Budgeting for “A” Funds
Education and General
Unrestricted Operating Funds
Definition of an Annual
Operating Budget
An annual operating budget is the financial
expression or plan of an institution’s activities
for a given year.
It generally:
• Provides overall direction for the University or an
individual unit or department
• Serves as a mechanism for setting priorities and
controlling resources
• Facilitates the decision-making process
Definition of an Annual Operating
Budget Continued:
It represents the summations of divisional and
departmental plans, and it normally contains three
elements:
1. A “bottom line” constraint
2. A set of assumptions (or forecasts)
concerning the institution’s current revenue
and expendable resources
3. A set of expenditure targets
“Bottom Line” Constraint
Total Resources
- Total Expenditures
Bottom Line
Ideally, the “bottom line” should be positive or zero.
The goal is to accomplish a balanced budget
where expenditures do not exceed resources.
How to Determine Current
Revenue and Expendable
Resources
(In 5 Easy Steps)
Determine Current Revenue and
Expendable Resources
1. Identify types of resources
2. Understand your variables
3. Develop a list of assumptions
4. Get consensus
5. Set the resource budget
Current Budgeted
Revenue and Resources
Resource Type
(Columbia Only)
Identify the
types of
resources
available
to support
your
activities.
2005 Budgeted
Revenue
% of Total
(rounded)
State Appropriations
127,442,248
39%
Tuition and Fees
161,750,737
49%
153,391
.04%
Sales and Services
4,181,470
1.3%
Net Transfers
1,830,787
.55%
34,273,981
10.1%
329,631,633
100%
Grants, Contracts, and Gifts
Prior Year’s Fund Balance
Total Revenues
State Appropriations
Legislative appropriations received from the
State of South Carolina General Fund for the
current operations of the University.
Recurring Funds
Non-Recurring Funds
•Base AllocationsUndesignated
•Below-the-Line
•Below-the-Line
Allocations
•CHE Funding for
performance, access &
equity and academic
endowment
Tuition and Fees
• General Academic
Tuition
• Department Fee
Revenue
General Academic Tuition for
Regular and Summer Sessions
Revenues collected from students for regular
courses provided in the fall, spring, and
summer used to support the program needs
of the academic operating budgets of the
University.
Department Fee Revenue
Revenues collected from students and used to
support the program needs of the academic unit
that controls the fee to include:
• Discipline specific tuition charges
• Enrichment/Enhancement fees
• Course material fees
• Student participation fees
• Discipline specific application and laboratory
fees
Budgeted Tuition & Fee
Revenues for 2005
Resource Type
General
Academic
Tuition
Dept. Summer
School
Dept. Fee
Revenue
Total Tuition
and Fees
2005 Revenue
% of Total
131,871,435
89.5%
11,328,278
7.7%
4,111,427
2.8%
147,311,140
100%
Distribution of Tuition and Fees by
Student Type and Status
Status
% of Total Hours
FT UG Resident
78.2%
FT UG Non-resident
12.2%
PT UG Resident
2.4%
UG Other (scholarships)
7.4%
FT Grad Resident
22%
FT/PT Grad Non-Resident
6.2%
FT Grad Assistant
48.2%
PT Grad Resident
21.3%
Grad Other
2.3%
Estimated Resident Student
Cost Per Semester
STUDENT/RESIDENCY STATUS
CURRENT
2003-04
$
CHANGE
Columbia - Undergraduate
Resident Undergraduate Tuition:
Educational and General
2,281.50
246.00
Institution Bond
128.00
54.00
Athletic Bond
20.50
Wellness Center
105.00
Renovation Reserve
22.50
Student Health
98.50
Computer Fee
36.00
4.00
Campus Activity
66.00
Athletic Activity
16.00
Total Tuition
2,774.00
304.00
PROPOSED
2004-05
%
Change
2,527.50
182.00
20.50
105.00
22.50
98.50
40.00
66.00
16.00
3,078.00
10.8%
42.2%
0.0%
0.0%
0.0%
0.0%
11.1%
0.0%
0.0%
11.0%
6,507.00
182.00
20.50
105.00
22.50
98.50
40.00
66.00
16.00
1.50
7,059.00
9.8%
42.2%
0.0%
0.0%
0.0%
0.0%
11.1%
0.0%
0.0%
0.0%
10.0%
Columbia - Law School
Resident Tuition:
Educational and General
Institution Bond
Athletic Bond
Wellness Center
Renovation Reserve
Student Health
Computer Fee
Campus Activity
Athletic Activity
Law Review
Total Tuition
5,923.00
128.00
20.50
105.00
22.50
98.50
36.00
66.00
16.00
1.50
6,417.00
584.00
54.00
-
4.00
642.00
Current Budgeted
Revenue and Resources
Develop a clear
understanding of the
variables that impact
your ability to
generate these
resources.
