Carryforward Estimates
for “A” Funds
Wednesday, April 5, 2006
UTS Auditorium
First Session – 9:00 - 10:00
Second Session – 10:30 - 11:30
What is Carryforward?
Surplus funds that are retained
by the unit at the end of the
fiscal year and included in the
following year’s budget
How Does a Unit Generate Carryforward?
Surplus funds are generated
when the SOURCES for a unit
exceed the USES during the
fiscal year
Carryforward = MONEY
Carryforward is analogous to retained earnings in
corporate income statements
Retained earnings are money available for use
So why have money?
Transactions
demand
Precautionary demand
Speculative demand
What is My Unit’s Carryforward?
Object codes 31533 & 31534
How Do I Calculate My Carryforward?
1. Start with the prior year’s carryforward amount (31533 & 31534)
2. Add final BUDGETS for remaining allocations (3’s)
3. Add ACTUAL revenues (4’s)
4. Add ACTUAL transfers from (81XXX)
5. Subtract ACTUAL transfers to (86XXX)
6. Subtract ACTUAL expenditures (5’s)
7. Add ACTUAL IITs (6’s)
8. Balance = New year’s carryforward amount
 The balance should equal the YTD fund balance PLUS the allocation
budgets (All the 3’s)
What Are My Unit’s Sources?
Tuition & Fees (Academic Units)
401XX
Other Revenue
4XXXX
State Appropriations
31500/31525/31526
NET of other 3’s
Non-recurring - 363XX/368XX and 36400/36500
Permanent - 373XX/378XX and 37400/37500
NET of Transfers
81XXX and 86XXX
Tax In and Tax Out
81150/81160 and 86150/86160
Carryforward
31533/31534
What Are My Unit’s Uses?
Expenditures
5XXXX
Contra-Expenditures
6XXXX
How Does Carryforward Occur?
SOURCES exceed USES
Examples:
Tuition
and fee receipts are higher than budget
Transfers in more than anticipated
Expenditures are lower than budget
Salary lag
IIT’s are higher than expected
Planned project/initiative is implemented late
Expenditures move to grant funds
The reverse is true too – if USES exceed SOURCES, then a
unit would have a NEGATIVE carryforward
Is Carryforward Recurring or
Non-recurring?
This is the million dollar question!
By definition – carryforward is non-recurring!
– if your unit’s regular actual expenditures are
less than regular actual revenues – there is a recurring
component to your carryforward
BUT
Under
the DECENTRALIZED budget method we
operate under, the Budget Office cannot tell you what
your recurring carryforward is – the unit’s have to
determine this given the many differences under which
they operate
What About the Other Funds?
Do the other alphabet funds have carryforward?
Yes – it is the fund balance – booked by an OB to
object 32000
Current Funds:
B, C, D, E, R and S (some) – unrestricted
F, G, H, J, K, L and S (most) – restricted
Non-Current Funds:
Loan, Endowment, Agency, Plant
What About the Other Campuses?
Do the USC Senior, Regional and School of
Medicine campuses have “A” fund carryforward?
Yes – it is the campus fund balance
All campuses except for one have “A” fund
balance less than 10% of their “A” fund budget
Is Carryforward Bad?
NO!
Having
carryforward allows us to plan expenditures
end-of-year spending under a “use-it-orlose it” mentality
Discourages
BUT – too much carryforward MIGHT be bad
Why Would “Too Much” Carryforward Be Bad?
Perception – Tuition caps, reduced state
allocation, reduced philanthropy
Public
Management Problem – Understating
revenue, overstating expenditures
Financial
Misalignment
Inability
dollars
of resources to needs
to express commitments on carryforward
What is “Too much” Carryforward?
There
is not one answer for that because it is
specific to each unit with carryforward
Every
Every
unit operates differently
unit has a different level of budget and mix
of funds
So Why Are We Completing a Carryforward
Estimate?
Carryforward is a component of the University
budget and is reported to the Board of Trustees in
total during the budget development process

Estimating carryforward is one step towards
better budget forecasting for the next year and in
future years


