Business Services Training: Part 1 February 13, 2007

1
Business Services Training Part 1February 13,
2007

• Cost Center Management

2
Presentation Topics

• Understanding Cost Center Budgets
• Understanding Purchase Orders Encumbrances
• Understanding Payments Expenditures
• Understanding Revenue
• Understanding Budget Transfers, Fund Transfers
  Expenditure Corrections

3
Understanding Budget

• A budget is spending authority, not money
• Expenditure budgets are based on forecasted cost
  center needs to support a program for a fiscal
  year
• Expenditure budgets are categorized personnel and
  non-personnel

4
Understanding Budget

• Budget Categories
• Salary (0099)
• Fringe (0019)
• Equipment (4000)
• Non-Salary (0999)

• Spending Authority
• Employee Salaries
• Benefits
• Capital Items 5000
• Supply Items

5
Personnel BudgetSalary 0099 Fringe 0019

• Budget basis is authorization for a position
• These budgets are established at the beginning of
  the fiscal year (July 1) and funds are encumbered
  for the year
• Adjustments are made for staff changes or pay
  rate changes

6
Capital Budget 4000

• Capital Budget
• Spending Authority
• Equipment
• 5000 per item (exception applies to component
  parts)

• Budget Basis
• 1 drill press 8,000
• 3 machines 12,000 each
• 6 widgets 5,000 each
• Total Budget 74,000

7
Capital Budget 4000

• Budget Items
• Drill Press
• 3 Machines
• 6 Widgets
• Total Budget

• Budget vs. Actual
• 8,000 8,000
• 36,0000 39,000
• 30,000 23,000
• 74,000 70,000

8
Non-Salary Budget 0999

• Budget basis is the dollar figure
• Used to purchase all goods with an individual
  value less than 5,000 and services
• Total value of goods purchased may be greater
  than 5,000, though no individual item can be
  greater than 5,000
• Any adjustments will require justification and
  approval

9
Understanding Budget
10
Questions?

• Did this presentation help to clarify LSC
  budgets?
• Was this information different than your
  understanding?

11
Purchasing

• Purchase orders are used to encumber funds prior
  to any purchase obligations
• Purchase orders are issued to a specific vendor
• Purchasing instructions are available online at
  http//www.lsc.edu/BusinessServices/index.cfm

12
PC0031UG
13
PC0033UG
14
PC0034UG
15
PC0039UG
16
Purchase Order Authorization

• MMA, Dean, or Vice President approval required to
  provide budget control for cost centers
• Plan ahead whenever possible
• Increase existing P.O. or open a new P.O.?
• P.O. increase request forms are available at
  http//www.lsc.edu/BusinessServices/index.cfm
• Only the person who authorized the P.O. (or
  designated person if absent) can increase the
  P.O.
• P.O. increases are appropriate for blanket orders
  or ongoing services
• Create a new P.O. for any unrelated purchases

17
Purchase Order 16-A Clarification

• MS 16A.15, Subd. 3, prohibits creating an
  obligation without an encumbrance
• Funds should be encumbered using an approved
  purchase order prior to any purchase agreement
• To determine if a purchase order is approved,
  view any page the status must be 050 or higher.

18
Purchase Orders

• P.O. Status numbers mean
• 000 Requisition originator enters data
• 020 Insufficient funds
• 030 Sent to department for authorization
• 050 Authorized Purchasing will print
• 450 PO has been printed is open
• 500 PO has been paid closed
• 901-907 PO has been cancelled

19
Purchase Orders

• To determine funds available for an open purchase
  order use AC0481UG
• To view all open purchase orders in a cost center
  use AC480UG or run an open commitment report
  AC0519CP.
• AC0519CP includes payment/invoice information,
  AC480UG does not.
• When viewing any of these reports consider if any
  invoices are in process

20
AC0481UG
21
AC0480UG
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Purchase Order Processing

• Purchasing requirements are available on the
  Business Services website at
• http//www.lsc.edu/BusinessServices/index.cfm
• Instructions on how to create a purchase order
  can be found on this site or by contacting Holly
  Valentine.

23
Questions?

• Does everyone understand how to create a purchase
  order?
• Does everyone understand how to check the status
  of a purchase order?
• Does everyone know who to contact with questions
  regarding purchase orders?

