I. THE BUDGET PROCESS OF THE UNIVERSITY SYSTEM
A. Overview
Florida Gulf Coast University (FGCU) is the tenth and newest member of the State University System (SUS) of Florida. It is financially supported by the state of Florida. The majority of the funding for the university is derived from state appropriations determined by the Governor and the Legislature through the Board of Regents (BOR). Once these funds are appropriated, it is the responsibility and duty of each of the ten universities to allocate and maximize the use of those resources to meet the mission and goals of the institution. The following is an outline of the budgeting process at Florida Gulf Coast University, beginning with the Legislative Budget Request through the allocation of funds within the University.
B. Categories
The fiscal year for FGCU begins on July 1, and is completed on June 30. The use of University funds is tracked and recorded in SAMAS (State Automated Management Accounting Subsystem). The reports and data generated from SAMAS are widely used from the Comptroller’s office to the individual account managers within a given organization. It is through this system that all expenditures and budgets are recorded and maintained.
The budget of a given department is comprised of several if not all of the following categories:
Salaries - The salary and benefit cost associated with the employment of faculty, administrative, and support personnel.
Other Personnel Services - Consulting services, temporary employment, student assistants, adjunct faculty, etc. are paid out of this category.
Expense - This category includes items such as travel, printing, office supplies, software (under $500), and general office items.
Operating Capital Outlay - Assets and equipment over $500 are purchased from this category. Examples would be personal computers, furniture, automobiles, etc.
Other categories include Library Resources, Electronic Data Processing, and other special categories.
Each of these categories are budgeted under individual department accounts. It is through this structure that budget is managed and allocated within the University. Ultimately, it is the responsibility of the University Budget office to be sure that the total budget authorized does not exceed the total value of funds allocated by the State University System to the University within each given category and budget entity.
C. Budget Entities
A Budget Entity is defined as a unit or function that has been required by the Legislature to report and control revenues and expenditures in a prescribed manner. Its function and purpose define each budget entity. The State University System has seven operating budget entities as listed below:
Each of the above budget entities are standard within the State University System. Currently, the majority of funding for Florida Gulf Coast University is Education & General Revenue, with a smaller portion from Contracts and Grants and Auxiliaries.
Education and General Revenue
The Education and General Revenue (E&G) budget entity is the largest source of funding for Florida Gulf Coast University. The E&G budget consists of several different sources of funds. They are:
General Funds - state revenues such as sales tax.
Educational Enhancement - proceeds from the state lottery.
Incidental Revenue Trust Fund - proceeds from tuition and fees.
Each is unique in their generation; however, they all serve to fund the operation of the main educational mission of the University. The first step in the allocation of E&G funds to the University is the Legislative Budget Request.
Legislative Budget Request
In accordance with the formulas established by the Board of Regents, and in conjunction with instructions from the Governor’s office, the University prepares the Legislative Budget Request. The budget is developed in six functional areas:
Generally, the prior year level of funding is used as a base budget with the focus of the Legislative Budget Request on the increase to the base. In addition, special one time appropriations for non-recurring programs and activities may be included.
Each university submits their budget requests for review and approval by the Board of Regents. The SUS budget is then submitted to the Department of Education, where it becomes a part of the larger education budget request. The budget request is then submitted to the Governor’s office for review and revision. Once this step is completed, the document becomes a part of the state’s budget request to the Legislature for approval. The Legislature reserves the right to make its own adjustments to the budget before approving final appropriations.
After final appropriations are made, the funds must be allocated to the individual budget units of SUS. This allocation is documented and distributed in the Allocation and Summary Workpapers issued by the Board of Regents. Once this process is completed, it is the responsibility of each institution to allocate funds internally.
Details of the above information is available at the following locations:
The Legislative Budget Process: Discusses in greater depth the budget request process
Budget Related Statutes: Listing of key budgetary statutes
The SUS Allocation Process: The SUS process of allocation once funds are apprporiated
The Internal Budget - The University Operating Budget Allocation
Beginning in the early spring, department managers submit to their Vice President (with a copy to the budget office) a request budget which includes additional staffing for the upcoming fiscal year. Special attention is given to newly requested positions and programs.
