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									                                                          Finance and Planning

       TO:     Distribution

   FROM:       John J. Spinard

   DATE:       November 6, 2007

SUBJECT:       FY 2009 – 2011 Budget Development

The budget manual provides a comprehensive view of information regarding the budget process,
policies, procedures and forms. It covers the entire budget development process from budget
assumptions to uploading next year’s budget into PeopleSoft.

In summary, the budget process consists of the following:

     Budget Assumptions. The three-year budget assumptions will be presented to the Trustees
      at the February meeting. The assumptions will include estimates for major items such as
      tuitions, fees, enrollments, financial aid, merit increases and strategic initiatives, as well as
      pertinent market and comparative data. The presentation of the budget assumptions in
      February allows for Trustee feedback in advance of developing the actual budget. Budget
      assumption packages are due on December 7, 2007. (See manual: pages 4-8 for details.)

     Final Budgets. The three year budget including final operating statements and capital
      budgets will be presented at the Trustees’ May meeting. Complete budget submissions are
      due on February 4th, 2008. (See manual pages 8-12 for details.)
      Capital budgets are due on December 14th, 2007.

Please refer to the budget development calendar provided at the beginning of the manual for
planning purposes. Your cooperation in helping us meet the critical dates will facilitate the decision-
making process with the President, his senior staff and the Trustees. Contact Gloria Riccobono
(73717), Rock Rottler (73715) or myself (73719) with any questions or concerns.
                                                         Budget Process

                        TABLE OF CONTENTS

BUDGET PROCESS ………………………………………………………………...…3-11

I.     Calendar……………………………………………………….……………………3

II.    Budget Assumptions……………………………………………….…………….4-8
         Critical Budget Issues
         Profile Data Instructions
         Comparative Data

III.   Budget Package Instructions………………………………………………….. 8-11
         Operating Budget Statement, Schedule I
         Program Changes, Schedule II
         Carry Forward Budget
         Roster of Budgeted Positions and Merit Analysis
         Capital Budget

IV.    Closure…………………………………………………..……………..………….11
          Upload Files
          New Dept Ids, Allocations and Recurring Entries

POLICIES AND PROCEDURES……………………………………………….…..12-21

I.     Economic Guidelines………………………………………….……..………….12

II.    University Budget Policies and Procedures……………………..…………12-21
       Revenue Budget Policies and Procedures
       Expense Budget Policies and Procedures
           Deferred Maintenance, Information Technology,
           Non-Faculty and Faculty Merit Increase,
           Employee Fringe Benefits, Institutional Support (Assessment),
           Structural Deficit Funding, Contingency Margin,
           Shared Costs


Economic and Budgetary Guidelines
Budget Upload Format
Capital Budget

FY 2009 – 2011 Budget Development Manual                          -2 -
                                                                            Budget Process

                                   BUDGET PROCESS:
                                     Budget Calendar

FY 2009 - 2011 Budget Assumptions
Week of Nov 5, 2007   F&P distributes budget instructions to schools
December 7            Schools submit budget assumptions to F&P
Dec 7- Jan 2          F&P reviews and summarizes budget assumptions
January 2 - 18        Review by Executive Administration and prepare mailing
Week of January 15    Deans, Executive Administration review assumptions
January 25            Mailing to A&F Committee
February 8, 2008      A&F Committee reviews assumptions, provides feedback, endorses A&S
FY 2009 - 2011 Budget
Oct 16 – Nov 21       Central divisions prepare budgets
Week of Nov 5         F&P distributes capital budgets
Nov 21 – Dec 14       F&P analyzes Central budgets for Executive Administration review
December 14           Schools submit capital budgets to F&P
Dec 17 - 28           Executive Administration reviews Central budgets
Nov 1 – Jan 4         Operations divisions prepare budgets
Jan 2 - 11            F&P analyzes Operations budget for Executive Administration review
Week of Jan 14        Executive Administration reviews Operations budget
January 21            F&P forwards debt schedules to schools
January 25            Endowment projections, bad debt, salary accruals available to schools
February 1            Final Operations budget forwarded to schools
February 4            Schools submit budgets to F&P
Feb 4 - March 7       F&P analyzes school submissions, forwards for Executive
                      Administration review
Week of March 10      Executive Administration reviews school budgets with F&P
Week of March 17      Executive Administration reviews budgets with Deans to resolve issues (as
March 19 - 31         Deans, President and Executive Administration review budgets
April 1               Schools forward final submissions
April 1 - 11          F&P prepares University package for Executive Administration review
                      - final school sections verified
                      - University and Central sections
April 14-18, 2008     Executive Administration approves budget submission
April 21 – April 30   F&P prepares mailing
May 2                 Mailing to A&F Committee
May 16                A&F Committee votes budgets, tuitions, enrollments
May 22 – May 30       Uploads for FY 2009 submitted

FY 2009 – 2011 Budget Development Manual                                                -3 -
                                                                          Budget Process

                                   BUDGET PROCESS:
                                  II. Budget Assumptions


The budget assumptions process provides the Trustees an early warning on strategic plans and
budget issues and obtains their concurrence on general policy and budget assumptions. At the
November Trustee Administration and Finance Committee meeting, the Trustees are given a
preview of key budget factors including any potential changes. At the February Trustee
Administration and Finance Committee meeting, the budget assumptions presentation
incorporates a review of the external environment, the University's financial position, long-term
goals and major initiatives. Additionally, economic and budget assumptions are highlighted and
peer tuition comparisons included for each school. Also, Arts, Sciences & Engineering requests
a Trustee endorsement of its planned undergraduate total student charges, reflective of its unique
admissions and financial aid processes.