Step 2- Variable Examples
•
Using tuition revenue as an example, one approach would be to
develop a list of questions and seek out the answers.
•
What courses did we teach last year?
•
What level of student participation credit hours did we have in
each of these courses?
•
Will we offer these same courses next year?
•
Will we offer new courses next year?
•
How will changes in the general academic tuition rate impact my
unit’s revenue generation?
•
How will changes in overall university student enrollment impact
my unit?
•
How will changes in the course requirements for students in this
discipline impact my unit’s participation and is that impact shortterm or long-term in nature?
Variable Examples
Using carry forward balances as an example, one approach may be a
historical review of prior year’s carry forward balances to determine the
specific reasons for changes in your unit’s carry forward amount. It may be
helpful to develop a separate list for resources and expenditures.
Examples for resources:
Example for expenditures:
•Unit’s share of University funding
was reduced.
•Dean’s position vacant all year,
but will be filled in August.
•Summer school revenues
exceeded expectations.
•Computer maintenance costs
doubled since last year.
•The “E” fund transfer was not
posted at year end.
•Travel expenditures were less
than anticipated.
•Enrollment in our Master’s program
hs dropped significantly from last
year.
•Equipment ordered last year was
not delivered in time to get the bill
paid.
Carry Forward Calculation
1. Start with the prior year’s carry forward amount (31533 &
31534)
2. Add final BUDGETS for remaining allocations (3s)
3. Add ACTUAL revenues (4s)
4. Add ACTUAL transfers from (81XXX)
5. Subtract ACTUAL transfers to (86XXX)
6. Subtract ACTUAL expenditures (5s)
7. Add ACTUAL IITs (6s)
8. Balance = New year’s carry forward amount
 The balance should equal the YTD fund balance PLUS the
allocation budgets (All the 3s)
Current Revenue and
Resources
Develop a list
of assumptions
used in
creating your
budget
estimate.
Examples of Assumptions
• Student Enrollment
• Departmental Fee
Changes
• Grant/Research Activity
• Staff Turnover
• Temp Hires
Step 3-
Identify future needs
or…
“When in doubt, predict that the
present trend will continue.”
~Merkin’s Maxim
Step 3- Develop a list of
assumptions to use in creating
your budget
Tuition Revenue
• Maintain current year’s course offerings
• Use current year’s per hour tuition rates
• Student participation at 85% of 3-year average
for each course
Current Revenue
and Resources
Get consensus
from your
management
team on these
assumptions.
Step 4- Management Team
Consensus
Communication is:
• Major function of a budget
• Essential to management team support
If management understands “assumptions” used in
developing revenue estimates, they can:
• Provide guidance
• Anticipate needed changes
• Monitor the outcome
Current Budgeted
Revenue and Resources
Set the resource
budget to be
used in
developing your
expenditure
budget.
Step 5- Resource Budget
Now, based on…
• Revenues Identified
• Data Collected
• Consensus on Assumptions
You can…
• Establish the resource budget to
be used for your unit.
Establish Expenditure
Targets
Identify current types of
expenditures
Most “A” funded units will have the
following:
Personnel
Full-time (Classified, Unclassified,
Administrative, Faculty)
Part-Time (Staff, Graduate Assistants,
Student, Faculty)
Fringe Benefits (General Fund vs.
Department Paid)
Fixed Costs
Rents
Insurance
Tuition Abatements
Contractual Services
Travel
Telephone Utilities
Repair Services
Printing
Equipment
Library Books
Computers
Non-Capital ($500 to $4,900)
Supplies and Materials
Office
Educational
Postage
Maintenance
Data Processing
Offset to Expenditures
Inter-Institutional Transfers
•Personnel
•Contractual Services
•Supplies
Major Cost Drivers*
• Personnel (Unclassified, Classified)
• Travel (USC, Non-USC)
• Supplies (includes telephone, copier, &
postage)
• Equipment (non-inventory, inventory)
*based on a review of prior year’s activity
Personnel
• How many full-time positions?
• Are all positions budgeted at full salary?
• Are any positions vacant?
• Is the vacancy temporary or permanent?
• Will these positions be filled?
• Salary level?
Travel
• Who has required travel to maintain certification or
research programs?
