1. Finance and Budgeting in Higher Education
Paula Birke
Director of Business Operations for Student Affairs
Special Thanks to Lora Miles, Dave Heth and Bill Winter for various materials used.

2. Higher Education uses Fund Accounting
Funds/groups of related accounts are segregated for specific purposes in accordance with regulations and/or special restrictions
Used by governments, non-profit organizations, colleges & universities, churches, hospitals
Emphasis on accountability rather than profitability
Must keep separate records for each fund (group of related accounts)
Similar to separate personal checking accounts
Much of our revenue is Restricted
Can we use grant money to pay faculty salaries?
Can we use Housing money to pay faculty salaries?
Can we use Athletics money to pay faculty salaries?
Can we use money donated for a building to pay faculty salaries?

3. SIUE Major Fund Groups (Sources of Funds)
State Appropriations – Includes General Revenue Fund and Educational Assistance Fund, which come from Illinois Tax dollars. Income Fund – Includes Tuition, off-campus program revenue (based on charges sufficient to cover all instructional and administrative costs of the program), Interest Earnings and certain miscellaneous fee revenue (application fees, course-specific fees, graduations fees, etc.). Grants & Contracts – Funds received from governmental entities, private foundations and corporations for the support of various research projects, instructional and training programs, public service activities, student financial aid and other programs. Funds are restricted by contractual agreement with the sponsoring agency. Indirect Cost Recovery (ICR) – Funds recovered as overhead allowances on grants and contracts. They are used to help cover a share of expenses for such items as operation and maintenance, library services, sponsored project administration, and general administration.

4. SIUE Major Fund Groups (Sources of Funds) cont.
Revenue Bond Operations – Operations of revenue bond financed facilities. Revenue Bond enterprises are funded primarily from student fees, operating charges, as well as sales and services of various activities. Includes such facilities as residence halls, student centers, student recreation centers and parking and traffic.
Self-Supporting Activities – Include a wide range of operations which are directly related to Instructional, Research, or Public Service units, or supports the overall objectives of the University. They may be Self-Supporting in whole or in part. Revenue is generally derived through student fees or sales of services (Dental Clinic, Textbook Services, Athletics).
Service Departments – Provide specific types of services to University departments and are supported by internal charges incurred by using departments. Such services might be purchased from outside sources, but for reasons of convenience, costs, or control are often provided more effectively by an in-house service department (Facilities Management, Transportation).

5. Differences between State and Non-State Accounts
Budget = Planning tool
Budget = Authority to spend
Accounts are centrally supported
Revenue comes primarily from State Appropriations and tuition revenue (Income Fund)
Fiscal Year = (July – June) + two months (July – Aug) lapse period
Funds received during the fiscal year must be obligated by June and expended by August
Non-State Accounts
Budget = Planning tool
Budget and Available cash balance = Authority to spend
Accounts are self supporting
Revenue comes from Sales, Fees, Grants, Etc.
Fiscal Year = (July – June)
Unused funds are rolled over as cash to the new fiscal year

6. Revenue Bond Accounts Can be funded by: Fees Sales and Services
Treated like non-state accounts
Pays debt on the “loan” for the facility or operation
Responsible for utilities and facilities/custodial charges
Uses of funds very restricted, also known as Funded Debt

7. Other Types of Accounts (Not Included in University Budget)
Service Departments
Provide services to other university departments
Examples?
Agency Accounts
Not university money—we just hold it
University-Related Organizations (UROs)
Separate nonprofit corporations with their own Board of Directors
Service Departments – Facilities, Transportation, ITS,
Agency Accounts – Accounts for Student Organizations (8-accounts)
UROs – ESL Charter School, University Park, Foundation & Alumni

8. Budgeting Agenda Budget definition
Why a budget is important and why each department needs a budget
What a budget is
What a budget is NOT
Resources needed to complete a budget
Types of budgets
What should be included in an Operating Budget
How to prepare your budget
Budget processes
How your budget ties into the entire SIUE Budget

9. Budget Definition
A financial plan of projected future income and expenses
A management tool to track performance

10. Why a Budget is Important and Why Each Department Needs a Budget
It is a tool that enables fiscal officers to determine the amount of funds available, and to develop a plan to spend those funds on departmental needs and goals
It is required by Board Policy
It is also required reporting to the State of Illinois, Granting Agencies, etc.
The Budget Office asks the various fiscal officers to prepare their budgets because they are the experts in the operation of their areas

11. What a Budget is….. A planning tool
A short-term perspective, usually one year
A tool for monitoring and controlling the generation and use of resources
Foundation for next (future) year’s budget

12. What a Budget is NOT…..
For Non-State Accounts with their own source(s) of funding, it is not authority to spend; rather it is a planning tool. Authority to spend is also based on available cash in the account.

13. Resources Needed to Complete a Budget
AIS Funds Available Report
Banner HR Payroll Report (NZREPBD – Detail of Employee Position) – if applicable
Last year’s budget
Fee Review projections – for Mandatory Fee Units
Anticipated changes in operations that will cause changes in revenue or expenditure from prior years.

