Indiana University Overview of Budget June 19 Presentation Campus Administrative Training Series Chris Puckett

Indiana University

Overview of Budget

June 19 PresentationCampus Administrative Training Series

Chris Puckett

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Budget Overview

What is a Budget and How is it Used? Unique Budget Orientations of Various

Fund Groups Types of Budgets Where/how is the Budget Used? The Budget Cycle

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What is a Budget?

Definition from Webster’s New World Dictionary:

Budget - “a statement of the financial position of a sovereign body …. based on detailed estimates of planned or expected expenditures …. and proposals for financing them”NOT AT IU!NOT AT IU!

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Why Budget?(What functions does it serve?)

Ideas?

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Unique Orientation of Budget General Fund (10) represents the fundamental

academic mission Designated/Restricted Funds (2x)

increasingly significant, segregated based on source of funds and intended uses

Contracts and Grants (4x/5x) externally-sponsored funding for research efforts

Auxiliary & Service (6x) business enterprises maintained for the convenience of faculty, staff and students

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IU’s Base Budget(Policies and Practices)

General Fund

Designated and Restricted

Contracts and Grants

Auxiliary and Service

All aspects budgeted in detail

if more than $10,000 annual operations or if personnel are paid

only salaries in BC; nothing loaded to G/L base budget

Budgeted in detail, by month if desired

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Indiana University2002-03 Base Budget

Designated & Other Restricted

7%

Contracts & Grants

14%

Auxiliary & Service

20%

General Fund 59%

General Educational Fund

54%

Medical Practice Funds

5%

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Indiana University2002-03 Base Budget

General Fund

State Appropriation $ 495,753,230 42% Student Fees 524,756,794 45% Other Income 147,328,427 13% Total Funds Available $ 1,167,838,451

Compensation $ 722,568,114 62% General Expense 413,339,093 35% Capital 31,931,244 3% Total Allocations $ 1,167,838,451

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College of Arts and Sciences2002-03 Budget

Compensation

$119.5M

Financial Aid$12.9M

Reserves $2.9M

Capital $1.2M

Travel $0.5M

S&E $7.6M

$-

$30.0

$60.0

$90.0

$120.0Student Fees,

$157.5M State Appropriation

$85.4M

Other Revenues,

$0.7M

Indirect Cost Recovery,

$7.5M

Assessment Revenue,

($106.5)

$(150.0)

$(100.0)

$(50.0)

$-

$50.0

$100.0

$150.0

$200.0

$ millions % Total

Student Fees $ 157.6 109.0%

State Appropriation 85.4 59.0%

Other Revenues 0.7 0.5%

Indirect Cost Recovery 7.5 5.2%

Assessment Revenue (106.5) -73.7%

Total $ 144.6

$ millions % Total

Compensation $ 119.5 82.6%

Financial Aid 12.9 8.9%

Total General Expense 7.6 5.3%

Travel 0.5 0.4%

Capital Assets 1.2 0.8%

Reserves 2.9 2.0%

Total $ 144.6

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Types of Budgets

July 1 Base Budget

Adjusted Base Budget

Current Budget

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Types of Budgets

– “Plan” presented to Trustees for approval– State appropriation request – modified!– Fiscal Analysis reported to Trustees– Official external reports– Comparative analyses and time series

July 1:

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Types of Budgets

– Basis for permanent changes in budget

allocations> Examples?

– Starting point for budget construction

Adj. Base:

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Types of Budgets

Current– Internal management tool

standard reports and FIS screens

– Fiscal Analysis preparation– Year-end reversions and carry-forwards– Purchasing: availability of funds

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Current Budget at Year-End

Other than carry-forward of in-process items such as purchases that should have been completed but were delayed….

The current budget for next year is increased to accommodate the acquisition of these items without drawing against that year’s current budget

Disappears!!!

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The Budget CycleJuly 1 Base Budget

Adjusted Base Current Budget

Budget Adjustments: base current

Budget ConstructionYear-end Reversions

ActualPlans

Long-term Short-term

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Budget Overview

Questions?

Indiana University

The Budget Construction Process

Campus Administrative Training Series June 19, 2003

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ActualPlans


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ActualPlans


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Budget Construction Process

1. Review the base budget & develop budget planning models

2. Develop budget guidelines

3. Estimate resources available

4. Allocate resources to planned uses

5. Perform detailed budget construction

6. Obtain Trustee approval of budget

7. Upload budget and salaries to systems

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Budget Construction Process

Timeline:– December to June!