Units at USC need to manage carryforward
What is Carryforward Management?
At the unit level, the administration is looking for
clearly defined and expected commitments of
these funds
Better budget planning on the front end yields less
variance which yields less unforecasted changes
in carryforward balances
What is Carolina’s “A” Fund Carryforward
Position?
The percentage of carryforward to total “A” fund budget
at January 31, 2006
USC Columbia – TOTAL – 11.59%
Academic Units – 12.68%
Service Units – 11.11%
Of the total amount of “A” fund carryforward
Academic Units have 61% of the total
Service Units have 39% of the total
How Well Did Units Estimate Carryforward
Last Year?
The difference in the unit projections and actual
carryforward was just over $15M
- a swing of over 32%
Why Were the Estimates Off Last Year?

The source of carryforward not well understood

The estimate was a new request – units unsure of
its purpose and use

Are units deliberately understating revenue and
overstating expenditures?
How Do We Make Our Estimates Better?
Carryforward Template
What Do I Need to Complete This Template?
General Ledger as of March 31, 2006
General Ledger as of March 31, 2005
FY2004/2005 General Ledger FINAL
Academic Units – Tuition report for Spring 2006 and
Summer I 2005
Fall/Spring review
Discussion with dean and/or department head
What Are Some Things to Consider?
 Do I have one-time expenditures before June 30?
 Are there any year-end specific transfers that effect my unit?
 Does any unit owe me revenue or transfers
(3’s or 8’s) or do I need to complete any IIT’s?
 Do I need to transfer funds to a “W” account?
 For academic units, there will be an assessment of utility costs
prior to June 30 to cover the utilities shortfall
 Are there current commitments that will not be liquidated by June
30 that will be expended in the next year
 Is Summer I expected to have the same enrollment as last year?
What is the Impact of Summer I?
Unlike
the academic year, the fiscal year encompasses the
student terms beginning with Summer II, then Fall, then Spring,
Maymester, and ends with Summer I
Summer
School revenue is booked just prior to the close of
the fiscal year, however, because this happens every year, it is a
rolling process – the unit will always have five semesters worth
of tuition each year
The
The
budget is there from the beginning of the year
adjustments from budget to actual for the summer terms
are minor as the tuition receipts tend to follow the prior year
collections, but include the tuition increase from the prior year
What is the Impact of Summer I?
The
booking of Summer I revenue and the payment of
Summer I expenditures by June 30 adheres to the accounting
principle of matching revenues to expenditures in the same
period
The
majority of expenditures associated with Summer I are
expended by June 30 and during the post-close process
If
payroll documents are submitted as requested, June 30 is the
final pay date for faculty for Summer I
Carryforward
is not calculated until after the fourth post-close
of the accounting system to be sure that entries from the prior
year are captured
What is the Impact of Summer I?
Summer
I is treated now like all the academic terms in that
under the budget methodology the net E&G revenue is allocated
to the department
Prior
to the implementation of VCM, academic units received
all their Summer revenues – but did not receive Fall and Spring
which went to the general fund
should not be thought of as being different – in fact
the treatment of the other terms changed to be more like Summer
was previously handled
Summer
Carryforward Calendar – FY2007 Budget Development
March
Carryforward removed from base line-item budget for
all units
April
All units estimate carryforward
Mid-April
Carryforward estimate rolled up for senior
administration
May
Vice President’s budget hearings with President
June
Carryforward estimate rolled up in Board of Trustees
Budget Document
July
As weekly post-close runs, carryforward estimate
updated by Budget Office
Early August Carryforward workbooks sent to all units
Mid-August
Carryforward BD’s due to Budget Office
So What Happens After This?
After FY2007 budget is approved and loaded, the
Budget Office will complete a FY2006 variance analysis
for each unit using the Fall and Spring Review template

Budget Office will develop training sessions for
Business Managers to complete a three year budget
projection

Three year projection is intended to tie to strategic
planning – the Blueprint for Excellence


CFO, Provost, and VPRHS will review
QUESTIONS