Budget Process Training Class

1. CalPlanning| Envision. Commit. Act. Budget Process Training Class

2. Welcome! • Introduce yourself • Name • Division/Control Unit • Question you hope gets answered at training

3. Today’s Learning Objectives

4. Agenda

5. What is CalPlanning? CalPlanning BFS/BAIRS • Data entry for forecast and operating budget • Planning level chart of accounts • Actuals data summarized to CalPlan chart of accounts CalPlan BFS PeopleSoft 9.0 Budgets, Forecasts at CalPlan CoA CalPlan CoA & Summarized Actuals CalRptg BAIRS • Full BFS chart of accounts • Contains chartstring-level reporting on actuals for FY10 to present, and… • CalPlan forecast and operating bgt CoA , actuals & encumbrances

6. What’s in a Name? Budget Before and After • What we currently call budget (TempBudg) is a combination of • A plan for revenue • The “actual” movements (transfers) of resource allocations (authorization to spend), and • A plan for expenditures • A representation of a prior year carryfoward • In CalPlanning, budget is exclusively a plan: • A plan for revenues • A plan for resource transfers • A plan for expenditures • The calculation of an ending balance from the planned revenues, transfers, and expenditures

7. Transition to CalPlanning Today’s training will focus on three aspects of our shift to CalPlanning: • Adjusting a seeded FY11-12 forecast to predict aggregate fund balances • Creating an Operating Budget in CalPlanning • Implementing two structural changes to the actuals ledgers • Operating Transfers booked in actuals to a new 7XXXX account range for non-Contract and Grant funds • Carryforwards booked to the Dept ID, Chartfield1, and Chartfield2 in actuals

8. Breaking Down the Temporary Budget Sample Division – Central Fund All Revenues/Expenses YTD Feb 2012 Summary Report by Accounts Revenues of $19 million recorded at central campus orgs; not visible to the department TempBudg to date balances are a snapshot - the net of a variety of transactions since the beginning of the year. How do we know where we started? What’s still outstanding?

9. Breaking Down the Temporary Budget 3 Sample Division – Central Fund All Revs/Expenses YTD Feb 2012 Summary Report by Accounts 1 2 What does the July 1 permanent budget download represent? A central campus transfer of $19 million to the department, and The department’s plan to spend $19 million

10. All Other Activity in Temp Budget 3 Sample Division – Central Fund All Revs/Expenses YTD Feb 2012 Summary Report by Accounts 1 2

11. TempBudg TransformationFuture State Equivalents in CalPlan and BFS Actuals Ledger CURRENT STATE FUTURE STATE TempBudg Components New Component Locations Budgeting for Revenue and Expense Intrafund Resource Transfers within same fund by DeptID, CF1 Interfund Resource Transfers between 2 funds Carryforward July 1 CalPlan BFS Actuals Ledger

12. TempBudg TransformationFuture State Equivalents in CalPlan and BFS Actuals Ledger CURRENT STATE FUTURE STATE TempBudg Components New Component Locations Budgeting for Revenue and Expense Budgeting for Revenue and Expense Intrafund Resource Transfers within same fund by DeptID, CF1 PLAN for Intrafund Resource Transfers NEW! Intrafund Resource Transfers within same fund by DeptID, CF1 New Account Series 7xxxx NEW! Interfund Resource Transfers between 2 funds PLAN for Interfund Resource Transfers Interfund Resource Transfers between 2 funds Fund Balance Accts 3xxxx at Dept chartstring level Carryforward July 1 PLAN for Carryforward July 1 NEW! Carryforward July 1 Fund Balance Acct 30000 CalPlan BFS Actuals Ledger

13. How Will CalPlanning Help? FUTURE STATE • CalPlanning will allow us to have a consolidated plan for all four aspects of our financial information: • Plan for External Revenues • Plan for Internal Intrafund Resource (within a fund) Transfers • Between the center and the divisions • Between divisions • Between departments within a division • Planned Expenditures • Plan for interfund (between different funds) transfers that finance plant or make an investment • We will be able to establish multiple versions of our plans (initial, working, in-year forecasts) that we will be able to compare with prior year plans and actual results Budgeting for Revenue and Expense PLAN for Intrafund Resource Transfers NEW! NEW! PLAN for Interfund Resource Transfers PLAN for Carryforward July 1 NEW! CalPlan

14. Give Me a Sign! BFS General Ledger Perm/TempBudg & Actuals CalPlanning

15. BAIRS Reporting will be different from…

16. …CalPlanning Reporting

17. A few more definitions… • Forecast – A prediction of anticipated results for a reporting period (i.e., annual fiscal year), based on period-to-date results. • Encumbrance is a way of showing that some portion of an approved spending limit has a “formal” commitment associated with it • “soft liens” • approved purchase orders The encumbrance is meant to prevent further spending or assignment of additional commitments that would lead to a deficit Encumbrance is not a forecast; though it can indicate a planned expenditure that might inform a forecast.