Players:–UBO, VP&CFO and President–Campus, with input from RC’s–External Constituents–Account managers and departmental

administrators

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1. Base Budget and Planning Model realignments and reorganizations

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1. Base Budget and Planning Model realignments and reorganizations Apply preliminary planning parameters

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1. Base Budget and Planning Model realignments and reorganizations Apply preliminary planning parameters Develop initial proforma budgets

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1. Base Budget and Planning Model realignments and reorganizations Apply preliminary planning parameters Develop initial proforma budgets Identify future needs and potential

reallocation opportunities

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1. Base Budget and Planning Model realignments and reorganizations Apply preliminary planning parameters Develop initial proforma budgets Identify future needs and potential

reallocation opportunities Adjust proforma budgets Detailed base/CSF Tracker reviews! Adjust proforma budgets

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2. Develop Budget Guidelines

Calculate pooled benefit rates Document known factors such as state

appropriation and debt service payments Obtain Trustee approval for instructional fee

rate increases and salary guidelines Identify inter-campus support levels Summarize institutional strategic initiatives

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3. Estimate Resources Available State appropriations - defined by state legislature Student fees - based on enrollment projections and

student fee rate increases

Other earned income:– interest income - as available and moved to GF– gift income - projected to be moved from IUF– sales and services - based on projected levels– indirect cost recovery - earned from C&G

accounts– other - as projected

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4. Allocate Resources Compensation - salary guidelines and known

workforce changes, application of pooled benefits Financial Aid - student fee rates & campus

programs

Other expenditures:– energy & utilities - provider rates & growth– S&E - as needed and supportable from revenues– budget allotments/assessments - campus-defined– univ. tax/insurance/IUF Development fee - from

institutional guidelines– capital - as required, UITS strategic plan

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5. Detailed Budget Construction

FIS electronic application– automatic calculations– pre-defined routing structure for review and

approvals– reporting and download options

Detailed reviews performed by schools, campuses, UBO– conformity with guidelines regarding operating

levels and salary-setting parameters

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Closure of Cycle

6. Obtain final Trustee approvals “Request” becomes “July 1 Budget” upon

approval

7. Upload budget and salaries to systems

Object code data loaded to the general ledger Salary data loaded to the payroll system

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Budget Construction

Questions?

Indiana University

Budget Administration andYear-End Closing

Campus Administrative Training Series June 19, 2003

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ActualPlans


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ActualPlans


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Budget Administration July 1, 12:00:00 am

Base Budget = Adjusted Base = Current Budget July 1, 12:00:01 am

Adjusted Base– Permanent changes realized post-budget construction

should be made

Current Budget– Increased for encumbrances (and other funds) carried

forward– May have significant realignments for current year

planned activities

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Budget Administration Campus-wide sufficient funds checking

– General Fund: Budget is primary control mechanism For daily management/operations, current

budget rules! Often, compensation and financial aid

controlled by RC’s S&E, capital, travel and wages more

discretionary at departmental level

– Non-General Funds: Most are “cash control”

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Budget Administration

Sufficient Funds Checking:– General Fund (10) and FEMP (28) –

overall expenditure available balance

– Non-General Funds (2x) – cash, after encumbrances and pending documents

– Auxiliary and Service (6x)/External Agency (97) – no sufficient funds checking

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Budget AdministrationSufficient Funds Checking Calculation

Budget Controlled:– Current Budget– Less:

Actual Transaction Total

Encumbrances Pending Documents

– Equals: Funds Available

Cash Controlled:– Cash Balance– Less:

Encumbrances Pending Documents

– Equals: Cash Available

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Budget Administration Where to find balance information:

– FIS balances screens (in menu, “Inquiries”, “Balances”)

Balances by Consolidation – for big picture, can drill down to detailed transactions

Available Balances – for object code detailed info

Pending Ledger Entries – for in-process items Open Encumbrances – detail info available Cash Balance – shows July 1 and current

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Budget Administration Some Guidelines:

– Transactions between GF accounts processed on a Budget Adjustment (TF if across charts)

– Transactions between GF and other accounts processed on a Transfer of Funds using 5199/1699

– Cannot transfer funds out of FEMP (28) or C&G (4x or 5x), use DI or GEC to move expenses

– See Handout for more examples

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Closing: Big Picture Snapshot of the University at a certain point in time

(June 30)

Required by external constituents to have an official periodic view of operations and fiscal stability

Net of revenue and expense balances (operating margin) calculated

Revenue and expense balances eliminated Asset, liability and fund balance absorb net operating

margin for that year

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Closing: Closer to Home

General fund operating results evaluated– Balances either carry forward in departmental

account or revert to RC

– Compensation and financial aid balances generally revert

– Other expense categories - If budget available to cover encumbrances, balance carries forward to subsequent year

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All non-GF negative cash balances MUST be covered– Trustees want this process 2x/year– Likely sources of funds:

IUF gift funds Commitments from department/RC/campus

offices May result from timing of sales or other

revenue sources

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Most activity is handled at the RC level Continues through most of July, so we

have two years of activity running parallel for a few weeks

At “final closing”, subsequent year beginning balances loaded and available for use and/or review

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Budget Administration and Closing

Questions?

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References CATS Website:

http://www.indiana.edu/~bfarp/ IU Fact Book:

http://factbook.indiana.edu Budget Policies:

http://www.indiana.edu/~vpcfo/policies/budget Operating Appropriation Request:

http://www.indiana.edu/~state Budget Construction:

http://www.fms.indiana.edu/fis/documentation Bloomington BOG Report Group:

http://www.fms.indiana.edu/fdrs/bog.asp