The sections that follow provide instructions to complete the school package for use in providing
University budget documents to the Trustees. This package consists of a narrative, a profile data
sheet and peer comparisons and is due to Finance & Planning on or before Friday, December 7

In addition, in preparation for the January meetings with Deans and executive administration, all
schools are asked to provide a preliminary operating statement pro-forma for FY 2009-2011.
The analysis should focus on areas of concern and funding issues and include a description of
changes on each revenue and expense line.

                           FY 2009-2011 Budget Request
Due December 7th, 2007:
    Profile Data
    Comparative Data
    Schedule I, preliminary
    Narrative

Due February 4th, 2008:
    Budget Detail with explanation of all changes
    Schedule I, final
    Source/Use Analysis
    Sales & Services Analysis
    Carry forward Budget
    Roster of budgeted positions
    Final Narrative

FY 2009 – 2011 Budget Development Manual                                             -4 -
                                                                            Budget Process

Shared Network Drive

Finance and Planning has created a folder in each school’s budget directory on the shared drive.
All Schools must utilize the template provided in the FY 2009-2011 folder in order to
standardize the budget process, as well as, to gain efficiencies in providing timely and accurate
data to the financial community. The template file contains multiple tabs for each required

A. Narrative

A standard template will not be required for the narrative. Narratives should be addressed to the
Provost and written by each Dean. Specific references to such critical factors as tuition and fees,
enrollments, financial aid, admissions statistics, faculty merit increases, strategic initiatives and
capital plans should be included. The narrative should also include a financial sensitivity
analysis describing the impact on the budget for each economic and budget policy assumption.
As we are aware, each school and division is in a different market, subject to unique market and
budgetary conditions. If you find it necessary to deviate from these University economic and
budgetary guidelines, the narrative should highlight the change and the underlying factors for
this change.

In the second narrative submitted with the final budget plan in February, a more robust
discussion of the three year plan and school initiatives should be included. This narrative should
also address the FY 2009-11 budget assumptions developed by each school, Advancement,
Operations and Central Administration highlights with the major policy and strategic issues,
proposed and planned program changes and long-term plans.

B. Critical Budget Issues

The following sections describe critical budget issues, either University-wide or school/campus
specific, to be considered in the development of the three-year strategic budget. The impact of
each of these items on school budgets should be addressed in both the budget assumptions and
budget packages.


1.     The impact of rising utility costs should be factored into all operating and capital

2.     Schools should closely watch tuition pricing strategies and market issues and assess their
       impact on operating budgets.

FY 2009 – 2011 Budget Development Manual                                                -5 -
                                                                        Budget Process

3.    Changes in applicant pools may result in changes to budgeted enrollment levels.
      Consideration of the budget implications relating to admissions policy should continue.

4.    The effects of federal and state funding shifts in program, financial aid and facilities &
      administration recovery (ICR) must be considered and alternative funding sources and
      plans identified in this three year planning period.

5.    Contingency planning is essential to assess possible risks and opportunities to both
      programs and to the financial health of each school and the University especially taking
      into consideration the current fluctuations in the market prices of utilities.

      Consideration of funding needs and priorities of past years' base revenue and expense
      problems and opportunities, coupled with productivity improvements, is essential to
      future years' fiscal health.

Health Sciences Campuses

1.    The Medical School’s continuing financial pressure with the reduction in NIH funding
      presents many challenges. Issues to be considered include the ability to achieve its
      budgeted deficit target given shifts in ICR funding, and rising costs and managing these
      demands with less.

2.    In the FY 2008 budget submission, the School of Dental Medicine identified managing
      the impact of the vertical expansion on its operational base as an area of concern. In
      addition, increasing expenses in the clinics, faculty retention, development and
      compensation continue as ongoing concerns. Accomplishments made towards these
      goals should be included. Updated information pertaining to the expansion of the Dental
      Tower and related assumptions should be incorporated into the budget submission.

3.    At the Cummings School funding the renovation of additional research space while
      competing for a pool of shrinking federal funding was identified as a concern in the FY
      2008 budget submission.

4.    Progress with Friedman’s faculty achieving 50% offset of their salary from research and
      training grants should be described. Enrollment and grant trends identified as issues in
      FY07 should be addressed. Is there continuing concern with faculty turnover and
      financial aid for doctoral students?

5.    Funding levels increased in FY08 at the HNRCA. Will the current downward trend in
      Federal funding impact the HNRCA? What planning has been done to address the
      shortfall in senior scientist salaries and cover inflationary increases?

