THE UNIVERSITY OF MEMPHIS OPERATING PROCEDURE
SUBJECT: Budget Procedures
PROCEDURE NO.: 2D:01:02A DATE: March 1, 1993
SUPERSEDES PROCEDURE NO.: 2D:01:02A DATED: July 1, 1991
Contents:
A. Summary of Content
B. Introduction
C. Budget Administration
D. Re-Budgeting Salary Funds from Regular Positions
E. Budget Discounts
F. Processing of Budget Revisions
G. Approval of Budget Revisions
Attachment I - Valid Budget Object Codes/Object Code Pools Table
A. Summary of Content
Item Section
Introduction and Purpose............................ B
General Budget Administration....................... C.1,2,3
Overexpenditure/Overobligations..................... C.4,5,6
Carryforwards-General............................... C.4,7
Carryforwards-Equipment............................. C.7
Proper Accounting of Expenditures................... C.5
Budget where Revenue/Expenditure are Equal.......... C.8
Salary Lapse General................................ D.1,4
Salary Lapse from Recoveries........................ D.2
Salary Lapse other than Recoveries.................. D.3
Base Salary Funds................................... D.5,6
Funding of Promotions, Transfers,
Reclassifications, etc............................ D.7
Personnel Turnover.................................. D.5
Budget Discount General............................. E.1
Budget Discount - Creating a Discount............... E.2
Budget Discount - Repayment of a Discount........... E.3
Processing of Budget Revisions - General............ F. 1 - 6
Reversing a Budget Revision which has
been Processed.................................... F.7
Approval of Budget Revisions - President............ G.1
Approval of Budget Revisions - Vice President or
or Provost........................................ G.2
Approval of Budget Revisions - Dean/Director........ G.4
Approval of Budget Revisions - Department Head...... G.4
Object Code Pools and Detailed Object Codes......... Attachment 1
B. Introduction
The University of Memphis prepares an annual "Operating Budget"
which serves as a guide for financial expenditures for salaries
and wages, travel, equipment, and other supplies and operating
expenses. The Operating Budget will be strictly adhered to in the
administration of fiscal affairs. No official is authorized to
make firm commitments or incur obligations unless budget provisions
have been approved.
This procedure applies only to current funds (Ledgers 1, 2, 3, and
4) and to restricted funds (ledger 5, grants and contracts from
outside sponsors) to the extent that those funds are not covered by
other procedures.
Any exceptional situation to these procedures should be directed to
the Office of Financial Planning.
C. Budget Administration
1. The University budget is divided into various "accounts" which
generally constitute a department or activity. For budget
control purposes, each account number is considered separately.
Each account number is assigned to one designated responsible
individual. Any higher level official in the same organizational
line may also approve or disapprove budget actions for an
account.
2. Each budget account is divided into different areas for budget
control purposes. Funds are budgeted by detailed object codes
or by object code pools per Attachment I, but expenditures are
always recorded by detailed object classifications. Specific
accounts may be subject to different control groupings when
approved by the Accounting Office. Adherence to budget limits
for each position or control area is required.
The Account Administrator is responsible for and will take
immediate action to correct any overexpended/overobligated
condition. The Office of Financial Planning will be informed
and an Administrative Budget Revision will be processed to
correct the overexpended/overobligated condition if the
condition is not cleared in a timely manner.
3. Any specific requirements or conditions imposed upon the
allocation of funds when approved will be followed.
4. A budget administrator may overexpend and/or overobligate an
account as defined below by five percent (5%) of the total
amount budgeted or $5,000, whichever is less. The budget for
the following year will be reduced by the actual amount of such
overexpenditures. A carry-forward of unexpended budget amounts
into the following fiscal year will also be provided up to 5%
or $5,000, whichever is less. The carry-forward of unexpended
amounts is subject to availability of funds University wide.
The amount subject to this provision is the net of supplies and
other operating expenses, travel, and departmental revenues.
Not included in the amounts subject to this provision are
salaries, staff benefits, and equipment. Certain entire
accounts are excluded from this provision; these include service
departments, auxiliary enterprises, self-supporting or break-
even activities, and other accounts budgeted for a specific
fiscal year.
5. Expenditures will be charged to the correct account or activity
and to the correct object classification based upon an objective
determination of the charge without regard to available budget
balances. If necessary, budget revisions will be processed to
transfer funds to the proper account or budget control area.
