UVa Seal

Policy: Oversight of University Operating and Capital Budgets and Long-term Financial Plans 


Date: 06/08/09 Policy ID: FIN-022 Status: Final

Policy Type: University
   
Contact Office: Budget Office (University)
   
Oversight Executive: Vice President for Management and Budget
   
Applies To: Academic Division, Medical Center, and the College at Wise.
   
Table of Contents:  Policy Statement
  1. Responsibilities
    1. Dean or Unit Head
    2. Vice President
    3. University Budget Office
    4. Vice President for Management and Budget

Procedures

   
Reason for Policy: Guidelines are provided regarding responsibility for the University’s operating and capital budget and long-term financial planning processes in order to: (1) provide reasonable assurance of the integrity of budget processes; (2) manage available resources to a consistent standard of accountability; (3) support progress towards strategic goals; and (4) facilitate informed decisions around the investment of financial resources in operating activities and capital assets.
   
Policy Summary: This policy articulates the responsibilities of the Vice President for Management and Budget, the University Budget Office (UBO), vice presidents, and deans and unit heads for the budget processes including:
  1. developing and approving University operating and capital budgets and long-term financial plans;
  2. establishing spending authority (through setting of award installments); and
  3. monitoring and controlling expenditures against the authorized award installments.

Responsibility for establishing spending authority (through setting of award installments) and monitoring and controlling expenditures against the authorized award installments for other fund sources within the University’s financial systems is delegated accordingly:

Area/Type of Award

Delegated To

Grants and Contracts

Asst. Vice President for Research Administration

Intellectual Property

Vice President for Research

Gifts, Endowments, F&A Recoveries, Local Plant, State Plant < $1M, Agency

Asst. Vice President for Finance and University Comptroller

Medical Center

CEO, Medical Center

Wise

Chancellor, College at Wise

BACK TO TOP

   
Definition of Terms in Statement: 

Annual Renovation and Infrastructure Plan:  A plan presented to the Board of Visitors annually through the University’s Annual Budget Summary; this provides an expedited approval process for interior renovation projects that will cost less than $5 million and will be funded from non-general fund cash.

Award Installment:  An award (a seven digit alpha-numeric field in the University’s Integrated System, but not the Medical Center’s accounting system) represents a source of funds owned by a responsible unit.  Spending authority is established, for a specific period of time, through an installment on the award.  The type of funds is indicated by the first two characters as defined in the table below:  

Fund Source

Award Prefix

Definition

Agency

YY (Agency), YA (Agency-Direct Loans)

Funds on deposit with the University by outside agencies/organizations that are not a part of the University, but have a close relationship.

Auxiliary

SA (State Auxiliary), LA (Local Auxiliary)

Funds generated by an entity which exists to furnish goods or services to students, faculty or staff and which charges a fee that is directly related, although not necessarily equal, to the cost of the service.  Examples are housing, dining, and athletics.

Endowment Income

ER (Endowment-Restricted), EU (Endowment-Unrestricted), EI (Endowment-Institutional)

Funds from the distribution on the University’s endowment.

Facilities and Administrative Cost Recov.

FA (F&A Recoveries), FI (F&A Recoveries-Institutional)

Funds derived from recovery of facility and administrative indirect costs from external research sponsors.

Gifts

DR (Gift-Restricted), DU (Gift-Unrestricted), DI (Gift-Institutional)

Funds provided from donors to the University.

Grants and Contracts

G* (Grants).  The second letter of the prefix indicates the external agency funding the grant (for example, GA is used for NSF grants).

Funds derived from external sponsors who provide funds in response to a proposal for specific instruction, research, or public service activities.

Local General

LG (Local General)

Funds derived from distributions on the unrestricted endowment, earnings on short-term investments, and other (licensing, affinity card, etc.) revenues.

Sales and Service

SS (State Sales and Services), LS (Local Sales and Services)

Funds derived through other (non-auxiliary) services established to support instruction and research efforts, usually at the school or department level.  Examples include self-supporting academic programs (Law and Darden), copy centers, conferences, etc.

