|
||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
|
Budget Policies and Procedures
|
|||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Introduction
This manual addresses budget policies and procedures for general and
auxiliary fund budgets that are applicable for all university campuses and
teaching sites: Hattiesburg, Gulf Coast, Gulf Coast Research Laboratory,
Stennis Center for Higher Learning, and the Mississippi Polymer Institute.
Information regarding budgeting for designated fund budgets will be supplied
by the Controller’s Office, and restricted-fund budgets will be
supplied by the Office of Contracts and Grants Accounting. Definitions of General and Auxiliary Fund
Budgets
For the purposes of this document, the following definitions for general fund and auxiliary fund budgets are provided. A general fund budget is defined as a budget developed to support
the primary mission of the university. The general fund budget provides those
resources necessary to fund the general operations of the university. The
primary revenue sources that support the general fund budget are state
appropriations and tuition and fees. The Hattiesburg campus, An auxiliary fund budget is defined as a budget
developed for an auxiliary enterprise. An auxiliary enterprise is an
operation that directly or indirectly provides a service to students,
faculty, or staff and charges a fee for these services; the most
distinguishing characteristic of an auxiliary enterprise is that it must be
managed as a self-supporting activity. It may have a portion of student fees
allocated to fund its operation. Overview
These policies and procedures will first provide a brief overview of budgets and how they will be handled in the SoarFin General Ledger. Then, general requirements for completing a Budget Revision Form will be explained, followed by the allowability of revisions across specific budget categories. A Budget Revision Form has been designed in an Excel spreadsheet and directions for its completion will be outlined. It is assumed that departments have already read PeopleSoft ChartFields, located at the following URL address: http://www.usm.edu/controllersoffice/chartfields.html While a recap of the Budgeting in SoarFin will be included in this document, departments should still read the aforementioned Web sites before reviewing these policies and procedures. If anyone has any questions regarding these policies and procedures,
please contact the University Budget Office at (601) 266-4091. Budgets in the SoarFin General Ledger
The Controlled Budgets
Budgets in the SoarFin General Ledger will be controlled budgets, which means that departments will not be able to spend more than is budgeted. To keep up with how much a department has spent during the year, department personnel will be able to inquire online in the SoarFin general ledger module, view the status of their budgets, and review transactions that have been processed against the budget. Utilizing the concept of controlled budgets is important for two reasons. First, a department should not spend money that is not budgeted. Controlled budgets will prevent a department from spending more than its total budget. That is to say, if a department submits transactions that will exceed either the Personal Services or Other budget categories, then the transaction will not be processed. These categories will be explained in more detail in the next section. Second, the chart of accounts for the university can have numerous combinations across campuses. Using the controlled budget feature will prevent an invalid chart of account combination from being improperly charged and keep the financial system from having inaccurate information. Departments will still have the flexibility to spend over in some
categories as long as the total budget is not expended. The university is
utilizing the appropriation and organization budget features within the
SoarFin general ledger to accommodate this flexibility. Explanation of Appropriation and Organization Budgets
A definition of an appropriation and organization budget in SoarFin will help explain these types of budgets. An appropriation budget is the highest level of budgeting in SoarFin. The term appropriation is a SoarFin term and should not be confused with the appropriations received by the university from the state of Mississippi. The appropriation budget is the controlling budget, and as long as funds are sufficient within the categories of the appropriation budget, a department will be able to process transactions that will pass budget checking. An organization budget can be either linked to an existing appropriation budget or stand alone. The organization budget will show budget categories at a more detailed level than that of an appropriation budget. The detail of the organization budget is akin to the current budget in the legacy system. Budgets will be displayed by the major categories: that is, salary, wages, fringe benefits, travel, contractual services, commodities, capital outlay, equipment, purchases, mandatory, and nonmandatory transfers. The appropriation budget will be displayed in two categories only: personal services and other. The personal services category will combine the totals of the salary and fringe benefit categories, and the other category will combine the totals of the remaining categories of the operating budget. For general and auxiliary fund budgets, there is an organization budget
linked to an appropriation budget. This does not mean that the budget is
doubled. It just means that the budgets are linked, and they should equal
each other in total. The only difference will be the level of detail. Sample Budget
Below is a sample budget for a department.
