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Abstract
The purpose of this study was to explore the policy settings, environmental factors, and various roles of budgetary slack within the context of three public universities. As a consistent unit of analysis, unreserved fund balances were used as a measure of budgetary slack.The universities examined in this study operate under a diverse set of budgetary policies and procedures governing the use of fund balances. Despite these varied approaches, two prevailing philosophies existed in terms of how fund balances are managed use it or lose it or save it to use later. The research analysis suggests that the use it or lose it philosophy fosters a culture under which individuals may be forced to satisfice in their decision making in order to spend down state funds before the fiscal year end. However, the actions of administrators to spend down funds were not accomplished solely through accelerated purchasing in June. Instead, administrators often reassign costs or revise their budgets mid-year to either maintain control of these funds or to ensure that state dollars are exhausted before other institutional funds with greater flexibility.In contrast, the save it to use later philosophy exists when administrators have the flexibility to carry forward funds across fiscal periods. While this policy environment reduces the incentive to spend down state funds, this philosophy still has limitations as decentralized decisions to allocate fund balances within the loosely coupled university are often challenged with issues related to the dominant coalition, goal congruency, and principal-agent conflict.The studys findings suggest that while slack resources were identified to be effective means to leverage as a buffer to environmental variation, resource for confliction resolution, catalyst for strategic behavior and as a plug for ongoing operating needs, public universities may still operate in an environment that limits the effective use of budgetary slack as a campus resource. In particular, the study identified constraints related to governance and policy restrictions, political activity within the internal management structure, and public perception risk as primary factors influencing the use of slack.