FY 2009 – 2011 Budget Development Manual                                           -6 -
                                                                            Budget Process

Medford Campus

1.       After completing a comprehensive review of its base budget, AS&E continues to report
         significant deficits over the next three years. Plans to bring AS&E back into balance
         should be addressed.

2.       The School of Engineering has projected a reduction in federal grant funding for FY08.
         This and future strategies to offset the impact on the AS&E budget should be addressed
         along with Advancement’s plan for meeting realistic annual fund goals.

3.       The Fletcher School should address the future direction and risks associated with GMAP
         and other new programs. Also describe plans for new revenue sources and increasing

C. Profile Data Instructions

Using the “Profile Data Sheet” tab in the template, please provide the following data for FY
2007 actuals, FY 2008 budget and FY 2009-11 budget assumptions.

     -   Tuition rates (by program) and percentage increases;
     -   Other fees such as room, board, application, etc;
     -   Planned enrollment by program;
     -   Selectivity and yield admissions statistics (see University Fact Book);
     -   Undergraduate financial aid as a percent of total student charges;
     -   Percent of students receiving aid;
     -   Average award per student;
     -   Indebtedness upon graduation;
     -   Faculty and Non-Faculty FTE;
     -   Faculty and Non-Faculty salary increase pools;
     -   Student/faculty ratio;
     -   Endowment per student – market value/student FTE;
     -   Competitive Position

     Note: Please insure this data is consistent with data provided by your Admissions Office to
     Dawn Terkla.

D. Comparative Data

This section is intended to provide key competitive information, measured for the current year
and one year ago. Please reference last year's Trustee presentation.

FY 2009 – 2011 Budget Development Manual                                             -7 -
                                                                          Budget Process

Tuition and Fees
Display tuition and fees per student, average school grant and net tuition (tuition and fees less
average grant) for your school and the mean and median of selected peers. A footnote should
detail data the schools used in this comparison and an explanation of any unusual data or trends.

GPA, Test Scores
These data will measure incoming grade point average and appropriate test scores, again
displaying your school statistics and the mean and median of comparative institutions.

These tables will include joint acceptances, won/lost comparisons, selectivity and yield statistics
for your school and key competitors.

Outcome Data
If outgoing test scores or other outcome data are available for your school and key competitors,
please provide the tables here. Examples may include: LSAT or GRE for undergraduate board
scores for health professionals.

                                  BUDGET PROCESS:
                            III. Budget Package Instructions


The budget process provides an opportunity for each school and division to translate its long-
term goals and plans into action steps and specific three-year operating and capital budgets, and
to provide this information to Trustees for approval of the upcoming year's tuitions, fees,
enrollments and budgets.

The sections that follow provide guidelines and instructions to complete the school budget
package requests for presentation to the administration and to the Trustees. A complete package
consists of a narrative from the Vice President or Dean which includes the strategic mission and
critical budget factors (see page 2) of the school, an operating budget statement (Schedule I),
program changes (Budget Detail), profile data sheet, comparative data schedule, capital budget,
sales & services detail by DeptID, source/use analysis and a detailed carry forward budget. In
addition, all Schools are asked to submit a complete roster of budgeted positions. The total FTE
and compensation dollars in the roster should match the total FTE in your profile data and
compensation dollars in your budgets (50XX accounts).

A signed original of the final narrative for inclusion in the Trustee mailing should be forwarded
to Finance and Planning. Budget policy and major economic assumptions are provided to assist
you in budget development. (See Policies and Procedures and Appendix)

FY 2009 – 2011 Budget Development Manual                                              -8 -
                                                                          Budget Process

We ask that each school provide complete and accurate information on time. Complete budgets
are due on or before February 4, 2008. If any specific information is not available or not
applicable, please leave blank and note the exception.

A. Narrative

The emphasis of the narrative or executive summary is to discuss the status of the school
(strengths, weakness/threats, opportunities and strategies), the critical budget factors and only
those operating and capital budget plans that bear major significance to strategies (referencing
both the operating budget size and significant capital plans). As a guideline, 3-5 pages in length
are suggested for this executive summary. As you build your budgets for FY 2009-2011, please
narrate any major variances to last year's 2009 and 2010 submission.

B. Budget Detail of Program and Economic Changes (Replaces Schedule II)
             (See sample Budget Detail template on next page)

Please check to insure FY 2007 actuals match PeopleSoft reports and that the FY 2008 budget
matches the Trustee budget.

FY 2009 Program Change
Using your three year plan for FY 2009-11, place the dollar impact of all FY09 program changes
in column 4, on the Detail Budget, by line item category of income or expense. Column 4
should contain not only the dollar impact of program additions or deletions but also adjustments
to the FY08 budget reflecting realignments since the budget voted by the Trustees in May, 2007.
Inflation, merit increases and fringe benefit rate changes on base budgets should be reflected in
the FY09 Economic Change column (5). Any figures (income or expense) contained in column
(4) must be explained in column 8.

FY 2009 Economic Change
Column 5, Schedule I should only contain the dollar impact of economic adjustments including
inflation, merit and fringe rate changes. Changes to line items that vary from the inflation
guidelines must be explained.

FY 2010 and FY 2011 Budgets
Columns 9 and 10 reflect the estimated costs of planned programs for those fiscal years. These
budgets should be calculated in escalated dollars, adjusted for inflation, merit increases and
programmatic changes. If these adjustments differ from recommended economic and budgetary
guidelines, explanations should be provided in the school narrative.

Describe the change and identify revenue, staffing and other expense implications in the program
change column of this schedule in column (11). Provide the justification for the change, citing
the three year strategic plan as necessary.

FY 2009 – 2011 Budget Development Manual                                             -9 -
                                                                 Budget Process

B. Budget Detail of Program and Economic Changes (Replaces Schedule II)

FY 2009 – 2011 Budget Development Manual                                  - 10 -
                                                                       Budget Process

C. Operating Budget Statement, Schedule I

After you have completed the operating detail budget, confirm that the detail totals match the
totals in the Operating Budget Statement, Schedule I.

All FY 2009-11 budget statements must balance income and expense as directed by Trustee
policy, unless previously authorized. The following is an explanation of the school's operating
budget statement to be used to translate the school's three year plan and programs into budgets
by fiscal year and major category lines of income and expense. The Schedule I displays columns
for FY 2007 actuals, FY 2008 budget and the FY 2009-11 budget requests summarized by
revenue and expense categories.

FY 2009 – 2011 Budget Development Manual                                         - 11 -
                                                                                     Budget Process

D. Sales & Services

Where appropriate to the mission of your school, please update the tab, detailed by dept id, that
supports your clinical and other activities revenue and expense budgets. This schedule should
include information that ties to the operating statement for FY 2007 actuals through FY 2011

E. Carry Forward Budgets

Schools are asked to provide a budget for all carry forward dept id’s. Using the carry forward
report, budget anticipated changes to revenue, expense, and final balances.

F. Source/Use Analysis

Each school should prepare and submit a source/use analysis plan for FY 2009-11. A sample
template and training will be provided.

G. Compensation Roster of Budgeted Positions and Merit Analysis.
FY 2008 Compensation Roster

                                                      FTE by             FTE by    Full
                   Name       Title      Dept   FTE   DEPT     % Distr     %      Salary   Acct   Dist Salary Is Faculty
                                                (1)    (2)       (3)      (4)      (5)     (6)       (7)          (8)
Department 1

The total FTE listed for all positions in the roster should be equal to the total faculty and non-
faculty FTE reported in the Profile Data sheet.

The total compensation in the compensation roster must equal the total of all compensation
accounts (50XX) in the budget upload.

H. Capital Budget

An example of a detailed capital budget template is included in the Appendix. Total project
costs and total funding sources must be equal. Project completion is dependent upon the timing
of construction and the availability of resources. The detailed capital plan will be reviewed by
Operations, Advancement and Finance & Planning.

Detailed capital plans are due December 14, 2007. Templates to submit capital plans are e-
mailed the first week of November. If you have any questions or concerns, please contact Betsey
Anderson at X73716.

FY 2009 – 2011 Budget Development Manual                                                            - 12 -
                                                                       Budget Process

                                  BUDGET PROCESS:
                                     IV. Closure


The final step in the budget development process places the budget data into PeopleSoft for the
coming year. Each school should submit its upload file to Finance and Planning beginning May
21st and prior to Friday, May 30th. (See Appendix for instructions).

New Dept ids, Allocation Changes and Recurring Entries

If you require new dept id’s for FY 2009, please submit a Dept id Create Form to F&P before
submitting the upload file containing the budget for the new dept id. This will ensure that the
budget will be accepted into PeopleSoft. Also, if you are responsible for any allocations or
recurring entries, you should contact F&P to update, create or delete these as necessary before
the start of the new fiscal year.

FY 2009 – 2011 Budget Development Manual                                         - 13 -
                                                                 Policies and Procedures

                              POLICIES AND PROCEDURES:
                                 I. Economic Guidelines

The Finance & Planning Office has assembled and summarized a selection of the most recent
forecasts of economic factors that may influence budget development. This fact sheet presents
economic assumptions for areas such as salary and wages, employee benefits, books, utilities and
indirect cost rates. (See Appendix) These data are presented in an historical trend, listing budget
assumptions for FY 2007-2008 and a forecast of assumptions for FY 2009 – 2011. These factors
should be incorporated in each school's budget development and are subject to Trustee
Administration and Finance approval in February. If a school finds it necessary to deviate from
these factors, the school narrative should highlight the change and the underlying factors for the

                          POLICIES AND PROCEDURES:
                    II. University Budget Policies and Procedures


This section describes the major University assumptions to be incorporated in each school's three
- year assumptions and budget plans. As with the economic assumptions, deviations from these
University budget policy issues should be identified in the school narrative.

A. Revenue Budget Policies and Procedures

1. Tuition and Fees will be determined by each school taking into consideration the following

              Position in the marketplace;
              National applicant pool trends and school applicant acceptance and matriculation
              Extraordinary programmatic needs; and
              Level of student financial aid required.