• Which travel is grant (or other) funded?
• Should the department provide travel funds on a
prorated basis to each employee?
• Will travel be required for recruitment of employees
and/or graduate students?
Supplies
• What are basic needs- paper, folders, transparenciesto support instruction and administration?
• What are postal rates? Is an increase expected?
• What are telephone charges? Are any additional
telephone lines required for research or new
employees?
• Should general pool be created based on average use
per employee?
The Big Question:
• Can we afford to
increase the
budgeted amount
for any of these
over time?
The “Other” Big Question:
• If a budget reduction is needed, which of
these items can be reduced or provide
savings?
• What are implications of such an action?
Management Team
Consensus
Communication is:
-Major function of a budget
-Essential to management team support
If management understands “assumptions” used
in developing major cost estimates, they can:
-Provide guidance
-Anticipate needed changes
-Monitor the outcome
Expenditure Budget
Now, based on…
• Major cost drivers
• Historical cost data
• Consensus on assumptions,
You can…
• Establish the expenditure budget to be
used for your unit.
“Bottom Line” Constraint
Total Resources
- Total Expenditures
Bottom Line
Ideally, the “bottom line” should be positive or zero.
The goal is to accomplish a balanced budget where
expenditures do not exceed resources.
University of
South Carolina
2005 Internal Budget
Development Process
Internal Budget Process
Due Date
March
Activity
Permanent budget transfers cutoff
April
VP’s tuition & fee recommendations due
May
Unit’s line item budget distribution due to budget office
Unit’s initiative requests due to VP
May
VP’s initiative request recommendation due to budget office
May
Budget office presents consolidated fee change
recommendations and initiative funding requests to President
May
Budget office mails USC FY budget request to BOT members
June
BOT executive committee considers FY budget
June
BOT approves FY budget
Early July
Budget office uploads FY budget into financial accounting
system
Integration of Planning,
Budgeting, and Effectiveness
• Planning Drives Budgeting
• Planning Drives
Implementation & Evaluation
of Effectiveness
• Evaluation of Effectiveness
Drives Planning
Planning
Budgeting
Effectiveness
Budget Development
• Cut-off for Permanent Budget Transfers
• Non-recurring Budget Transfers
• New or Expanded Programmatic Needs
• Fee Requests (New or Changes to Existing)
Development of Line-item
Base Budgets
• Recognize changes in
recurring general fund
allocations (Unit’s share of
centrally budgeted resources
from state appropriations
and general academic tuition
and fees)
• Identify non-recurring
resources (Departmental
controlled revenues)
• Adjust line item
expenditure
budgets to reflect
resource changes
• Balance total
resources to total
expenditures
CODING
Effective July 1, 2004 – All permanent budget changes must be
submitted on separate budget transactions. Permanent budget changes
may occur in any of the following object codes:
373XX – Alloc Permanent From
374XX & 375XX – Perm Intrafund Transfer In/Out
378XX – Alloc Perm TO
For the Budget Office Only:
31500 – General Fund Operating Recurring
31525 – Below the Line Appropriations
81150 & 86150 Trf FR/TO VCM Service Units
81160 & 86160 Trf FR/TO VCM Academic Units
Planning
Plans and Goals for next fiscal year should be
based upon prior evaluation results
Look at:
• Unit and division results
• Institutional effectiveness reports
• Strategic planning reports
• Performance funding reports
• Key Information: Achievements, Needs for
further action or improvement
Unit Planning Information
• Unit level planning takes place each spring semester as
college units refine their mission statements and update
goals in support of college priorities and the college’s
mission and strategic plan.
• Updated Unit Mission
• Goals for next fiscal year
• Implementation activities
• Specific intended results
• Evaluation methodology and effectiveness criteria
• Special assistance needed from other units
Unit Planning- Goals
• The first goal for every unit must be
its principal mission goal,
representing the intended results of
performing its routine operations and
achieving its unit mission.
• Additional special initiative goals are
optional, representing efforts to
strengthen the unit or achieve
institutional strategic goals.
• Every goal is made measurable
through the specification of intended
results and evaluation methods.
Budgeting
• Resources allocated only to support
goal achievement
• Budgets for each unit goal:
-Zero-Based Operating Budget
-Personnel
-Equipment
Budget Execution
• Budget Document
• Account Memorandum
• Mid-Year Budget Review
• Monitoring Tools (Datawarehouse)
• Reference Tools (USC Budget Office
http://busfinance.admin.sc.edu/budget/default.asp)
Effectiveness
• Goal achievement is evaluated to determine
needs for further action or improvement
• Implementation and evaluation of programs and
services:
• Actual results
• Analysis of effectiveness
• Recommendations for further action or
improvements
• Actions taken
• Evaluation reports on achievements and needs
Completing an Account
Memorandum
An account memorandum is used to establish, modify, or
deactivate “A” or “E” funds.