6. Overexpenditures or overobligations of $25.00 or less in an
individual personnel position or budget control category do not
require a budget revision.
7. Outstanding purchase orders for equipment (costing $500 or more)
made at the close of the fiscal year will remain encumbered.
The budget for the activity will be increased in the following
year by the amount of the encumbrance or the unexpended balance
in the equipment budget, whichever is less. The carry-over of
any other encumbrances will not be made.
8. In some cases there is direct relationship between expenditures
which will be incurred and the amount of revenues to be
realized. Budget administrators in these cases are responsible
for maintaining the planned relationship or for submitting
requests for budget revisions, detailing corrections necessary
to the budget.
D. Re-Budgeting Salary Funds From Regular Positions
1. "Salary Lapse" is the term applied to salary budgets which are
not expended.
2. Beginning July 1, 1993, salary lapse generated as a result of
salary charges to sponsored projects (restricted funds) may all
be rebudgeted by the department/activity. Priorities on use, in
order, must be to provide services for the individual's whose
salary was charged off, graduate assistants and research related
activities. (Current temporary provisions remain in place through
June 30, 1993.)
3. All other salary lapse may be re-budgeted by the department/
activity to achieve the duties of the related position. Of
the remainder, 25% may be re-budgeted by the department/activity.
4. Certain accounts and activities will continue to be responsible
for their own unused salary budgets. (Included are all
Auxiliary Enterprises, service departments, and Centers of
Excellence). Budget changes cannot be made between these units
and any other units.
5. Base salary funds of positions in any of the University's pay
plans will revert to the University's general fund when
personnel turnover occurs.
7. Increases for clerical personnel and positions in the Pro-
fessional Pay Plan will be funded by the University when the
increase results from promotion, involuntary demotion, voluntary
demotion, transfer, reclassification, or re-evaluation. Budget
increases caused by exceptions to the hiring range will be
funded by the division, department, or activity.
E. Budget Discounts
1. "Budget Discount" is the term used to request an advance of
budgeted funds with the anticipation that the funds will be
replaced by salary lapse, salary recoveries, or other funds
available to the department/ activity.
2. Discount amounts are budgeted as negative amounts in the
following object classifications:
1160 - Budget Discount - Administrative/Professional
1260 - Budget Discount - Academic/Professional
1360 - Budget Discount - Clerical/Supporting
These budgets will usually be in one account for each dean/
director. There are no position numbers associated with
these budgets, and they will not appear on detailed salary
reports which are listed by position, but will appear on
monthly FAM 090 and screen #623 in the FRS.
As amounts are available to satisfy the budget discount, a
budget revision should be processed. Typically, the revision
will decrease one or more regular positions, with the offset
being to the budget discount account and object code. (Since
the budget discount is a negative amount, an "increase" will
cause the discount budget to become smaller.)
Establishing a budget discount requires the approval of the
Provost or area Vice President.
3. The budget administrator who established the budget discount is
responsible for either applying unused salary dollars equal to
the discount budget or covering the amount in some other way.
The following provisions also apply.
a. Budget discounts will be established by object classification,
but it is the total budget discount which is to be satisfied.
b. Unused salaries from sponsored activities may be re-budgeted
before the total payroll discount budget is satisfied so long
as there appears a good probability that the total discount
will be met.
c. Amounts may be re-budgeted to other forms of salaries (students,
graduate assistants, temporary employees, etc.) or to non-salary
object classifications such as equipment, supplies, printing,
or travel. These budget changes will be for the current fiscal
year only and are subject to any other temporary budget re-
strictions.
d. All re-budgeting of unused salary must be consistent with sec-
tion D.2.
e. Budget discounts may be satisfied by reducing non-salary object
classifications if desired.
F. Processing of Budget Revisions
1. When a change to the current approved budget for an activity is
required, a "Request for Budget Revision" should be processed.
A revision is not final until approved by the Office of
Financial Planning.
2. Instructions concerning preparation of the "Request for Budget
Revision" are available from the Office of Financial Planning
or The Users Guide for Business and Finance Services.
3. Requests for Budget Revisions should be initiated at the lowest
possible level and signed (manually or electronically) in
accordance with the approval process in Section G of this
procedure.
4. All officials in the normal chain of authority should approve
a revision when it requires approval at a higher level.
5. The Office of Financial Planning is responsible for reviewing
all budget revisions to insure that the revision contains all
of the required approvals, is accomplishing the intent of the
revision, and is properly prepared. (Some electronic budget
revisions will be reviewed after being processed.)
