American University in Bulgaria Division of Finance MEMORANDUM To: AUBG Budget Managers
From: Alex Alexandrov, VP Finance and Administration Ann Ferren, Provost Date: February 13, 2008 Re: FY09 Budget Development
We are now in our third year of balanced budgets due to the careful management of our resources. Fiscal restraint and clear priorities have helped us to accomplish our goals of sustainability and quality. There is still much to do, and we must continue to be disciplined in our planning and resource allocation. The financial situation of the University requires difficult choices among competing priorities. Consequently, we must continue to prepare budget submissions based on an evaluation of our progress toward shared goals and an analysis of where investments will make a positive difference for the future of the University. There will be two budget training sessions next week where we will explain the requirements for submissions, explain how the submissions will be reviewed, and answer questions about how the budget development process will proceed. As in past years, our goal is to have a transparent and collaborative budget development process so that the budget submitted to the Board in May represents our best thinking about AUBG. The budget that each unit develops should be linked to the plans and focused on four strategic goals: 1. New ideas that will support AUBG’s ongoing commitment to academic excellence; 2. Strategies that will enhance AUBG’s reputation for excellence in the region and beyond; 3. Initiatives that will enable AUBG to more effectively carry out its mission of service to the region; 4. Investments that will improve efficiency and effectiveness of operations All budget requests will be evaluated by the Budget Committee, according to these criteria. As you prepare your budget submission you will want to identify any activities that are no longer necessary, determine whether the initiative requires new funding, and consider whether current resources can be reallocated to higher priorities. Reallocation could be within a single budget, across budgets within a unit, or across units. The training sessions for Budget Managers are scheduled as follows: February 18, 2008 (Sofia, 10:00, Elieff Center Library) February 20, 2008 (Blagoevgrad, 10:00, Red Room)
Created: July 2003 Last updated: February 2008
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American University in Bulgaria Division of Finance
Deadline for submitting the budget requests is March 10, 2008. Please note that only budgets submitted by the deadline and with explanations will be considered. It is advisable that you forward your budget requests to your supervisor for approval at least a week before the submission. In addition to the electronic submission, please forward a hard copy signed by you, your supervisor and by the Provost, VP Finance and Administration, or President, as appropriate. Please find attached a table that can facilitate the budgeting process. The table consists of four columns, in addition to the name and number of the line items (expense categories). The first column is your FY07 actuals (last fiscal year). The second is your projections for the current fiscal year (July 2007 - June 2008). Also fill your budget request for FY 2008-09 (third column) justifying and providing enough detail (the fourth column) for each amount so that the budget committee can review the request. Do not fill the salary and benefits, depreciation, and facilities transferable costs lines, these will be added for you. Save the table as “XXXX [your cost center’s number] Budget Request FY08-09” In addition to the table, please provide a very short (1-2 pages max) narrative along the following topics (1-2 paragraphs each): Major Areas of Focus and Activity (describe briefly your area of activity and major changes) Major Accomplishments During Fiscal Year 2008 (based on last year’s budget submission and justification) Goals and Expected Accomplishments for Fiscal Year 2009 (link the budget request to the four strategic goals) Key Budgetary Assumptions (factors that would be useful in reviewing your budget submission) Capital Project Priorities (link the budget request to the four strategic goals)
In discussing the items above, please refer to your submissions for last year. If you have any questions do not hesitate to contact Anelia Stoyanova (nelly@aubg.bg ), Yuliya Sotirova (yuliya@aubg.bg) or your supervisor.
Created: July 2003 Last updated: February 2008
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American University in Bulgaria Division of Finance
Summary of 2008-2009 budget preparation and management reporting process Instructions on use of the analytical segments by budget managers
Format and brief description of the analytical segments Since July 01, 2003 the format and description of the analytical segments are the following: Cost Center: XXXX, Project: XXX, Line Item: XXXX, Donor Code: XXXX Cost center is a four-digit number that denotes the budget unit. The leading two digits are “talking”, i.e. they show the organizational positioning of the unit. For example, all units in Instruction (a sub-group of Education and General) have the following format: 11XX. Project is a three-digit number that budget managers can use to label individual projects/activities of the unit. Should a manager decide that he/she does not need to track activities by individual projects, a general project code is used – 000 General/ Administration. All units from Education and General, Institutional Support, and Auxiliaries functions are able to create projects in the range 100-299. The Outreach function uses the 300-999 range. The following ranges apply for setting up Outreach projects:
English Language Institute Business Courses Computer Courses Outreach Projects Conferences and Institutes Elieff Center Projects Center for European Programs
300 – 349 350 – 399 400 – 449 450 – 499 500 – 549 550 – 599 600 – 649
Rules for setting up and managing projects: A project will be set up in the cost center, which will be the leading party in its implementation; the manager of the respective cost center shall also be responsible for the management of the project. The budget for the project shall be contained in the respective cost center whose manager is also responsible for the management of the project; the budget shall not be distributed among multiple cost centers where actual costs could also be incurred.
Created: July 2003 Last updated: February 2008
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American University in Bulgaria Division of Finance
Line items describe the purpose of the revenue/expense. This four-digit number (last digit is 0 for normal expenditures and 9 for internal transfers) allows for adequate statutory reporting and management reports, including certain groupings of expenditures (e.g. salaries, supplies and expenditures, capital expenditures) Donor code denotes the donor. The first digit indicates the type of donor (unrestricted, federal, private, etc.). All unrestricted donors are represented by one code only – 0001 General/Unrestricted. The payment request forms must denote all four codes in order to be processed. The accounting office will specify the line item code on the payment request; the budget managers (or their assistants) will write down the other three codes - cost center, project, donor. The list of codes for the analytical segments and the payment request form can be downloaded from the AUBG Business and Finance web site. Budget preparation and management reporting process The monthly budget and year to date activities report per cost center are divided in two sections: operational performance; capital performance. The capital performance report displays the budgeted and actual amount of fixed assets that the center will purchase during the year. The operational performance report includes revenues and expenses for the particular center. Revenues and expenses are recognized on accrual basis both for budget and actual figures. That means that cost centers are charged with their income and expenses as they happen, and not when paid. The cost centers are charged with depreciation expenses for the fixed assets used by them. The following types of costs are directly allocated to the individual cost centers incurring the expenses: Relocation and travel Child-benefit allowances Workstudy expenses Transportation costs Facility costs
Created: July 2003 Last updated: February 2008
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American University in Bulgaria Division of Finance
Facility costs are allocated to the respective centers on the basis of usable square meters of space. “Facilities” is defined as depreciation and use allowances, building maintenance, property insurance, utilities, salaries and benefits related to maintenance staff. For further details, please refer to the Allocation of Facilities and Administrative Costs document that is available on AUBG Business and Finance web site. Cost Center Responsibilities: The cost center managers have responsibilities for the decisions taken in regard of both operating and capital expenses, purchased on their discretion, although some capital expenses remain out of the budget managers’ control. It is expected that the cost centers are aware that the higher capital expenses they budget, the higher will be the costs and the lower will be the profit margin. Cost centers, which are required to keep their activities at profit or at least on break-even point, must recalculate the break-even value of their operations. Cost Centers Budget Update Each cost center manager has prepared a budget request for FY 2008-2009. Allocation of the facilities, capital expenses and depreciation charges has been added also. The Budget Committee has revised the requests initially approved by President or one of the Vicepresidents and has submitted the University Overall budget for the approval by the Board of Trustees.
Created: July 2003 Last updated: February 2008
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