Flavors of Money...

Slide 1

• Tell Me About the Flavors of Money…
• Content Credit:
• Erin Poff,
• Matt Swift, VT Budget Office

Slide 2

• Contents:
• Definitions
• Chart of Accounts
• Do I have money for
• ____?
• E&G Funds
• Overhead Funds
• Salaries
• SCHEV Funds
• Various Funds
• Tuition
• VTF Research Funds
• Industrial Affiliate Funds
• VTF Funds

Slide 3

• Chart of Accounts – CAUS Structure
• S02 – College of Architecture & Urban Studies
• M020 – Architecture & Urban Studies
• Orgs
• Funds/account codes
• M021 – School of Visual Arts
• Orgs
• Funds/account codes
• M022 – School of Architecture + Design
• Orgs
• Funds/account codes
• M023 – Myer’s Lawson School of Construction
• Orgs
• Funds/account codes
• M024 – School of Public & International Affairs
• Orgs
• Funds/account codes

Slide 4

Slide 5

• Definitions obtained from the VT Office of Budget & Financial Planning
• Base Budget
• - In an incremental budget environment, there is usually a consistent funding level from year to year for various programs. The base budget is the portion of the budget that is identified to fund ongoing operating costs, rather than short-term projects. While base budgets are dependent on resource availability, as are all budgets, the intent of the base budget is an ongoing allocation
• .
• Budget
• - "A spending plan that balances revenues and expenditures over a fixed time period-usually one year-and that includes, at least by implication, a work plan" (Bland and Rubin, 1997); may also include non-financial resources (e.g., personnel (FTEs) or space
• ).
• Budget Call
• - A letter or announcement requesting detailed information about a program's financial, personnel, and other needs for the coming year. A budget call generally produces detailed descriptions with associated costs and justifications for cost or program changes.
• Operating
• Expense
• - Payments for general expenses, contractual services, printing, communication, travel, data processing, equipment, and other expenses occurring in the regular operations of a
• program.
• Revenue
• - A revenue is any addition to cash or other current assets which does not increase any liability or reserve and does not represent the recovery or reimbursement of an expenditure. Revenues are not available for current expenditure until appropriated or allocated.

Slide 6

• Definitions continued…
• Chart of Accounts
• -
• Presents
• hierarchical structures along several dimensions: fund, organization, program, and account. Each Banner fund is established based on codes that identify the funding source/destination, the organization within the university with control and responsibility for the fund, and a program code to identify how expenditures in that fund are expected to contribute to one of the major programmatic areas. Then for each transaction in the fund, an account number is utilized to describe the revenue or the specific item or service being acquired.
• Education & General (E&G
• ) Program
• - State program code describing "all operations related to the institution's educational objectives. All activities associated with instruction, research, public service, academic support, student services, institutional support, and operations and maintenance of
• plant
• Encumbrance
• - Commitments incurred by a governmental unit where the goods and services have not yet been received. These commitments are expressed by purchase orders, contracts, future salary, etc. It ceases to be an encumbrance when the commitment is paid or otherwise canceled
• .
• Fixed Asset
• - Things owned by the university that have considerable value and are intended to last a long time (e.g., land, buildings, certain furniture, and other equipment
• ).
• Full-time Equivalent (FTE)
• - A method of calculating employment and enrollment to adjust for part-time or part-year participation. For classified personnel, one FTE equals 2,080 hours per year. Part-time and part-year employees are expressed as a proportion of a full FTE based on the number of hours
• worked.
• For GRAs, GTAs, and GAs working 20 hours per week, the FTE equivalent is 0.25.

Slide 7

• Definitions continued…
• Fund
• - In Banner Finance, a fund is a code describing the location of financial transactions. Each fund has attributes that specify its purpose, including its organization, program, and fund source (see example at right). These attributes serve as mechanisms of budgetary control, facilitate financial reporting, and limit access to authorized users.
• Indirect Cost
• - Sponsored programs and other contracted activities, have an associated cost for facilities and administration. The university recovers indirect costs related to overhead from the sponsoring agency or organization. A cost study is conducted periodically to develop the indirect cost rate. The rate charged on most sponsored work is negotiated between the university and a federal oversight agency
• .
• One-time Budget
• - An allocation that is non-recurring; one-time allocations are generally made to cover unexpected expenses or to fund short-term projects. Personnel-related expenses are generally not funded by one-time money
• .
• Overhead
• - Elements of a cost which cannot be determined directly. For sponsored research these costs generally consist of facilities and administration
• .
• Sponsored Programs
• - "Activities of the university that are financed through external funds that support various instructional, research, and public service functions of the institution." These arrangements make the university "a service provider to the client" (CUBA, 2000). Normally, these activities involve basic or applied research activities and have a contracted deliverable.