24
Payment Expenditures

• To determine if a payment has been processed for
  a specific invoice related to an open purchase
  order, use AC0519CP (open commitment report) or
  contact Judi Seifert
• Payment information can also be obtained using
  AC0450CP by entering the purchase order number
  and PV as the transaction code
• Payments Expenditures may be named
  disbursements in ISRS
• Information about payment processing, invoice
  approval packing slips is available at
  http//www.lsc.edu/BusinessServices/index.cfm

25
AC0519CP
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AC0519CP

• Report-ID AC0519CP
  MN State Colleges and
  Universities
  Date 2/11/07
• Version/Mode 03.02 / PROD
  General Ledger Accounting
  System
  Time 193256
• Institution Lake Superior College
  Open Commitment Report
  
  Page 1
• --------------------------------------------------
  --------------------------------------------------
  --------------------------------------------------
  --------------------
• P/O Cost Object Name /
  Tran Tran
  Transaction
• Number FY Center Code Description
  Type Date Invoice Number Transaction
  Description Serial Nbr
  Encumbrance Disbursement
• 
  
  
  
• 32747 XEROX CORP
  
  Vendor/Employee 11907400530
• 2007 014065 Business Office
  Operations Responsible Person
  Mark Winson
• 1260 Maintenance
  Contracts EN 07/12/2006
  Encumbrance - XEROX CORP 101723488
  800.00
• 1260 Maintenance
  Contracts EN 10/13/2006
  101807979
  93.64-
• 1260 Maintenance
  Contracts PV 10/13/2006 020195110 70
  101807982
  93.64
• 1260 Maintenance
  Contracts EN 01/11/2007
  101879596
  87.33-
• 1260 Maintenance
  Contracts PV 01/11/2007 022164078 70
  101879597
  87.33
• 
  
  
  _______________________________
• 2007 014065 Total
  
  
  619.03 180.97
• 
  
  
  
• 32747 P/0 Total
  
  
  619.03 180.97
• 
  
  
  

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AC0450UG
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Questions?

• If after viewing open commitment report
  (AC0519CP) and/or the AC0450CP you are still
  unable to identify a payment or invoice, contact
  Judi Seifert
• To be honest, ISRS reporting of payments
  expenditures is not intuitive

29
Revenue

• Cost centers receive revenue either from
  department deposits or student tuition fee
  payments
• Revenue receipts do not provide more budget funds
• Use AC0470UG to view revenue by object code

30
AC0470UG
31
Questions?

• Do you understand how revenue relates to budget?

32
Budget Transfers, Funds Transfers Expenditure
Corrections

• Budget Transfer forms are available at
  http//www.lsc.edu/BusinessServices/index.cfm
• This form has been used for requesting budget
  transfers, payment or funds transfers between
  cost centers, and correcting expenditures charged
  to the incorrect cost center
• Once completed, this form is submitted to Rob
  Waksdahl or Suzanne Olsen to identify which
  transaction type is appropriate

33
Budget Transfers

• Budget transfer requests reduce the expenditure
  budget in one cost center and increase the
  expenditure budget in another cost center
• This transaction provides additional spending
  authority for a cost center while reducing
  spending authority in another
• Typically impacts budget in 0999 (non-salary) or
  4000 (equipment)

34
Funds Transfer

• Funds transfer requests move actual dollars from
  one cost center to another
• The end result does not provide additional budget
  or reduce budget
• The cost center receiving a funds transfer
  typically has a revenue transaction, the cost
  center paying funds typically has an expenditure
  transaction

35
Expenditure Corrections

• Expenditure correction requests move an expense
  from one cost center to another
• Expenditure correction transactions will free
  up budget in one cost center by charging an
  expense to another

36
Budget Trans, Funds Trans, Exp Correct
37
Thank You!!

• Questions about anything we discussed today?
• The Training on Thursday, Feb. 15th will focus on
  Business Office procedures including travel
  requirements, service contracts, obtaining
  quotes, inventory tracking, 16-A processing,
  business office forms, etc

38
Business Services Training Part 2February 15,
2007

• Business Office Procedures

39
Presentation Topics

• Bid/Quote Requirements
• Service Contract Requirements
• 16-A Requirements
• Travel Requirements
• Equipment Inventory Requirements
• Special Expense Requirements

40
Bid/Quote Requirements(Purchases Less Than
5,000)

• Purchase orders less than 5,000 do not require
  formal quotes
• Staff should compare prices, obtain quotes
  informally, and shop around
• College staff are required to use professional
  judgment to assure campus financial resources are
  properly managed