The Personal Services category is comprised of the budget categories of Salaries and Fringe Benefits. The Other Category is comprised of all remaining budget categories. These categories include Wages, Travel, Contractual Services, Commodities, Equipment, Capital Outlay, Mandatory Transfers, Nonmandatory Transfers and Purchases (Auxiliary only). In this example, note that the department exceeded the budget amount for
the fringe benefits and contractual services categories in the organization
budget. In addition, this department did not have funds budgeted in
equipment, but had expenditures that were charged against that budget
category. This is not a problem since the categories are combined in the
appropriation budget, and the department still has sufficient funds in the
related categories of personal services and other. The fact that there is
overspending in various categories in the organization budget does not cause
the department's transactions to fail budget checking. Budget Checking in SoarFin
In general, most transactions should not fail budget checking, especially at the beginning of the fiscal year when funds have not been expended. In addition, by combining categories at the appropriation level, the likelihood that a transaction will fail budget checking is mitigated. As the fiscal year-end approaches, departments will have to be extremely cognizant of remaining budget balances. As noted earlier, departments will have the ability to inquire online to ascertain the status of their budgets. However, in the event a transaction still fails budget checking, the
Purchasing Department, Financial Affairs Department, Office of Contracts and
Grants Accounting, and the University Budget Office (UBO) have designed an
internal business process to accommodate this issue. For the most part, if a
requisition, remittance voucher, and interdepartmental invoice fail budget
checking, the department will be contacted and asked to either provide an
account that has sufficient funds or cancel the transaction (if the item is a
requisition). The primary source of contact will be by e-mail. For payroll
transactions, Financial Affairs will contact the University Budget Office or
Office of Contracts and Grants Accounting to research the failure of payroll
charges. If departments have exceeded budgeted salary dollars, then a budget
transaction request form will have to be completed to move budgeted funds
from another source. Revenue Budgets
Departments should not be concerned about developing revenue estimates for
general fund budgets. The University Budget Office will handle these
estimates. The revenue estimate budget for the auxiliary funds must equal
total related expenditures and should be taken into consideration during the
budget panning process. Budget
Revisions
Based on the controlled budget feature in SoarFin, a more formalized process is needed when budgets need to be revised for academic and nonacademic departments. The following definitions are provided to differentiate between a nonacademic and an academic department. Academic departments are those departments that report to a dean, director, or chair within a particular college and are generally involved in the instructional and the academic support functions within the general fund. These units in general report to the Office of the Provost. Nonacademic departments are those departments who report to all vice presidents other than the provost and in general support the following areas: research, public service, student services, institutional support, and operation and maintenance of the physical plant. These broad definitions are loosely defined, and as such, some departments may be units that could be classified as either nonacademic or academic. UBO can be consulted if there is any uncertainty related to the classification of a unit. Completion of the Budget Revision Form will be required in the instances indicated below:
A Budget Revision Form need not be processed for the following scenario:
In all instances, the Budget Revision Form must be properly approved by
the appropriate expenditure authority, and the next higher level depending on
the category. Additional information on approval signatures will be provided
later in this document where the instructions for completing the Budget
Revision Form are explained. Budget Categories
As indicated earlier, the budget categories for the general and auxiliary
funds are Salaries, Wages, Fringe Benefits, Travel, Contractual Services,
Commodities, Purchases (auxiliaries only), Capital Outlay (general fund
only), Equipment, Nonmandatory Transfers, and Mandatory Transfers. Below is a
discussion about each category and if budget revisions are allowable for each
category. Salary
All fixed positions of the university will be budgeted in the salary category of the budget. This means that exempt and nonexempt (monthly and biweekly paid) employees will be budgeted in the salary category. The reason for this is twofold. First, any dollars that are budgeted in an actual position represent a fixed cost and should therefore be segregated from the more variable operating costs of a department. Second, due to the controlled budget feature in SoarFin, combining all positions into the salary line will provide better assurance that payroll transactions will pass budget checking. In some instances, miscellaneous pooled salary funds can be also budgeted
in the salary category. For example, if a department anticipated paying a
graduate assistantship on a monthly basis, then it would be appropriate to
budget a pooled salary amount. Uncommitted Salary Dollars
Academic departments may submit a Budget Revision Form to transfer unused
salary dollars to supplement part-time faculty needs. Any other use of salary
funds other than as originally budgeted will require approval of the provost
and the vice president for Business and Finance. In general, nonacademic
units may not utilize unused salary funds for any other purpose than as
originally budgeted (i.e., compensation). For departments on the Transfers of unused salary budgets to another category will always require a Budget Revision Form. Creating a New Position
Academic and nonacademic departments may transfer funds from other categories (other than fringe benefits and mandatory transfers) to create a new position. However, while funds may be available within the department's budget with the new position, this does not mean that the department can immediately hire someone for a position. When a new position is created, a department should simultaneously submit a Budget Revision Form with proper approvals to UBO and complete a job analysis questionnaire with the proper approvals to the local Human Resources Department. A job description, title, and, if applicable, a level will be assigned to the new position by Human Resources. Once this has been accomplished, and, if budgeted funds have been secured, the Human Resources Department will advertise the position. All new positions must have final approval by the respective vice president. It is important to note that salaries of any employee classified as staff by the Department of Human Resources who is a new hire or who transfers within the university, will be examined independently from the budgeted salary the former employee was earning. The Department of Human Resources will evaluate and approve the final salary. All offers of employment must come from the Department of Human Resources. For offers of employment made for an academic position, university departments should follow the departmental hiring procedures outlined in the Faculty Handbook. In addition to the Department of Human Resources, UBO must be notified
anytime a department wishes to change the nature of salaried positions that
are budgeted. UBO has a position database in SoarFin that is used to track
all changes to a position that is budgeted in the annual Budget Book. This
database is the key resource that is utilized to report demographics on
general fund positions to the Mississippi Institutions of Higher Learning and
the Legislative Budget Office. These demographics determine the university's
level of state funding for positions. As such, it is imperative, that all
position changes be reported to UBO and HR departments. Eventually, it is the
goal of UBO to provide position information to departments on a semiannual
basis to ensure the data is accurate. Wages
Departments should use wage funds to pay student workers, regular
employees' overtime, temporary workers (no benefits), and part-time faculty.
