PAGO POR LIQUIDACIÓN E INDEMNIZACIÓN DE LA RELACION LABORAL.

Incremental budgeting is common in universities (Hills & Mahoney, 1978; Lee & Van Horn, 1983; Davies & Davies, 1984; Hackman, 1985; Jones, 1994b; Ezzamel and Bourn, 1995; Grant Thornton, 2016a). It is viewed as a safe approach, requiring little effort and causing the least disruption.

Fielden and Lockwood (1973) explained that during periods of national prosperity and satisfaction with higher education's share of available resources, the 'incremental' approach to planning went largely unchallenged. It is much easier to agree on a small addition or decrease than to compare the worth of one program of activity to that of another. Conflict is minimised by an incremental approach because the area open to dispute is reduced (Good, 2011). Furthermore, the burden of calculation is eased because no one has to undertake a comprehensive review (Schick, 1983). This

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comes at the expense of a potential loss of accuracy and equity in terms of what should be funded. However, unpredictable consequences are avoided (Atkinson, 2011).

Alternative approaches to incremental budgeting have been advocated. For example, Fielden and Lockwood (1973) suggested that each activity or programme of a university should be planned and budgeted separately using a Planning, Programming, Budgeting System (PPBS). However, they recognised the difficulties of such an approach when universities have multiple and inseparable objectives. Whilst there appears to be no successful on-going application of a comprehensive PPBS in a higher education institution (Schroeder, 1973; Dufty, 1976; Massey & Hopkins, 1979), Borgia and Coyner (1996) found that many of the characteristics of PPBS were popular with American institutions, such as the emphasis placed on achieving goals, objectives and future outcomes. Zierdt (2009) also notes that it provides an effective link with an institution’s priorities and vision, but the arbitrary allocation of costs can adversely influence a program’s outcome and the resulting performance assessment.

Zero-Based Budgeting (ZBB) and Priority Based Budgeted (PBB) have been developed to overcome the weaknesses of an incremental approach. Carr (1994, p.51) explained that: “Without the use of priority based budget reviews colleges run a real risk of perpetual year on year incremental increases without the benefit of a fundamental appraisal”. This approach would re- establish the need for the activity or service, ensure value-for-money and provide a consideration of alternatives. In essence, a budget is created from first principals every year. As well as being useful to assess costs it can also be used as a tool to encourage managers to think strategically (McCann & Donnelly, 1992).

Although ZBB was fashionable in the 1970s (Phyrr, 1976), and was the topic of many budgeting articles (Suver & Brown, 1977), it rapidly declined and became a rarity by the 1980s. Prowle and Morgan (2005, p.9) explain why, “the procedures are cumbersome and time consuming and it will probably be difficult to switch resources between areas of activity without retraining staff and/or making redundancies”. Grant Thornton (2016a, p.12) also note that: “Some institutions say they are using zero-based budgeting, but in reality they can’t effectively judge each programme freshly every year because it would take too much time and effort”. Furthermore, the characteristics of an

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organisation’s accounting system may also hamper the identification of resources used for specific purposes (Maccarrone, 1998).

Drury (2004, p.621) offers the view that “many organizations tend to approximate the principles of ZBB rather than applying the full-scale approach outlined in the literature. It can be applied selectively to those areas about which management is most concerned and used as a one-off cost reduction programme”. PricewaterhouseCoopers (2012b) found evidence of a trend towards a targeted one-off use of ZBB, particularly in areas of high materiality and volatility. An example is Aston University Library which benefited from a ZBB exercise undertaken in 1984-85, resulting in a detailed analysis of all library tasks and the assignment of costs to each. They found the task difficult and time-consuming, but it provided a greater understanding of the Library’s functions and activities. It also improved relationships between the Library and both the Information Services department and the Finance Office, as well as giving staff an improved knowledge and awareness of the costs and trade-offs in information provision (Foskett & Brindley, 1991).

Others have suggested that the large amount of detail required for ZBB to be usefully maintained means that it may not be beneficial to use it throughout a large library facility (Johnson, 1994). This view is reflected in the conclusions of Foskett and Brindley (1991, p.33) who state that “although it is too time-consuming to undertake a ZBB exercise annually and undesirable for many reasons, a more likely continuing approach at Aston is the use of ZBB within a particular area that is appropriate to examine in detail”, which is consistent with Drury’s comment above. However, this has not been subsequently undertaken at Aston University.

Boyd (1982, p.437) found that ZBB “had no real effect on the allocation of funds for a state supported university in Texas” when compared with the methods that preceded it. Indeed, this journey of discovery may actually be one of the key advantages of ZBB. A ZBB exercise at Colorado Mountain College, using formula to calculate the expenditure budgets for faculties, professional development (based on grade) and repairs and maintenance (using square footage), led the institution to identify significant differences between best and worst practices in areas such as tutoring, the duplication of activities and the undertaking of tasks which did not tie in with the strategic plan. Other institutions in America have introduced a modified form of Activity Based Budgeting (ABB), rather than ZBB, which analyses specific areas of expenditure (Porter, 2012).

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The Education Advisory Board in Washington DC (2009) commissioned a review of ZBB. This identified a few universities who had adopted ZBB in detail across all areas. However, the review found that as the majority of faculty budgets (upwards of 80 per cent) were comprised of recurring salaries it made little sense to apply ZBB principles and therefore concluded that ZBB did not suit the financial needs of higher education as it did not provide any significant financial planning or strategic benefit.

Overall, there is evidence to suggest from the literature that the more complex methods, such as ZBB, are shunned or not fully implemented by universities in favour of a traditional incremental approach because of the resources required to undertake the process and the limited perceived benefits. Good budgeting in a university would go beyond an incremental approach but would perhaps not involve overly sophisticated methods because of the resources required to implement and maintain, particularly as other performance and control mechanisms (e.g. REF, TEF, NSS, etc.) may be viewed as more important.