Purpose

To outline the authority, roles, and responsibilities that enable Memorial University of Newfoundland to:

• effectively plan ,allocate, and manage its operating budget to achieve its strategic goals and objectives;
• provide for accountability, transparency, and stewardship of the operating budget; and
• ensure the University is operating in accordance with the requirements of the Memorial University Act.

Scope

The Operating Budget of Memorial University of Newfoundland and all Units receiving an allocation from the Operating Budget. Ancillaries, Special Purpose, Trust, and Research Funds are not in the scope of this policy. Separately incorporated entities are also not in the scope.

Definitions

Adjusted Budget — The budget for a unit adjusted for one-time allocations and other adjustments throughout the Fiscal Year.

Ancillary Services — Services provided by the University that are peripheral to the educational mission, including but not limited to, student residences, bookstore, and food services.

Base Budget — The annual on-going allocation of funds for operating activities consisting of revenues and expenditures for salary and non-salary costs.

Cumulative Surplus/Deficit — The sum of all prior year surplus/deficits including the current fiscal year surplus/deficit.

Current Year Surplus/Deficit — The calculation of the adjusted budget less the total expenditures in the current fiscal year.

Envelope Head — The executive leader (president/vice-presidents) responsible for the allocation of the operating budget within their portfolio.

Faculty/Staff Turnover Mechanism — The mechanism to recover steps assigned to a position upon vacancy and subsequently provide the University with a sustainable funding source for future step increases.

Fiscal Year — The financial reporting period which runs from April 1 to March 31.

Incremental Budget Model — Budget allocation model in which the operating budget is determined using previous year's base budget with incremental changes for the new budget year.

Internal Chargeback — The process of one unit charging another unit for provision of services.

One-time Allocation — Non-recurring adjustments to budget revenues allocated in a given year.

Operating Budget — The projected annual revenues and expenditures (salary and non- salary) for each unit.

Operating Expenditures — Expenditures of operating units including but not limited to material and supplies, travel, rentals, leases, insurance, utilities, taxes, and fees.

Operating Grant — The grant provided to the University by the Province of Newfoundland and Labrador to support operating expenditures of the University.

Research Support Fund — The grant provided by the Government of Canada, to offset the indirect costs incurred in the operating fund in support of federally funded research.

Salary and Benefits — The allocation for permanent and contractual academic and non-academic positions, fellowships, and student employment inclusive of fringe benefits.

Tuition Revenue — Fees paid by students and allocated on a campus basis.

Unit — Academic or administrative unit, as defined in the University Calendar, or any board or other body appointed or elected to carry out University business.

Unit Head — A Dean, Director and other senior administrators at a comparable level or above, including the President, Vice-Presidents and Associate Vice-Presidents.

University — Memorial University of Newfoundland.

Vice-Presidents Council (VPC) — The senior administrative committee of the University. It is a decision-making body with responsibility for pan-university operations and affairs, for matters that cross over vice-presidential portfolios, and for making recommendations to the President on matters within their sole authority.

Policy

1.0 Authority and Responsibility

In accordance with the Memorial University Act, the authority and responsibility for approval of the University’s Operating Budget rests with the Board of Regents.

Strategic planning ensures the best use of the Operating Budget. Vice-Presidents Council, and standing committees including the University Planning and Budget Committee of Senate, and the Provost and Vice-President (Academic)’s Integrated Planning Committee recommend and establish priorities for the University Operating Budget. The Provost and Vice-President (Academic) is responsible for overseeing the preparation of the University’s Operating Budget and is entrusted with allocating financial resources to the Envelope Heads. The Provost and Vice-President (Academic)’s authority is exercised in conjunction with Vice-Presidents Council, and subject to approval by the President. The University’s revenue includes the Operating Grant, Tuition Revenue, Research Support Fund, and other income. The total of these amounts determine the Operating Budget.

Envelope Heads are responsible for the allocation of budgets to their respective Units. The Unit Heads are accountable for ensuring that the University receives maximum benefit from the funds allocated to their Units, that expenditures are made in accordance with University regulations, policies and procedures, and that expenditures do not exceed budget allocations. While certain duties and responsibilities may be delegated to department heads or other officials within Units, the Unit Heads have the final responsibility for all funds allocated to the Units under their jurisdictions. The President and the Envelope Heads have the authority to change Operating Budget allocations during the Fiscal Year to accommodate the financial needs of the University. Any such changes will be incorporated into updates on financial position provided to the Board of Regents commencing mid Fiscal Year.

The Director of Budgeting reports to the Vice-President (Administration & Finance) and to the Provost and Vice-President (Academic) and is responsible for the oversight and implementation of this policy and its associated procedures.

2.0 Operating Budget Model

The University follows an Incremental Budgeting Model. Operating Budget allocations are provided for the Fiscal Year. Each Unit receives a budgetary allocation from the Envelope Head, manages its own budget, and is responsible for Current Year and Cumulative Surplus/Deficit.

3.0 Operating Budget Components

Salary & Benefits 
Units are provided with budget calculations for salary and benefits for established permanent positions.

Operating Expenditures
Units allocate the balance of the operating budget to this component to reflect planned spending.

Revenues
Unit budgets may include a Unit generated revenue component and this is available for allocation to the components above.

Internal Chargebacks
Internal Chargebacks are permitted, subject to the approval of the Envelope Head.

At the discretion of the Unit Head, Units may move budget allocation from one component to another to reflect increases or decreases in revenues and accommodate salary and benefits or operating expenditure needs and operational requirement throughout the Fiscal Year.

4.0 Budget Transfers

Budget changes may occur throughout a Fiscal Year due to recurring and non-recurring transfers after the Operating Budget has been allocated. This will be reflected in the Adjusted Budget for a Unit.

5.0 Surplus/Deficit

The University permits the carryover of Current Year and Cumulative Surplus/Deficits. Salary and benefit adjustments for vacant positions are managed through the Faculty/Staff Turnover Mechanism. The maximum Cumulative Surplus is 10% of the Unit's current year Base Budget allocation. If a Unit is engaged in multi-year planning for a one-time expenditure, they may request in writing to the respective Envelope Head and the Vice-President (Administration & Finance) to exceed the 10% maximum. Approval for such requests will not be unreasonably withheld provided the planned expenditure is one-time in nature and not for ongoing Operating Expenditures. This information and multi-year planning would appear in a Unit’s annual budget submission, as required.

All Units are expected to balance to their budget allocation. Unit deficits are managed through the Procedure for Deficit Reduction Planning. The overall University Cumulative Deficit must not exceed the limits as outlined in Section 36 (2) of the Memorial University Act.

Surplus Carryover Exemptions

Certain budgets are permitted to have a 100% carryover, allowing them to be spent in the following year without a 10% of budget maximum. This exemption recognizes the unique cash flow timing of those units. Surpluses receiving this exemption are:

• Library acquisitions;
• Graduate fellowships;
• Funds where revenues received are similar to contractual arrangements (i.e. annualfunding being receivedfrom external sourcesand committed to be usedfor specific purposes); and
• Other centrally administered budgets.

The Faculty of Medicine is excluded from the 10% maximum cumulative surplus.

Related Documents

Memorial University Act
Tangible Asset Administration policy
Capital Projects policy
IT Investment policy (in development)
Position Management policy (to be proposed)
Internal Chargeback Guidelines (to be proposed)
Schedule - Operating Budget Cycle

Procedures: