Note--Sufficient Conditions for Maintaining a Balanced University Budget

In a recent article, in Management Science, W. F. Massy [Massy, W. F. 1976. A dynamic equilibrium model for university budget planning. Management Sci. 23 (3, November) 248-256.] outlines an interesting difference equation model of the Stanford University budget system. He proceeds then to solve for first and second order (i.e., short-term) balanced budget conditions. However, Massy's assertion that the balanced budget requirement cannot be modeled "effectively" for an extended time horizon is inaccurate. This note shows that such long-range solutions are readily available from the eigenstructure of his model. We derive simple sufficient conditions for maintaining balanced university budgets. Related issues of balanced budget attainability, empirical correspondence, and policy feasibility are also discussed.