   2. Government Grants and Contracts should be budgeted using the following guidelines:

              Each school should work with principal investigators and their grant managers to
               determine a realistic level of outside funding (as well as for private grants that
               report on the Contributions and Grants line, see #4).
              Schools should request input from Sponsored Program Accounting and Grants &
               Contracts Administration to determine new and changing funding of grants and
                                                                Policies and Procedures

              The budget for sponsored income should always equal the sum of sponsored
               expense line budgets. (Total revenue = total expense + financial aid expense).
              ICR (F&A) income will be budgeted in accordance with projected grant activity
              Current and projected indirect cost rates developed by Finance & Planning should
               be used where appropriate. Adjustments should be made where grants are unable
               to fund the authorized University rates.
              A percent of the ICR (use allowance) income is budgeted as RR&R. This amount
               represents the recovery on building and equipment use allowance included in the
               facilities and administration cost recovery rate.
              The Medford campus use allowance rate for FY 2009-2011 is 16.6%. The Health
               Sciences use allowance rate for FY 2009-2011 is 15.5%.

3. Sales and Services, commonly known as Organized Activities, includes revenues derived
   from the sale of goods or services that are produced in conjunction with the school mission of
   instruction, research and public service. Auxiliary Enterprises includes revenues derived
   from the sale of such services as dining, dormitories, conferences, bookstores, and health
   services. Both operate within the following guidelines:

              A policy will be maintained that each activity should break-even unless directly
               associated with the success of the academic program.
              Activities will be fully costed including O&M of Plant, debt service, and capital
               maintenance costs.
              Schools will plan budgets considering past history, current performance and
               future programs.

4. Contributions and Grants. Each school should work with Advancement in defining its
      individual annual and capital fundraising goals. Gift estimates are now divided into
      unrestricted (annual fund) and restricted gifts (restricted/carry forwards). Advancement
      will provide proposed annual fund goals for the FY 2009-11 timeframe.

5. Endowment Payout Policy is developed by the Investment Committee of the Board of
      Trustees and approved by the full Board on a periodic basis. The current policy increases
      spending by 4% per year. The policy also limits the spending rate, requiring adjustments
      if the rate does not remain within a range of 4.5% to 5.5% of the December endowment
      market value. The following policies remain the same:

              Non-pooled funds pay out interest and dividend income earned. Budget
               projections are based on the yield of the current portfolios.
              Additions to principal will be factored into the budget if the funds have been
               actually received or payment on a predetermined pledge has been recorded.
              Endowment estimates for FY 2008-11 will be forwarded to each school by Karen
               Pepper (x72201) from Finance & Planning.

FY 2009 – 2011 Budget Development Manual                                           - 15 -
                                                                 Policies and Procedures

B. Expense Budget Policies and Procedures

1.   Deferred Maintenance and Facilities Renewal and Replacement
The Trustees approved a deferred maintenance plan which addresses the current backlog of
building deficiencies and provides for future facilities renewal and replacement. The plan was
the result of a comprehensive survey by an outside engineering firm of all buildings, roads,
walkways, site utilities and landscaping. Policies and procedures were established to prioritize
existing deficiencies, maintain the data and develop strategies to fund deferred maintenance for
the long term. (See tables that follow on pages 17, 18 & 19).

Funding is at a University level and includes the major components in following tables. Capital
Campaign and grants are not included in these tables as they have no budget impact.

                              2008             2009             2010             2011
       Annual Funding       14,266,485       15,061,515       16,095,599      17,188,062

FY 2009 – 2011 Budget Development Manual                                            - 16 -
                                                                                                                    Policies and Procedures

        FY 2009           A&S        Medical       Cummings     Fletcher    Dental    Friedman        Central       TischColl    Oprtns         Total
O&M Capital & Utility
Reserves @ 50%             50,000      140,582        29,685      10,160         0        3,386         31,436              0                    265,249
Current O&M Budget
used for Def Maint        511,284       82,651        20,009      19,502     18,625             74      55,590           1,645                   709,380
Building Reserves         244,018       97,710         6,532       9,308     36,420            117      30,555            785                    425,445
B&G Admin Reserves        106,969       42,834         2,864       4,080     15,965             52     13,1395            344                    186,503
School RR&R Funding       658,500      161,100       162,750      49,050    179,550       7,350        281,700              0                  1,500,000
Use Allowance             461,374              0     429,207      25,979     70,619      16,144                 0           0                  1,003,323
Capital Maintenance     7,558,095    1,717,958       720,331     285,967    622,307      78,674        949,254         25,704                 11,958,290
Debt Savings              363,324              0           0           0         0               0              0           0                    363,324
Totals                  9,953,564    2,242,835      1,371,378    404,046    943,486     105,797      1,361,930         28,478          0      16,411,514
Less: M&V Retrofit                  (1,200,000)                                                                                               (1,200,000)
Less: Future DM Study    (94,806)     (21,549)        (9,036)     (3,587)   (7,806)        (987)       (11,907)          (322)         0       (150,000)
Total Deferred
Maintenance Funding     9,858,758   1,021,286      1,362,342     400,459    935,680    104,810       1,350,023         28,156         0       15,061,515

         FY 2009 – 2011 Budget Development Manual                                     - 17 -
                                                                                                                      Policies and Procedures

       FY 2010            A&S        Medical       Cummings     Fletcher    Dental       Friedman       Central       TischColl    Oprtns         Total
O&M Capital & Utility
Reserves @ 50%              50,000      140,582        29,685    10,160              0       3,386         31,436             0                    265,249
Current O&M Budget
used for Def Maint        528,318        88,099        21,228    20,390       19,348               77      55,216          1,755                   734,431
Building Reserves         252,146       100,519         6,734     9,731       37,643              119      30,478           838                    438,208
B&G Admin Reserves        110,533        44,065         2,952     4,266       16,502               52      13,361           367                    192,098
School RR&R Funding       658,500       161,100      162,750     49,050     179,550          7,350       281,700              0                  1,500,000
Use Allowance             477,915              0     444,334     26,908       73,187        16,778                0           0                  1,039,122
Capital Maintenance      8,069,104    1,730,379      768,826    309,359     769,823         78,814       966,779         28,307                 12,721,391
Debt Savings              327,578              0            0         0              0              0             0           0                    327,578
Capital Renewals            35,746       86,794         9,026         0        5,050        16,606         56,550             0     17,750         227,522
Totals                  10,509,840    2,351,538     1,445,535   429,864    1,101,103       123,182      1,435,520        31,267     17,750      17,445,599
Less: M&V Retrofit                   (1,200,000)
Less: Future DM Study     (95,144)     (20,403)       (9,065)    (3,648)     (9,077)          (929)      (11,400)          (334)         0       (150,000)
Total Deferred
Maintenance Funding     10,414,696   1,131,135      1,436,470   426,216    1,092,026       122,253      1,424,120        30,933    17,750       16,095,599

          FY 2009 – 2011 Budget Development Manual                                       - 18 -
                                                                                                                              Policies and Procedures

        FY 2011           A&S         Medical        Cummings        Fletcher       Dental        Friedman        Central      TischColl    Oprtns          Total
O&M Capital & Utility
Reserves @ 50%              50,000      140,582          29,685        10,160                0            3,386     31,436              0                    265,249
Current O&M Budget
used for Def Maint         556,131       93,901          22,527        17,823         20,089                80      48,414          1,496                    760,461
Building Reserves          265,421      103,437           6,939          8,506        38,878               118      27,341           714                     451,354
B&G Admin Reserves         116,353       45,344           3,042          3,729        17,043                52      11,986           313                     197,862
School RR&R Funding        658,500      161,100         162,750        49,050        179,550              7,350    281,700              0                  1,500,000
Use Allowance              494,952               0      459,914        27,865         75,833          17,432             0              0                  1,075,996
Capital Maintenance      8,789,319    1,746,042         819,137       274,520        922,893          79,279       876,114        24,705                  13,532,009
Debt Savings               290,760               0               0             0             0               0           0              0                    290,760
Capital Renewals            72,564      176,192          18,323          2,500        10,252          33,710       114,797              0    36,033          464,371
Totals                  11,294,000    2,466,598       1,522,317       394,153      1,264,538         141,407 1,391,788            27,228     36,033       18,538,062
Less: M&V Retrofit                   (1,200,000)                                                                                                         (1,200,000)
Less: Future DM Study     (97,428)     (19,354)          (9,080)       (3,043)      (10,230)              (879)     (9,712)         (274)            0     (150,000)
Total Deferred
Maintenance Funding     11,196,572   1,247,244       1,513,237       391,110       1,254,308     140,528          1,382,076 26,954          36,033       17,188,062

         FY 2009 – 2011 Budget Development Manual                                                - 19 -
                                                                            Policies and Procedures

2. Information Technology

   Details of the FY 2009-11 Budget will be sent to each school by Marybeth Caputo.

3. Non-Faculty Merit Increase

   In early October, the Human Resources Office developed estimates for the non-faculty merit
   increase pools based on market and employment data. The recommendation is for an annual
   merit pool average of 3.5% University-wide for FY 2009 and 3.5% for the out years.

4. Faculty Merit Increase

   Each school competes for faculty members in its own regional and national markets, and will
   recommend to the President and administration appropriate salary pools.

