Interesting post from "The Angry Professor" about LSU's new budgeting procedure:

Several years ago LSU moved to a business model budget. Under this model, each department has control over its own funds. We might choose, for example, to give everyone a big raise. Or, we might choose to hire new faculty. We might purchase equipment, or furniture.

As with all such schemes, the administration makes sure that they will get money from somewhere to sustain their bloated salaries. Each department pays a "tax" to the college, which is determined by enrollments and indirects as earned in "Year Zero" (the year before the new budget took effect). If the department fails to generate at least the enrollments and indirects earned in this year, the college will take the shortfall out of the departmental budget. We're not talking about that funny fake money that colleges usually shuffle around, but real dollars: my raises.

Also very interesting: Alex Tabarrok's comments on this (and the ensuing discussion) and King Banaian's.