The budget of an organization reflects its plan in monetary terms over a given period—usually for a year. This chapter is devoted to planning and budgeting in higher education (HE). We present various budgeting procedures, such as incremental budgeting, along with costing methods in HE institutions (HEIs). A variety of optimization models with budget constraints and bounds on the allocations to organizational units are given, where the bounds are a result of the planning process and past budgets. We present linear and nonlinear objective functions (quadratic), with and without constraints, intertwined with a simulation scheme in an HEI. The optimization models are presented in a single and multilevel hierarchy, and over time. Moreover, several aggregative long-run financial models are presented. We conclude that the quadratic model fits HE better than the linear model since it provides allocations around the midpoints of the upper and lower bounds of the allocations rather than the extreme linear model’s allocation. We determine that the quadratic model procedure is preferred, as its optimal solution is intuitive and does not require mathematical formulation and skills. Moreover, the relationship between the mathematical models and known budgeting procedures are analyzed, and we conclude that the optimization/simulation scheme described here results in a combination of several budgeting procedures—as actually happens in practice.