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Budgetary Process

 
 

B-1.1 – INTRODUCTION

B-1.1.1 - PURPOSE

The purpose of this policy is to establish the responsibilities and procedures in respect of the annual University salaries, operating, capital and revenue budgets.

B-1.1.2 – SCOPE

This policy is applicable throughout the University for all salaries, operating, capital and revenue budgets.

B-1.1.3 – AUTHORITY

  1. The line of authority for preparation and approval of the budgets is represented in the following chart:
    BOARD OF REGENTS
    FINANCE COMMITTEE – BOARD OF REGENTS
    PRESIDENT
    VICE-PRESIDENTS
    DEANS AND DIRECTORS
    DEPARTMENT HEADS
  2. The President has the authority to change budget allocations during the year to accommodate the financial needs of the University. Any such changes will be incorporated into the major periodic reviews of the budget submitted to the Finance Committee and to the Board.

  3. The Director of Financial and Administrative Services reports to the Vice-President (Administration and Finance) and is responsible for the administration of this policy and these procedures. For more budget information, training, etc., please contact the Director.

  4. Any deviation from this policy must be approved by the Vice-President (Administration and Finance).

B-1.1.4 - RESPONSIBILITY

It is the responsibility of each Dean or Director to ensure that each unit under his/her control complies with these procedures. This responsibility may be delegated to Heads of Departments.

B-1.1.5 - STATUTORY LIMITATIONS ON EXPENDITURE

Section 37 of "The Memorial University Act" states:

  1. "The Board shall not incur any liability or make any expenditure beyond the amount unexpended on any grant made to the University by the Legislature of Newfoundland and the estimated revenue of the University from other sources for the current year unless an estimate thereof has been first submitted to and approved by the Lieutenant-Governor in Council."  

  2. "Notwithstanding subsection (1), the Board may, without the consent of the Lieutenant-Governor in Council, incur any liability or make any expenditure not to exceed the amount of one-quarter of one percent of the total of:

a.    any grant made to the University by the Legislature; and

b.  estimated revenue of the University from other sources for the current year."

Section 38 of "The Memorial University Act" states "The Board shall not incur any liability or make any expenditure for the purchase of lands or erection of buildings without prior approval of the Lieutenant-Governor in Council."

B-1.1.6 - OBJECTIVE

The main objectives of the budget are as follows:
  1. To achieve and maintain a balanced budget.

  2. To encourage optimum use of available funds in a manner that will best assist the University in achieving its goals and objectives.

  3. To obtain the most cost effective distribution of resources.

  4. To decentralize budgetary responsibility, and accountability, in so far as it is practicable to do so.

  5. To respond to acceptable government guidelines.

  6. To act as a control mechanism.

  7. To assist in evaluating performance.

B-1.2 - DEFINITIONS

B-1.2.1 - REPORTING STRUCTURE

Page 1 of this policy depicts a simplified reporting structure for budgeting at Memorial. In reality, some officials report directly to the President rather than through a Vice-President. Also, in such areas as Student Affairs and Services, officials report to the Dean rather than to a Vice-President. Thus the line of authority for budget submissions should be in accordance with the University's organizational chart (Policy 4.3).

B-1.2.2 - DIRECTORS

Throughout this policy, references are made to Deans and Directors. For budget purposes Directors include not only those with the title of Director but also other persons to whom budgets are allocated by the President.

B-1.2.3 - BUDGET UNITS

Budget units are faculties, schools, research institutes and the other budget units listed in the University's estimates.

B-1.2.4 - BUDGET ADMINISTRATOR

The Budget Administrator is the person responsible for a budget unit.

B-1.3 - BUDGET ALLOCATIONS

B-1.3-1 - BUDGET ALLOCATIONS

Global budget allocations are made to the Deans and Directors who are responsible for the distribution of funds to the individual departments and/or other budgetary components within their units.

B-1.3.2 - RESPONSIBILITY

The Deans or Directors are responsible for ensuring that the University receives maximum benefit from the use of funds allocated to their units and that expenditures are made according to University regulations and do not exceed budget allocations. Within their units, they may implement, within the constraints of University policy, whatever additional procedures they deem necessary to carry out this responsibility. While certain duties and responsibilities may be delegated to Department Heads or other officials within units, the Deans and Directors have the final responsibility for all funds allocated to the budgetary units under their jurisdictions.

B-1.3.3 - LIMITATIONS

The autonomy of Deans and Directors, with regard to the budget, is restricted as follows:
  1. They should not incur expenditures in excess of their approved budgets.
  2. They are required to adhere to all other relevant University policies, procedures and regulations. 

B-1.3.4 - AUTONOMY AVAILABLE

Deans and Directors have autonomy to distribute their budget allocation as follows:
  1. To distribute their salaries budget to academic and non-academic staff categories including full-time, part-time, temporary and casual staff.
  2. To distribute operating funds among the various subcodes for operating expenditures.
  3. To distribute capital funds among their departments in accordance with approved estimates.  

B-1.4 - BUDGET CYCLE

B-1.4.1 - FISCAL YEAR

Budget allotments are made for the fiscal year (April 1 to March 31 inclusive). Departments are permitted to carry forward unspent funds to the next fiscal year as specified in section B-1.11.

