Incentive Based Budgeting: The Financial Game at Land-grant Institutions

This thesis explores the impacts of the Partnership for Incentive-Based Budgeting (PIBB) model at Virginia Tech (VT), a land-grant institution. By conducting a mixed-methods approach including semi-structured interviews, document analysis, and a review of political theory, this research examines the differences in perceptions of employees across employee classifications, academic area, and financial experience at VT on the PIBB model, unhealthy internal competition, communications, fiscal policy, and political influence. The PIBB model was adopted at VT as a strategic response to reduced state funding and aims to encourage budget management improvements and collaborative planning across the university. Findings indicate that while the PIBB model is designed to align financial incentives with the university's academic and operational goals, it may also foster unhealthy, internal competition among faculty, staff, and administrative units. This competition arises from the pressure to meet specific performance metrics linked to budgetary allocations, potentially leading to conflicts and misalignment with the university's broader educational objectives –underscoring the need for a balanced approach to budgeting that supports both financial sustainability and academic integrity. Complexities of implementing market-driven budgeting models within academic settings suggests that while such models can drive efficiency, they must be managed carefully to avoid undermining the core mission of educational institutions. This thesis contributes to ongoing discussions about the optimization of resource allocation in public higher education.