Financial literacy stands as one of the most critical yet unevenly developed competencies among academic leaders in health professions education. In our professional development work at AAL, we regularly encounter both extremes: the department chair who has never seen a budget report outside her own unit, and the newly appointed associate dean who managed a substantial clinical research portfolio before stepping into administration. Both individuals are in the same room, and both need something from the discussion on finances. The key challenge is finding language and framing that effectively serves them both.

This is one of the defining tensions of AAL’s leadership development. For some participants, discussion of departmental or institutional budgets is just-in-time learning. They are living the decisions right now and need frameworks they can apply on Monday morning. For others, the relevance lies somewhere in the future: they know they will eventually need to understand institutional finances, but the urgency has not yet arrived. And yet for all of them, the underlying case is the same. Leaders who understand institutional finances, including how money flows in and out, what drives costs, how budgets reflect values and priorities, and how to communicate financial realities to those who do not share their vantage point, are simply more effective. They build credibility with senior administrators. They make better resource decisions. They advocate more persuasively for their programs and their people. And when financial crises inevitably arise, they are prepared to respond with confidence and clarity.

Start With Purpose

The stakes of financial literacy have never been higher for universities and in health professions education. Across the country, academic health centers are managing the compounding pressures of declining enrollment, volatility in federal research funding, rising labor costs, and reimbursement models that have not kept pace with the actual cost of training the next generation of health professionals. Budget decisions made today at the institutional level will shape departmental structures in five years. They determine which programs survive, which faculty lines are protected, and which missions can be sustained. Academic leaders who lack the vocabulary and analytical tools to participate meaningfully in those decisions are not simply uninformed; they are unrepresented at the table where it matters most.

But financial literacy for academic leaders is not only about understanding numbers. It is also about communicating them. There is a persistent gap in most institutions between the people who manage financial data and the faculty and staff most affected by its implications. Business officers and deans can recite deficit figures and fund balance percentages fluently and still leave a faculty meeting having conveyed nothing. Bridging that gap requires more than financial knowledge. It requires the ability to translate complex financial concepts into language that is honest, accessible, and grounded in shared institutional values. It requires leaders who understand that the story behind the numbers is as important as the numbers themselves. Transparent dialogue about resources is not a vulnerability; it signals institutional integrity and builds the trust required for collaborative problem-solving. When leaders model financial curiosity and encourage others to develop financial confidence, they create cultures where difficult trade-offs can be navigated with collective purpose rather than suspicion.

Bridging Strategy and Budget

And then there is the dimension that receives perhaps the least attention of all: the connection between financial planning and strategic planning. At too many institutions, the strategic plan and the budget live in separate documents, developed on separate timelines, by separate teams. The strategic plan describes an aspirational future; the budget describes the operational present. When these two remain disconnected, strategy becomes wish fulfillment and budgeting becomes an exercise in incremental self-preservation. The institutions that navigate financial uncertainty most effectively are those that have learned to treat strategic planning and financial projection as a single, integrated act of institutional leadership.

The leaders who will be most effective in health professions education over the next decade will not be the ones who leave financial conversations to the finance office. They will be the ones who walk into those conversations ready to engage, to ask harder questions, and to connect the numbers to the mission their institutions exist to serve.

Author: 

Felicia Tucker-Lively, MPH, PhD

Vice President, AAL