GENERAL OVERVIEW

ithin the Educational & General ("E&G") function of the University are accounts often referred to as self-supporting accounts. These accounts generate 100% of their operating funds. Examples of such accounts are Special Course Fees, Library Resource Fees, Assessment Fees, endowed chair or professorship accounts. Prior to July 1, 1993, the revenues and expenditures associated with self-supporting accounts were in separate accounts, resulting in the need for sponsors to review and reconcile various reports. To enhance the ability of an account sponsor to monitor activity related to their accounts, simpler reports have been developed. These procedures are provided to assist in the preparation and interpretation of these new reports.

Currently, reports for self-supporting E&G expenditure accounts (xx2-7xxx) include all revenues (AD000927 report), expenditures (AD000925 report) and associated balance sheet account balances (AD000929 report which will include cash, accounts receivable, allowance for doubtful accounts, accounts payable, fund balance, etc.). Each 1x2-7xxx self-supporting account is assigned an individual CUFS fund number and will be able to accept all deposits and revenue entries. The AD000925 report will assist sponsors in reviewing actual versus budgeted expenditures. When accounts are established, each sponsor will be notified of their account number and corresponding fund number.

When preparing a budget for a self-supporting account, the budget for projected expenditures should generally be equal to or less than the expected income for the year. To assist in the budgeting process, an additional form will be provided in the budget package for departments to identify amounts and sources of income.

As part of the budgeting process, departments should be aware of the following guidelines as they relate to the establishment of income budgets, the allowance for doubtful accounts, fringe benefit budgets, and the budgeting of endowed chairs and professorships.

1. Income Budget: The income budget should represent total anticipated income. For example, a course with an associated special course fee of $50 per student and estimated student enrollment of 2,000 would budget estimated income of $100,000.

2. Allowance for Doubtful Accounts: Sponsors are asked to recognize that some uncollectable receivables are inevitable when extending credit. These bad debt expenses are considered normal operating expenses and should be provided for as a part of the budgeting process. It will be necessary to estimate the bad debt expense because actual uncollectable receivables will not be known until future periods.

   Sponsors are asked to establish an initial allowance for doubtful accounts equal to 5 percent (5%) of total budgeted income. This will allow sponsors to spend up to 95 percent of budgeted income. For example, if total budgeted income was estimated to be $100,000, an allowance for doubtful accounts of $5,000 should be established and budgeted in the "Contractual and Related Current Expense" budget category, object code 8800. Periodically, Financial Support Services will review the aging of the underlying accounts receivable, calculate and record an actual allowance for doubtful accounts.

3. Fringe Benefits: Expenditure budgets for self-supporting accounts with line-item salary or wage positions should also include a line-item budget for the associated fringe benefit cost. The current average fringe benefit rate is estimated to be 33 percent for faculty, monthly staff, and hourly staff. However, account sponsors should review actual past fringe benefit expenditure patterns to determine the most appropriate cost, particularly those areas with high risk worker compensation costs.

4. Endowed Chairs and Professorships: Separate accounts (and funds) were established for each State Regent's endowed chair and professorship to identity salary expenditures, associated fringe benefits, and maintenance and operation costs associated therewith. If State Regents endowment reimbursements are not sufficient to support the total salary, a Personnel Action Form should be processed to split the salary and FTE between the endowed chair account and the regular E&G account.

   For example, a 1.00 FTE faculty in Philosophy funded at $45,000 is appointed to an endowed chair position with a salary of $50,000. The account currently exists for the endowed chair and if actual earnings are reported as $32,000, this is not sufficient to support the total salary of $50,000 plus $16,500 (33%) in benefits. A Personnel Action Form should be processed to split the salary and FTE between the endowed chair account and the regular Philosophy department account. As a result, the expenditures in the endowed chair account would be budgeted at $25,000 or 0.50 FTE plus $8,250 in associated benefits for a total budget of $33,250. The remaining salary of $25,000 and the remaining 0.50 FTE would be budgeted in Philosophy.

Account sponsors of E&G self-supporting accounts who want to increase spending authority or transfer funds between E&G accounts should follow the guidelines below.

1. Budget Revisions: Revisions to increase spending authority may be processed if the account sponsor can demonstrate that actual income has exceeded expectations. For example, if a self-supporting account budgeted at $100,000 had actual year-to-date income of $102,000, the sponsor could process a budget revision, using a Budget Revision form, to increase the budgeted spending authority by $2,000. In the event expenditures exceed income for the fiscal year, the deficit must be resolved as provided for in the University's Deficit Policy. Unresolved deficits will be settled with a reduction in the subsequent year's spending authority.

   A Budget Revision can also be used to transfer funds to another E&G account. However, because of the different types of E&G accounts, the sponsor should contact the Budget Office to determine the correct procedure for processing a budget revision.

2. Transfer Forms: In the event a self-supporting account sponsor wants to provide support to other E&G accounts, a Transfer Form can be utilized. For example, if a self-supporting account sponsor wanted to transfer $10,000 to another E&G account, the sponsor would prepare a Transfer Form. The account receiving the "credit" would process it as a credit to an M&O expense category, thereby increasing the free balance.

Should you have any questions concerning the preparation of a Budget Revision Form or a Transfer Form, please contact the Budget Office at 325-5511 or Financial Support Services at 325-3021.

A year-end settleup (previously performed by Financial Support Services and the Budget Office) of self-supporting accounts is not necessary unless there are certain correcting entries which need to be made before year-end. The sponsor is responsible for reconciling the account and conveying any anomalies to Financial Support Services in a timely fashion.

All self-supporting accounts have their own CUFS fund resulting in the creation of a balance sheet statement (report AD000929). All year-to-date 6-30-9x revenues and expenditures are "closed" into the fund balance category (code 3000) on the balance sheet. The 6-30-9x final balance sheet amounts are automatically carried forward to the next fiscal year. These amounts include cash, accounts receivable, accounts payable, fund balance and others as applicable.

To the extent that a self-supporting account ends the fiscal year with a positive cash balance, the balance will be carried forward to support future fiscal year budgets for that account. Likewise, should a self-supporting account end the fiscal year with a deficit cash balance, the deficit must be resolved as provided for in the University's Deficit Policy.



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