41
Bid/Quote Requirements(Purchases 5,000 or more)

• Purchase orders greater than 5,000 require a
  minimum of 2 formal quotations
• Quotations should include names of vendors
  providing quotes, amounts of quotations, and each
  successful quote signed and dated
• Quotations must be provided to Purchasing before
  the P.O. will be processed by Purchasing
• Forms are available at http//www.lsc.edu/Busines
  sServices/index.cfm

42
MNSCU Telephone Quote Form
43
MNSCU Written Quote Form-pg 1
44
MNSCU Written Quote Form-pg 2
45
Bid Quote Requirements(Purchases 5,000 or more)

• If written or email quotes are obtained on forms
  provided by a vendor, attach those forms to the
  MNSCU form and note any relevant information on
  the MNSCU form
• You can not divide a purchase into multiple
  purchase orders to avoid the bid/quote
  requirement

46
Bid Quote Requirements(Purchases 25,000 or more)

• Sealed bids must be solicited by public notice
• Contact Purchasing to assure compliance with bid
  requirements

47
Questions?

• Does everyone understand what is required for
  purchases 5,000 or more?
• Has anyone used these quote forms in the past?

48
Service Contract Requirements

• The requirement applies to all purchased services
  such as consulting, technical, professional,
  legal, cleaning, etc
• Service contracts must be prepared on MNSCU forms
  available at http//www.lsc.edu/BusinessServices/
  index.cfm
• Contact Purchasing anytime you are considering
  the hiring someone to provide services
• Purchase orders are required for professional
  services and purchasing must receive a copy of
  the fully executed (signed) service contract
  before services begin.

49
Questions?

• Does everyone know a purchase order is required
  in addition to a service contact?

50
Purchase Order 16-A Clarification

• When an obligation occurs prior to an encumbrance
  (approved P.O. status 050), LSC issues16-A
  letters
• P.O. must be a status 050 before an order is
  placed for goods or services
• P.O. at a status 050 must have sufficient
  encumbrance
• 16-A letters document the reason for the
  exception to state statutes
• Vendors do not receive payment until the 16-A
  letter is completed

51
MN State Statute 16A

•  Subd. 3. Allotment and encumbrance. (a) A
  payment may not be made without prior
  obligation. An obligation may not be incurred
  against any fund, allotment, or appropriation
  unless he commissioner has certified a sufficient
  unencumbered balance or the accounting system
  shows sufficient allotment or encumbrance balance
  in the fund, allotment, or appropriation to meet
  it. The commissioner shall determine when the
  accounting system may be used to incur
  obligations without the commissioner's
  certification of a sufficient unencumbered
  balance. An expenditure or obligation authorized
  or incurred in violation of this chapter is
  invalid and ineligible for payment until made
  valid. A payment made in violation of this
  chapter is illegal. An employee authorizing or
  making the payment, or taking part in it, and a
  person receiving any part of the payment, are
  jointly and severally liable to the state for the
  amount paid or received. If an employee knowingly
  incurs an obligation or authorizes or makes an
  expenditure in violation of this chapter or takes
  part in the violation, the violation is just
  cause for the employee's removal by the
  appointing authority or by the governor if an
  appointing authority other than the governor
  fails to do so. In the latter case, the governor
  shall give notice of the violation and an
  opportunity to be heard on it to the employee and
  to the appointing authority. A claim presented
  against an appropriation without prior allotment
  or encumbrance may be made valid on
  investigation, review, and approval by the agency
  head in accordance with the commissioner's
  policy, if the services, materials, or supplies
  to be paid for were actually furnished in good
  faith without collusion and without intent to
  defraud. The commissioner may then draw a warrant
  to pay the claim just as properly allotted and
  encumbered claims are paid.

52
Purchase Order 16-A Clarification

• The Business Office monitors 16-A forms and
  resolutions
• Any individual receiving two 16-A violations
  without a valid explanation in a one year period
  will be required to meet with the Vice President
  of Administration Finance to discuss the
  importance of proper encumbering of state funds
• Any individual receiving four 16-A violations
  without a valid explanation in a one year period
  will have their purchasing authority reviewed

53
Questions?

• Does everyone understand how to avoid receiving a
  16a letter?
• Does everyone understand why accounts payable
  staff must assure compliance with MN statute 16a?
• All questions regarding 16a should be directed to
  Judi.