All other personnel services should be budgeted in the salary category. Fringe Benefits
The fringe benefit category is used to pay employer-paid benefits such as
retirement, social security, unemployment, health insurance, workers
compensation, and life insurance. These funds are calculated based on the
percentage of an employee's annual salary. Departments cannot transfer funds
into or out of the Fringe Benefits category without appropriate approvals. Travel
The travel category is where funds are budgeted to cover the costs of employees'
travel. Appropriate permission to travel forms adn travel vouchers are needed
to expend travel funds. Contractual Services
The contractual services category is where funds are budgeted to cover the
costs of items such as communication services, postage and shipping,
utilities, professional fees such as auditing, legal, engineering,
subscriptions, and rents. Commodities
The commodities category is where funds are budgeted to cover the costs of
items such as office supplies and materials, maintenance materials, food for
persons, scientific chemicals and supplies, and printing costs. Purchases
The purchases category is where funds are budgeted by auxiliary units to
cover the costs of inventory items purchased for resale. No departmental
budget within the general fund should ever use this category. Although not
necessary, only auxiliary departments can initiate a Budget Revision Form to
move funds initially budgeted in the purchases category to any of the other
categories or from other categories to the purchases category. Capital Outlay
The capital outlay category is where funds are budgeted to cover the costs
associated with the land, buildings, and library acquisitions. In general,
the only areas that would use the capital outlay category would be the University
Libraries, Physical Plant, and the Controller's Office. No other departments
within the general fund or the auxiliary funds should use this category. Equipment
The equipment category is used to budget funds to cover the costs
associated with items such as computer equipment, medical equipment, farm
equipment, vehicles, office machines, and furniture. Transfers
(Mandatory and Nonmandatory)
The category, formerly known as Subsidies, Loans, and Grants, has now been replaced by two categories: Mandatory Transfers and Nonmandatory Transfers. The reason this category has been further defined into two components is to better facilitate UBO's reporting requirement to the Mississippi Institutions of Higher Learning. In addition, a further breakdown of this category assists departments in the proper usage of the funds. Funds budgeted in the Mandatory Transfers category are budgeted for the most part to represent a binding legal agreement related to financing (debt service) that is accounted for in the plant fund. Funds are also budgeted in this category to satisfy grant agreements with external agencies or organizations for matching funds within the restricted fund. Funds budgeted in the Nonmandatory Transfers category are budgeted to
transfer discretionary funds out of the general fund to other funds, such as
the designated fund, auxiliary funds, restricted funds, and the plant fund.
Generally, a department would budget funds in this category to fund a
renovation project. In addition, the auxiliary fund may provide services such
as mail service or animal research for the general funds for which a
nonmandatory transfer would be appropriate. Instructions for Completing the Budget
Revision Form
The purpose of the Budget Revision Form is for University Budget Authorities to submit changes to their beginning budgets during the fiscal year. This form is applicable only for general and auxiliary fund budgets at all university locations. The Budget Revision Form is available on the UBO website in an Excel spreadsheet.
Hattiesburg (includes Center for Higher Learning
at Stennis and Mississippi Polymer Institute)
|
||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Maintained by the University Budget Office
Last modified:
The University of
Southern Mississippi | Page URL:
http://www.usm.edu/budgets/Budget_Policies_and_Procedures.html | AA/EOE/ADAI