After review of each Vice President, the Executive Staff (the President, and the respective Vice Presidents of Academic Affairs, Administrative Services, and University Relations) discuss and review the requests for the whole university. The Executive Staff’s decision determines the final operating budget for the next fiscal year.
Once approved by the Executive Staff, the University operating budget is entered into data files (and SAMAS) for submission to the Board of Regents Budget Office. The BOR Budget Office reviews the data for accuracy and compliance before approving. The BOR submission is used to generate a detailed report (the University Operating Budget) which outline the staffing and operating budgets of the University. Available for review is a copy of the most current published operating budget for FGCU.
Contracts and Grants
This budget entity is the mechanism by which the University budgets and accounts for contracts, grants, and other research funds received from federal, state, or private sources. As with Education and General Revenue, there are several funds within the budget entity. They are:
Sponsored Research Trust Funds: - For programs to support research, training, and public service functions of the University with funds received from outside sources.
Contracts and Grants Trust Funds: - Funds that are received or made available by grants, contracts, and cooperative agreements with other organizations.
The budget process for Contracts and Grants are less complex and less scrutinized than that for Education and General Revenue. It does not require the Legislature and Governor’s approval. However, budget authority for these funds must be requested and actual funding must be available or realized. Revenues and expenditures (both operating and non-recurring) are projected and submitted to the BOR and included in the operating budget. Once the submission is approved, the Budget Office monitors expenditures to identify potential budget issues.
Auxiliary Enterprises
Auxiliary enterprises are self-supporting activities which support or enhance the university mission. A primary example would be a university bookstore, which is a self-sufficient, self-generating enterprise. Another example is a food service. FGCU will outsource both of these operations.
The budget process for auxiliaries is similar to that of Contracts and Grants. Sources of revenue and types of expenditure are outlined in the operating budget. The University Budget Office monitors the budget for auxiliaries. As with the other budget entities, this budget is subject to review and approval by the Board of Regents.
Non-operating Funds
In addition to the above mentioned budget entities and funds, there are non-operating funds. These funds are dedicated to facilities, construction, and renovation. The two primary sources are the Capital Improvement Trust Fund (CITF) generated from facilities fees paid by students, and the Public Education Capital Outlay and Debt Service Trust Fund (PECO). PECO funds are generated by a levy on gross receipts of utilities. While CITF is limited to the State University System, the PECO funds are shared with the public schools and community colleges. The Florida Board of Regents administers PECO funds allocated for given projects of the universities.
Other Issues
In addition to the above, there exist other aspects of the budget control process utilized by the SUS and the BOR. The two most noteworthy are outlined below.
1. Rate Control
A key component to the operating budget of Florida Gulf Coast University and that of the other state universities, is rate. Rate is defined as the amount required to annualize salaries and the University may not hire staff above the total rate allocated by the BOR, regardless of cash availability. Rate is the control method by which the BOR and Legislature monitors and manages the staffing and salary levels of the state universities. Each employee must be in an authorized position with the appropriate classification code and pay plan defined in the operating budget. This compiled information is submitted to the BOR for their review.
2. Spending Authority
There is a distinct difference between having funds, and the ability or authority to expend them. For Contracts and Grants, and Auxiliaries, the institution may have available funds (which it is required to raise); however, the BOR must authorize the budget and ability to use them.
E&G funds are managed by the BOR through the " budget release process". A given university may only expend a limited percentage of its total annual allocation each quarter in each given category.
The release of budget (and expenditure authority) by category is determined and requested by each university. Once granted, the universities may not exceed that release amount within the category or in total for that quarter. This is monitored and controlled by the Budget Office.
3. Budget Amendments
As with any budget plan, the need for changes may become necessary. These changes are referred to as budget amendments (or transfers). A Budget Amendment may take place within the University, or it may be a system wide change.
During the course of a given year, various additional funds may become available to the SUS. A transfer of funds may take place between two universities within the system or a budget reduction may be mandated. When this occurs, a budget amendment is issued to the affected institution, outlining the nature, source, and allowed use of these funds. The BOR Budget Office controls the issuance of these budget amendments. Internally, budgetary managers may request a change to their operating budget. This is usually due to a change in their planned activities and a resulting change in a given department’s or divisions spending requirements. When a change is needed, a Budget Transfer form is completed with the appropriate signatures, and the University Budget Office inputs the authorized changes to the budget.