54
Travel Considerations-prior to departure-

• All in-state travel requires verbal prior
  approval and all out-of-state travel requires
  written prior approval
• Out-of-state travel request forms are available
  at http//www.lsc.edu/BusinessServices/index.cfm
• Be sure to keep a copy of the signed out-of-state
  travel approval to submit with each part of your
  documentation provided to accounts payable
• All travel requires a P.O. to prior to departure

55
Travel Considerations-prior to departure-

• A purchase order is necessary for all fares,
  lodging, and conference fees
• Fares Employees should secure the lowest fare
  available.  Arrangements should be made early
  enough to take advantage of purchase discounts
  when possible.  Travel insurance coverage is not
  a reimbursable expense.  Upgrades are not
  permitted.  Lost baggage excess baggage fees
  are not reimbursable travel expenses.

56
Travel Considerations-prior to departure-

• Lodging  The lowest, government rate available
  should be secured at a reasonably priced licensed
  lodging facility.  Additional miscellaneous
  charges included with the room are generally not
  reimbursable unless necessary for business
  purposes.
• Conference Fees  Employees are encouraged to
  take advantage of early registration discounted
  rates when available.  Obtain a conference agenda
  to submit with your reimbursement.

57
Travel Considerations-prior to departure-

• Rental Vehicle  Rental vehicles are generally
  not allowable. Rental vehicles are acceptable
  provided the type of trip or location of meetings
  is such that use of local transportation (taxis,
  airport shuttles/limousines, buses, etc?) is not
  practical or more expensive.  Rental vehicles
  shall be rented at the lowest possible rate. 
  Employees shall use compact or mid-size/intermedia
  te rental vehicles subject to the following
  exceptions
• The number of passengers is three or more and
  additional space is necessary.
• Excess baggage for official business requires a
  large vehicle (booth displays, sales items, large
  instructional or presentational items, etc?).
• A larger vehicle is provided at no additional
  charge above the compact or midsize rate
• All vehicle rental reservations are made through
  Enterprise Rent-a-car at 722-5800. Contact Holly
  for non-local rentals.

58
Travel Considerations-prior to departure-

• Personal Vehicle Usage  Use of a personal
  vehicle for travel is acceptable.  Mileage is
  reimbursable based on respective bargaining
  agreement mileage rates.  Mileage claimed may
  only include necessary mileage for business
  purposes.  Personal mileage while in travel
  status is not reimbursable.

59
Travel Considerations-in travel status-

• When in doubt, obtain a receipt for any
  reimbursement item
• Meals are not per diem. Claim only what you
  actually spent on a meal by meal basis
• To claim breakfast you must be in travel status
  before 600 a.m. and to claim dinner you must be
  in travel status after 700 p.m.  Times of travel
  must be listed on your reimbursement or meals
  will not be reimbursed.
• Refer to your bargaining unit for allowable
  expenses and amounts
• Record personal vehicle odometer reading to be
  included on the travel reimbursement request

60
Travel Considerations-upon return-

• Travel expense reports must be submitted timely,
  no more the 60 days from the date of travel
• Travel expense reports received after 60 days
  will require the Presidents signature

61
Travel Considerations-upon return-

• Please include the following with your travel
  expense report
• Agenda if available. An e-mail, written notice,
  website or other documentation describing the
  travel if an agenda is not available. Dates of
  travel are necessary.
• Receipts for any business expense claimed (meals
  excluded)
• Odometer readings if personal vehicle mileage is
  claimed
• Out of state travel approval form if applicable

62
Questions

• Everyone know what purchase orders and approvals
  are required?
• In-State?
• Out-of-State?
• International?

63
Inventory Considerations

• Maintaining an accurate equipment inventory is
  the responsibility of the entire campus
• The Business Office has responsibility for
  recording the addition, relocation, or
  disposition of items in ISRS
• Departments share responsibility to assure items
  within their program are properly recorded

64
Inventory Considerations

• Additions must be tagged Property State of
  Minnesota department staff should verify when
  items are received
• Relocations must be communicated to the Business
  Office, consider this when you move or receive
  tagged items
• Dispositions must be documented and recorded to
  inventory records, never allow a tagged item to
  be removed without completing the proper
  disposition forms

65
Inventory Considerations

• Business Office staff will supply inventory
  records for all locations at least annually for
  your review
• Please verify the accuracy of inventory records
  as we all share responsibility when discrepancies
  occur
• Failure to maintain accurate inventory can result
  in audit findings, bad publicity for the campus,
  and inadequate program resources

66
Questions?

• Is everyone aware items tagged Property of the
  State of Minnesota must be locatable at all
  times?
• Does everyone understand the responsibility for
  locating these items?