State General

SG (State General)

Funds derived from the state general fund appropriation, tuition revenues (of non-self-supporting programs), and other activities.

State Restricted Awards

SR (State Restricted)

Funds derived from specific state general fund restricted appropriations, such as financial aid, research initiatives, and the eminent scholar match.

Capital Projects:  Represented by the award prefix SP (State Plant), any acquisition of property, new construction, and improvements to property, plant or equipment costing $1 million or more.  [Some SP awards are used for capitalizable expenditures less than $1 million; these are not capital projects.]

Centrally Managed Funds:  Includes those funds sources managed by the UBO, including State General, State Restricted, Local General, State Auxiliary, Local Auxiliary, Endowment Institutional, Gift Institutional, and F&A Institutional awards.

Decision Brief:  A required written summary, developed by the respective Facilities Management project manager, reviewed by the project sponsor, and approved by senior administration, which explains capital project budget increases.  Required approvals include:

Executive:

Approval Required:

Executive Vice President and Chief Operating Officer

All decision briefs

Vice President for Management and Budget

All decision briefs

Executive Vice President and Provost

Academic-related projects

Vice President and Chief Financial Officer

Debt-funded budget increases

Sr Vice President for Development & Public Relations

Gift-funded budget increases

Executive Review Committee (ERC):  The University administrative committee which oversees the capital program.  ERC membership includes the Executive Vice President and Chief Operating Officer, the Executive Vice President and Provost, the Senior Vice President for Development and Public Affairs, the Vice President for Management and Budget, the Vice President and Chief Financial Officer, and the Architect for the University.

General Funds:  General tax revenues that are appropriated by the General Assembly for the use of the institution.

Major Capital Projects Program:  The rolling ten year capital project plan, updated every two years and approved by the Board of Visitors.

Non-General Funds:  Resources which are earned or generated by the University such as tuition, F&A recoveries, grants and contracts, auxiliaries, or private resources.

Operating Plan:  A submission required by the Commonwealth of Virginia’s Department of Planning and Budget that outlines the University’s plan for expending appropriated state funds.

Six Year Financial Plan:  The financial plan required by Chapters 933 and 943 of the 2006 Acts of Assembly, updated every two years and approved by the Board of Visitors.

Six Year Capital Outlay Plan:  The capital outlay plan required by the Department of Planning and Budget.  This is a subset of the Major Capital Projects Program. 

Spending Authority:  The permission to make expenditures from a particular fund source for a specific period of time up to an established level, provided with the setting of an award installment. 

University Budget Summary:  The University’s annual operating budget approved by the Board of Visitors.

BACK TO TOP

   
Policy Statement: 

Vice presidents, deans, and department/activity heads must actively participate in the development of the operating and capital budgets and financial plans for the University.  Each has responsibilities as noted below.
BACK TO TOP

