Budgeting Expense

Budget Home > Process > Budgeting Expense

You should budget at a fine enough level of detail to show standing faculty salaries separate from other academic salaries and non-academic salaries. If you are a large unit, then you should build in a vacancy rate for positions based on past turnover history.

For staff salaries, you should set aside an amount of up to 0.5% of the pool for salary adjustments and reclassification requests. For clarity, it is recommended that you use a salary reserve object code (518x) to budget for this setaside with an accompanying cell text note. Keep in mind that the salary reserve object codes are subject to full-time employee benefits rates and that no actuals are posted to these object codes in BEN.

If you have faculty or staff who are paid in part by the Health System or other related entities, you may budget that portion of their salary in the appropriate receivable object code (12xx and 15xx). These amounts will not appear in the compensation section of your budget, but will be included in reports on the Cash Effect - Other Activity line.

Budgeting Employee Benefits

Employee benefits are automatically calculated in Planning when you enter salaries and save your data, based on the salary object code that you use. The process for charging dependent tuition is more complicated because of federal government rules that prohibit the charging of dependent tuition to federal grants (Fund 599999 in Planning) and service centers (Fund 000011). When you budget salaries in these two funds, Planning will initially put the associated dependent tuition in those funds. However, during the overnight process it will move the dependent tuition to the 000000 Fund of the org where you budgeted the salaries, putting the dependent tuition associated with the service center salaries in Program 7493 and the dependent tuition associated with federal grant salaries in Program 7494 (consistent with how the actuals are booked). At the org level, what Planning does is different from what occurs in BEN, because in the actuals all of the dependent tuition associated with service center and federal grant salaries is moved to the surrogate org’s 000000 Fund. The dependent tuition associated with salaries booked to all other funds, including non-federal grants, remains in those funds in both Planning and BEN.

Budgeting Current Expense

Do not budget current expense in a single object code such as miscellaneous current expense. At a minimum you should budget current expense at the RCM row level of detail, i.e. at least one object code for each row in which you expect activity, which include travel & entertainment, supplies & miscellaneous expense etc.

Budgeting Capital

Your capital funding transfers in object codes 4821 and 4812 (from a capital gift) should be consistent with your capital plan. Since you don’t budget activity in the capital construction fund (000010) you should not show your planned borrowing in object code 2780: the Budget Office budgets that centrally, based on the collective planned funding and the planned spending in the 000010 fund. If you are receiving Century Bond proceeds, budget the loan in object 2782 and your transfer to the project in object code 4821.

Budgeting Debt Service

Most principal payments are on internal capital loans and are budgeted in object code 2783. However, some Centers may have equipment loans outstanding for which principal payments should be budgeted in object code 2784; in addition, payments on special loans such as the century bond loans should be budgeted in object code 2785. Interest payments for all loans should be budgeted in object code 5604.You should include any debt service shown in final amortization schedules issued by the Treasurer’s Office as well as projected debt service for capital projects that are not yet closed out or are still in the planning stage.

If any of your construction projects incur interim financing, you should budget the appropriate interest amounts in the 000000 Fund in object code 5604. Interest is accrued monthly throughout the fiscal year until a capital project is deemed to be substantially complete and then booked in the appropriate center in the following fiscal year in July. You can see what interest has been accrued to date by looking at schedules provided by the Treasurer’s Office.

The minimum interim interest rate is 2.0%, which is the rate that has been assessed for a number of years. If short-term rates rise sufficiently, then the interim interest rate will be increased to 25 basis points above 90 day Treasury bills rates. Conversely, you can accrue interest for capital projects that have surpluses at a rate of 25 basis points below the 90 day T-bill rate (assuming T-bill rates are above 25 basis points). The interest should be booked as Other Investment Income in object code 4780.

Budgeting Student Aid

Be careful to budget Student Aid in the appropriate object codes, so that the component of Student Aid that will be counted as contra-revenue, the component of Student Aid that will be counted as Compensation, and the component of Student Aid that will be counted as Current Expense all appear in the appropriate categories. The aid for each term is distributed using the following methodology:

For traditional undergraduates, a financial aid discount rate is assessed against the home school and teaching school portions of the distributed tuition to fund the undergraduate financial aid pool. Your forecast and budgeted aid in object code 4181 should be equal to the discount rate times your traditional undergraduate tuition.
For non-traditional undergraduates (LPS and Nursing Accelerated), the centrally incurred aid is distributed to the home and teaching school in object code 4183. The effective rate may be more or less than that for traditional undergraduates, based on the actuals. Any direct aid that you incur for LPS degree candidates and NAP students should be in object code 4183 after Pennant is implemented in FY16.
For graduate and professional students, student aid is determined by the home school and the expense is retained by the home school. Starting with the implementation of Pennant in FY16, it should be recorded in an object code that will show the kind of student and whether or not service is required as a condition of the award.
- 4172--PhD Students, no service required
- 4173--PhD Students, service required
- 4174--Other degree students, no service required
- 4175--Other degree students, service required
- 4176—Non-degree students, no service required
- 4177—Non-degree students, service required
Stipends should be forecast and budgeted in the appropriate service or non-service payroll object codes.

Budgeting Expense Credits

The use of the Expense Credit Object Codes (550x) should be limited to service centers or to those specific organizations (e.g., General Counsel) that have a single office that is part of both the University and the Health System. In all other instances, an expense incurred by one organization on behalf of another organization should *not* be reimbursed using expense credits. Instead, both the debit side and the credit side of the reimbursement should use the appropriate current expense object code so as not to overstate total expense across the University.

In cases in which resources are simply being transferred from one Center to another, or from one org within a Center to another, and no reimbursement is involved, you should budget a Resource Transfer, not an Expense Credit.

Budgeting Allocated Cost and Space Charges

These charges should be budgeted as specified in your budget guarantee letter. If you expect to add new facilities during the next few years, please be sure to adjust your O&M and Facilities Renewal Charges accordingly. It is best to contact the University Budget Office and Facilities and Real Estate Services to obtain a building specific estimate for additional space charges. For information on how your allocated costs and space charges are calculated, see Calculating Allocated Cost and Space Charges.