to a dean ... or a finance director and say, 'you can't do that.'"</p> <hd id="AN0160178811-10">Provosts failing to press for budgetary reforms in colleges</hd> <p>Administrators in colleges and the provost's office also argued that provosts too often miss opportunities to intervene during the budget review to protect resources in units. Notably, administrators in Dean Conrad's college expressed concerns about the provost's reluctance to pressure the dean about budgetary issues. One administrator in the college argues that the provost "never really pushes" the dean to address a million‐dollar deficit in the dean's office. "All this time, there were no secrets ... We were very transparent about the problems in the unit. The provost knew from day one what was going on, why things were happening." In fact, numerous budget reports propose reforms for addressing the deficit in the dean's office. "We've said 'we're going to change this' ... every year, we say 'we're going to change it, we're going to change it' ... and then nothing ever happens." The provost's failure to press Dean Conrad stumps this administrator. "I'm amazed. I'm amazed that [the provost is] not being more violent."</p> <p>Administrators attribute the provost's reluctance to intervene with the college's budget to several factors. First, administrators' sense that the provost is waiting for the dean's term to end. One administrator in the college argues, "for the last couple of years, I think the provost's office knew that [the dean's] term was about over, so that was not a time when they were going to do anything." Second, the provost's office focuses on "bottom‐line" balances. From this perspective, the unit's budget is "teetering," but "hanging in there," according to an associate dean. The college's finance director explains, "My bottom line is still positive, but I have had an operating deficit every year I have turned in a budget." The college would be in deficit without a substantial positive balance in one department, but this issue does not concern the provost because it is an "internal allocation" problem.</p> <p>Administrators in the college, however, contend that the provost misunderstands or ignores the root cause of the college's budgetary stress—Dean Conrad has no intention of challenging department chairs about fiscal issues, especially guidelines for grant buyouts. In most units across the institution, when professors receive research grants, dean's offices capture some funds, the professor's department captures some funds, and faculty members receive some funds as a "modest bonus," according to the college's finance director. In the college, however, professors and their departments receive funds, but not the dean's office. This practice provides substantial bonuses—even tens of thousands of dollars every year—to some professors, including chairs. "The amount of bonuses ... is outrageous," according to an associate dean. This practice exacerbates the college's fiscal stress; the finance director estimates that reclaiming a portion of buyout funds could eliminate at least half of the deficit in the dean's office. But Dean Conrad does not want to alienate the chairs over this issue.</p> <p>This concern about provosts not pushing deans on budgetary issues extended beyond Dean Conrad's college. Dean Austen criticized the provost for not demonstrating a greater commitment to budget accountability. The provost does not offer "great rewards" for "real financial professionalism" or level "great punishments" for incompetence. Dean Austen decries the lack of consequences "for not understanding your own budget" as a dean. "If you don't make the numbers ... there are not very harsh penalties." At other universities, deans who generated substantial deficits would be dismissed, but "that doesn't happen here." Administrators in the provost's office articulate similar concerns about fixing fiscal "messes" in colleges, especially after deans finish their terms. One administrator explains that instead of providing incoming deans resources to advance their priorities, provosts too often need to cover debts. "You get to the end of a dean's tenure, and the next dean coming in ... You have to spend multi‐million dollars to bring them back to a breakeven point .... That just doesn't seem to make much sense."</p> <hd id="AN0160178811-11">Rejoinder: Holding deans "fully accountable"</hd> <p>In stark contrast to these concerns, a senior central administrator at Sprawling University contends that the provost's office holds deans "fully accountable" with budgets. "I've seen no instances in which [accountability] has not been satisfied." This senior leader acknowledges that the provost's office continues to refine its monitoring processes, including reviewing budgets every quarter and implementing a monthly "watchlist" for units trending toward deficit. "The system is intended to catch problems before they happen." Despite these mechanisms, this senior leader contends that deans and their finance directors as well as central administrators still miss discrepancies. "Does [the budget model] always work? No. We're all humans, we all make mistakes."</p> <hd id="AN0160178811-12">STRENGTHENING INTERNAL ACCOUNTABILITY BY REINFORCING ANNUAL BUDGET REVIEWS</hd> <p>This chapter reveals critical implications about internal accountability with Responsibility Center Budgeting that warrant further consideration from practitioners and scholars. The findings offer a timely analysis as universities design, adopt, and refine monitoring mechanisms amidst calls for increased accountability from stakeholders. An underexplored vulnerability with RCB models is whether provosts actually possess sufficient expertise and experience to fulfill their monitoring responsibilities. Provosts, especially those new to the position, might not possess the financial acumen, leadership skills, or interpersonal gumption to question and challenge deans about their fiscal or strategic decisions. Correspondingly, academic deans might not possess the expertise or experience to serve as the chief budgetary and academic officers of their colleges, as deans are rarely recruited and selected for their financial and managerial skills, especially at research universities (Curry et al., 2013). RCB models prescribe different budgetary authority to provosts and deans, but deans might not possess the competence to advance the strategic missions of their units while balancing the budget and provosts might not possess the skill or will to hold deans accountable.</p> <p>Within this context, the annual budget review at Sprawling University, specifically the experience of drafting annual budget reports and convening annual budget conferences, can be framed as fantasy practices that affirm the institution's commitment to fiscal management as much as enact this commitment by scrutinizing academic and budgetary planning in units. The findings reveal numerous opportunities to increase internal accountability by strengthening annual budget reviews. First, senior central administrators such as provosts could require every dean to publish an executive summary of their unit's annual budget report. In collaboration with deans and unit‐level finance directors, the provost's office could design this executive summary, which could highlight fiscal realities and strategic priorities but without divulging specific details. By distributing this summary, deans would not only provide community members with more information about the fiscal and strategic direction of their units, but also enable community members to consider, endorse, or question their unit's academic and budgetary priorities. This consideration would likely provoke questions from community members, stimulating discussion and debate about the state of units, and would likely prompt deans to align professed and pursued priorities, closing gaps between espoused and enacted realities. This practice, albeit time consuming for deans and other administrators in their units to navigate, could underscore the instrumental functions of budget reviews. By introducing this transparency, the provost's office could increase internal accountability.