You should complete:
• Date, Dept, Fund
• Action (deactivate requires an original signature)
• Data Warehouse Structure Point (only if adding or moving)
• Department/Title (these are not the same!)
• Type Account (Note that “A” accounts are always budgeted.)
• Chairman, Principal Investigator, Direct Charges, Cost Sharing,
Organizational Level
• Restrictions on Account (optional)
• Description of Account (as necessary)
• “A” accounts are always established by the budget office.
• For “E” accounts, please refer to BUSF 3.30 or contact Ralph Summer
(7-8412) in the Budget Office for additional information.
UNIVERSITY OF SOUTH CAROLINA
ACCOUNT MEMORANDUM
Date
Dept
Fund
(5 chars)
(4 chars)
Action - check one:
Data Warehouse
Management Reporting
ADD
CHANGE
Department/Title (40 characs max)
DEACTIVATE
Structure
REACTIVATE Add to:
Type Account
Move from:
N=unbudgeted
B=Budgeted
Chairman (20 chars maximum)
Enter N if Budgeted treated Unbudgeted at Year End
Direct Charges
Principal Investigator (20 chars maximum)
Y=yes
N=no
Grant NBR (15 chars maximum)
Grant Type
Cost Sharing
Y=Required
N=No cost share
Begin Date
End Date*
6/30/2050
Indirect Cost Class**
Renewal Date*
6/30/2050
Indirect Cost Rate**
Indirect Cost Code**
Organization Code Structure
campus
prgm
fund grp
subprog
resp
"00"
(2 chars)
(2 chars)
(1 char)
(2 chars)
(2 chars)
(fixed)
Fed. Cat. No.
STARS Mini-Code
Project Code
Restrictions on Account:
Description of Accounts, as necessary:
Requested:
Approved:
Date:
Date:
Project Phase
Instructions for Completing
New Budget Transfer Form
• Row 1- Enter Responsibility Name (i.e. Honors College)
*The date is automatic and requires no entry
• Row 2- Enter your name and phone #
• Row 3- Enter a brief reason for the entry
*This is a required field
*The import button is reserved and should not be used
• Rows 4-5- contain Sort, Email, and Clear. Sort and Clear are
self explanatory, and the email button works with Groupwise.
The Total Debit and Total Credit do not require any action and
contain formulas which will sum the respective column.
• Row 6- Fill in the blanks corresponding to the headings Dept,
Fund, Object, Analytical, Debit, Credit, and Remark.
Department
Requested By
Reason
Date
Phone
June 7, 2004
Import
Sort
Dept
Email
Fund
Clear
Object
Analytical
Total Debit
0.00
Debit
Total Credit
0.00
Credit Remark
Purpose of the Form
• The request for Budget Transfer Form is
used by USC Columbia colleges and other
units to request budget transfers within their
unit or to request the transfer of funds to or
from other units.
Debits = Credits
“5” object codes
“6” object codes
+ “86” object codes
Expenditures
“3” object codes
“4” object codes
+ “81” object codes
Resources
The debits must always equal credits in order to
have a balanced budget.
Electronic Submission
• All USC Columbia colleges and units reporting directly to
vice-presidents are required to submit this Excel form
electronically as an attachment to an email.
• The email transmitting request should be from the chief
business officer designated by the dean or other
responsibility head.
• It is not necessary to submit an original signature for the
request.
• All other units are encouraged to submit the form
electronically to save time and reduce the change of
errors from re-keying data.
Types of Transfers
The form will be used for “A” fund budgets to
accomplish one of the following:
1.
To move budget dollars between object (object of
expenditure) codes within a department/fund.
2.
To move budget dollars between
department/funds within a responsibility area.
3.
To move budget dollars between responsibility
areas with the written authorization of both
responsibility heads.
Form Restrictions
• The form may not be used for the following:
• To move cash from one fund to another (for
example, the “E” fund to the “A” fund)
• To move cash from one campus to another
(moving cash requires a journal entry that must
be processed by the Budget Office and approved
and entered into the accounting system by the
Controller’s Office.)
• To move budget dollars to a department/fund that
has not yet been established.
