BS5768 - Management of Expense Budgets

1. Institutional Regulations
   
   Budget Managers are responsible for the daily management of the funds under their control.
    
2. Procedure
   1. General Information
      1. Budget managers are required to practice “bottom line” management. This practice allows the budget manager to use amounts allocated in their budgets as they best determine.
   2. Budget Divisions:
      1. The Budget for each cost center is assigned a unique index that is used for identification in the budget management process.
      2. Within each cost center, each type of expenditure is assigned a four-digit account number.
      3. Budget managers are responsible for independently managing the cost center budget in four different areas:
         1. Accounts 5000 to 5999 … Salaries, wages and fringe benefits
         2. Accounts 6000 to 6999 … Operating expenses (except 6801 and 6802)
         3. Accounts 6801 and 6802 … Transfers out
         4. Accounts 7000 to 7999 … Capital expenditures
      4. The controller or designee must approve budget transfers from on area to another.
   3. The amount of budget available for expenditure is equal to the budgeted amount in each area minus the expenditures already made in each area minus the encumbrances in each area.
   4. Encumbrances:
      1. The accounting system will record an encumbrance in an account within a cost center at the time a contractual obligation has been incurred through the issuance of a purchase order or salary agreement.
      2. Encumbrances will be made in the following instances and amounts:
         1. All regular employee salaries for amounts of fiscal year pay as of July 1st of each fiscal year.
         2. Adjunct faculty, temporary employees, and student employees for amounts shown on payroll authorizations.
         3. Approved purchase requisitions or purchase orders.
      3. The accounting system will relieve an encumbrance as partial payments are made or completely once final payment is made. This process essentially eliminates the encumbrance and records an expenditure.
   5. If an expenditure is proposed in any of the four areas and the amount proposed exceeds the budget available, the proposal will be rejected.
   6. If an expenditure is rejected, the budget manager has four options:
      1. Cancel the proposal.
      2. Request a Budget Revision (an increase or decrease in the budget).
      3. Request a Budget Transfer, moving available budget amounts from another area within the same cost center.
      4. Request a Budget Transfer, moving available budget amounts from another cost center.
   7. Budget Transfers:
      1. Budget Transfers may not be made between funds
      2. Complete and submit a Budget Transfer Form to the Business Office.
      3. The Controller or designee must approve budget Transfers between areas of a cost center.
      4. If Budget Transfers involve more than one cost center, the budget manager of each cost center must approve the transfer.
      5. All Budget Transfers must move equal amounts from one account to another.
   8. Budget Revisions:
      1. Budget Revisions result in an increase or decrease to the total revenue or expenditures budgeted within a cost center.
      2. Complete and submit a Budget Revision Form to the Business Office.
      3. A Vice President must approve all Budget Revisions.