Section A: Introduction

The Budget Manager Resource Guide is published by the Accounting & Budget Services department and is intended for use by faculty and staff who have university budget management, financial administration, disbursement (bill paying), accounting, or other financial record keeping responsibilities. We have organized this resource guide with the goal of providing guidance to budget managers and administrative support staff about managing and spending the university budgets for which they are responsible. Please review the Table of Contents on the preceding page, for a summary of the topics included.

1. When you have questions or need more information

Contact information in this resource guide
At the end of each section you will find contact information for the staff in Accounting & Budget Services and other departments who can answer questions about the topics covered in that section.

Please visit the Accounting & Budget Services Web Site, where you can find:

• Hours and locations for the Accounting & Budget Services office & staff
• Directory of services offered by Accounting & Budget Services
• Staff directory for Accounting & Budget Services
• Online purchase order information
• Policy & procedure information published by Accounting & Budget Services
• Financial reports & downloadable forms published by Accounting & Budget Services
• Resources for Budget Managers (you can download the most up to date version of this resource guide from this page)
• Resources for faculty and students with research or study grants

Not sure who to contact?
Please contact the Accounting & Budget Services front desk by calling 253.879.3224 or the Associate Vice President for Accounting & Budget Services for a referral.

Other resources provided by Accounting & Budget Services:

• Accounting & Budget Services staff are happy to meet one-on-one with budget managers and/or their administrative support staff to answer questions and provide additional guidance, as needed.
• Accounting & Budget Services does provide periodic group training for faculty and staff. Group training is most typically offered when new financial systems are implemented and/or as part of the Faculty and Staff Professional Development Conference sponsored by Human Resources.

2. Report Corrections to This Guide or Missing Information

Please help Accounting & Budget Services improve this Resource Guide. If you find an error or believe the information in this guide could be enhanced or expanded, please tell us about it by sending an e-mail to the Accounting Operations Coordinator.

3. University Finance 101 - Understanding Accounting at Puget Sound

Life is Complicated
Colleges and universities are complex institutions, managing many different types of businesses, with use restrictions often limited by:

• Law
• Donors
• Granting agencies
• Governing bodies
• Others

Fund Accounting

• To enable the tracking of limitations and restrictions, colleges and universities maintain separate funds or groups of funds for particular purposes.
• Each fund group represents a separate business or set of operations under distinct regulations & limitations.
• Each fund is either restricted or unrestricted in the use of resources.
• Each fund is either closed out at the end of a fiscal year or carries forward its resources for the following year.

UPS Fund Groups

• Educational and general
• Designated funds
• Restricted funds
• Auxiliary funds
• (Student) loan funds
• Endowment funds
• Life income funds
• Agency funds
• Plant funds

Education & General and Auxiliary Funds

• Focus of the Budget Task Force
• Funds used to carry out our core business of enrolling and educating students, and the auxiliary functions that support that core business;
• Funds for housing, food services, bookstore
• Funds budgeted each year and regularly reviewed throughout
• Unrestricted resources from several major sources:
  • Tuition, Housing & Food, Endowment Earnings, Annual Gifts, Bookstore Purchases

Designated Funds

• Unrestricted funds set aside for specific purposes, with the approval of the university’s Board of Trustees
• Source of funds may be from unrestricted gifts, the operating budget, or other unrestricted sources
• Funds often carry forward beyond one fiscal year
• Examples of specific purposes approved for designated funds include: curriculum development, contingencies or reserve funds, faculty start up or travel funds, faculty research or enrichment grants, investment, including quasi-endowment, program development, purchase or construction of fixed assets, student research grants
• Often referred to as “carryover funds”

Restricted Funds

• Funds provided by external donors and restricted by those donors to specific purposes
  • Government agency
  • Corporation
  • Foundation
  • Individual
• Usually provided in response to specific proposal
• Funds often carry forward beyond one fiscal year
• Also often referred to as “carryover funds”

Endowment Funds

• True Endowment: the donor specifies that the principal of the gift is to be invested in perpetuity with only earnings used for specified or unspecified purposes
• Quasi Endowment: The Board of Trustees designates funds to be invested for a specific purpose or length of time. This designation may be reversed at any time
• Term Endowment: Donor specifies funds to be invested for a specific period of time, after which principal and earnings may be expended for specified or non specified purpose

Plant Funds

• Plant funds are used to account for the construction and major maintenance of the physical plant of the UPS; all buildings, land, playing fields, and major equipment
• These facilities constitute assets of UPS with borrowed funds used to construct or renew them constituting offsetting liabilities
• Since facilities and equipment age and must be replaced, they are depreciated over time according to set formulas
• Sources of funds for plant construction and renewal: donations, transfers from E & G and Auxiliary Funds, reserve funds, borrowed funds