B-1.4.2 - PLANNED SEQUENCE OF EVENTS

The following planned sequence of events is subject to changes to adapt to various situations that may arise from time to time.
  1. June/July - The President and his officials draft the format and guidelines for the budget submissions of the Deans and Directors.
  2. July/August - Deans and Directors are provided with information, instructions and related documents for budget submissions.
  3. August/September - Deans and Directors submit budget estimates to the President through the Vice-Presidents and preliminary estimates are prepared.
  4. September/October - A major review of the current fiscal year's budget estimates is undertaken.
  5. November - The revised budget for the current fiscal year is presented to the Board via the Finance Committee for review and approval.
  6. October/November - Preliminary allocations for the upcoming year are announced to the Deans and Directors and meetings are held with each individual Dean and Director to discuss budgetary plans, to consider problems and special requests, and to review the planned development of the units.
  7. November/December - Estimates of the upcoming year's funding are drafted and presented to the Board of Regents via the Finance Committee for approval and submission to the Provincial Government. Meetings are held with government officials to discuss the University estimates.
  8. December/January - The University will attempt to obtain from government information regarding its grant for the coming fiscal year. If the information is not available, the Senior Executive Committee will make an estimate of the amount of the grant and the Deans and Directors will be advised of their tentative budget allocation for the coming year.
  9. February/March - The Deans and Directors will review their tentative allocations and advise their Vice-President of any anticipated difficulties.
  10. March/April - It is expected that the University will receive formal notification of its grant from government and the tentative estimates will be revised in order to present a balanced budget to the Board of Regents via the Finance Committee at its May meeting.  Normally, communication of final budget will follow that meeting.


B-1.5 - SALARIES BUDGETS

B-1.5.1 - SALARIES BUDGETS

The salaries budgets include salary and wage payments to all employees of the University including the following categories: full-time, part-time, temporary, contractual and casual. Also included are the costs of overtime, extra teaching, stipends, vacation pay, etc.

B-1.5.2 - FRINGE BENEFITS

Employer contributions to MUN Pension, C.P.P., E.I., Health Insurance, etc., are budgeted in a centrally controlled departmental fringe benefit account. The cost of administrative employees staff doing educational courses at this University or other institutions is also charged to these accounts. Any recoveries for the fringe benefit costs of seconded personnel, etc., are credited to the fringe benefit accounts and not to departmental revenues.

B-1.5.3 - PROCEDURE

For each year's salary estimates, the Deans and Directors will be provided with the appropriate forms and instructions for submission of their requests.

B-1.6 - OPERATING BUDGETS

B-1.6.1 - OPERATING BUDGETS DEFINED

The operating budgets include all other expenditures except those defined as salary and capital.

B-1.6.2 - ALLOCATED RESPONSIBILITIES

  1. Advertising - Advertising for departmental faculty positions should be included in departments' budgets. Local advertising for staff positions is budgeted by the Department of Human Resources. All other types of advertising costs should be included in departmental estimates.
  2. Graduate Fellowships - Graduate Fellowships are budgeted by the Dean of Graduate Studies. Additional support (e.g., graduate assistantships) should be budgeted by departments.
  3. Renovations and Repairs to Buildings and Grounds - Requests for renovations or repairs to buildings and grounds should be submitted to the Director of Facilities Management for review and possible inclusion in the budget request of the Department of Facilities Management. Funds for such work should not be included in departmental budget requests. For further information, please contact the Department of Facilities Management.
  4. Computing Services - Computing costs for centralized academic services and administrative offices are included in the budget for the Department of Computing and Communications. Any proposed expansion or other changes in the service provided must be submitted to the Director of Computing and Communications. The Director may refer such requests for consideration by the Academic Computing Committee or the Administrative Computing Committee, as appropriate.   

B-1.6.3 - SPECIFIC PROCEDURES

  1. Cost - All estimates of cost must include such items as taxes and freight (i.e. total cost of bringing the goods to the University).
  2. Student Assistants - Estimates should include 4% vacation pay.
  3. Telecommunications Costs - All costs for telecommunications equipment and related charges should be included in the requests of the Deans and Directors. Consult Policy T-4.4.3 for further details.
  4. Postage and Other Service Charges - See Mail Services Policy M-1 and other appropriate policies in the Policy and Procedures Manual.

B-1.7 - CAPITAL BUDGETS

B-1.7.1 - CAPITAL BUDGETS DEFINED

The capital budgets include provision for all items of furniture and equipment that cost more than $2500 and for all major construction and renovations to buildings.

B-1.7.2 - PROCEDURE

All requests must include estimated costs and be supported by an itemized listing ranked in order of priority.

B-1.7.3 - BUILDINGS AND GROUNDS

The Department of Facilities Management will include in its budget request all costs for construction and renovations related to University buildings and grounds. Departmental requests should be submitted to the Director of Facilities Management for review and possible inclusion in the budget request of the Department of Facilities Management.

