1. F UNCTION /NACUBO C ODES – W HAT ARE T HEY AND W HY ARE T HEY I MPORTANT ? May 25, 2016 Sheri Hardison, Asst. VP for Financial Affairs & Controller May 25, 2016 Sheri Hardison, Asst. VP for Financial Affairs & Controller

2. What is a “NACUBO” code? The National Association of College and University Business Officers (NACUBO) published the accounting literature standardizing the use of functional codes in higher education  NACUBO codes Functional Classification of Expenses Required presentation in annual financial reporting How is a University/government entity/non-profit spending its money? How much money goes to programs versus administration? Defined in the FARM (Financial Accounting and Reporting Manual – Section ¶703 and Appendix F for Activity Look-Up Table) Updated by the NACUBO Accounting Principles Council The National Association of College and University Business Officers (NACUBO) published the accounting literature standardizing the use of functional codes in higher education  NACUBO codes Functional Classification of Expenses Required presentation in annual financial reporting How is a University/government entity/non-profit spending its money? How much money goes to programs versus administration? Defined in the FARM (Financial Accounting and Reporting Manual – Section ¶703 and Appendix F for Activity Look-Up Table) Updated by the NACUBO Accounting Principles Council

3. NACUBO Code Guidelines NACUBO classification is based upon the primary purpose of the cost center In PeopleSoft – set and controlled by the Speedtype/Speedchart Classification is not set by individual transactions Determines the expense category for financial reporting – –Operating Expenditures on the Statement of Revenues, Expenses and Changes in Net Position (SCRENP) – –Other schedules of the AFR – –IPEDS (Integrated Postsecondary Education Data System) – –Other financial reports NACUBO classification is based upon the primary purpose of the cost center In PeopleSoft – set and controlled by the Speedtype/Speedchart Classification is not set by individual transactions Determines the expense category for financial reporting – –Operating Expenditures on the Statement of Revenues, Expenses and Changes in Net Position (SCRENP) – –Other schedules of the AFR – –IPEDS (Integrated Postsecondary Education Data System) – –Other financial reports

4. UTShare/PeopleSoft NACUBO Codes Known as Function Codes in PeopleSoftKnown as Function Codes in PeopleSoft Listing Instruction - 100 Research - 200 Public Service – 300 Academic Support – 400 Auxiliary Enterprises - 500 Student Services - 600 Institutional Support - 700 Operations and Maintenance of Plant - 800 Scholarships and Fellowships – 997 Others were created that we do not use Known as Function Codes in PeopleSoftKnown as Function Codes in PeopleSoft Listing Instruction - 100 Research - 200 Public Service – 300 Academic Support – 400 Auxiliary Enterprises - 500 Student Services - 600 Institutional Support - 700 Operations and Maintenance of Plant - 800 Scholarships and Fellowships – 997 Others were created that we do not use

5. What Function? Mathematics department Study abroad Dean’s Office Institute of Texan Cultures Provost Office INSTRUCTION ACADEMIC SUPPORT INSTITUTIONAL SUPPORT

6. InstructionInstruction Expenses for activities that are part of an instruction program Example of use – Instructional costs per Student FTE All kinds of courses/instruction - credit/non-credit, vocational, remedial All types of sessions Sub-classes – –General academic instruction – –Vocational/technical instruction – –Community education – –Preparatory/remedial instruction – –Instructional information technology Dean’s Offices excluded – primary activity is administration Expenses for activities that are part of an instruction program Example of use – Instructional costs per Student FTE All kinds of courses/instruction - credit/non-credit, vocational, remedial All types of sessions Sub-classes – –General academic instruction – –Vocational/technical instruction – –Community education – –Preparatory/remedial instruction – –Instructional information technology Dean’s Offices excluded – primary activity is administration

7. Academic Support Expenses to provide support services to the institution’s primary programs – Instruction * Research * Public Service Sub-classesSub-classes –Libraries –Museums & galleries –Educational media services –Ancillary support (e.g. demonstration program associated with an instruction program) –Academic administration –Academic personnel development –Course and curriculum development –Academic support information technology Expenses to provide support services to the institution’s primary programs – Instruction * Research * Public Service Sub-classesSub-classes –Libraries –Museums & galleries –Educational media services –Ancillary support (e.g. demonstration program associated with an instruction program) –Academic administration –Academic personnel development –Course and curriculum development –Academic support information technology

8. What Function? Institute for Cyber Security Research IT Support Vice President of Research Office of Community Outreach Small Business Development Center Vice President Community Service Research Service Centers Grants and Contracts Financial Services RESEARCH INSTITUTIONAL SUPPORT PUBLIC SERVICE INSTITUTIONAL SUPPORT ACADEMIC SUPPORT INSTITUTIONAL SUPPORT

9. ResearchResearch Expenses for activities specifically organized to produce research Example of use – Texas Higher Education Coordinating Board reporting (with some adjustments)Example of use – Texas Higher Education Coordinating Board reporting (with some adjustments) Externally funded or notExternally funded or not Must be separately budgetedMust be separately budgeted Sub-classesSub-classes –Institutes and Research Centers –Individual and Project Research –Research Information Technology Expenses for activities specifically organized to produce research Example of use – Texas Higher Education Coordinating Board reporting (with some adjustments)Example of use – Texas Higher Education Coordinating Board reporting (with some adjustments) Externally funded or notExternally funded or not Must be separately budgetedMust be separately budgeted Sub-classesSub-classes –Institutes and Research Centers –Individual and Project Research –Research Information Technology