Loan Funds

• Loan funds are used principally to account for funds used to provide loans to students
• Sources of funds: federal, gifts, or institutional resources
  • Example: Perkins Loan Fund

Agency Funds

• Agency funds are those funds belonging faculty, staff, and student organizations that the university holds as custodian
• The organizations deposit money with the university for safe-keeping and then withdraws funds as necessary for activities
• University acts as a bank
• University does not own Agency Funds

Life Income Funds

• Life income funds are charitable giving arrangements, often arranged through a trust, in which the donor donates funds to the university but retains some benefit from the earnings of that gift through some designated period of time. The beneficiary of that gift then receives the funds.
• Also called deferred giving agreements or split-interest agreements
• University might also be the trustee of the fund

4. The University’s Budget (Fiscal) Year

Budget year and fiscal year are used interchangeably and refer to the same year. The university’s budget/fiscal year is different from the calendar year.

Prior to September 1, 2002, the university operated on a budget or fiscal year of September through August. In February 2002, the Board of Trustees approved changing the university’s budget/fiscal year from September through August to July through June. The change was effective July 1, 2003. The 10-month period of September 1, 2002 through June 30, 2003, was a transition fiscal year to the new fiscal year cycle.

Because the fiscal year crosses calendar years, it is commonly referred to as the XXXX-XX fiscal year. Examples: The 2002-03 fiscal year = September 1, 2002 through June 30, 2003. The 2003-04 fiscal year = July 1, 2003 through June 30, 2004.

The fiscal year may also be referred to by a single year, which indicates the year in which it ends. Examples: The 2003 fiscal year is the same as 2002-03 and is the fiscal year ended June 30, 2003. The 2004 fiscal year is the same as 2003-04 and is the fiscal year ended June 30, 2004.

Beginning with fiscal year 2003-04, financial reporting to the Board of Trustees included operating budget variance reports prepared in the late fall (November), in the early spring (February/March), and after fiscal year end (July). See Section D.3, beginning on page 24, for more information about budget managers’ role in preparing the periodic budget variance reports for the Board.

External financial reports (e.g. the university’s audited financial statements, the informational tax return filed with the Internal Revenue Service, and other financial reports) are typically prepared annually, based on the fiscal year.

5. Budget Manager Fiscal Responsibilities

1. The financial strength of a university shows in many ways. Certainly one indicator is the ability and ongoing commitment to operate within budget. Puget Sound has demonstrated this ability and commitment for many years. This success is a direct result of the due care and fiscal responsibility exercised by budget managers.

2. Each division of the university has established specific responsibilities and processes for budget management and oversight. In general the responsibilities of budget managers may include:

3. Submitting budget requests to their division vice president, associate vice president, or other designated director for consideration and inclusion in the division budget request to the BTF.

4. After the Board of Trustees has approved the annual operating budget recommended by the President, Accounting & Budget Services will provide budget managers with detail budget worksheets. Budget managers are asked to complete the worksheets (assign budget amounts to individual accounts within specified indexes) and return them by the requested due date. Accounting & Budget Services uses this information to “load” the annual operating budget into the Banner Finance (budget and accounting) system.

5. Approving purchases (online purchase orders), and invoices and other disbursement requests for payment.

6. Monitoring and routinely (at least monthly) reviewing the status of their budgets, to help ensure that financial transactions are recorded timely and accurately. Requests for corrections, questions, or other requests for assistance should be submitted to Accounting & Budget Services as they are identified.

7. Reporting budget variance projections to the applicable Division Vice President. Variance projections are provided to the President and Board of Trustees in the fall (November), spring (March), and at fiscal year end (July). The Accounting & Budget Services office coordinates budget variance reporting activities and budget managers are asked to submit their budget variance projections to their division vice president and a designated member of the Accounting & Budget Services team (specific procedures vary by division). Guidelines and due dates are provided to budget managers in October, February, and May. See section D.3 on pages 24-26 in this guide for more information about budget variance reporting.

8. Submitting accurate and timely information to Accounting & Budget Services and other departments that is needed to ensure the recording of financial transactions in the appropriate fiscal year. This is important throughout the year and especially at the end of the budget/fiscal year (June – July).

6. Contact Information for Budget Managers

Not sure who to contact?
Please contact the Accounting & Budget Services front desk by calling 253.879.3224 or the Associate Vice President for Accounting & Budget Services for a referral.

Please visit the Accounting & Budget Services department Web site for more information and resources for budget managers.