18. CalPlanning Chart of Accounts - Account • CalPlanning Account Hierarchy allows for strategic budgeting, and aligns with the Statement of Revenues, Expenses, and Changes in Net Assets (SRECNA) • Room and Board: Moved under Auxiliary • Other Employee Comp: Moved under Benefits • Financial Aid or Scholarships and Fellowships: Moved from Comp to Non-Comp • New parents under Staff Salaries: Career, Contract, Casual • Summary values were included, as well as some level-0 accounts that may be necessary for budgeting at individual level • Transfer accounts have been added to the hierarchy • Statistical accounts have been created for calculations

19. CalPlanning Chart of Accounts - Fund • The CalPlan Fund Hierarchy includes categories based on fund group • The goal of analysis was to allow units to plan to specific funds that represent at least 5% of their overall ‘Current Funds’ financial activity within a fiscal year • Planning summary values have been included in the hierarchy to allow for budgeting where specific COA values were not included • All of the BFS funds have a home in this hierarchy in CalRptg

20. CalPlanning Chart of Accounts - Department • The CalPlan Entity Hierarchy has been adjusted to align the meaning of the various levels for reporting • The Outreach Teams will be working on • For the Phase 2 Go-Live, the top three levels of the Dept ID hierarchy were modified in the CalPlan Hierarchy

21. CalPlanning Chart of Accounts – Program Code Program code will just not be used in Planning, it isn’t going away…it will still be in actuals. • As of July 1, 2012, the program code chartfield will not be required for budgeting current, non-sponsored funds (Contracts and Grants) • The program code will continue to be used on sponsored budgets in the temporary budget ledger and on all expense transactions in the actuals ledger • If you have some unique uses of the program code in (segregating certain central funding, etc.), please notify your CalPlanning Outreach contact. • The team has developed a number of suggested standards that may help with the transition

22. CalPlanning Chart of Accounts – Chartfield 1 • The CalPlan set of chartfield 1 has been scaled for planning • A “Shared Chartfield 1” parent was created for cross campus activities (Faculty Startup, Faculty Retention, Commencement, etc.) • A number of project-like Chartfield 2 values have been migrated to Chartfield 1 to allow for planning . . .

23. Getting to the Bottom Line in the Operating Budget… Beginning Balance + • Beginning Balances from 2011-12 Forecast • Revenues are external income (e.g., Gifts, Grants, Student Fees, Sales and Services) • Transfers are flows of money within the University • Expenses are familiar to all of us. If a check gets cut from the Regents to an outside party (and employee or supplier) it’s generally an expense. • Change in Fund Balances in-year flows to/from plant and endowment/investments. Does not impact net operating results. • Ending Balances in the Operating Budget are the sum of all the activity above. This is the expected balance on 6/30/13. = Ending Balance

24. Statement of Revenues, Expenses, and Change in Net Assets (SRECNA)

25. Phased Process of Budgeting Transformation We know the Operating Budget will not be perfect on day 1 (we imagine there will be a larger variance between the budget and actuals), we will use this next year to understand the numbers and refine the budget so it is more in line with our strategy and actuals Budget Predictability Range Positive Variance Actual Financial Performance Negative Variance 2013-14 2015-16 2014-15 2012-13 Time Operating Budget Position Info, Strategic Allocation, Multi-Year Planning, etc.