5. Employee Fringe Benefits

   University policy is to remain competitive in our total compensation package. The unrestricted
   fringe benefit rate for full time employees will be 26.5% in FY 2009, 27% in FY 2010 and
   27.5% in FY 2011. The part time rate will be 8.5% from FY 2008-10. We continue to monitor
   the changes in the health care industry to ensure appropriate levels of funding. The economic
   and budgetary guidelines, located in the Appendix, contain both the unrestricted and restricted

6. Institutional Support and School and University Resources

   The Central Administration budget will be established each year at a fixed dollar amount.
   The budget will be approved by the President and will continue to be open to BFOs’ and dean’s
   comments. The cost of the Central Administration budget will be shared among the schools.
   Each school's percentage share will be fixed at the percentage that each school's 10% assessment
   bore to the total assessment for FY 1995 as listed below:

                                 Arts & Sciences             54.1%
                                 Fletcher                     3.4%
                                 Friedman                     1.0%
                                 Medical                     20.6%
                                 Dental                      10.4%
                                 Veterinary                  10.5%

    Additionally, 10% of school revenues (excess assessment) shall continue to be calculated for the
    purpose of sharing any surplus in excess of each school's fixed assessment with the University.
    Specifically, if 10% of revenues (less restricted aid, bequests and instrumentation grants) exceed
    its Central assessment (fixed amount), the excess will be split equally between the School and
    University. The School's share is defined as surplus (and therefore, directed to the school RR&R

   FY 2009 – 2011 Budget Development Manual                                             - 20 -
                                                                            Policies and Procedures

    reserve); the University share is added to its reserves. Both the school and University excess
    assessments are reported on the RR&R operating statement line

7. Structural Deficit Funding

   Each School's share is derived from its portion of the Central Administration budget after the
   Cummings School of Veterinary Medicine's share is redistributed. The FY 2008-11 budgets
   should present these amounts in the transfer section of the operating statement as "RR&R". The
   following table includes the contributions for FY 2008 – FY 2011. (3% per year increases with
   the Cummings School decreasing by $170,000 per year).

                                        2008            2009             2010           2011
         Central Administration      $1,133,158       $1,167,153      $1,202,167     $1,238,232

         O&M                          $755,074         $777,727        $801,058       $825,090

         Cummings                    $1,352,762       $1,182,762      $1,012,762      $842,762

         Arts & Sciences              $960,507         $989,322       $1,019,002     $1,049,572

         Fletcher                      $59,007         $60,777         $62,600         $64,479

         Freidman                      $17,736         $18,268         $18,816         $19,381

         Medical                      $364,972         $375,921        $387,199       $398,815

         Dental                       $183,536         $189,042        $194,713       $200,555

                    Total            $4,826,752       $4,760,972      $4,698,317     $4,638,886

   8. Contingency Margin

       The contingency margin budget represents funds available to cover unanticipated risks, that
       is, revenue or expense changes that could lead to an operating deficit. Continued reliance on
       traditional revenue sources poses a risk. Additionally, programs dependent on declining
       enrollment markets, federal funding and patient availability may suffer revenue losses as
       evidenced by past experience.

       Schools should weigh individual risks to determine contingency margin budget requirements.

   9. Other / Shared Costs

       Schedules for items common to all schools will be forwarded to you by the office responsible
       for compiling the information. These include:

   FY 2009 – 2011 Budget Development Manual                                             - 21 -
                                                                        Policies and Procedures

   Bad debt reserves - budgeted annually for potential uncollectible student receivables and
   loans receivable: Dick Doolin (x 73140), clinic receivables: Ed Mahoney (x75280) will
   provide an estimate for each school as appropriate.

   Weekly Salary Accruals - Finance & Planning will provide estimates for each school. John
   Walker (x 73816) will communicate these amounts to all schools.

   Faculty Salary Accruals - budgeted annually to accrue for faculty salaries, which are paid out
   over a 12 month period versus a 9 month academic period. The amount is calculated by
   applying future year merit and fringe rate assumptions against current year faculty salary
   bases. Contact John Walker (x 73816).

   Internal Loan Repayments - as provided by Finance & Planning, reflects payments due to the
   University for internal borrowing. Contact John Walker (x 73816)

   Telecommunications, Library Automation - Contact Marybeth Caputo (x 72615)

   TNEMC, Health Services Boston, Health Sciences Library - Contact Joe Carroll (x 66549)

   Student Services - Contact Rich Kelley (x 73756 Medford), Joe Carroll (x 66549 Boston)

   Annual Fund Projections – Schools should work with their respective Advancement Officers.

C. Transfer Budgets

This category includes those transfers from the current operating funds group to other fund
groups made at the discretion of the Board of Trustees and administration to serve a variety of
objectives. Specific line designations have been developed on the school's operating statement
to report the income and expense transfers in accordance with generally accepted accounting

1. Reserves for Renewals and Replacement Transfers

The renewals and replacement reserve (reserve funding) category is designated to transfer
current funds to plant funds for future plant projects. This includes: use allowance, deferred
maintenance, department, building, insurance and school reserves, internal loan repayments, and
structural deficit funding.
               Account 7002, Transfer To/From Reserves, is used to record these budgets on the
               RR&R line.

FY 2009 – 2011 Budget Development Manual                                            - 22 -
                                                                       Policies and Procedures

2. Unexpended Plant Transfer (Capital Project Funding)

The unexpended plant transfer category is designated to transfer current fund balances to the
plant fund for capital equipment, project construction or acquisition of physical property.

              Account 7006, Transfer To/From Cea Projects, is used for this activity.
              Account 7018, CEA's funded from Carry Forward Dept Ids, is used to record this
              activity when the funding for a capital expenditure is from a carry forward dept

3. Other Transfers

These include transfers for the administration of student loans and endowments.

