> a more sophisticated approach to things

You could substitute "sophisticated" with complicated. The existing method is simple. Yes, extra more gets spent each December, but it gets spent on stuff the departments would possibly be asking for later anyway. With the existing method, its easy to track, gives departments a little morale boost cus they get some cool shit, and a greater sense of agency.

The alternative is a complex system trying to balance who came in under budget, by how much, how often. Which department got that cool thing they asked for? Did they need/deserve it? they came in under budget 3 times and they've gotten additional funding they requested twice, but one of those times the funding vastly exceeded the amount of money they were under budget. What is fair? Is one department seeing favoritism?

You can see how complicated that can become... plus there would likely be additional accounting and management costs required for implementing it, so the net benefit would be reduced.