Slide 8

• Do we have money for _________?
• e.g., equipment, renovations, salaries, travel, student projects, startups
• 1. Who should pay, the department or the faculty? Does the faculty have Various or Overhead?
• 2. Use E&G first (if you have enough to cover your salaries) – you want to use it up by yearend
• 3. What is the purpose of the expenditure? e.g., in the
• School of Architecture
• , is the Architecture
• Fee
• is available and must enhance the quality of the instructional mission -- could be
• salaries, special
• projects, equipment, furniture or renovations
• 4. Overhead and Various have virtually no restrictions
• (
• but avoid salary payments
• )
• 5. SCHEV (ETF) for equipment
• only
• 6. Other pockets of money may exist, controlled either by the department or by faculty:
• Professorship
• or Fellowship operating
• VTF
• Research
• Foundation
• Unrestricted
• Continuing
• Education surplus
• IP
• Royalties
• Institutional
• Allowance
• Admin
• Fee
• 7. The following can ONLY be used for their designated purpose:
• Sponsored
• projects
• Cost-Share
• Local
• Funds
• Service
• Centers
• IFS
• / Tuition Remission

Slide 9

• What are E&G Funds?
• E&G
• funds (also called 208 funds) hold “state” money intended
• for supporting
• the instructional mission of the
• university
• Every
• department has separate E&G fund numbers in place for
• salaries, operating
• , and budget distribution, e.g.,
• 121147
• – Operating
• 121466
• – Salaries
• 124881
• –
• Dept. 0347
• Budget Pool
• 124943
• –
• Dept. 0347
• Salary
• Pool
• Departments
• are free to create additional E&G fund numbers
• for specific
• purposes like Startups, or operating expenses
• in categories they want
• to control separately, e.g.,
• 134601 – Staff
• Salaries
• 117179 – Grad Student Support
• 119356 – Staff Development
• 115008 – CAUS Rent

Slide 10

• E&G Rules
• Budget is allocated from scratch every July,
• and must
• be used by June 30
• (
• Unspent balances can sometimes be carried forward to
• the new
• fiscal year)
• Pays
• salaries of regular (unrestricted) faculty and
• S
• taff
• , plus GTAs
• ~85
• % of money is used for salaries and fringes
• Salary
• budgets are based on Position Allocations
• Remaining
• 15% is spent on basic
• department operating
• costs.

Slide 11

• More on E&G
• “Educational
• and General”
• The
• “State” portion of the budget
• Allocated
• by the General Assembly in the
• biennial Appropriations
• Act
• Negotiated
• in Richmond during ODD years to cover a
• two-year period
• ; e.g., in 2015 they passed the 2016-2017 budget
• 2016-2017
• covers two fiscal years:
• FY2016
• – July 1, 2015 to June 30, 2016
• FY2017
• – July 1, 2016 to June 30, 2017
• E&G
• money comes in two flavors:
• University
• Division (Agency 208)
• Cooperative
• Extension/Agricultural Experiment Station Division
• (
• Agency
• 229
• )

Slide 12

• Where does E&G money come from?
• The
• General Fund
• is tax money collected by the state
• The
• Non-General Fund
• is primarily Tuition and Fees
• Some
• Federal Funds are provided for Agency 229

Slide 13

• What are Overhead funds?
• Overhead
• funds hold money that came from research sponsors
• The
• money is intended for general support of the research endeavor
• Every
• department has a default overhead fund number, e.g.,
• 230653 – Returned
• Overhead
• Departments
• are free to create additional overhead fund numbers
• for specific
• purposes like payroll or credit card
• kick-outs
• , PI overhead
• share, startups
• and other categories they want to control separately, e.g.,
• 232269
• –
• Salary Default
• 231904
• –
• Student Initiative Grants
• 232479
• –
• Graphics Overhead
• 232185
• –
• Green Overhead
• 230886
• –
• Returned Indirect

Slide 14

• What is Overhead?
• OVERHEAD = INDIRECT = F&A (Facilities & Administrative
• )
• Most research grants and contracts budget both DIRECT
• and INDIRECT
• charges to the sponsor
• Why
• ? Because federal regulations restrict what can be
• DIRECTLY charged
• to a research project
• And
• therefore the INDIRECT allows us to collect money from
• a sponsor
• to cover other costs not directly charged
• The
• INDIRECT money collected from the sponsor
• becomes OVERHEAD
• money transferred monthly to your department as
• an automatic
• budget
• transfer
• Unspent balances carry over AUTOMATICALLY at year-end

Slide 15

• Where to charge salaries
• When to use E&G
• Unrestricted
• (allocated) positions, including GTAs
• Summer
• teaching on E&G
• Summer
• for AY Faculty with banked savings
• E&G
• can cover wage help
• Fringes
• are covered automatically
• When to use SPONSORED
• GRAs
• , Post-Docs, Research Associates, and fractions
• of faculty
• if in the project budget; Generally NOT staff.
• Must cover
• fringes.
• When to use OVERHEAD
• The
• last resort.
• Must cover fringes.