</p> <p>Second, the president's office could require the provost's office to publish an executive summary of key lessons learned from the annual budget review after completing all of the budget conferences. In this summary, the provost could highlight patterns or trends with respect to fund balances, unit goals or priorities, reallocation trade‐offs, enrollment projections, and progress on institutional priorities. This report could also explain the ways in which the provost's office plans on collaborating with units to address budget issues. Across the institution, how might the provost's office, for example, support units attempting to spend down surpluses, or how might the provost's office intervene to support units digging out of deficit? This summary could also provide a shared reference point for community members to interpret the performance of their units, allowing faculty, administrators, and staff to compare the accomplishments and challenges of their colleges relative to other units across their institution. This report would also identify courses of actions that the provost's office plans to pursue with deans and their colleges in advance of the next annual budget review, which could increase internal accountability by publicizing shifts in overarching budgetary practices every year.</p> <p>Third, presidents, provosts, and deans could engage trustees in annual budget reviews to bolster internal accountability. At Sprawling University, the Board of Trustees informed two key facets of the annual budget review—setting tuition rates, including indicating projected increases for planning purposes, and approving the final budget. Yet boards of trustees, as guardians of institutional treasuries, could assume a more active role in enhancing budget accountability in RCB models (AGB, 2015). The president, for example, could convene an annual budget workshop every summer that includes the provost, deans, administrators in the provost's office, and trustees who serve on the budget and finance committee. In this workshop, administrators and trustees could discuss the main themes detailed in the provost's annual report about the budget review and probe emerging and existing budgetary vulnerabilities. By inviting trustees into more candid discussions of budget machinations, which delve into details often omitted from sanitized presentations and reports, central administrators underscore the authority of governing boards to steward institutional resources, which reminds trustees of their fiduciary duties, while also underscoring the management duties of deans and their own monitoring duties.</p> <hd id="AN0160178811-13">CONCLUSION</hd> <p>This chapter highlights missed opportunities to explore institutional budgeting as a mechanism for promoting internal accountability. It underscores the importance of diagnosing vulnerabilities with RCB models to ensure that annual budget reports and annual budget conferences do not become bureaucratic check‐the‐box rituals more than rigorous evaluations of fiscal health and strategic direction. Finally, administrators could demystify annual budget reviews across their institutions. The sensitive nature of budgets warrants discretion as deans assess and report the fiscal health of their units, describe the status of initiatives, and articulate emerging priorities. Prudence, however, does not mean concealment. Within and across units, administrators, faculty, and staff hear chatter about the budget review, comparing notes about what they hear (and do not hear) from the provost and their deans; but some individuals might never read the budget report for their unit, or learn of its contents from their dean, or learn about the provost's assessment of their unit's fiscal health or strategic direction. These omissions can engender frustration and cynicism across institutions, undermining the potential of RCB models to increase budgetary accountability.</p> <ref id="AN0160178811-14"> <title> Footnotes </title> <blist> <bibl id="bib1" type="bt">1</bibl> <bibtext> This chapter investigates an underexplored mechanism of internal accountability – annual budget reviews – by exploring the annual budget review at an American research university.</bibtext> </blist> </ref> <ref id="AN0160178811-15"> <title> REFERENCES </title> <blist> <bibtext> Association of Governing Boards of Universities and Colleges (AGB). (2015). Statement on the fiduciary duties of governing board members. Author.</bibtext> </blist> <blist> <bibl id="bib2" type="bt">2</bibl> <bibtext> Austin, I., & Jones, G. A. (2018). Emerging trends in higher education governance: Reflecting on performance, accountability and transparency. In E. Hazelkorn, H. Coates, & A. C. 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Institutional theory and the study of educational organizations. In J. Murphy & K. S. Louis (Eds.), Handbook of research in educational administration (pp. 359 – 384). Jossey‐Bass.</bibtext> </blist> <blist> <bibtext> Selznick, P. (1949). TVA and the grass roots. University of California Press.</bibtext> </blist> <blist> <bibtext> Strauss, J. C., & Curry, J. R. (2002). Responsibility Center Management: Lessons from 25 years of decentralized management. NACUBO.</bibtext> </blist> <blist> <bibtext> Trow, M. (1996). Trust, markets and accountability in higher education: A comparative perspective. Higher Education Policy, 9 (4), 309 – 324.</bibtext> </blist> <blist> <bibtext> Vidovich, L. (2018). Institutional accountability in higher education. In P. Teixeira & J. Shin (Eds.) Encyclopedia of International Higher Education Systems and Institutions. Springer.</bibtext> </blist> <blist> <bibtext> Vonasek, J. (2011). Implementing responsibility centre budgeting. 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  Data: Higher education scholars often investigate the policy mechanisms of external accountability, but rarely explore institutional mechanisms of internal accountability. This chapter, which reports select findings from an in-depth case study of institutional budgeting at an American public research university, examines an underexplored mechanism of internal accountability -- annual budget reviews. The findings illustrate that the university's budget review often constitutes a fantasy practice that affirms the institution's commitment to fiscal prudence as much as scrutinizes budgetary decisions in academic units. The findings reveal opportunities to strengthen budget reviews at institutions that have adopted decentralized budget models such as Responsibility Center Budgeting.
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