In summary, Florida Gulf Coast University is governed and budgeted through the State University System of Florida and must follow all relevant Florida Statutes, Florida Administrative Code, Chancellor’s Memoranda, and all other rules and regulations stipulated by the State and or the Board of Regents. The internal budget process has been established to provide additional checks and balances, so that the integrity of funds is maintained and the goals and missions of the University are achieved.
A. Overview
Budget transfers are a re-allocation or adjustment of the internal budget and accounts of the university. The need for which develops due to unexpected costs and events that mandate a change in the given operational budget. Budget transfers allow account managers to allocate their funds through the course of the year on a need basis.
B. Process
The steps to process a budget transfer are as follows:
2. The Budget Office will assign a sequential budget number to the document prior to input. The Budget Office is wholly responsible that available balances are verified prior to input. Once completed, the form is be input into SAMAS by the Budget Office within 2 work days of receipt.
3. Verification for accuracy is to be undertaken by both the Budget Office and the appropriate account manager.
C. Regulations
1. Authorized Signatures
An authorized signature listing is to be maintained in coordination with the Controller’s office. Signature is required on each transfer that is generated. Only the account manager or other designees as listed on the authorized signature file may authorize the transfer.
Countersignatures by Vice Presidents are not required for budget transfers requested by authorized account managers on their authorized accounts unless required by departmental policy.
The Budget Office does not require notification of budget transfers by authorized designees to the account managers. However, it is strongly recommended that any changes to an account manager’s budget allotment be communicated immediately.
2. Reserve Accounts
Strict controls of reserve accounts are to be maintained and enforced by the Budget Office. Therefore, the following guidelines apply.
3. Budget Entities
Transfers may only take place within the same budget entity.
4. Cross Category Bookings
The Budget Office must review the transfer of funds between categories prior to input. Due to certain expenditure limitations as imposed by the state, certain transfers may not be feasible in a certain time frame. It is strongly encouraged that account managers discuss their needs once realized with the Budget Office so that these transfers may be coordinated in advance and that no transfer need be denied.
Each budget entity has its own unique set of guidelines and procedures to follow for authorizing the establishment of new accounts. As a rule, requests are to be made in writing by the accountable officer. The accountable officer will complete the Request To Establish New Account and the Signature Authorization Form and submit to the University Budget Office for review and approval. If approved, the Budget Office will forward both forms to the Controller's Office for processing.
Depending upon the nature of the fund and activity, additional forms and approvals may be required by the Budget Office before an account may be authorized. For example, Auxiliary operations will require operating budget plans in addition to the above paperwork. As a general rule, all fund types other than Education and General Revenue based accounts will require additional detail. Please contact the University Budget Office for further information.
A. Overview
The key to the operating budget of Florida Gulf Coast University and that of other state universities, is rate. Rate is defined as the amount of salary required to annualize salaries (i.e., pay the employees for an entire year, regardless of when the appointment date is). The University may not hire staff above the total rate control number allocated by the BOR, regardless of cash availability. Rate is the method by which the BOR monitors and manages the staffing and salary levels of the state universities. Each employee must be in an authorized position with the appropriate classification code and pay plan defined in the operating budget. This compiled information in the annual Operating Budget is submitted to the BOR for their approval and review.
B. Rate Restrictions
Rate is restricted in several ways. First and foremost, the University may not exceed the total rate allocated at any given time. Therefore all positions when hired, as well as at several times throughout the fiscal year, are measured at their full annual cost. Rate is an annualized figure. Second, minimum rate requirements must be met and expensed in Plant Operations and Maintenance (PO&M). PO&M is the only program component that has a minimum amount of rate that is required by the Legislature and the BOR Budget Office. Other restrictions do apply as well concerning the amount of rate that may exist on an unfilled line given the class code and pay grade.
C. Internal Management
The Budget Office manages rate within the University. The Budget Office reviews the allocations of rate by the SUS, and then allocates that rate in accordance with allocation papers prepared by the BOR Budget Office, the staffing plans and budget allocations of the FGCU Executive Staff. Once these positions are authorized and allocated to the given departments, all positions must be accounted for in the Personnel-Payroll-Budget System. The responsibility of managing rate, and not exceeding the amount authorized by the Board of Regents, is the sole responsibility of the Budget Office. Therefore, only the Budget Office may establish positions in the Personnel Payroll Budget System. The movement of rate between positions is managed by the budget office, as described below.
