Procedure 3-7 - Budget Management

Date effective: 2012-08-29

Authorized by: Administration Committee

BUDGET MANAGEMENT

PURPOSE

1. University Policy 55 (Budget Management) establishes budgetary guiding principles for the operating fund and ancillary enterprises. This procedure codifies current decisions and practices that specify how the policy is applied.

DEFINITIONS

2. In this procedure, the following definitions apply:
a) “Fiscal year” refers to the period beginning May 1 and ending April 30.
b) “Base budget” refers to the unit’s recurrent budget on May 1, plus or minus the recurrent budget transfers made during the year.
c) “Effective budget” refers to the unit’s budget approved on May 1, plus or minus one-time budgetary transfers made during the year in progress. It is the budget available for the fiscal year.
d) “Regular employees” refers to employees holding a regular position with no end of contract date.
e) “Payroll” refers to the dollar value of academic, support staff and student salaries.
f) “Budgetary surplus/deficit” refers to the difference between the effective budget and actual revenue and expenditures.
g) “Operational surplus/deficit” refers to the difference between actual revenue and expenditures.
h) “Unit” is the general term used to refer to faculties and services.

BUDGET TIMETABLE

3. A timetable is developed for the preparation, submission and approval of the budget. The budget can be adjusted throughout the year.

BUDGET GROUPS

4. Within the operating fund, different budget rules apply. It is therefore necessary to establish groups (fund types or budget groups) to define these rules. The operating fund is made up of five budget groups:

a) The Global group includes faculties and services with a payroll of more than $4 million.

b) The Regular group includes services with a payroll of less than $4 million. This group includes the Faculty of Graduate and Postdoctoral Studies as well.

c) The Restricted group includes central funds whose management may have been delegated to the faculties and services. There are two types of restricted budgets:
(i) The unavoidable costs budget, which includes expenditures that are difficult to control because they are mandated by policy or fluctuate.
(ii) The budget for specific projects or initiatives approved by the Administration Committee and whose funds cannot be used for other purposes.

d) The Targeted grants group includes funds from external sources for specific programs or expenditures.

e) The Self-funded group includes two types of budgets:
(i) Revenue-generating services offering services closely tied to the University’s teaching and research mission.
(ii) Ancillary enterprises offering complementary services.

Appendix 1 lists the makeup of each of these budgetary groups.

EXPENDITURE FUNDING

5. a) Expenditure funding varies by budget group. Appendix 2 shows details on funding sources by expenditure type for the Global, Regular and Restricted budget groups.

b) The Targeted grants group must finance all its expenditures, including salary increases and employee benefits.

c) The Self-funded group must finance all of its expenditures, including salary increases, employee benefits, energy and maintenance costs, and overhead costs, calculated according to the formula explained in Appendix 3.

SURPLUS OR DEFICIT CARRYOVER

6. a) Global, regular or restricted budget
(i) Global budget: The year-end surplus or deficit for all accounts, including salaries of regular employees, is carried over to the unit’s budget for the following fiscal year.
(ii) Regular budget: The year-end surplus or deficit is carried over to the unit’s budget for the following fiscal year; any surplus in salary accounts for regular employees is excluded. Surpluses in these accounts are returned to the central funds, while the unit covers any deficit.
(iii) Restricted budgetunavoidable costs: The year-end surplus or deficit is returned to the central funds.
(iv) Restricted budget—specific projects or initiatives approved by the Administration Committee: At the end of the year, the surplus is carried over to a separate cost centre (ORGN) if the project is not completed. At the end of the project, any surplus is returned to the central funds and any deficit is charged to the unit. See Appendix 4 for operational details.
(v) When calculating deficits or surpluses, remaining commitments in the financial system at the end of the year are added to current expenditures. Commitments are carried over to the new year and the effective budget is increased by the same amount.

b) Targeted grants

Any surplus at the end of the fiscal year is carried over to the following fiscal year or returned to the granting agency; any deficit is charged to the unit.

c) Self-funded budgets
(i) Self-funded services must present a budget including revenue and expenditures at the start of every fiscal year. The financial viability of every service is reviewed annually.
(ii) Operating surpluses and deficits are accumulated in a restricted reserve on behalf of each self-funded service. No interest is paid on surpluses nor charged on deficits. On request, the Financial Planning Service transfers funds from the restricted reserve to the self-funded service.