26. Agenda

27. Planning for Revenue and Expenses

28. SRECNA - Revenue and Expenses

29. CalPlan – Revenue and Expenses

30. Planning for Revenue and Expenses - Concept • Plan all revenues and expenses • Some planning done at summary level but all are included • Different account roll-ups for better summary reporting (same underlying accounts) • Some summary-level accounts • Some funds planned at “bucket” level (more later) • Plan for revenues you expect, not just what you have in hand (e.g., gifts) • Plans are just plans • Uses positives and negatives not debits and credits • Revenues: Reversed signage from BFS actuals • Expense: Same signage as BFS actuals

31. Agenda

32. Planning for Resource Transfers

33. SRECNA – Operating Transfers

34. Planning for Transfers Four Planning Areas: • Campus Support • From Chancellor/EVCP (71xxx) • Viewable, locked for editing • Campus-wide Distributions • Plan funds expected from HR, summer session, COR awards, etc. here (731xx) • The few “campuswide distributors” will plan outgoing funds here • To/From Dean/AVC Office • Internal transfers from Dean/AVC to subsidiary units (741xx) • Not required for May 18th budget submission • General Transfers • Plan inter-divisional transfers (732xx) and inter-campus transfers (72xxx) here For the FY12-13 Budget Submission, you only need to plan for material resource transfers into and out of your division (items #2 and #4) for May 18th!

35. Visualizing The Intrafund Transfer Account Hierarchy Not Required for May 18th Submission! CBO Plans Division Plans Division Plans

36. FY12-13 Operating Transfers: Journal Example • In Actuals Ledger • Same account (73310 – Summer Session/UNEX Rev Share) • Same fund (20095) • Different DeptIDs • FROM: 25650 (debit) • TO: 11970 (credit) • No program code • Chartfield 1 and/or chartfuield 2 as needed

37. Transfers Concepts • Intra-fund resource transfer • NOT cost transfer nor revenue, fund balance or inter-fund transfers • Uses new account series, 7xxxx • New accounts and hierarchy make better reporting of transfer activity • Replaces much of activity in 58000 series • Accounts reflect flow of activity, do not store balances • Looks like revenue, you do not need to “move” or rebudget to an expense account • Planning for transfers is not the same as the actual BFS journal • Uses positive/negative not DR/CR • Does not require both “to” and “from” • Sometimes, you will plan both sides, other times you cannot (e.g., transferring out of your division) and it’s ok

38. Transfers Concepts - Continued • Seeding • System will seed some initial values including the download of the permbudg (more later) • Additional seeding by the budget office will input estimates you should expect to receive in the “Campus Support” section • Estimates are just estimates; Good for planning purposes • Benefit of CalPlanning is decoupling of plans from actual transfers, unlike tempbudg • Note that Dean/AVC does similar in its internal divisional transfers • Access is top-down. “Higher” orgs in tree can plan for “lower” orgs • Access in NOT lateral (e.g., cannot plan for another division) • Order of Entry • Campus -> Division -> Departments • Overwriting the seeded values is possible in some instances • Plan accordingly (Overwriting is sometimes okay, develop internal policy)

39. Exercise 1: Transfers

40. Agenda

41. Planning Changes in Fund Balance

42. SRECNA – Changes in Fund Balance & Beginning Fund Balance (prior year carryforward)

43. CalPlan – Beginning Fund Balance • Beginning Fund Balance (aka, Prior Year Carryforward) • Account 30000 in actuals • Actual beginning fund balance by department, chartfield1 and fund, based on same logic in TempBudg 58100 carryfoward • Replaces 58100 in most cases

44. Changes in Fund Balance - Concepts Changes in Fund Balance • Inter-fund transfers occur in the 3xxxx series • Few departments prepare these journals • NOT a fund swap • Examples include: To/From Loan, To/From Plant, To/From Endow FFE

45. Agenda

46. Planning for Contract & Grant Funds

47. SRECNA – Contract & Grant Funds

48. The Two Worlds of Contracts & Grants CalPlan (Summary) Tempbudg (Budget of Record)

49. Contracts & Grants in Planning - Concept • Tempbudg continues as the budget of record for C&G • Also in CalPlanning, but only at a summary level • Easy synthesis of two worlds • “Fiscalized” C&G seeded into CalPlanning so no duplicate data entry in most cases • Reports show all actual revenues, expenses and fund balances • Including C&G • C&G revenue now visible as revenue • Used to need tempbudg to reflect C&G “revenue” • Contracts & Grants Temp Budgets are loaded into CalRptg on a monthly basis, along with actuals, so two types of reporting are possible: • Temp Budget to Actuals for individual awards, or • Operating Budget for planning level fund against individual fund expenses

50. Agenda