D. Personnel - Payroll Budget System
The Personnel-Payroll Budget System is the official listing of each position, employee position number, title, employee name (if filled), rate, pay grade, pay plan, and class code. In order for an employee to be hired at the University, this information must be accurate and complete. Furthermore, each position created must be within the parameter of the classification and pay grade structure determined by the Office of Human Resources.
E. Operational Procedures
What follows is an outline detailing how a position is allocated, established, and filled.
Classification and recruitment are the responsibility of Human Resources. As mentioned previously, the Budget Office does coordinate with Human Resources on classifications.
F. Rate Transfers
In order for a college/department to re-allocate rate, a Rate Transfer Request Form must be completed. Examples of when this form is required include special pay increases, reclassifications, promotions, etc. Any situation (other than the normal salary increase process) when the rate on a particular line is to be changed. This form is also used when a position is to be transferred between two colleges/departments. When completing a transfer form the responsible vice-president or delegated official must sign off.
The crossing of rate between budget entities, i.e. from Educational and General to Contract and Grants is prohibited. Furthermore, unless a new allocation to the University is involved, all rate transfers must net to zero. The University Budget Office will not process the form if these or any other items are in discrepancy.
As indicated above, a rate transfer form will not be required as part of the annual salary increase process. Salary increases are processed under a separate procedure.
As discussed in section I, the Education and General Revenue funds consist of different fund types. Included in that group is the Incidental Revenue Trust Fund, which is generated from tuition and fees charged to students. Each University in SUS has a portion of their operating budget derived from this trust fund.
During the course of the fiscal year, an analysis is conducted to compare funds collected to the Incidental Revenue requirements issued by the BOR. In the event that collected funds are insufficient to meet the institutional requirement, the program component reserve accounts are assessed. The assessment is based on a proportional basis of the component to the total budget.
If funds are collected in excess of requirement, then those funds are either carried forward into the next fiscal year, or may otherwise be used dependent upon the decision of the Executive Staff.
VI. THE INTERNAL BUDGET PLANNING AND REVIEW PROCESS
In addition to the process and steps of the external budget allocation process, Florida Gulf Coast University has established processes for the allocation, management and review of the budget and the budget process.
The operating budget consists of numerous funding components categorized by seven budget entities (see section number one on Budget Process). The primary concern and focus for management are those funds allocated under Education and General Revenue.
A. Education and General Revenue
The first step in the development of the Education and General operating budget is to compile the operating budget requests of the various budgetary units. These are developed in accordance with the methods and techniques employed by the University (see below). The University Budget Office communicates both orally and in written form, with each department regarding the format of the requests. The University Budget Office is the focal point for providing and collecting data on the development of the operating budget.
The operating budget requests of the departments are submitted in the early Spring to the appropriate Vice President, prior to the start of the July 1 fiscal year. These requests include anticipated operational needs and additional staffing requests (subject to availability: see Rate & Employment). This information is reviewed by each Vice President and forwarded to the University Budget Office. The University Budget office compiles this data to develop a draft of the University Operating Budget request.
The operating budget requests consist of more than operational fund needs. A summary is provided of the allocation granted to the University by the BOR, a summary that details the budget by department, and the total estimated budget position of the University. The Executive Staff summarizes budgetary issues for review, clarification, and action. Often, before a final allocation can be authorized, the Executive Staff must agree on how various cost issues will be administered. Furthermore, the Budget Office provides a brief synopsis on the prior year process, in order to implement improvements.
Once the operating budget requests are compiled, the Executive staff will modify and debate over the allocation of resources within the University. Changes to the operating budget draft are given to the budget office, which in turn continues to modify and update the operating budget. This process continues until a final operating budget for the given fiscal year is decided upon.
1. Techniques and Methods of Allocating the Budget for FGCU
Beginning in fiscal year 1997-1998, Florida Gulf Coast University will utilize zero-base budgeting techniques for the development of the operating budget. Given the lack of good historical data upon which to base expenditures, the University will utilize this method until such time that operational expenditure data will no longer reflect a start-up operation, but rather that of an operating institution. At this point, it is projected that FGCU will move to a base budget methodology no earlier than the 1999-2000 fiscal year.