REVIEW, INTERPRETATION AND IMPLEMENTATION

The Associate Vice-President, Financial Resources is responsible for reviewing, interpreting and implementing this procedure. He or she may approve exceptions should unique situations occur, but must report annually to the Administration Committee on any exception that has been approved.  

Revised August 29, 2012 

(Financial Services)

APPENDIX 1

BUDGET GROUPS

1.1 Global

The following faculties and services operate on a global budget:

FACULTIES
• Faculty of Arts
• Faculty of Education
• Faculty of Engineering
• Faculty of Health Sciences
• Faculty of Law, Civil Law Section
• Faculty of Law, Common Law Section
• Faculty of Medicine
• Faculty of Science
• Faculty of Social Sciences
• Telfer School of Management

SERVICES
• Computing and Communications Services
• CO-OP Office *
• External Relations
• Library
• Physical Resources Service
• Teaching and Learning Support Service*

* Given its ability to finance salary increases, this service is part of the Global budget group even though its payroll is less than $4 million.   

1.2 Regular

The following services operate on a regular budget:
• Centre for Global and Community Engagement (CGCE)
• Ceremonies and Events
• Community Life Service**
• Faculty of Graduate and Postdoctoral Studies*
• Financial Aid and Awards Service
• Financial Planning Service
• Financial Services
• Human Resources Service
• Human Rights Research and Education Centre
• Internal Audit Office
• International Office
• Office of the Associate Vice-President, Financial Resources
• Office of the Associate Vice-President, Institutional Research and Planning
• Office of the Associate Vice-President, Student Services
• Office of the President
• Office of the Registrar
• Office of the Vice-President Academic and Provost
• Office of the Vice-President, External Relations
• Office of the Vice-President, Governance
• Office of the Vice-President, Research
• Office of the Vice-President, Resources
• Office of Risk Management
• Procurement Services
• Protection Services
• Research Management Services
• Sports Services**
• Strategic Enrolment Management
• Student Academic Success Service
• Technology Transfer and Business Enterprise
• Treasury

* The Faculty of Graduate and Postdoctoral Studies is defined as a service.
** The main section of this unit is run as a self-funded service.  

1.3 Restricted

The following expenditures are included in this budget group:
• Scholarships and financial aid managed by the Financial Aid and Awards Service
• Scholarships managed by the Faculty of Graduate and Postdoctoral Studies
• Energy and unavoidable costs managed by the Physical Resources Service
• Corporate software costs managed by Computing and Communications Services
• Insurance and regulatory expenditures managed by the Office of Risk Management
• Legal fees managed by the Office of the Vice-President, Governance
• Certain corporate expenditures managed by Financial Resources
• Certain corporate expenditures managed by the Human Resources Service
• Specific initiatives receiving one-time funding approved by the Administration Committee and managed by the faculties and services

1.4 Targeted grants
• Aboriginal initiatives
• Access for disabled students
• B.Éd. en mode alternative
• Campus security
• Canada-Ontario Agreement (partially)
• Consortium national de formation en santé (CNFS)
• Credit transfer
• First Generation students
• Interpreters
• Nurse practitioners
• Professional Association of Interns and Residents of Ontario (PAIRO)
• Summer Transition Program for disabled students  

1.5 Self-funded

The self-funded budget group includes the following services:

REVENUE-GENERATING SERVICES
• Animal Care and Veterinary Service
• Centre for Continuing Education
• Computing and Communications Services—docUcentre
• Faculty of Arts
   o Official Languages and Bilingualism Institute
   o Visual Arts Store
• Faculty of Education
   o Additional Qualifications Program
• Faculty of Social Sciences
   o Professional development—Public Management and Governance
   o Public Management and Governance program
• Health Services
• Sports Services
• Student Academic Success Service—in-house counselling
• Student Services—uOttawa card
• Telfer School of Management
   o Career Centre
   o Centre for Executive Leadership
   o Executive MBA

ANCILLARY ENTERPRISES
• Community Life Service
• Conventions and Reservations
• Food Services
• Housing Service
• Parking and Sustainable Transportation
• University of Ottawa Press  

