FIN-022: Oversight of University and/or Medical Center Operating and Capital Budgets and Long-term Financial Plans

Date: 06/08/2009 Status: Final
Last Revised: 07/12/2018
Policy Type: University
Oversight Executive: Vice President for Finance, Chief Accounting Officer (Medical Center)
Applies To: Academic Division, Medical Center, and the College at Wise.
Reason for Policy:

Guidelines are provided regarding responsibility for the University’s and/or Medical Center'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 Finance, Chief Financial Officer of the Medical Center, vice presidents, deans, unit heads, the Office of Financial Planning & Analysis (FP&A), and/or the Budget Office of the Medical Center for the budget processes including:

  1. developing and approving University and/or Medical Center 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 Financial Operations

Medical Center

CEO, Medical Center

Wise

Chancellor, College at Wise

 

Definition of Terms in Statement:
  • 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 Office of Financial Planning & Analysis, 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 Finance and/or Chief Accounting (Medical Center) as applicable

    All decision briefs

    Executive Vice President and Provost

    Academic-related projects

    Vice President for Finance and/or Chief Accounting (Medical Center) as applicable

    Debt-funded budget increases

    Sr Vice President for Advancement

    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 Advancement, the Senior Vice President of Operations, the Vice President for Finance, the Chief Accounting Officer (Medical Center) as applicable, 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 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.

  • 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.

  • 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 and Medical Center Budget Summary:

    The University’s and Medical Center's annual operating budget approved by the Board of Visitors.

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.

  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.
    2. Each Vice President (VP) is responsible for:

      • 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 periodic operating and capital budget submissions to FP&A; 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.
    3. The Office of Financial Planning & Analysis (FP&A) and Medical Center Budget Offie are 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 EVP for Health Affairs and the Chancellor of the College of Wise:
      • allocating budgets for for centrally managed funds to each VP, ensuring that the total allocated 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.
    4. The Vice President for Finance 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.
    5. The Senior Vice President for Operations is responsible for:

      • 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.
  2. Compliance with Policy:
    Failure to comply with the requirements of this policy may result in disciplinary action up to and including termination in accordance with relevant University Policies.

    Questions about this policy should be directed to the Contact Office.

Procedures:

Procedures are under revisions. Questions should be directed to the Contact Office.

Related Information:

Capital Project Approval Process
Financial Planning & Analysis Operating Budget Instructions

Major Category: Finance and Business Operations
Next Scheduled Review: 05/03/2021
Approved by, Date: Policy Review Committee, 06/08/2009
Revision History: Added Med Ctr information 7/12/18; Updated 5/3/18.
Supersedes (previous policy):
III.A.1, Budgeting and Budgeting Process; III.A.2, Budgetary Control; XIII.D.2, Facilities Management Capital Budget Program.