2. Budget Management During the Course of the Fiscal Year
Once the budget is allocated, it is the responsibility of each account manager to monitor their budget and expenditure of those funds. The University Budget Office will monitor the entire University budget, reconciling it to the allocation control totals to verify that the University is not spending more than what was appropriated by the Legislature.
On a monthly basis, the departmental account managers are provided several reports to assist in monitoring their budgets. The two most utilized are the Organizational Ledgers and Expenditure Summary By Account. These reports contain detailed expenditure information managers utilize in the analysis of expenditures.
Furthermore, the University Budget Office partakes in mid-year budget reviews of departmental budgets conducted by the Vice Presidents. The purpose is to provide advice and counsel and to communicate items that would impact either the current fiscal year or long term strategic issues.
The University Budget Office is responsible for monitoring the overall operating budget. This is achieved through constant review of the individual accounts within the university, and a monthly reconciliation of the operating budget once it has been posted to SAMAS. The individual accounts are reviewed daily for potential budget problems. The source of this information is the Report of Budget Position generated from SAMAS where the budget is recorded.
The operating budget is reconciled to the University control total amount as displayed in the allocation workpapers, adjusted for any budget amendments issued by the BOR during the course of the fiscal year. Any variances from this amount are identified, and appropriately resolved.
It must be noted how SAMAS budget controls serve to protect against excess expenditure by the University. No purchase order or expenditure may be booked within a given account without a sufficient budget balance available. There are only two exceptions to this rule. The first is in the OPS category. SAMAS does not stop these expenditures since they are payroll functions. Therefore, each account must be reviewed to be certain that any OPS budget issues can be identified in a timely manner, and sufficient funds moved into these accounts. The second exception is that early in the fiscal year, before the operating budget is recorded on SAMAS, the Controller’s Office may authorize the use of available balance override since day to day operations must continue. Increased overview of expenditures occurs when available balance override is utilized.
At the end of the fiscal year, all unencumbered, unexpended funds are converted into carryforward. This is done in accordance with the Chancellor's Memorandum on Carry Forward funds. These funds are recorded in a centralized university account. The approval of the expenditure of these funds is held at the Executive staff level. Therefore, colleges/departments are not allocated these funds unless specifically directed by the Executive Staff.
B. Contracts and Grants and Auxiliaries
The budget management process for Contracts and Grants and Auxiliaries is separate from that of Education and General Revenue. The internal budget is allocated based upon operational plans and cash flow projections of the individual grant and auxiliary managers. The operating budget for these budget components reflects the "authority" to spend funds acquired from various sources. For example, an auxiliary department may have a fifty thousand dollar budget for the entire year, but will only be allowed to spend up to whatever the cash balance on deposit happens to be. The same is true for Contracts and Grants.
During the course of the fiscal year, it is the responsibility of the grant and auxiliary enterprise managers to review their expenditures and utilization of cash, to ascertain that a sufficient amount of funds is available to continue until the end of the grant, and/or the fiscal year. The budget in place must be of sufficient amount to allow for planned expenditures for the entire year.
The University Budget Office’s function is to establish and submit an operating budget for the University that is as complete and accurate as possible related to planned expenditures. Once the operating budget is submitted, the Budget Office’s role in the management of these funds is minimal. The day to day operational management of the Contracts and Grants fund is handled by the Controller’s Office
C. Management Flexibility of the University
The policies and procedures related to the allocation of the budget is determined by the Executive Staff, with strong input from the University Budget Office. The guidelines established are consistent with all BOR mandated budgetary controls.
However, it should be noted that polices established herein, are at the discretion of the institution and are subject to change without approval or influence from any other organization.
D. Additional Information
Chancellor's Memorandum on the development of the operating budget may be viewed at: http://www.bor.state.fl.us/gen/cm/cm-d-061.htm
A copy of the Budget Calendar and a Detailed Glossary of terms is also available.
E. Forms
Many of the forms utilized by the budget office are available on the FGCU Marlin shared folder, under Budget Office Forms. Please refer to this location when an electronic copy of a particular form is desired.
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