B-1.8 - DEPARTMENTAL REVENUES

B-1.8.1 - REVENUE DEFINED

Departments that generate revenue from their operations and activities must include these revenues in their budget requests.

B-1.8.2 - EXPENDITURE RECOVERIES

The recovery of expenditures that were incurred on behalf of another University department or research grant should not be classified as revenue (e.g. the recovery of a long distance telephone call). Each budget pool has appropriate subcodes to record expenditure recoveries.

B-1.8.3 - PROCEDURE

Revenues and recoveries should be estimated as accurately as possible and subtracted from the total request to arrive at the net amount required.

B-1.9 - NON-DEPARTMENTALIZED BUDGETS

B-1.9.1 - RESPONSIBILITY

The Manager of Budgets, Department of Financial and Administrative Services, has the responsibility for preparing all the non-departmentalized budgets for approval.

B-1.9.2 - PURPOSE

To provide the following global allocations for certain centralized budgetary units.
 

B-1.9.3 - FRINGE BENEFITS

See salaries section (B-1.5.2).

B-1.9.4 - GENERAL REVENUE

Included in this category are tuition fees for full-time and part-time undergraduate and graduate credit courses, interest revenue and government grants.

B-1.10.1 -  BUDGET TRANSFERS

Departments may request budget transfers within their budget line items.  Such transfers must exceed $1,000 per transfer.

B-1.11.1 - CARRYOVER BUDGET POLICY

The University permits the carryover of unspent (overspent) budget funds from one fiscal year to the next in accordance with the following terms:

1.  Funds Eligible to be Carried Forward  

a.  Full carryover of unspent/overspent salaries, operating and capital funds with departmental revenues considered as part of the operating budget.
b    Surpluses or deficits in centrally controlled budgets (e.g., Fringe Benefits) will be carried forward in a central University account.
2.  Restrictions on Surplus Carryover Amounts  

a.  The overall University accumulated surplus carryover must not normally exceed 3.0% of the University's net budgeted expenditures.  Net budgeted expenditures includes total salaries plus total operating expenditures plus total capital plus interfund transfers minus departmental revenues (i.e. room rentals, sale of products, etc).

b.  There will be no limits imposed on annual departmental carryovers provided the overall University total does not exceed the limits expressed in B-1.11.1(2)(a) above.

c.  Surplus funds can be carried forward more than one year. However, the total accumulated departmental surplus carryovers will be limited by B-1.11.1(2)(a) above.

3.  Restrictions on Deficit Carryover Amounts  

a.  The overall University accumulated deficit carryover must not exceed the limits expressed in “An Act Respecting the Memorial University of Newfoundland” see Section B-1.1.5

b.  All units are expected to balance to their budget allocation.

c.  Normally deficits are repaid in the following fiscal year.  However, units requiring a longer timeframe to repay their deficit must make the request in writing to the President or to their respective Vice-President as appropriate and Vice-President (Administration and Finance) and prepare a deficit elimination plan for approval.  Such a plan must include:

i)    the amount to be applied against the deficit in each year of the plan
ii)   the measures that will be taken to achieve savings to contribute to the deficit
iii)  Timeframe for repaying the deficit (up to a three year maximum).

d.  Should the plan be approved, only the portion of the deficit that is scheduled to be paid off in a given fiscal year will be transferred to the operating budget by the Budget Office, with the remainder staying in the carryover fund/org.

e.  If the plan does not meet the approval of the President, respective Vice-President and Vice-President (Administration and Finance), 100% of the cumulative deficit shall be repaid in the following fiscal year and the Budget Office will transfer this amount to the operating budget.

f.  Deficit reduction plans will be monitored on an annual basis by the President or appropriate Vice-President (using the Budget Office).  For those units failing to fulfill the commitments outlined in the plan, measures will be introduced to manage the deficit that may include but not be restricted to hiring freezes for academic and non-academic staff appointments and deferral of major capital purchases.
4.  Restrictions on Expenditures of Carryover Funds
a.      All carryover funds, regardless of their source (i.e., salary, operating or capital budgets) are pooled into one account and can be utilized for time limited expenditures that do not create a continuous funding requirement (i.e., salary, operating or capital).
b.      No additional approvals are required for expenditures except as provided in the University's Policies and Procedures.
5.  Budget Allocation
a.      Carryover funds will not be considered by the Senior Executive Committee when allocating the departmental budgets.
b.      The budget figures used for the various calculations of the carryover funds will be those in the Board of Regents approved budget plus any approved adjustments thereafter.
6.  Accounting for Budget Carryover
a.      Separate carryover fund/orgs will be set up for each major budget heading, rather than a fund/org for each department (e.g., Faculty of Science will have one fund/org for the whole Faculty - not one for each department, i.e., Biology, Chemistry, etc.).
b.      No expenditures will be recorded in the budget carryover fund/orgs, only budget transactions. When Deans and Directors wish to spend funds that are carried forward, they will prepare a budget transfer from the carryover fund/org to an appropriate fund/org from which the expenditures will be recorded. Documentation supporting the transfer must be attached to the budget transfer.

Last Updated:  October 06, 1999
Revised Draft:  October 4, 2005
 
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