The Catholic University of America

 

Archived 11/30/10 University Budget Policy

I. Introduction

The university seeks to allocate resources most efficiently to achieve its goals. The university has a responsibility to submit annually a balanced fiscal budget to the Board of Trustees. The policy is an outline of the university's annual operating budget process and a description of the budget components and other related budget procedures integral to the process.

This policy applies to all university departments in preparation and management of operating budgets.

 II. Definitions
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 III. University Budget Committee

A committee, titled the university Budget Committee, will be composed of the University Vice Presidents, Secretary to the Board of Trustees, an Academic Senate representative, staffed by the Budget Office, and chaired by the Vice President for Finance and Treasurer. The Committee is responsible for developing the university's fiscal year budget for submission through the Finance Committee of the Board of Trustees to the Board of Trustees for approval. In conjunction with the fiscal budget, the Committee also submits tuition, fees, and salary increases to the Board of Trustees for their approval.

The Committee has the fiduciary responsibility of monitoring the actual revenues and expenditures against the budget and to make and implement recommendations during the fiscal year for budgetary adjustments as needed. The Committee meets throughout the fiscal year with a concentration of meetings for the development of the fiscal budget

IV. Annual Budget Calendar

The University Budget Committee, at its first meeting, will develop a budget calendar for the fiscal year. The calendar will include all meeting dates; presentation dates; Board of Trustee budget report dates; date of the submission of the detailed budgets from university departments to the Budget Office; and associated other submissions, such as salary increases. The calendar will be available on the university's web-site.

V. Fiscal Year Budget

The fiscal budget presented to the Board of Trustees will include projections for all fund activity. The budget will include operating fund activity (funds 11, 12 and 15), which comprises the balanced budget activity, sponsored grant activity (funds 26 and 27), endowment payout activity (fund 31) and all other reserve activity (funds 18, 19, 51, etc.).

The balanced budget activity will include separate projections for the "University Balanced Budget" (which excludes the Law School), the "Law School", "Auxiliaries", and "Workshop Activity". The budgeting of revenues and expenses should align with the presentation of the Consolidated Statement of Activities, which is part of the university's financial statements. The expenses will be in natural classifications (salaries, benefits, scholarships, etc.) instead of financial statement classifications of education and general, auxiliaries, etc. The fiscal budget will be accompanied by a four-year capital plan for construction and renovation and a four-year technology capital plan.

Both during the fiscal year and at the close of the fiscal year, the Budget Office is responsible for preparing for the Board of Trustees, a comparison of budget to actual and a projection for year-end results. The comparison will include a written explanation of variances.

VI. Fiscal Budget Approval Process

The University Budget Committee will present the annual fiscal budget to the President before submission to the Board of Trustees for comment, adjustment, and approval. The Finance Committee of the Board of Trustees will review and approve the annual budget and submit it to the full Board of Trustees. The Board of Trustees will provide the final approval of the annual fiscal budget.

VII. Submission of Detailed Budgets

The university's budgeting is a centrally administered budget. Each Vice Presidential area is provided an appropriation for the upcoming fiscal year. The Vice Presidents decide on the allocation of the appropriation to their departments and/or schools.

The responsibility-centered budgets are auxiliary operations, the Law School, and workshop activities. These activities can be responsible for either funding an allocation for central services, such as utilities, maintenance, housekeeping, security, insurance, etc.; a net to the university; an overhead allocation based on a percentage of expenses; or a combination of these recoveries

Dependent on the deadline stated in the Budget Calendar, university departments are responsible for submitting detailed operating budgets (funds 11, 12, and 15) to the Budget Office. Fiscal spending in other funds is governed by other processes, which are described in the Fund Balance Campus User Practice Guide #12.

The level at which detailed budgets are submitted is dependent on the type of expense. Salary expenses are budgeted at the detailed account code level. Fringe benefits are budgeted at a summary level and are calculated based on the type of salary expense. The Budget Office provides the percentage calculation as part of its annual budget package to the Vice Presidents for dissemination to departments and/or schools. Scholarships are budgeted at a summary level. Other expenses can be budgeted at a detailed level and are left to the discretion of the departments. Allocations are budgeted at a summary level. A specially designed budget report from the financial system can be used by departments to provide prior year activity, current year budget and current year-to-date activity to assist in the development of the next fiscal year detailed budget.

The Budget Office coordinates the submission and loading of the detailed budgets into the financial system. The Office is responsible for creating the revenue and debt service budgets and coordinating their upload into the financial system. The Office is also responsible for ensuring that the university remains in balance as budget changes occur.

With the submission of the budgets, the departments include a listing of the employees and their budgeted salaries. The Budget Office maintains position budgets for all employees paid from operating funds. Some position budgets are pooled positions as in the case of temporary and student employment. The positions must be fully budgeted for the fiscal year. Funding permanent employees on "soft money" is discouraged. Soft money is defined as one-time sources, such as gifts which have no written commitment for future years.