Some Guidelines
• Budget actions that are permanent, i.e., recurring,
should not be mixed on the same form with onetime, i.e, non-recurring budget actions.
• Whole dollar amounts should be used. Do not enter
any cents.
• Remarks are limited to 18 characters.
• DO NOT adjust the width or height of the cells or rows.
• Develop a system for identifying and tracking your
budget transfers in order to avoid duplication and as a
way to follow up to ensure all actions have been
processed.
Budget Transfers vs.
Journal Entries
• A Budget Transfer allows the movement of
budget dollars between accounts during the
fiscal year.
• Budget Transfers are not the same things as
Journal Entries- the difference:
• Budget Transfers move budget dollars between
accounts
• Journal Entries move actual expenses (or
revenue) between accounts.
• Expenses must show up in the appropriate
account.
Budget Transfers vs.
Journal Entries Continued
• When an expense is incurred in the correct account
and budget dollars are needed to fund the expense, a
budget transfer would be used. However, when an
expense has been inappropriately charged to a
wrong account, you should not move the budget
dollars, but instead prepare a journal entry to move
the expense to the correct account.
• If you are not sure how to do this, contact Accounts
Payable.
Reasons for Budget
Transfers
• Sabbatical Salaries
• Redistribution of budget dollars from dean’s office
account to a department account
• Contribution toward an expense incurred by an
account within the area
• A new account within the area
• Closing out an account within the area, i.e. removing
budget dollars in order to delete the account
Financial Data- http://datawarehouse.sc.edu
• On this website, click on the
training link
• Download the financial
information documentation
and training manual, as well
as look at financial report
videos
• Reference Reports
• Management Reports
• Transaction Detail Reports
• Vendor and Travel Detail
Reports
• Financial Management Reports
• Budget Reports
• Contract and Grant
Supplemental Reports
Where to Obtain Forms:
• Forms are available electronically at
http://busfinance.admin.sc.edu/budget/
execution.asp
• Do not hesitate to contact the Office of
Business and Finance at 777-7478
Debits and Credits
Assets
Liabilities
Equity
(Fund
Balance)
Revenue
Expense
Budget
for
Revenue
Budget
For
Expense
Encumbrances
(Commitments)
To increase
or create or
show a
positive
amount
Debit
Credit
Credit
Credit
Debit
Credit
Debit
Debit
To Decrease
or remove or
show a
negative
amount
Credit
Debit
Debit
Debit
Credit
Debit
Credit
Credit
Fringe Benefit Rates
SC Retirement
10.80%
SC Retirement- Group Life
0.15%
Police Officers Retirement
13.55%
Police Officers Retirement- Group Life
0.20%
Police Officers Retirement- Accidental
Death
0.20%
FICA-Employer:
SS up to a salary base of $87,900
6.20%
Medicare- unlimited salary base
1.45%
Unemployment Compensation
0.10%
Workers Compensation
1.00%
Dental Insurance- per covered employee
$11.71 per month
Health Insurance
Coverage Type
All Health Plans
(Except TRICARE)
TRICARE Supplement
Employee Only
$210.35/Month
$67.08/Month
Employee/Spouse
$407.77/Month
$126.08/Month
Employee/Child
$316.25/Month
$126.08/Month
Full Family
$470.37/Month
$167.08/Month
Total Fringe RatesPermanent Employees
• Members of SC Retirement System
19.70% of total salary plus health and
dental insurance.
• Members of Police Officers Retirement
System
22.70% of total salary plus health and
dental insurance.
Total Fringe Rates- TERI
Employees
• 19.70% of total salary plus health and
dental insurance.
Temporary/TFAC Employees
Members of the SC Retirement System19.70% of total salary
Fringe includes:
• SC Retirement
• SC Retirement- Group Life
• FICA- Employer
A. Social Security
B. Medicare
• Workers Compensation
• Unemployment Compensation
Temporary/TFAC Employees
Members of Police Officers Retirement22.70% of total salary
Fringes includes:
• Police Officers Retirement
• Police Officers Retirement- Group Life
• Police Officers Retirement- Accidental Death
• FICA- Employer
A. Social Security
B. Medicare
• Workers Compensation
• Unemployment Compensation
Temporary/TFAC Employees
Non-members of SC Retirement System8.75% of total salary
Fringes Includes:
• FICA-Employer
A. Social Security
B. Medicare
• Workers Compensation
• Unemployment Compensation
Temporary/TFAC Employees
Student Employees- 1.00% of total salary
• Includes worker’s compensation only