              Account 7004, Transfer To/From Loan Funds, records budget and actual student
              loan transfers. This account must be used to budget current fund expenses being
              transferred to the student loan general ledger.

              Endowment Funds Transfer

              Account 7005, Transfer To/From Endowments, records budget and actual current
              fund transfers to Unrestricted Endowment. If prior knowledge of these
              transactions is known, you should budget your Dept id’s accordingly.

FY 2009 – 2011 Budget Development Manual                                          - 23 -

Economic and Budget Assumptions
FY 2008-2011                                     FY 2008        FY 2009      FY 2010   FY 2011
                                                 Budget         Budget       Budget    Budget
Salary and Wages
Non-Faculty Merit                                  3.5%             3.5%      3.5%      3.5%
Average Market Pool Adjustment                     1.0%             1.0%      1.0%      1.0%

Employee Fringe Benefits
Unrestricted Funds
Full-Time Rate                                    26.5%             26.5%     27%      27.5%
Mandated Rate                                      8.5%              8.5%     8.5%      8.5%

Restricted Funds
Full-Time Rate                                    25.7%             27.2%    27.2%     27.2%
Mandated Rate                                      8.5%              8.5%     8.5%      8.5%
Post Doc                                           15%              15.2%    15.2%     15.2%

Other Costs
Annual CPI                                         3.0%             3.0%      3.0%      3.0%
Capital Equipment                                  3.0%             4.0%      4.0%      4.0%
Office & Educ. Supplies                            3.0%             4.0%      4.0%      4.0%
Books                                              9.0%             4.0%      4.0%      4.0%
Laboratory Supplies                                3.0%             4.0%      4.0%      4.0%
Lab Instrumentation                                3.0%             4.0%      4.0%      4.0%
Chemicals                                          3.0%             4.0%      4.0%      4.0%
Food & Commodities                                 3.0%             4.0%      4.0%      4.0%
Trans. & Lodging                                   3.0%             4.0%      4.0%      4.0%

Monthly Rate
Boston                                            $44.00            $46.00   $46.00    $46.00
Grafton                                           $34.00            $35.00   $35.00    $35.00
Medford                                           $52.00            $52.00   $52.00    $52.00

Betsey Isenstein will provide FY 2009-2011 projections by school.

Indirect Cost Rates
Health Sciences:
Research On Campus                                64.0%             64.5%    65.0%     65.0%
Research Off Campus                               26.0%             26.0%    26.0%     26.0%
Other Spon. On Campus                             37.0%             37.0%    37.0%     37.0%
Other Spon. Off Campus                            26.0%             26.0%    26.0%     26.0%
Independent Operations                            10.0%             10.0%    10.0%     10.0%

Medford Campus:
Research On Campus                                53.5%             53.5%    53.5%     53.5%
Research Off Campus                               26.0%             26.0%    26.0%     26.0%
Other Spon. On Campus                             36.5%             36.5%    36.5%     36.5%
Other Spon. Off Campus                            26.0%             26.0%    26.0%     26.0%

FY 2009 – 2011 Budget Development Manual                                                 - 24 -

Budget Uploading

The FY09 budget will be uploaded into PeopleSoft by Finance and Planning. Templates have
been provided in each school’s network drive to submit the budget upload. Note that revenue is
uploaded as a negative number and, financial aid, a deduction to revenue, is uploaded as a
positive number. Please verify that the totals for each revenue and expense line in the budget
upload file match the total revenue and expense lines in the approved FY09 budget before
notifying F&P that the templates are ready for uploading.

Sample Upload Templates for FY 2009 (Note: samples are only part of an upload file)

Budget Revenue

          Account    Dept ID      Year                Amount    Operating Statement
ORG          4001    V000100      2009           -10979010.00   Tuition & Fees
ORG          4004    V000100      2009              -74160.00   Other Tuition Related Fees
ORG          4001    V000110      2009              -98500.00   PhD
ORG          4005    V350500      2009               -1500.00   CFA Application Fees
ORG          4005    V410100      2009              -45750.00   Application Fees
                                                 -11198920.00   Total Tuition & Fees

ORG           5200   V410600      2009              596888.00   Scholarships
ORG           5200   V800886      2009              413374.00   Carry Forward Student Aid
ORG           5200   V800887      2009               80000.00   Fed Student Aid
ORG           5200   V800888      2009               30000.00   State Student Aid
ORG           5200   V800889      2009               11000.00   Private Student Aid
                                                   1131262.00   Total Financial Aid

Budget Expense

           Account   Dept ID             Year             Amount
ORG           5004   N200200             2009           416752.00
ORG           5007   N200200             2009           143830.00
ORG           5011   N200200             2009            98801.00
ORG           5012   N200200             2009            24059.00
ORG           5051   N200200             2009           333270.00
ORG           5055   N200200             2009            12226.00
                                                        899938.00   Total Instruction

FY 2009 – 2011 Budget Development Manual                                          - 25 -

FY 2009 – 2011 Budget Development Manual   - 26 -

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