A Dissertation Submitted in Fulfilment of the Requirements for Award of the Degree of Master of Science in Accounting and Finance (MSc A&F) of Mzumbe UniversityThis study dwelt on responding to the budget deficit in private universities in Tanzania. St. Augustine University of Tanzania was chosen to represent other private universities in Tanzania as a case study. Specific objectives of this study are to examine the effectiveness of the budgetary process in private universities in Tanzania, to examine the reasons budgetary process in private universities in Tanzania has failed to work effectively and to search for successful alternative financing strategy to close the budget deficit gap. Mixed method research design was applied, that included qualitative and quantitative methods. Data were collected by using questionnaires, interview and documentary reviews. The findings of this study show that budget deficit in private universities in Tanzania is mainly attributed to overdependence on few sources of income especially tuition fee, and poor forecasting. It is recommended that there should be a method which assists to identify costs per unit (unit cost system) for each subject a student would take to obtain a degree, and all costs of services offered by faculties and departments. In order to solve the budget deficit budget process, constant cash flows and economic factors should be considered throughout the budget period.