Why We're Evolving the Budget Model
Current State: Growth-Oriented ABB
For many years, the University of Washington, Seattle campus Activity-Based Budgeting (ABB) model effectively served as a revenue allocation framework, designed to distribute resources during periods of sustained growth. It functioned optimally in an environment characterized by expanding research portfolios, new academic programs, and increasing funding streams, providing a stable foundation for financial planning.
However, the economic landscape has shifted dramatically. We now face a condensing environment and challenging financial realities, where the limitations of ABB—a model optimized for expansion—have become acutely apparent.
The Need for Sustainability
In this new reality, the ABB framework makes it increasingly difficult to understand the true costs of our activities and lacks the incentives required to prioritize efficiently and in alignment with the UW strategic plan during times of constraint. This opacity can lead to misaligned priorities and hinder our ability to make strategic, sustainability-focused decisions.
Incentive-Based Budgeting (IBB) offers a critical path forward. It will provide clearer insight into our financial operations, stronger accountability mechanisms, and better alignment between our budget decisions and strategy, particularly as we pivot towards long-term sustainability as a leading public research university.