1. Indiana University Overview of Budget
June 19 Presentation
Campus Administrative Training Series
Chris Puckett
Introduction… name and title
Reference the UBO lists of products and services and staff

2. 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

3. NOT AT IU! 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!
Webster’s New World Dictionary,
Sovereign – supreme in power v. independent of all others
NFP, so we first estimate resources, THEN expenditures!!

4. Why Budget? (What functions does it serve?)
Ideas?
Planning tool
Identification and Allocation of Scarce Resources
Communication mechanism
Control system
Benchmark for Goal Achievement

5. 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
Anna covered the fund groups in a prior session – we budget only current funds
We tend to aggregate some funds when reporting and analyzing the budget
Designated funds – rightly or wrongly increasing in significance

6. IU’s Base Budget (Policies and Practices)
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
General Fund
Designated and Restricted
Contracts and Grants
Auxiliary and Service
Designated and restricted… not enough are budgeted
C&G – Steve Martin and staff covered, but unique lifespan dictates exclusion from annual budget process

7. Indiana University 2002-03 Base Budget
In , GF was 47%, D&R 7%, C&G 10%, and Aux 36%
GF 48%, D&R 7%, C&G 8%, aux 36%
More to follow….

8. Indiana University 2002-03 Base Budget General Fund
State Appropriation $ ,753, %
Student Fees ,756, %
Other Income ,328, %
Total Funds Available $ 1,167,838,451
Compensation $ ,568, %
General Expense ,339, %
Capital ,931, %
Total Allocations $ 1,167,838,451
General fund hit 10 digits last year!!
In , state appropriation represented 59% of the total GF budget

9. College of Arts and Sciences 2002-03 Budget
$ millions
% Total
Compensation $
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 $
$ millions
% Total
Student Fees $
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 $

10. Types of Budgets July 1 Base Budget Adjusted Base Budget
Current Budget
July 1 - “official” budget, serves as the cumulative record of resource allocation decisions
Adj Base - July 1, as revised for long-term anticipated changes in revenue and expenditure levels
Current - reflects one-time, current year adjustments to the base budget

11. Types of Budgets July 1: “Plan” presented to Trustees for approval
State appropriation request – modified!
Fiscal Analysis reported to Trustees
Official external reports
Comparative analyses and time series
External reports would include… bonding authority documents, OAR, Official Budget, Fact Book, salary list, AAUP, AAUDE?, IPEDS

12. Types of Budgets Adj. Base: Basis for permanent changes in budget
allocations
Examples?
Starting point for budget construction
New degree programs would result in higher enrollments (fee income) faculty lines, other expenses

13. 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
Current

14. Current Budget at Year-End
Disappears!!!
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

15. The Budget Cycle July 1 Base Budget Plans Actual Adjusted Base
Budget Adjustments:
base current
Budget Construction
Year-end Reversions
Plans
Actual
Adjusted Base
Current Budget
Long-term
Short-term

16. Budget Overview
Questions?

17. Indiana University The Budget Construction Process
Campus Administrative Training Series June 19, 2003

18. The Budget Cycle July 1 Base Budget Plans Actual Adjusted Base
Budget Adjustments:
base current
Budget Construction
Year-end Reversions
Plans
Actual
Adjusted Base
Current Budget
Long-term
Short-term

19. The Budget Cycle July 1 Base Budget Plans Actual Adjusted Base
Budget Adjustments:
base current
Budget Construction
Year-end Reversions
Plans
Actual
Adjusted Base
Current Budget
Long-term
Short-term

20. Budget Construction Process
Review the base budget & develop budget planning models
Develop budget guidelines
Estimate resources available
Allocate resources to planned uses
Perform detailed budget construction
Obtain Trustee approval of budget
Upload budget and salaries to systems

21. 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

22. Base Budget and Planning
Model realignments and reorganizations

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

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

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

26. 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!

27. 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

28. 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

29. 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

30. 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

31. 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

32. Budget Construction
Questions?

33. Indiana University Budget Administration and Year-End Closing
Introduction… name and title
Reference the UBO lists of products and services and staff
Campus Administrative Training Series June 19, 2003

34. The Budget Cycle July 1 Base Budget Plans Actual Adjusted Base
Budget Adjustments:
base current
Budget Construction
Year-end Reversions
Plans
Actual
Adjusted Base
Current Budget
Long-term
Short-term

35. The Budget Cycle July 1 Base Budget Plans Actual Adjusted Base
Budget Adjustments:
base current
Budget Construction
Year-end Reversions
Plans
Actual
Adjusted Base
Current Budget
Long-term
Short-term

36. 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

37. 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”

38. 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

39. Budget Administration Sufficient 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

40. 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

41. 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

42. 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

43. 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

44. Closing: Closer to Home
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

45. Closing: Closer to Home
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

46. Budget Administration and Closing
Questions?

47. References CATS Website: IU Fact Book:
IU Fact Book:
Budget Policies:
Operating Appropriation Request:
Budget Construction:
Bloomington BOG Report Group: