This year, the UW has begun to look into adopting a new way of budgeting: activity-based budgeting.

Activity-based budgeting (ABB) is a significant upgrade from the dated incremental budgeting system currently in place. Right now, resources are allocated by tinkering with the previous year’s budget based on the claims of department leaders.

The ABB system could change this as early as 2011 by making this process a lot more formulaic.

Budgeting would no longer be decided by which department can make the most convincing argument. With ABB, sources of revenue are quantitatively aligned with the departments and activities they are supporting. Metrics of activity, such as enrollment, hours of instruction per quarter, and department graduation rates, all factor into the ABB formula.

The upsides of the ABB system are promising.

By streamlining the budgeting process down to a formula based on activity, each department would theoretically receive enough funding to hold events and classes that match their student base.

As a result, the ABB system ensures that the popular majors, many of which have experienced budget strains in the past, are allocated enough money to support all of their students. ABB would end the days of departments rejecting students because the budget doesn’t have room for them.

ABB would also make the budget a lot more transparent, a change that is beneficial to faculty and students alike.

“Incremental budgeting has slowly evolved into a ponderous, opaque process,” said Bruce Balick, vice chair of the UW Faculty Senate, on his official blog. “It is impossible to say for sure whether our funds are being used wisely or purposefully. The Legislature has been frustrated by our inability to account for the impact of their funds. The day may come when students and their parents also ask for more transparent accountability. The present system won’t readily provide it.”

An additional benefit of the transparency provided by ABB is that revenue is traceable throughout the system.

One potential result? Scalable tuition, depending on your major.

“Charges to individuals (tuition) should be linked to the cost of their education,” noted Paul Hopkins, chair of the chemistry department, in an Oct. 7 presentation on ABB at the science-chairs meeting. “If there are tuition-based cross-subsidies ([such as a] philosophy student subsidizing an Engineering student) they should be controlled and quantified.”

While ABB certainly sounds like an improvement over the current system, the change to ABB does come with its own worries.

The primary concern with the ABB model is that departments will gradually “dumb down” their material so they can receive a larger budget.

Providing departments with a budget based on student success and enrollment motivates the faculty to lower their grading and acceptance standards. If this is the case, an arms race might develop between departments to lower their standards, gradually reducing the UW’s education levels.

Still, the possibility of budgetary abuse doesn’t mean there will actually be budget abuse.

Universities in Michigan, Indiana and Toronto, among others, have been using ABB variants for more than 10 years without any major issues so far. Hopefully, the UW will be the next.

Reach contributing columnist Gavin Verhey at opinion@dailyuw.com.