Universities are inherently complex, with intricate academic and operational structures, multiple layers of leadership, and a wide spectrum of needs and competing priorities across various colleges, departments, or other institutional units. As a result, it can be challenging to effectively manage and balance the constant array of funding requests, active hiring and startup plans, upcoming initiatives, and other multi-year university commitments. 

University budgets traditionally capture what is real and immediately likely to happen, focusing predominantly on the current fiscal year's allocations and expenses. This annual budget-centric approach — while useful for short-term financial management — is insufficient for capturing the full spectrum of financial commitments. It fails to fully reflect the scope of a university’s already committed, ongoing, and future activities and investments. Many commitments, such as multi-year contracts or strategic investments, follow a regular cycle, renewing every three to five years. However, this cycle does not align with the current year's budget and is therefore not reflected in it. 

Effective strategic planning requires a more comprehensive approach to financial management. Having the ability to track commitments over multiple years helps university leaders make more informed and data-driven decisions. It gives them a clearer and more complete view of all commitments across the institution. They can see which schools or departments are making requests, which requests are being granted, and how the funds are flowing across all fund types. It also allows them to better understand the long-term impacts of commitments on the institution’s resources and overall objectives.  

With multi-year financial tracking, leaders can better plan and allocate resources to ensure sustainability and strategic growth. At Montana State University, for example, having a centralized commitment planning solution means that leaders can evaluate requests in context of all the institution’s existing and forthcoming commitments, and the overall budget. This broader perspective is crucial for meeting future challenges and adapting to an evolving educational landscape. 

"A campus-wide approach was fairly critical to us,” said Mackenzie Seeley, director of university budgets at Montana State University. "Our institutional processes very much require the ability to track these multi-year commitments and ensure long-term financial resource alignment.” 

Common pitfalls associated with commitments planning 

University leaders often face common pitfalls when it comes to managing commitments. First and foremost, is a lack of transparency around the entire commitments planning process. Stakeholders are more likely to be skeptical of a process they cannot see. For example, they may question why some departments seem to get more funding compared to others, or develop a perception that approvals are driven more by favoritism than merit.  

A lack of transparency can contribute to another common pitfall in commitments planning, which is a lack of buy-in among stakeholders. Department or unit leaders will be less willing to participate in a process that they do not understand or trust. 

Establishing a standard process for submitting, evaluating, approving, and monitoring university commitments is critical to building both transparency and buy-in. Such a process should be developed based on a collaborative approach that gathers input from stakeholders organization wide. Once defined, the process then must be communicated thoroughly across the institution so that leaders at all levels are clear on the expectations. Providing this level of visibility helps build support for the process and assures stakeholders that commitment requests are evaluated on a level playing field. 

At Montana State, the commitments planning system has helped the budget office extend support to all units across campus, including those that previously may have had limited access due to limited resources. 

“Because it is a singular source, it allows all of our users to track resources,” Seeley said. “Now, we’re able to provide that support in multiple locations, which is fantastic.” 

The benefits of tracking university commitments 

Institutions that manually track commitments through emails or Excel spreadsheets inhibit the ability to create a transparent understanding across all stakeholders. Such records are more susceptible to human error. There is a greater chance something will be missed when commitment requests are collected in a piecemeal manner rather than through a standard process and a centralized system. This problem is exasperated when individuals responsible for managing such requests leave the organization. 

Having a centralized system to track the many short- and long-term funding commitments across an institution helps higher education overcome these challenges. Such systems enable numerous benefits, such as: 

Faster decision making: A commitments tracking system serves as a secure, single source of information about various ongoing, planned, or proposed projects across an institution. This allows leaders to easily access information needed to guide critical decisions in a timely manner. Otherwise, information about such projects is often scattered in more unreliable sources on desktops or in files across campuses, such as emails or spreadsheets. 

Greater trust and transparency: By consolidating information, such a system makes it easy to run reports to keep key stakeholders informed and accountable. This transparency facilitates trust and the seamless flow of information. It helps finance teams align with leaders engaged in strategic planning for individual campuses, operational units, schools, or colleges.  

More effective cross collaboration: Improved transparency and communication contribute to better collaboration, as stakeholders across campuses are kept informed throughout the various stages of a commitment and are more aware when there are opportunities for them to actively engage. For example, it helps leaders identify and reconcile commitments that warrant multiple funding sources, such as a joint appointment with a university’s school of public health and medical school, or a new laboratory funded in part by a president's innovation fund or endowment funds. 

Better risk management: In addition to providing transparency, such tools help to ensure accuracy and consistency. Even minor mistakes in budgeting for commitments can cause significant challenges, such as a delay in tight construction schedules or the loss of a highly sought-after faculty recruit. Having a system to track projects establishes standardized processes and automated reporting that significantly enhance accuracy and reduce the risks of costly human errors.  

More effective planning: Many projects or initiatives are multi-faceted, with a variety of needs across different departments. Faculty hiring is a prime example. For instance, hiring a new Bioengineering chair typically involves a lengthy, multi-year recruitment process and therefore may not be included in the current budget. In addition to offering a competitive salary and benefits, the college would need to provide a lab, assistant faculty, research assistants, specialized equipment, and relocation expenses to attract the right candidate. It is important to have a centralized source to track all facets of the recruitment effort, as elements such as those noted form a substantial part of the overall commitment.  

Enhanced resource allocation processes: Commitment tracking systems are especially important with long-term, ongoing commitments that otherwise may be neglected amid the bustle of day-to-day university operations. Since not all commitment funds are received or disbursed simultaneously, having a dynamic view of cash flow is essential. A commitment management system ensures that complex, multi-year commitments are tracked over the long term and that specific funding needs — such as routine equipment replacements or facility maintenance — can be earmarked and managed on an ongoing basis.  

Reduced disruption risks: By implementing a system to track commitments, information is maintained over time in an accessible, centralized source. This ensures knowledge continuity. University leaders can be confident that valuable details on the context, scope, and status of a project are not lost due to turnover within specific departments or other institutional changes. 

The need for an institution-wide approach 

Montana State University uses its commitments planning tool to better understand what commitments are being made, where they are being made, and how they are defined across campus. “Having that really continuous flow of understanding in where those commitments lie was really critical,” Seeley said. 

Managing the many commitments across a university is no easy task. At a fundamental level, responsibility for overseeing commitments lies with the university provost's office and the respective school leaders. In practice, however, managing commitments requires the ongoing engagement and collaboration of leaders at varying levels and from a variety of functions university wide.  

A commitment tracking system helps to streamline many of these processes. It provides a robust and transparent system to help leaders effectively manage the intricate financial landscape of higher education institutions. 

More resources for budgeting and planning