10. Public Service Expenses for activities established to provide non-instructional services to individuals and groups external to the institution Includes community service programs and cooperative extension servicesIncludes community service programs and cooperative extension services Includes conferences, institutes, radio and television, consulting and similar non-instructional services to particular community sectorsIncludes conferences, institutes, radio and television, consulting and similar non-instructional services to particular community sectors Sub-classesSub-classes –Community service –Cooperative extension service –Public broadcasting services –Public service information technology Expenses for activities established to provide non-instructional services to individuals and groups external to the institution Includes community service programs and cooperative extension servicesIncludes community service programs and cooperative extension services Includes conferences, institutes, radio and television, consulting and similar non-instructional services to particular community sectorsIncludes conferences, institutes, radio and television, consulting and similar non-instructional services to particular community sectors Sub-classesSub-classes –Community service –Cooperative extension service –Public broadcasting services –Public service information technology

11. What Function? Office of Financial Aid Student Orientation Athletics Student Life Housing Parking Student Advising STUDENT SERVICES AUXILIARY STUDENT SERVICES AUXILIARY ACADEMIC SUPPORT

12. Student Services Expenses incurred with the primary purpose of contributing to the students’ emotional and physical well-being Contributes to intellectual, cultural, and social development outside the context of formal instructionContributes to intellectual, cultural, and social development outside the context of formal instruction Includes student activities, cultural events, student organizationsIncludes student activities, cultural events, student organizations Sub-classesSub-classes –Student services administration –Social and cultural development –Counseling and career guidance –Financial aid administration –Student admissions –Student records –Student health services –Student services information technology Expenses incurred with the primary purpose of contributing to the students’ emotional and physical well-being Contributes to intellectual, cultural, and social development outside the context of formal instructionContributes to intellectual, cultural, and social development outside the context of formal instruction Includes student activities, cultural events, student organizationsIncludes student activities, cultural events, student organizations Sub-classesSub-classes –Student services administration –Social and cultural development –Counseling and career guidance –Financial aid administration –Student admissions –Student records –Student health services –Student services information technology

13. Auxiliary Enterprises Expenses related to operation of auxiliary enterprises Auxiliary Enterprise exists to provide good or service to students, faculty and staff and charges a fee related to that good or serviceAuxiliary Enterprise exists to provide good or service to students, faculty and staff and charges a fee related to that good or service Managed to operate over time as a self-supporting activityManaged to operate over time as a self-supporting activity Our Auxiliary EnterprisesOur Auxiliary Enterprises –Athletics –Housing –Food services –Bookstore –Parking & traffic –Student Health Center –Student activities –Other Expenses related to operation of auxiliary enterprises Auxiliary Enterprise exists to provide good or service to students, faculty and staff and charges a fee related to that good or serviceAuxiliary Enterprise exists to provide good or service to students, faculty and staff and charges a fee related to that good or service Managed to operate over time as a self-supporting activityManaged to operate over time as a self-supporting activity Our Auxiliary EnterprisesOur Auxiliary Enterprises –Athletics –Housing –Food services –Bookstore –Parking & traffic –Student Health Center –Student activities –Other

14. What Function? Accounting Services President’s Office University Development Provost – VP of Academic Affairs VP Student Affairs Office of Information Tech. Police English department office renovation INST. SUPPORT INST. SUPPORT/ACAD. SUPPORT (60/40) OPER/MAINT. OF PLANT

15. Institutional Support Expenses incurred for the central and executive-level activities concerned with the management and long-range planning for the entire institution Example of use – Administrative Cost RatioExample of use – Administrative Cost Ratio Sub-classesSub-classes –Executive management (President and all VPs) –Fiscal operations –General administration –Public relations/development –Administrative information technology Expenses incurred for the central and executive-level activities concerned with the management and long-range planning for the entire institution Example of use – Administrative Cost RatioExample of use – Administrative Cost Ratio Sub-classesSub-classes –Executive management (President and all VPs) –Fiscal operations –General administration –Public relations/development –Administrative information technology

16. Operations and Maintenance of Plant Expenses for the administration, supervision, operation, maintenance, preservation, and protection of the institution’s physical plant Example of use – Facilities and Administrative rate charged to sponsored projectsExample of use – Facilities and Administrative rate charged to sponsored projects Sub-classesSub-classes –Physical plant administration –Building maintenance –Custodial service –Utilities –Landscape and grounds maintenance –Major repairs and renovations –Security and safety –Logistical services Expenses for the administration, supervision, operation, maintenance, preservation, and protection of the institution’s physical plant Example of use – Facilities and Administrative rate charged to sponsored projectsExample of use – Facilities and Administrative rate charged to sponsored projects Sub-classesSub-classes –Physical plant administration –Building maintenance –Custodial service –Utilities –Landscape and grounds maintenance –Major repairs and renovations –Security and safety –Logistical services

17. Other Expenses Scholarships and Fellowships – –Includes expenses for scholarships and fellowships in the form of grants that neither require the student to perform service to the institution as consideration for the grant, nor require the student to repay the amount of the grant to the funding source. –Most scholarships are reported as a reduction again tuition and fee revenue; only some remain in expense Depreciation and amortizationDepreciation and amortization – –Recognition of the allocation of the cost of capital assets over the useful life of the asset. Scholarships and Fellowships – –Includes expenses for scholarships and fellowships in the form of grants that neither require the student to perform service to the institution as consideration for the grant, nor require the student to repay the amount of the grant to the funding source. –Most scholarships are reported as a reduction again tuition and fee revenue; only some remain in expense Depreciation and amortizationDepreciation and amortization – –Recognition of the allocation of the cost of capital assets over the useful life of the asset.

18. Questions?