APPENDIX 2

EXPENDITURE FUNDING

Expenditure

Global budget

Regular/Restricted budget

Economic salary increases—regular employees

Central funds

Central funds

Progress through the ranks (PTR) or step movement—regular employees

Unit

Central funds

Progress through the ranks (PTR)—promotion of professors

Central funds, if the request is submitted to the Joint Committee before May 1

Central funds

Salary increases—part-time professors (APTPUO)

Central funds

Central funds

Salary increases—teaching and research assistants (CUPE)

Central funds

Central funds

Salary increases—contractual staff (including replacement professors)

Unit

Unit

Salaries—deans

Central funds

Central funds

Administrative supplements

Unit

Central funds

Research supplements

Unit

Central funds

Hiring of partners of regular academic staff

First 2 years: Central funds 50%

Subsequent years: unit

N/A

Annual employee benefits

Central funds

Central funds

Professional expenses reimbursement (PER)—excluding replacement professors

Central funds

Unit

Professional expenses reimbursement (PER)—replacement professors

Unit

Central funds

Severance payments

Unit

Unit

Renovations

Central funds 50%  

Central funds 50%

 

Exception

Economic salary increases—regular employees

  • CO-OP Office

Unit

N/A


APPENDIX 3

CALCULATING OVERHEAD COSTS

Most self-funded services are charged overhead costs for their use of common services.

The following services are exempted:
• Animal Care and Veterinary Service
• docUcentre
• Faculty of Arts—Visual Arts Store
• Faculty of Education—Additional Qualifications Program
• Food Services—vending machines
• Health Services
• Student Academic Success Service—in-house counselling
• Telfer School of Management—Career Centre
• University of Ottawa Press

The following services are charged using the standard method:
• Centre for Continuing Education
• Community Life Service
• Conventions and Reservations
• Food Services (excluding vending machines)
• Housing Service
• Sports Services
• Student Services—uOttawa card (starting May 1, 2013)

The following services are charged using the standard method less 25%, due to the fact that they are not located on campus:
• Faculty of Social Sciences
   o Professional development—Public Management and Governance
   o Public Management and Governance program
• Telfer School of Management
   o Centre for Executive Leadership
   o Executive MBA

The Official Languages and Bilingualism Institute will be charged 8% of its total expenditures, excluding certain accounts, until 2014-2015. After that, the standard method will apply.

The Parking and Sustainable Transportation Office is charged using a modified version of the standard method.

The Gee-Gees Summer Camps offered by Sports Services are charged 3% of revenue generated, excluding transfer revenues.

Standard method for calculating annual overhead costs

Add all of the following:
• 1.6% of regular support staff payroll (631) and external contracts (69)
• 3% of expenditures in the purchase, maintenance and equipment rental accounts (706, 707, 708, except for 70721 to 70723)
• 8.6% of total expenditures, except for certain accounts

Modified standard method

Add all of the following:
• 1.6% of regular support staff payroll (631) and external contracts (69)
• 3.3% of total expenditures other than salaries, employee benefits and certain accounts
• 5.3% of revenues, excluding transfer revenues5.3% of revenues, excluding transfer revenues
• Land rental at $134.55 per parking space (2011-2012 rate), indexed to the CPI.

Accounts excluded: 

ACCOUNT

DESCRIPTION

702xx

Land and buildings—rentals

703xx

Physical resources—purchases

704xx

Physical resources—maintenance

709xx

Construction and renovations

712xx

Utilities

713xx

Insurance

714xx

Telecommunication

721xx

Commissions and royalties

722xx

Property taxes

723xx

Interest and bank fees

726xx

Overhead

727xx

Mortgages

73551

Items for resale

797xx

Transfers

 

APPENDIX 4

MANAGING SPECIFIC PROJECTS AND INITIATIVES

Faculties or services that receive a budgetary allocation for a specific project or initiative are responsible for its financial management. A separate cost centre (ORGN) must be created in the financial system to include transactions related to the specific project. An effective budget transfer is made at the beginning of the year or when the project or initiative is approved. Should the initiative be one where costs are not significant or it is difficult to separate financial transactions, the Financial Planning Service can allow funds to be transferred to the budget of the faculty or service.

Faculties and services are not authorized to initiate transfers of funds out of the restricted budget group. If certain expenditures are incurred in another ORGN, a journal entry is necessary to reclassify the actual expenditure as part of the project and avoid charging transfer accounts.

 

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