VIII. Capital Project Budgets

For any type of project greater than or equal to $50,000, a budget will be provided by the appropriate Vice President to the Vice President of Finance and Treasurer and Controller's Office. The budget will be submitted using the summary level account codes for projects. Budgets will include a summary of all appropriate expenses associated with the project and will include such expenses as utilities, interest expense, and project management. The budget when submitted will include the funding source for the project. The actual expenditures will be tracked against budget until the project is completed and placed in service.

A budget can be revised. The revision can be made by adjusting within summary levels of the current budget or by increases based on funding increases that must be identified with the submission of the budget revision. The budget revision will be submitted to General Accounting using the budget revision form.

IX. Budget Accountability

The university's departments are responsible for the management of their budgets. The financial system does not allow for overspending in other direct expenses. The Budget Office continuously monitors salaries and scholarship expenditures as automated system controls do not currently exist. When necessary, appropriate steps are taken by the Budget Office to ensure sufficiency of funding.

When overspending does occur on other direct expenses the department or school is responsible for covering the excess expenditures. The Budget Office notifies either the appropriate Vice President or Dean of the overspending and then works with the department to determine the appropriate funding source to cover the negative variance.

X. Budget Adjustments

Between the time the budget is approved by the Board of Trustees and the start of the fiscal year, there could be adjustments to the budget, either by increases or decreases in revenue and increases or decreases in fiscal year expenses. These adjustments will be reported to the Finance Committee of the Board of Trustees.

Departments may want to make adjustments to the detailed budgets (funds 11, 12 and 15). These adjustments will be made by using the budget revision form. Any budget adjustment for funds 11, 12 and 15 must be balanced.

A budget revision form must be completed, which is available on the university's web-site. A revision can be made within the four appropriation levels of salary and fringe benefits, scholarship, other expenses, and allocations. A revision can occur between organizations (Orgs), as in the shifting of resources. Revisions can occur because of increases to revenues and therefore increases to expenses and vice versa. Both the appropriation level and the detailed org budget must be adjusted when making the budget revision. If it is necessary to make a budget revision from other direct expenses to salary and fringe expenses, the budget revision is permanent. The department should not ask for future increases to other direct expenses because of that decision. Exceptions are granted to reduce salary and fringe benefit expenses and increase other direct expenses because of a need to hire outside temporary help due to personnel leaving the employment of the university.

XI. Fiscal Year End Budgetary Transactions

At the end of the fiscal year, the Budget Office, in concert with the Controller's Office, will close the budgeted funds by making the necessary transfers into reserve funds and ensuring that the funds are in balance (revenues equal expenses). This includes any required transactions such as the Law School overhead transfer, overhead calculations of workshop and off-campus activity, and auxiliary budgeted net contributions to the university. The transfer of funds in departments will be based on the following Financial Incentive Plan:

  • Each department will be able to retain 50% of their year-end positive variance of the budget versus actual expenses for Other Expenses (Postage, Telephone, Travel, etc.). This variance will be transferred from the operating budget (fund 11) to an undesignated departmental reserve (fund 18).
  • If a department's operating budget is comprised of more than one Org under the same manager, the variances from each will be aggregated, and the 50% of the aggregated departmental operating variance will be transferred.
  • The department can only use the positive variance for university reinvestment. Examples are purchase of capital equipment, personnel training, and funding for one-time programmatic initiatives. It is the responsibility of the departmental manager to ensure that the use of the reserve is for this intended purpose.
  • Some areas of the university will have unique requirements affecting operating surpluses. Separate undesignated reserve Orgs will be created for these specific purposes:

1. Any positive variance in utilities will be used to fund a utility reserve. The purpose of the utility reserve is two-fold. First, an amount equal to 20% of the annual utility budget will be maintained at all times in order to provide funding for any current year or succeeding year's unexpected utility costs. This will allow sufficient time to make the necessary budgetary adjustments. Any savings (at year end) over the 20% reserve will be used to fund utility capital improvements, infrastructure, or utility savings programs.

2. Any savings in debt service Orgs (except for the Law Center and Auxiliaries) will be used to fund a debt service reserve that can either be used to accelerate the pay back of debt liabilities or be used for capital improvements. A transfer will be made at year end from all of the debt service orgs to this debt service reserve org.

3. A legal reserve will also be established using 100% of the positive variance from the budgeted Professional Services in General Counsel. A transfer will be made at year end to a legal reserve. Any positive variance in the remaining other expenses will be subject to the financial incentive plan above.

4. The auxiliary operations of Food Service and Housing and Residence Life will be able to keep 50% of their net operations after the budgeted university's net return is met. The 50% of the adjusted net for each auxiliary will be transferred to an undesignated reserve Org.

5. Any positive variance in the student technology fee budget will be transferred at year end to a designated reserve to fund student technology upgrades.