1. Responsibilities:

  1. Each dean or unit head is responsible for specific awards and projects owned by his/her organization.  These responsibilities include, but are not limited to:
    • allocating existing funds among reporting units.  Deans/unit heads have the responsibility to evaluate the  needs of all reporting units and to re-allocate among units to ensure University priorities are met;
    • distributing budget reductions among reporting units.  Deans/unit heads have the responsibility to evaluate the needs of all reporting units and to distribute differential budget reductions as needed to ensure the core mission of the University is protected;
    • requesting and prioritizing funding needs – both capital and operating – of reporting units during the periodic budget development processes;
    • reviewing, approving, and forwarding to their respective VP periodic operating and capital budget submissions;
    • ensuring that annual expenditures of reporting units are within the approved award installments for each respective operating unit.  Overall budget deficits among a school/department are expected to be cleared by year-end.  For any budget deficits remaining at year-end, the dean/unit head is responsible for identifying a source to be reduced by the amount of the deficit in the subsequent year;
    • assigning award managers who will fund projects only up to the amount authorized by the award installment;
    • assigning project managers who will establish project budgets only up to the amount funded by award managers; and
    • assigning managers who will complete award and project reconciliations as required by University policy in order to ensure expenditures do not exceed project funding or award installments.
      BACK TO TOP
  1. Each vice president (VP) is responsible for overseeing the budget for his/her responsible units and representing those units during budget processes.  These responsibilities include, but are not limited to:
    • allocating existing funds among reporting units.  VPs have the responsibility to evaluate the  needs of all reporting units and to re-allocate among units to ensure University priorities are met;
    • distributing budget reductions among reporting units.  VPs have the responsibility to evaluate the needs of all reporting units and to distribute differential budget reductions as needed to ensure the core mission of the University is protected;
    • requesting and prioritizing funding needs – both capital and operating – of reporting units during the periodic budget development processes;
    • reviewing, approving, and forwarding to the UBO periodic operating and capital budget submissions; and
    • ensuring that annual expenditures of reporting units are within the approved award installments for each respective operating unit.  Overall budget deficits among a VP’s units are expected to be cleared by year-end.  For any budget deficits remaining at year-end, the VP is responsible for identifying a source to be reduced by the amount of the deficit in the subsequent year.  Budget surpluses (also known as carryforward balances), net of any deficits, at year-end are returned to the VP in the subsequent year.
      BACK TO TOP
  1. The University Budget Office (UBO) is responsible for:
    • overseeing the development of the annual University Budget Summary, the Six Year Financial Plan, the Six Year Capital Plan, the Major Capital Projects Program, the annual tuition proposal, and periodic general fund budget requests;
    • developing instructions, schedules, templates, and submission procedures which are promulgated to each VP, including the VP and CEO of the Medical Center and the Chancellor of the College of Wise;
    • allocating target budgets for centrally managed funds to each VP, ensuring that the total allocated target budgets from state fund sources does not exceed the sum of appropriated state general funds plus estimated tuition and other non-general funds;
    • establishing state restricted awards for any restricted appropriations from the state (for example, research initiatives or financial aid) in order to facilitate compliance with such restrictions;
    • establishing, modifying, and controlling budgets for state general, state sales and services, state restricted, capital outlay, local general, local sales and services, local other, state and local auxiliary enterprises, institutional endowments, institutional gifts, and institutional F&A awards in the University financial systems;
    • submitting an Operating Plan to the Department of Planning and Budget that will not exceed the sum of appropriated state general funds plus estimated tuition and other non-general funds; and
    • establishing business and funding plans for approved capital projects in the University financial systems.
      BACK TO TOP
  1. The Vice President for Management and Budget is responsible for:
    • reviewing and submitting to the Board of Visitors, through the President, the University’s annual Budget Summary, including tuition and fee rates and the Annual Renovation and Infrastructure Plan;
    • reviewing and submitting to the Board of Visitors, through the President, and the Commonwealth of Virginia the University’s Six Year Financial Plan and Six Year Capital Outlay Plan and general fund appropriation requests;
    • coordinating the notification to the Governor and Chairs of the Senate Finance and House Appropriation Committees, in accordance with Chapters 933 and 943 of the 2006 Acts of Assembly, of non-general fund capital projects approved within the Major Capital Projects Program;
    • presenting to the Executive Review Committee for Capital Outlay any new capital projects to be added to the University’s Major Capital Projects Program and presenting the full Program to the Board of Visitors; and
    • overseeing the senior executive approval of decision briefs regarding capital project budget increases and coordinating Board of Visitors approval of any budget increases in excess of 10 percent.
      BACK TO TOP
   
Procedures: Procedure 3-1, "Preparation of Request for New Award"
Procedure 3-2 “Preparation of Request for Installment Creation or Modification (ICOM) for Awards
BACK TO TOP
   
Related Information: 

Capital Project Approval Process
University Budget Office Operating Budget Instructions

   
Policy Background: 
   
Major Category: Finance and Business Operations
   
Category Cross Reference: 
   
   
Process: 
   
Next Scheduled Review: 06/08/12
   
Approved By, Date: Policy Review Committee, 06/08/09
   
Revision History: 
   
Supersedes (previous policy):  Budgeting and Budgeting Process, III.A.1
Budgetary Control, III.A.2
Facilities Management Capital Budget Program, XIII.D.2