Slide 16

• What is SCHEV Money?
• Terminology:
• ETF (Equipment Trust Fund) = HEETF (Higher Education Equipment Trust Fund)
• Also called SCHEV money because SCHEV (State Council for Higher Education in Virginia) administers the program
• HEETF is a statewide bond-financed program started in 1986 to provide a continuous stream of dollars to Virginia universities for EQUIPMENT purchases related to research.
• It is renewed annually, from about $7M in 1999 to $14M in 2016
• The Budget Office oversees the program and distributes the money
• Budgets are in place in December of each year

Slide 17

• What should/can you buy with ETF money?
• Big-ticket
• lab items
• Buy
• a small number of expensive things and there is less to
• keep track
• of
• Buy
• items that will be around a long time
• ETF
• money is often used for faculty startups
• Some
• other considerations:
• You
• can only pay for something with ETF money if it
• is approved
• by the Budget Office and has an ETF item number
• You
• may buy equipment on another fund in the fall
• BEFORE the
• ETF money is released, and then journal the purchase
• to the
• ETF fund
• Avoid
• buying small-dollar items and computers, because
• they MUST
• be kept on active inventory for
• seven
• years

Slide 18

• What is a various fund?
• A
• RESIDUAL is the unspent money left over at the end of a fixed-cost
• sponsored contract
• .
• You
• may request the DIRECT portion of a residual by sending a
• Residual
• Request Form
• to OSP
• The
• residual amount is placed as budget money in a VARIOUS fund,
• which typically
• belongs to an individual faculty
• A
• VARIOUS fund looks like a sponsored fund in Banner, and the balance
• rolls forward
• at yearend, but it is NOT tied to a scope of work or begin and
• end dates
• .
• VARIOUS
• funds are identified in the Banner Data
• Warehouse
• with
• a
• Dept
• -Fund-Category-Code
• of ’03’

Slide 19

• What is a Tuition fund?
• A
• Tuition Remission fund that holds money to
• pay tuition
• for students on Graduate Student Assistantships
• Also
• called IFS money or IFS funds
• $
• 23M in total: 20% General Fund Financial Aid money; 80%
• unfunded waiver
• Tuition
• is “awarded” when a student is placed on payroll (no fund
• is specified
• )
• After
• the semester IFS money has arrived, the administrator goes
• back and
• “funds” the tuition by naming the specific Banner fund (either
• IFS or
• a sponsored fund if a GRA
• )
• Sponsored project money can only be used for tuition in the
• exact proportion
• that the project paid the salary of that student
• .
• Yearend remaining balances do NOT carry forward to the next
• fiscal year.

Slide 20

• What is a VTF Research fund?
• A
• VTF Research Fund is set up by transferring money from the VT Foundation
• These
• funds support professorships and many projects
• They
• look a little like sponsored projects but they are NOT. The money
• comes from
• private donations, which cannot require specific deliverables or reports.
• The
• funds behave much like a Various fund and the money carries forward.
• Why
• move money to a VTF Research fund?
• Make
• the money available to pay salaries
• Use for
• Hokie
• Mart purchases
• Move
• money to where it’s more convenient and visible

Slide 21

• What is an Industrial Affiliate fund?
• These
• programs allow industries to help sustain research and teaching
• outside the
• Sponsored Programs world
• Each
• program is created to support a particular avenue of
• research
• Contributions are subject to a 7% fee (whether VTF or OSP) but no overhead
• is charged.
• “Industrial Affiliates Programs are designed to facilitate the dialogue
• between academia
• and industry and the transfer of new knowledge to the
• general public
• . Supported by membership fees, these programs provide an
• avenue for
• industry to contribute to and sustain research and teaching in
• Virginia Tech
• departments and programs of interest. Members join in the support
• of an
• identified area of research for a stated period of time, with
• each participant
• receiving the same benefits from equivalent membership in
• the program
• . The benefits to be derived from such membership may include
• early access
• to technical information, participation in technical
• meetings, presentations
• , and access to the best and most productive graduate
• students as
• perspective employees.”

Slide 22

• What are Foundation (VTF) funds?
• The
• Virginia Tech Foundation is a related corporation with an endowment
• of almost
• $800M.
• It
• operates as a separate financial entity with its own accounting system
• From
• the department fiscal operation perspective, think of VTF as a
• different bank
• with its own procedures, in which funds intermingle with VT funds only
• in specific
• defined processes
• The
• VTF system does NOT have: payroll;
• Hokie
• Mart; sponsored
• research; budget
• transfers
• Many
• VTF funds are endowment or income funds related to scholarships
• and professorships
• , whose purpose is very focused
• Some
• VTF funds are less restricted and expenditures can be initiated with
• VTF procedures
• –OR– money can be moved to the main VT system
• When
• to spend VTF unrestricted: social events, alcohol, gifts,
• publications, renovations
• , software development