TABLE 3: CAPITAL EXPENSES Capital Budgeting The capital budget is an organization’s annual plan and long-term plan for capital improvements. Capital improvements are defined as any purchase of $5,000 or more, regardless of funding source, project length, with a useful life exceeding one year. Long term planning assists the organization by identifying needed resources both financial resources and manpower resources and sequencing purchasing in a logical and coordinated fashion. Capital improvement fall into the following categories: o Deferred maintenance to University general facilities – for example, repair of roofs, parking lot repairs, electrical and air conditioning o Maintenance and renewal of University housing and food services o Maintenance and renewal of academic facilities such as classrooms, laboratories, studios and academic department specific facilities o Purchase of major information technology equipment such as computers, telephone systems, software systems o Purchase of University owned vehicles used by primarily by Facilities, CPIT, and Public Safety o Purchase of miscellaneous equipment such as copiers, mail equipment, check printers, etc. Determining the amount of capital expenditures and the overall capital budget is part of the operating budget process because it impacts operating expenses through depreciation expense. That is, money spent on each capital purchase spread over the useful life of the item purchased, thus a portion of the expense is allocated to each year and is considered an expense that will be reflected in the bottom line of the financial operation of the University. Sources of Funds for Capital Projects The University must have the means to finance needed capital expenditures. Due to the costliness of these projects, funds must either be obtained from the operating budget, reserves, gifts, or borrowing. Long-range planning to obtain the necessary resources is important. In the past, the University has had the following sources of funds to make improvements: o Operating Budget – limited funds for Facilities to address deferred maintenance or other reallocated funds o Auxiliary Enterprises Revenue Housing –funds have been set aside from housing revenues to improve the dormitories Food Service –funds have been available from food service revenues to replace food preparation equipment, tables, chairs, etc. o Reserve Budgets – Offices have accumulated reserve funds which are to be used to replace equipment and renew space that is specific to a given office or academic program o Information Technology o Bond Financing - Building projects such as the new dormitory through bond financing. Guidelines for Submitting Capital Requests Preparation of Requests for Capital Spending To accumulate the comprehensive list of capital spending for FY 2009, each Vice President, along with CPIT, Housing, and Facilities, will be asked to submit a detailed capital budget. The capital requests should be identified on the attached form prioritized by level of importance, expected outcome, and source of funding. The items listed from each Vice President should be in addition to the items listed in the Facilities plan. Priority – projects should be given a priority ranking of 1 to 5. “1” being a high priority, “5” being the lowest priority. Supports – identify if the project supports the strategic plan, a safety issue, or deferred maintenance. Multi-year project – identify if the project will take longer than one year. Cost – Provide an estimated cost if known. If the cost is unknown, leave the cost information blank. Do not request cost estimates for Facilities or outside vendors. Formal cost estimates will be made when the project is approved for future consideration. Objective – What is the purpose of the project? What will it accomplish? If the item is identified as supporting the strategic plan, include which strategic goal the project will support. Please state the impact to the organization if the project is not approved. Funding source – Indicate the funding source and organization number. Date required – Indicate date when the project should commence and be completed. Review of Capital Requests All project requests will be submitted to the Provost or appropriate Vice President for review and approval. Approved projects will be sent to the Budget Office for review and compilation. A comprehensive list will be forwarded to the Facilities Office for comment, relatedness to other projects, feasibility of timing, ability to complete workload when requested, etc. The Planning and Budgeting Committee will review all requests for capital spending and make recommendations for all projects and prioritize projects based upon their level of importance to the strategic plan, the urgency of deferred maintenance, and availability of funds. For projects without funding estimates, the Committee will recommend that certain high priority projects be sent forward to Facilities for preparation of formal cost estimates. Once cost estimates have been completed, the Committee will make a final recommendation as to priority. The Co-Chairs of the Committee will recommend a prioritized list of projects to be included in the capital budget to the President for inclusion in the annual budget to the Finance Committee and the Board of Trustees. During the fiscal year, the Planning and Budget Committee will meet quarterly to review additional requests for capital spending, particularly for emergency repairs, provided that funds are available. No capital funds will be spent without a budget and prior approval of the Provost or appropriate VP and the Planning and Budget Committee. Projects not approved and funded in a given fiscal year will be eligible for resubmission in subsequent years. The goal of the Committee will be to develop a multi-year capital budget with a mix of projects from deferred maintenance, modernization, renovation, technology, etc. with a variety of funding sources, all of which are affordable within the limits of the budget.