AbstractAs universities react to severe financial pressures, there is a danger that too much emphasis will be placed on‘balancing the budget’at the expense of the academic goals of the institution. Therefore, the overall objective of this paper is to design and implement a model for reducing the operating budgets of the academic units of a university, while reflecting the diverse goals of the academic community. It recognizes that faculty, department chairmen and deans should share the responsibility of‘reverse’resource allocations or budget reductions. The model utilizes a goal-programming approach to reflect the multiple-phased model to allow for some degree of decentralization of decision making.The model is applied to a small private university. The solution to the model reveals the distribution of budget reductions among the schools and within the departments. A survey of potential users reveals a definite preference for the model results over the actual budget procedure.