Fund Accounting and Budgeting Basics

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Fund Accounting and Budgeting Basics

• Presented by
• David Proulx

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Intro to Fund Accounting
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Fund Accounting Overview

• We use fund accounting at UNH
• Funds established based on purpose of fund
• Major fund groups are
• Current Funds
• Plant Funds
• Endowment Funds

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Fund Accounting
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Current Unrestricted Funds

• Educational and General Fund
• Instructional operating funds of the University
• Tuition, indirect cost recovery and state
  appropriation revenue
• Internally Designated Funds
• Funds - designated for a specific program -
  example study away programs, PI funds
• Auxiliary Enterprise Funds
• Supported through separate revenue streams (fees)
• Examples include MUB, Campus Rec, Housing,
  Dining

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Current Restricted Funds

• Restricted Gifts
• Donations from alumni, corporations and others
• Funds can only be used in accordance with donors
  restrictions
• Grants/Contracts
• Federal, State and private grants to perform
  research or public service.
• Expenditures must be in compliance with Federal
  and State regulations as well as Grant
  Proposal/Awards.

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Plant Funds

• Includes fixed assets and long-term debt
• Capital construction and Repair Renovation fund
• Capital Replacement

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Endowment Funds

• Gifts from an external donor that can not be
  expended.
• A portion of the investment income (4) is paid
  out to be expended according to donors
  restrictions.
• Quasi endowments are designated by Trustees.

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Intro to Budgeting
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What are Budgets For?

• Translation of Strategic Plans to annual
  objectives or actions
• Institutions Formal Financial Plan
• Communication of Priorities
• Control Structure

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Key Components of Successful Budget

• Clear authority, responsibility, and
  accountability
• Establishment of priorities
• Collaborative, consultative decisions
• Clear, concise performance expectations
• Continuous, effective communication
• Good data
• General rule is expenses can not exceed
  revenue/budget allocation

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USNH Budget Process
State of NH
USNH
UNH
RC Unit
Department
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Annual Budget Development

• Normally begins well in advance of fiscal year
• Should focus on 3-5 year time period and be
  updated regularly
• Establish strategic priorities for unit/program

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Budget Cycle
Strategic Plan
Communication of Results / Assessment
Budget Development
Budget Monitoring/ Maintenance
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Connect the Budget to the Strategic Plan

• Strategic Planning sets the direction and
  priorities
• of an organization. Budgeting is the most
  efficient
• vehicle for getting there.
• Strategic Planning is not the production of a
  detailed document or written plan
• A Strategic Plan is implemented by connecting it
  to the budget and funding priorities
• Too much time spent thinking about the details
  need to focus on strategic priorities

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Resource Allocation Decisions

• A perfect world Revenues/Sales resource
  requirements
• Reality Resource requirements exceed revenues
• Aligning revenues and expenses
• Fund Priorities
• Eliminate duplication
• Evaluate effect of institutional policies
• Redesign processes
• Assign reallocation targets
• Use budget as a change agent

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Monitoring Financial Projections/Analysis

• Need to monitor actual results vs. budget
  frequently throughout the budget period
• Look at
• Current Year Projection vs. Budget
• Budget to (Prior Year) Actual
• Actual CY YTD to PY YTD Review
• Tips
• Summarize data at reasonable level
• Focus on areas of strategic importance.
• Make adjustments in budget/realign resources
• Be ready to make tough decisions - funding
  priorities
• Dont spend surpluses because you anticipate them

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Evaluating the Annual Budget

• Report financial performance on a regular basis
• Explain variances between the original budget and
  year to date financial results
• Document expenditures and revenue trends
• Incorporate current years experience and trends
  into next years budget
• Update the Strategic Plan

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Tips for Managing Budgets

• Budget process works best if it is fair and open
  you can not please everyone but everyone can
  have input
• Establish contingencies to guard against the
  unexpected
• Be conservative in revenue estimates and pad
  expense budgets for flexibility (within reason)
• Be diligent about monitoring progress and make
  necessary adjustments
• Do not worry about small items, focus on areas
  that have material impact
• Make your budget yours, be proud of it, and use
  it as a guiding business tool.

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Project Budgeting

• Use similar concepts to annual budgeting
• Estimate project revenues
• Estimate project expenses direct and indirect
• Evaluate the result
• Adjust revenue and expense estimates to effect
  the result positively. It must be realistic
• Think out of the box for funding solutions
• First consideration should be alignment with UNH
  Academic Plan. Financial impact is a
  consideration but should not be sole basis of
  decision.