Subject: Budget Development Principles and Guidelines
Approved by: Board of Regents
Approval date: May 15, 2001
Effective date: July 1, 2001
Revised: April 12, 2012; November 27, 2009 and December 5, 2003.
Administered by: Vice-President (Administration)
1 — PREAMBLE
As Chief Executive Officer of the University, the President is responsible for the preparation and development of the annual University Budget. This Budget, which is developed through a process established by the President, shall be forwarded in April to the Finance and Administration Committee of the Board of Regents. Once recommended for approval by the Finance and Administration Committee, the Budget will be forwarded to either the Executive Committee or the Board, or to both, for approval by the date of the May meeting of the Board.
The Budget is composed of the General Operating Budget, the Ancillary Operating Budget, the Endowment Fund Budget, the Special Programs Budget, and the Capital Budget. The main objective of the Budget is to allocate resources in a manner that will enable the University to achieve its strategic goals and objectives.
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2 — GUIDING PRINCIPLES
The Finance and Administration Committee will ensure that the Budget proposed by the President will respond to Board of Regents, government, donor and other applicable guidelines for the generation and expenditure of funds. Such guidelines include, but are not limited to, the following principles:
i. The Budget must respect generational neutrality which is to say that the cost of educating the current generation must not be deferred to future generations.
ii. The Budget must be balanced such that planned expenditures do not exceed expected revenues.
iii. A degree of conservatism must be incorporated in the Budget to reduce the risk of year-end deficits by including in the budget all expected cost increases and additions.
A contingency fund for revenue shortfalls and emergencies within the General Operating Fund will be maintained in the Special Purpose Fund as described in Policy 7202.
In the Ancillary Operating Budget the emergency reserve shall be at least 2% of the ancillary operating expenditure budget, and the provision for revenue shortfall shall be at least equal to 5% of the budget for residence accommodation fees.
iv. One time or short term funds must not be used to cover ongoing expenditures.
v. Revenues generated in the Ancillary Operating Fund must not be transferred to the General Operating Fund, and vice versa, except to the extent that the transfers represent internal cost recoveries for services provided. These internal cost recoveries must be reasonable and justifiable.
vi. Transfers of spending allocations from endowment funds to operating budgets or to the endowment expendable budget shall, subject to special Board-approved conditions, occur at the rate allowed by Board policy and only for the purposes established by external donor or internal Board of Regents’ restrictions.
vii. Unrestricted bequests and endowments are not to be used for operating purposes. All such bequests or endowments shall be fully recapped until such time as the Board approves a restricted use for them.
viii. Sufficient provision must be made in each of the General Operating Fund and the Ancillaries Operating Fund budgets for alterations and renovations to the physical plant and grounds. In the case of the General Operating Fund, the alterations and renovations budget for the 2013 fiscal year will be $2,268,000 and will increase each year thereafter by inflation plus an additional $135,000 in 2013 dollars until the budget equals 2% of the replacement value of the facilities maintained by the General Operating Fund. In the case of the Ancillary Operating Fund, the total of the alterations and renovation budget and the budgeted appropriation for capital projects must equal 2% of the replacement value of the facilities maintained by the Ancillaries Operating Fund. An effort should be made each year to supplement these provisions from other sources with a view to ensuring that in total 4% of the replacement value of facilities is spent annually on alterations and renovations.
ix. There must be sufficient provision for the acquisition, repair and replacement of teaching equipment, computers, and other equipment.
x. There should be an appropriate balance maintained among all areas of the University.
xi. Accountability for the effective management of the Budget rests with the President, who ensures that proper controls and budget management policies are established. The President has the authority to change budget allocations during the fiscal year in order to accommodate the needs of the University provided that no deficit results from the re-allocations. Any such changes will be communicated to the Finance and Administration Committee through the quarterly financial reports. However, the President must receive prior approval from the Finance and Administration Committee for expenditures in excess of one per cent (1%) of the General Operating Fund expenditure budget which have not been approved in the original budget allocations. The President may not expend any unrestricted funds which have not been approved in the original budget without approval of the Finance and Administration Committee and of the Executive Committee of the Board of Regents.
3 — COMPLIANCE
The Finance and Administration Committee will scrutinize the proposed budget to determine whether it accords with established Board guidelines for budget development. If it is determined that the proposed budget is not fully in accordance with such guidelines but that it should be approved as presented, the Finance and Administration Committee will seek separate approval from the Board for each exception from the established Board guidelines. The Audit Committee of the Board shall instruct the External Auditors to include scrutiny of this policy document in its work plan, and to report annually on adherence to this policy.