Budgeting 101 for New Administrators University of Maryland, College Park

1. Office of the Senior Vice President and Provost Budgeting 101for New AdministratorsUniversity of Maryland, College Park Cynthia R. Hale Associate Vice President for Finance and Personnel Office of the Senior Vice President and Provost Peg Hinkle, Research Analyst Office of the Senior Vice President and Provost August 2013

2. Table of Contents • Campus Budget Overview • Budgeting at the Local Level • Glossary of Budget Terms • DRIF Distribution • Finding Resources • Tools for Fiscal Oversight • Financial Systems • Top Ten Tips Office of the Senior Vice President and Provost

3. University of Maryland, College ParkFY 2013 Total Operating Budget: Revenue • State increased total FY14 appropriation by 7.3% to $447 M; 3% tuition increase for UG residents approved Tuition & Fees 27% State Appropriations 24% State/ Local Grants & Contracts 3% Auxiliary Enterprises 14% Private Gifts, Grants, Contr. 3% Federal Grants & Contracts 18% Gov't & Private Gifts, Grants 6% Sales & Services- Educ Activities 2% Other 3%

4. FY 2012 Tuition Revenue Sources* Entrepreneurial revenue from Academic Programs makes up $57.3 M. $57.6 M is generated from Self-Supporting Operations. Admin Fees $8.2 M GR Entrepreneurial $54.2 M Other Entrepreneurial $3.1 M GR Non-Resident $18.7 M GR Resident $35.9 M Non-State-Supported $57.6 M UG Non-Resident $143.7 M UG Resident $131.4 M *FY13 source breakdown not available.

5. University of Maryland, College ParkFY 2013 Total Budget by Expenditure Category Grants (Scholarships & Remissions) Salaries & Fringes Fuel & Utilities Fixed Charges, etc. Equip., Supplies & Vehicle Operations Travel & Comm. Land & Structures

6. Glossary of Terms • Fund Balance: The cumulative year-end balance of various departmental accounts including state roll-forward, DRIF, revolving accounts. It does not include gift funds held in the Foundations. • Soft Money: Funds received on a one time basis with no commitment of future allocation. DRIF, Summer/Winter and entrepreneurial revenues are considered soft money. • Hard Money: State allocated funds that are considered to be guaranteed year to year; COLA, MERIT and Fringe Benefits are allocated for hard money accounts. • FTE/Lines: “Full Time Equivalent” – a budgetary device that assigns fringe benefits from the campus Fringe Benefit Pool to a particular position. Only available in hard (state) budgets. • DRIF: A formulaic distribution of the F&A (overhead) produced by a program’s sponsored research activity. To be used for research related activity.

7. Glossary of Terms (cont’d.) • Revolving Account: An account into which soft money is transferred; the balance at the end of the fiscal year typically rolls forward. Summer/Winter term accounts, DRIF accounts are considered revolving. • Plant Funds: A central account, tied to the program, where programs transfer or “save” funds for future construction and renovation project. A prudent way to manage fund balances. • Restricted Funds: Funds received for which there is a proscribed purpose such as sponsored research grants and contracts and gifts for which the donor provided explicit directions. Administrators are responsible for assuring the funds are spent appropriately. • Interest Income: Annual income generated by endowments, which are always held in one of the foundations. Income is typically slightly less than 5% of the endowment value. It is used to reimburse program for costs incurred by the endowed chair or related activity.

8. Glossary of Terms (cont’d.) • Underwater Accounts: Gift accounts held in the foundations, the value of which is less than the original gift, due to poor performance by the investment portfolio. Accounts are often frozen until the original value is restored. • KUALI: A national consortium of universities to develop open source software which will support universities in perpetuity without the cost of commercial products or licenses. UM has been a member since 2007. We expect to replace our current financial system (FRS) with KUALI Financial in January; KUALI Student Services is under development.

9. Designated Research Funding Initiative(DRIF) • The total FY 2013 DRIF budget was $39,099,416 • Calculated on F&A generated by expenditures two years prior • FY14 DRIF was produced in FY12 • 50% of F&A revenues support the base budget of the campus

10. Funding New Initiatives InternalExternal • Fund Balance – Unspent $ • DRIF • Summer/Winter Revenue • Entrepreneurial Programs • Development • Foundation Accounts • Graduate School • Dean’s Office • Provost’s Office • VP for Research Office • Facilities Council • Special Initiatives

11. Effective Fiscal Oversight • Develop a report that includes information you need to monitor your accounts and resources: • Revised budgets – across multiple accounts • Projected expenditures • Projected balances • Current list of employees and salaries • Accounts receivable – who owes you money

12. University Financial Systems • Official Accounting Records • FRS – Financial Records Systems – accounting • BPM – Budget Preparation and Maintenance System – budget management • PHR – Payroll & Human Resources • KFS – Kuali Financial System – January 2014 • Foundation Accounts – UMCPF & USMF

13. Top 10 Safety Tips for New Administrators • Develop strong working relationships with your College Budget Officer and your Business Manager • Establish a culture of integrity and openness • There are no secrets - Diamondback Salary inset • Don’t make promises you can’t honor • Wear your campus hat – idiosyncratic credits

14. Top 10 Safety Tips for New Administrators • 6. Keep careful records of all commitments • 7. Don’t hoard - but develop a financial safety net • 8. Avoid a bad audit by training and empowering staff • 9. Beware of setting precedents • 10. Surprises are never popular with deans & provosts.

15. Balance Compliance Creativity