6. The Vice President for Business and Finance will review all
revisions which must be routed to the President for approval.
7. Any higher level official may initiate a revision to reverse the
effect of a revision with which he/she does not concur, but
which did not require the official's signature on the initial
revision request.
G. Approval of Budget Revisions
1. President. Revisions involving the following type items require
approval of the President. The President's approval may be in
the form of a memorandum, contract, or other document which
supports the budget revision when it is apparent that the
President's signature on the supporting document recognized the
need for and amount of the revision.
a. The creation of new, regular personnel positions or one-year
appointments that will increase the total position count.
b. The establishment of a new activity or a major change in the
scope of an existing activity.
c. The commitment of additional funding in future years.
d. Any shift of funds among or between Provost or Vice
Presidential areas of responsibility.
e. All revisions affecting individual salaries or personnel
positions not specifically delegated to other levels.
2. Provost or Vice Presidents. Revisions involving the following
type items will require approval of the appropriate Vice
President or Provost.
a. Permanent shifts to base budgets, within the Provost or
Vice President's area.
b. Current shifts among or between accounts under different
Deans/Directors within the Provost or Vice President's
area.
c. Increases or shifts in the salary level of professional/
administrative positions (non-faculty) or the upgrade of
salary levels in the Classification/Compensation plan,
provided they are consistent with the University General
Compensation procedure. (Applies to Budget Revisions only,
not to personnel actions.)
d. Re-budgeting of lapsed salaries, other than professional
recoveries from sponsored programs, to achieve the duties of
the related position.
e. Establishing a budget discount.
3. Deans/Directors. Revisions involving the following type of
items will require approval of the appropriate dean/director.
a. Revisions shifting current year budgets among or between
departments or activities not under the same department
head, but within the same dean/director area.
b. Revisions to the current year which include travel,
equipment, revenue accounts (not "departmental revenue"),
and transfers to other Fund groups.
c. Providing budgets equal to actual expenditures, where
separate budget holding accounts are maintained (such as fee
remissions, summer instructors, part-time instructors, and
graduate assistants.)
d. All shifts within the area involving group salaries for
part-time instructors, summer instructors, supplement pay
(overload and extra compensation), and graduate assistants.
e. Providing increased revenues and expenditures when revenues
are at least equal to expenditures and there is a normal
direct relationship between revenues and expenditures.
f. All re-budgeting of lapsed salaries from professional
recoveries on sponsored projects, consistent with the policy
on use of lapsed salaries and the re-budgeting of the 25%
portion of other salary lapses.
4. Department Heads. Revisions not specifically requiring approval
by the President, Provost, Vice President, or Dean/Director may
generally be approved by the activity head. The following type
revisions may be approved by the department head.
a. Current year shifts to, from, and among supplies and expense
objects, stores for resale, departmental revenue, longevity,
clerical overtime and temporary salaries, and student
salaries, for accounts under the same department head.
b. Establishing "cost sharing" accounts where the sponsored
project budget has already been approved in accordance with
other University requirements. Must be approved by the
Grants and Contracts Section of the Accounting Office.
c. Revisions within restricted accounts permitted by the sponsor.
Attachment I
VALID BUDGET OBJECT CODES/OBJECT CODE POOLS
Salaries - Each position number is considered separately for budget
control purposes. (Object Codes 1100 - 1999)
Employee Benefits (when applicable) - (Object Codes 2100 - 2199)
Object Code Pools -
Travel 3000
Printing, Duplicating & Film Processing 4100
Communications and Shipping Cost 4200
Maintenance/Repairs/Service by Others 4300
Professional and Administrative Services 4400
Supplies 4500
Rental and Insurance 4600
Awards and Indemnities 4700
Grants and Subsidies 4800
Other Service and Expense 4900
Equipment 8100
Detail Object Codes will be used for the following for both budget
and actual transactions:
Utilities and Fuels 5110 - 5190
Motor Vehicle Operations 5210 - 5290
Stores for Resale, Reissue, or Manufacture 6111 - 6120
Department Revenues 7110 - 7710
Land 8211 - 8290
Buildings 8311 - 8312
Improvements other than Buildings 8411 - 8499
Library Holdings 8511 - 8590
Capital Outlay - Transfers 9110 - 9170
Other - Indirect Costs 9211 - 9282