17. Capital Budget vs. Operations Budget
What is a capital budget?
Large in nature, allocating money for the acquisition or maintenance of fixed assets such as land, buildings (renovations and/or new facilities), equipment, infrastructure, enterprise software
Require long planning lead times
Implemented over multiple budget cycles
What is an operations budget?
Projected revenue and associated expenses for an upcoming period
Budget to actual variances, with estimated projections through fiscal year
It is for recurring and non-recurring expenses
Can be monthly, quarterly or yearly

18. What should be included in an Operating Budget:
Revenue
Sales and Services
Fees
Interest
Debt
Salaries
Wages
Travel
Equipment
Commodities
Contractual Services, including Utilities
Telecommunications
Transportation

19. How to Prepare Your Budget
Look at last year’s budget as a guide
Look at prior years’ Full-Year Actual revenue and expenditures. (Note - may have to look at 2 fiscal years back to get a full year depending when budgets are due)
Factor in known cost increases (e.g. salary increases, minimum wage increases, contract increases, etc.)
Factor out one time expenditures when building future year costs
Consider any new/discontinued revenue sources and/or additional/reduced expenses

20. Budgeting Processes
By Fund Group

21. Budget Process—State Appropriations
Four-step process:
University budget request—October
Illinois Board of Higher Education Recommended Budget—January
Governor’s Recommended Budget—February
Final Budget approved by General Assembly—May-September

22. Budget Process—Individual State Accounts
Vice Chancellor distributes budget to departments based on prior year budget and anticipated changes
Often just last year’s budget plus salary increase money (if any)
Each fiscal officer decides on the distribution of budget between expense lines: salaries, wages, travel, equipment, commodities, contractual services, automotive, telecommunications
Often very similar to last year
What proportion of State Account budgets are spent on salaries?
Nearly 69% of State budget is spent on Salaries/Wages – 68.8%

23. Student Affairs FY19 Budget
Base Budget Calculation
VCSA
Disability
SOAR
Special/General
Total
FY18 Adjusted Base - Tentative
XXXXX
FY18 AFSCME, IEA/NEA Salary Increases
Subsidy
FY18 Medicare Costs Est (No Billing again in FY18)
FY19 Base
DSS Budget Allocation - Recurring Request
(XXXXX)
Hold DSS Director salary 11.5 mo's
GA DSS for FY19
Overload DSS - Interim position
Additional Salaries needed for Dir Bus Ops/SA from Aug - Dec
FY19 Adjusted Base
Held Centrally by VCSA
Oracle
Insurance
2% Reserve
FY19 Planning Budget

24. Internal Operating Budget for FY19 Appropriated Funds
9/19/2017
Internal Operating Budget for FY19 Appropriated Funds
Vice Chancellor for Student Affairs
Original Budget
Oper of
AIS
Salaries
Wages
Travel
Equip
Comm CS
A/G
Auto
Telecom
Budget Purpose Description
BP Number
[4169]
[4249]
[4399]
[4499]
[4699]
[4899]
[5099]
[5199]
[5399]
Total
VC Student Affairs
721085
XXXXX
VCSA General
721086
VCSA Special Initiatives
721087
Disability Support Services
721032
SOAR
721070
Totals

25. Funding Request—State Account Revenue Allocation
SIUE uses the Incremental Budgeting method
Budget Office estimates new State Account revenue
Estimate State Appropriations
Estimate Income Fund and tuition revenue
Vice Chancellors Request Additional Budget
University Planning and Budget Council (UPBC) recommends allocation of new revenue
UPBC and Chancellor makes final decision

26. Budget Process—Individual Non-State Accounts
Fiscal officer estimates
Revenue
Expenses by line: salaries, wages, travel, equipment, commodities, contractual services, automotive, telecommunications
Current year ending cash (as of June 30)—>becomes beginning cash for next fiscal year
Revenue – Expenses + Beginning Cash = Ending Cash

28. Budget Process—Mandatory Fee Units
“Fee Review” Process:
Unit Advisory Councils (Faculty/Staff/Student) recommend new initiatives
Financial Affairs provides assumptions (e.g., fee rates, salary increases, wages, insurance, general cost increases), fee revenue estimate, and a template spreadsheet
Unit completes a four year financial plan by expense line/object code including, if needed, a fee increase for each year (current year and three future years)
Target ending cash = 25% of expenditures
Review Process:
Financial Affairs and Vice Chancellor for Student Affairs
Chancellor’s Council
Student Government
UPBC
President’s Office
Board of Trustees

31. Budget Process—Revenue Bond Operations
Similar to that of Mandatory Fee Units
Also “Bond Model”
30 year revenue and expense forecast (or through the life of the bonds)
Both operations and Repair Replacement Reserve (RRR) accounts

32. How your Budget Ties into the Entire SIUE Budget
Your department budget is a part of the entire SIUE budget
The data collected from each department (unit) is consolidated by fund group to create SIUE’s budget and is included in the Annual SIU Budget Book, which is approved by the SIU Board of Trustees.

34. Questions?