The following policy statements are effective for all budget items on or after July 1, 2003.
Responsibility for Budget Controls
The Associate Vice President for Finance, reporting to the Vice President for Fiscal Affairs, is responsible for developing and maintaining a system of internal controls, policies, and procedures relating to the operating budget of Southwestern University.
Authority for Budget Development and Modification
The Board of Trustees is responsible for approving the annual operating budget of the University. The Board approves the original operating budget in March-April prior to the beginning of the fiscal year (July 1-June 30) each year. The Board approves revisions to the operating budget in the fall (October-November) and spring (March-April) meeting.
The Fiscal Affairs Committee of the Board of Trustees is the Board committee with oversight of the operating budget. The chair of the Fiscal Affairs Committee submits the budget to the full Board for approval as noted above. The Fiscal Affairs Committee works with the President, Vice President for Fiscal Affairs and Associate Vice President for Fiscal Affairs to ensure good internal controls, policies and procedures are in place over the budget development and maintenance processes.
The Budget Committee is a standing committee of the University administration with responsibility over the budget development and maintenance and general financial internal controls. Members of this committee include the President, Provost, Vice President for Fiscal Affairs, Vice President for Student Services, Senior Advisor to the President, Administrative Assistant to the President and Associate Vice President for Finance.
The Business Office, led by the Associate Vice President for Finance, reports to the Vice President for Fiscal Affairs. The Business Office is responsible for all day-to-day financial operations of the University, including budget operations, and for ensuring that a system of sound internal controls is in place.
Strategic and Tactical Budgets
The University maintains a strategic budget model which forecasts 5 years into the future. This model addresses all significant revenue and expense categories. For example, revenue categories addressed in the model include: tuition and fees, endowment, gift, room, and food service revenues. Expense categories include: Salaries, fringe benefits, program expenses, utilities, financial aid, food service. The purpose of the strategic budget model is to ensure the long-term budget aligns with the strategic plan of the University (thus, the budget model addresses specific strategic plan initiates which impact the budget during the forecast period). Additionally, the strategic budget model requires the University to balance its budget assumptions so as to maintain a balanced budget, not just in the upcoming one year budget period, but over a five-year look-out period.
The University’s one-year (tactical) budget is approved in advance of the beginning of the fiscal year by the Board of Trustees. The one year budget is normally derived from the strategic budget assumptions. This budget is presented as a balanced budget, with revenues equal to expenditures. Southwestern normally uses a “hard” contingency line in the budget, equal to 1-2% of the total budgeted expenses.
The Budget Committee approves both the strategic budget model and the one-year, or tactical budget. The Fiscal Affairs Committee of the Board of Trustees reviews the strategic budget model assumptions and approves the one-year budget. The full Board approves the one-year budget, as noted above.
Annual Budget Preparation Timetable
The Budget Committee approves the rolling two-year calendar each August. To view the budget preparation timetable click here.
Assignment of Budget Officer
Each department or unit of the operating budget is assigned to a Senior Staff member who is responsible to the Budget Committee for oversight. Additionally, the Senior Staff member delegates responsibility for managing the department’s day-to-day budget operations to a Budget Officer. The Senior Staff member is responsible for communicating to the Associate Vice President for Finance changes in the Budget Officer of a department account. This communication may be made by written or electronic memorandum.
The University treats all program expense line items within a department as a pool of budget funds. Student work for the academic year is treated as a separate pool, and student work for the summer is treated as a third pool of funds. Not all departments will have academic year or summer student work budgets.
Most departments also contain faculty or staff salary budget pools, and fringe benefit budget pools. However, the Budget Officer is not responsible for managing these funds (the Associate Vice President for Finance is the Budget Officer for these budget pools). Accordingly, departmental budget printouts do not include faculty/staff salary or fringe benefit budget pools.
Funds shall not be co-mingled or transferred between these distinct budget pools without approval of the Budget Committee. For example, a Budget Officer is not allowed to move funds from academic year student work to program expenses without approval of the Budget Committee. However, a department Budget Officer may move funds from office supplies to postage without additional approval.
Responsibility of the Budget Officer
The Budget Officer is responsible for managing each of these distinct pools of budget funds within their department: program expenses, academic year student work and summer student work.
The Budget Officer is responsible for ensuring that actual expenditures for the fiscal year are equal to or less than the budgeted amounts for each of the three budget pools. The Budget Officer immediately shall communicate anticipated budget overages to their Senior Staff member and the Associate Vice President for Finance. The Senior Staff member is responsible for taking remedial action to resolve anticipated or actual budget overages for a department within their division.
The Budget Officer shall receive a monthly budget report, by the fifth business day following the end of the month (except for June) for each of the three budget pools (program expense, academic year student work, and summer student work). The Budget Officer is responsible for reviewing the transactions for the month and reporting any discrepancies, unauthorized transactions, questionable transactions or errors to the Business Office. The Business Office assumes Budget Officer approval of the transactions if no response is received from the Budget Officer within 30 days of the reporting month-end.
Once approved by the Board of Trustees, the original budget is input into the general ledger system by the Business Office. In May, each budget officer is sent a budget printout for each of their department’s operating budget for the upcoming year. Once approved by the Board of Trustees and input into the system, the original budget field is not modified during the fiscal year.
BUDGET ADJUSTMENT OVERVIEW
The working budget of the University may be modified or adjusted from time to time during the fiscal year. Budget Officers may request an adjustment to the budget by completing a Request for Budget Adjustment form (see form here), or by simply communicating the request by written or electronic memorandum to the Associate Vice President for Finance. Since the University operates a budget in which total revenues always equal total expenses, a request to adjust the budget must always move funds from one account number to another (i.e. “one-sided” adjustments are not allowed).
Budget adjustments affecting any revenue account, faculty/staff salaries, fringe benefits, academic year student work or summer student work require Budget Committee approval.
BUDGET ADJUSTMENTS WITHIN THE SAME DEPARTMENT
Budget Officers may adjust program expense budget lines within a single department by communicating the request directly to the Associate Vice President for Finance via a Request for Budget Adjustment form (see form here) or by written or electronic memorandum. The request must indicate the department number, the amount of transfer, the object code from which the funds will be taken, and the object code to which the funds will be deposited. No additional authorization is needed for this type of budget adjustment.
BUDGET ADJUSTMENTS BETWEEN DEPARTMENTS
Adjustments from one department to another require the authorization of the Budget Officer of the account from which the funds are being removed. Budget adjustments between departments for less than $1,000 do not require additional authorization and may be communicated directly to the Associate Vice President for Finance using the Request for Budget Adjustment form (see form here) or by written or electronic memorandum.
Budget adjustments between departments in equal to or greater than $1,000 require the authorization of the Budget Officer of the account from which the funds are being removed. Additionally, these transfers require approval of the Senior Staff member responsible for the department from which the funds are being removed and Budget Committee. These requests may be communicated using the Request for Budget Adjustment form (see form here) or by written or electronic memorandum sent to the Senior Staff member. If approved, the Senior Staff member will forward the request to the Associate Vice President for Finance for inclusion in the Budget Committee agenda.