67
Special Expense

• Definition Special expenses are extraordinary
  expenses incurred in connection with work-related
  responsibilities or official functions not
  generally supported with public funds of the
  Minnesota State Colleges and Universities or
  assigned duties of system employees, which are
  not reimbursable through the regular expense
  regulations.
• Except in emergency situations, approval is
  required before any special expense is incurred
  and before commitments involving special expenses
  are made.
• Employees must obtain approval of special
  expenses before incurring such expenses or the
  payment may be denied. Requests received after
  the event or too late to provide a proper review
  must include an explanation of why the request
  was not provided in a timely manner.

68
Special Expense

• The following expenses are covered where the
  benefits of the employee's attendance or
  participation will accrue primarily to the state
  
• Full cost of a meal when it is part of the
  structured agenda of a conference, workshop,
  seminar, or meeting which the chancellor or
  president has authorized the employee to attend,
  whether or not the employee is in travel status.
• Meals and related expenses, or non-alcoholic
  refreshments and food served when conducting
  business with citizens members of boards,
  commissions, task forces, or workgroups foreign,
  federal, state, or local governmental officials
  and/or employees.
• Registration and tuition fees for conferences,
  seminars, workshops, or education courses.
  Education courses provided through a tuition
  waiver are not special expenses. Prior approval
  is required only if the cost exceeds 1,000 per
  participant.

69
Special Expense

• Non-alcoholic refreshments and food for system,
  board, college or university sponsored meetings,
  receptions for speakers, performers, and
  commencements conferences workshops and other
  similar system, board, college or university
  sponsored meetings or activities that have
  predominantly non-state employees.
• Non-alcoholic refreshments, food and other
  conference costs for system, board, college or
  university sponsored events where registration
  fees are charged and the majority of the
  participants are non-state employees.

70
Special Expense

• Non-alcoholic refreshments and food for meetings
  that consist primarily of state employees when
  the non-alcoholic refreshments and/food are an
  integral part of the event and are necessary to
  sustain the flow of the meeting and to retain
  captive audience and meet one of the following
  criteria a.) a meeting with participants from
  many geographic locations where the majority of
  the participants are in travel status b.) a
  department-wide or division-wide
  annual/quarter/semester staff meeting for all
  employees c.) a department or division senior
  management planning or organizational meeting
  d.) a department, division, college, university,
  system or office of the chancellor wide meeting
  regarding a topic(s) with department, division,
  college, university, system or office of the
  chancellor wide impact e.) a structured training
  session, available to employees generally and
  conducted by persons outside the Minnesota State
  College and University System, provided it has
  been approved by the college, university or
  office of the chancellor. With the exception of
  Board of Trustees meetings, campus visits, and
  other official functions, including but not
  limited to committee meetings, the above meetings
  shall be scheduled to minimize the inclusion of
  meals.

71
Special Expense

• Non-alcoholic refreshments and food may be
  provided during official meetings or other
  functions of the Board of Trustees.
• Lodging if an employee is not in travel status
  a.) when weather conditions or other unforeseen
  occurrences warrant lodging b.) when college,
  university or office of the chancellor business
  or contract negotiations prevent the employee
  from returning home orc.) when the chancellor
  or president authorized overnight participation
  in an approved event. Authorization should be
  based on the benefit of such participation to the
  Minnesota State Colleges and Universities.
• Expense reimbursement for lodging, travel, and
  meals for one attendant for an employee with a
  disability that requires daily assistance in
  performing various personal tasks or who has
  special mobility needs.

72
Special Expense

• Expenses as follow for individual employee and
  board member awards and system, board, college,
  and university recognition events a.) Awards
  for individual or group achievements, which are
  limited to non-cash/non-negotiable items of
  nominal value as, provided for under IRS
  guidelines. Items of nominal value are those that
  have no market or retail value such as
  promotional or advertising items. b.) Up to 100
  food and non-alcoholic refreshment reimbursement
  for employees being recognized at annual employee
  recognition events. Reimbursement for travel in
  accordance with System Procedure 5.19.3.
  Reimbursement for alcoholic beverages is
  prohibited.

73
Special Expense

• Expenses specifically not covered
• Refreshments or meals for routine staff meetings.
  
• Private club memberships.
• Alcoholic beverages.
• Entertainment.
• Employee parties (including holiday parties)

74
Questions

• Does everyone have a general understanding of
  when special expense applies?

75
Thank You!!

• Questions about anything we discussed today?
• The PowerPoint for todays training and the
  Tuesday, Feb. 13th will available on the Business
  Services web site at http//www.lsc.edu/BusinessS
  ervices/index.cfm