Budget Analysis and Scenario Exercise
Higher Education Scenario
Institutional Budget Analysis & Scenario Exercise
Case: Prescott College for Integrative Learning
Prescott College is a small, private liberal arts institution with an enrollment of 2,000 students and 150 faculty and staff. Historically focused on humanities and liberal education, the college has recently begun repositioning itself toward career-focused majors such as business, healthcare, and technology. The institution’s mission now includes expanding access and diversity, increasing applied learning through industry partnerships, and maintaining its foundational liberal arts identity.
With a moderately high tuition dependence and a once-strong endowment now being cautiously drawn upon, Prescott College faces growing financial strain. Key constraints include:
• A governance-mandated requirement to keep instructional spending at or above 50% of the total budget.
• A board policy limiting endowment draws to 5% annually, absent formal approval.
• A continued commitment to need-blind admissions, despite mounting pressure on the financial aid budget.
• An active salary equity audit, expected to result in faculty and staff pay adjustments mid- year.
Prescott operates under a line-item budget and funds itself through a mix of tuition (undergraduate and graduate), endowment draw, auxiliary services (housing, dining), federal/state grants, private donations, and partnerships.
Assignment Instructions
Using the detailed line-item budget for Prescott College, complete the following:
1. Analyze the Current Budget:
o Identify misalignments between institutional mission and current allocations (e.g., spending patterns, access/equity goals, instructional commitments).
o Use course tools from Weeks 1–8 (cost classification, Step-Down, ABC, compliance review) to deepen your analysis.
2. Respond to one of the following scenarios:
o Scenario A: A major HVAC failure requires a $2 million reallocation from reserves. Given endowment and instructional constraints, how would you propose absorbing this cost?
o Scenario B: The loss of a $1 million state grant ends operational support for the Student Success Center. How can Prescott uphold its mission on access and retention?
3. Connect and Synthesize:
o Reflect on how your recommendations align with legal, ethical, and equity considerations.
o Suggest strategic adjustments that advance Prescott’s mission while maintaining financial stability.
Submission Requirements
• Length: 4–6 pages (double-spaced, not including references)
• Include at least one clearly labeled budget table in the appendix, referred to in the body
• Format: APA 7 style (include title page, references, appendix)