The Annual Budget Process provides for the collection, development and review of a wide range of information leading to the establishment of the university Operating Budget. The Annual Budget Process includes the identification of institutional budget priorities; projections of available revenues; the verification of current unit faculty and staff personnel position bases; identification of significant revenue and expenditure issues; and the allocation of resources to be expended. The Annual Budget Process supports strategic decision making regarding existing and prospective resource allocations.
Fixed costs are a collection of expenditures over which the institution has limited direct control such as utility rates, major institutional service contracts, and rates for existing fringe benefits. Expenditures must be approved as a designated university fixed cost in the budget process to be funded through the fixed cost process. Administrators responsible for managing activities associated with such fixed costs have the primary responsibility of projecting these costs for the annual budget period. After review by the Budget Office, Policy, and Budget and any further clarification by the area vice president, fixed cost expenditure increases/decreases will be factored into the institutional revenue and expenditure projections as a priority funding issue. Due to the priority funding of institutional fixed costs, central controls are placed on the expenditure of fixed cost dollars and these dollars are to be used to fund only the fixed cost requested.
Essential expenditures are expenditures necessary to protect the university from significant legal and financial liability; to maintain the safety and security of our students, faculty, and staff; and/or required to comply with new federal and state regulations. Essential expenditure requests are submitted by each Vice President during the annual budget process and reviewed by the Executive Team. Essential expenditures may be funded through reallocation within the Division and/or through the allocation of additional resources. Essential expenditures will be factored into the institutional revenue and expenditure projections as a priority funding issue.
Position Base Review
Each Vice President in collaboration with the Budget Office has budgetary position control responsibility for the staff position base. Primary responsibility for the faculty position base resides in Academic Affairs. During the course of a fiscal year, actions may occur which result in permanent changes to the university faculty and staff position base. All permanent changes to both the faculty and staff position bases require approval by the President.
Faculty Position Base
Academic Affairs maintains an active, approved list of budgeted faculty positions reflecting any permanent changes made during the year. Academic Affairs submits to the Budget Office a reconciled faculty position base annually to be loaded into the university’s budget system.
Staff Position Base
Each vice president is responsible for the review and verification of their base budgeted staff positions. The verification includes all approved position actions affecting the permanent base (through the issuance date). All budgeted fringe benefit expenditures are viewed as a component of the compensation cost of each budgeted position based upon the complement of benefits applicable under current policies. It should be noted that the salary component of any vacant position is budgeted at the target market rate established by the Office of Human Resources unless otherwise requested in writing by the appropriate Vice President.
Fees and Service Charges
The University is authorized to establish non-mandatory fees and service charges. All non-mandatory fees must be approved by the Board of Regents. Mandatory fees, defined as fees that apply to every full-time, undergraduate student, may only be established by the Kentucky Council for Postsecondary Education. The Budget Office is the office of record for matters concerning all non-mandatory fees and service charges.
The Fee and Service Charge Process provides the opportunities for units to propose new fees and service charges, establish rates for existing fees and service charges, and discontinue existing fees and service charges. The Budget Office facilitates the Fee and Service Charge process on an annual basis. Proposed fees are distributed to the Faculty Senate, Staff Congress and the Student Government Association for comment prior to presentation to the Board of Regents. The proposed Fee and Service Charge schedule is then presented to the Board of Regents by the Budget Office for review and approval. Please see the Fee and Service Charge policy for additional information.
Special Revenue Lines
A number of revenue codes have been established that have a relationship to a specific expenditure line in a specific budget unit. These are referred to as special revenue lines. While the budgets for these linked revenue codes and expenditure lines might not be set for the same amounts, they are designed to increase or decrease in tandem. Projections for any material special revenue lines are collected during the Revenue Projections process. Any projected increase or decrease to the revenue and expenditure line item is budgeted in the base in the affected units during the Annual Budget Process.
Auxiliary Enterprises / Revenue Units
Auxiliary Enterprises are non-academic, institutional support or service activities, specifically established to furnish goods or services to students, faculty, or staff primarily for personal use. Fees are directly related to, although not necessarily equal to, the full cost of goods or services provided. Revenue units are units created to diversify the university’s revenue base and contribute revenues towards the university’s education and general expenses. They are primarily established to furnish goods or services to the non-university community. Both auxiliary enterprises and revenue units are managed as self-supporting, stand-alone activities. Each designated unit provides to the Budget Office on an annual basis a Financial Plan summarizing revenues and expenses for the prior fiscal year, forecasts for the current fiscal year and a proposed budget for the upcoming fiscal year. The Financial Plan should include proposed rates for the upcoming fiscal year along with a justification of these rates.
Tuition Setting Process
The Tuition Committee meets on an annual basis to make tuition rate recommendations to the Executive Team. Members of the Tuition Committee provide a cross-organizational perspective on factors that are considered in the tuition setting process. At least one student is appointed to the Tuition Committee annually by the student government president. Vice President’s nominate faculty and staff to the Tuition Committee.
The Executive Team determines proposed tuition rates for the upcoming academic year. These proposed tuition rates are presented to the Student Government Association for comment. Once SGA comments are taken into consideration, a final tuition rate schedule is proposed to the Board of Regents. The Board of Regents approves the final tuition rate schedule that is submitted to the Kentucky Council for Postsecondary Education. The Kentucky Council for Postsecondary Education approved the final tuition rates for the university.
Budget Request / Reallocation Planning
The Annual Budget Process provides for institutional consideration of: proposed reallocation of current base budgets within and/or between units under a major area; proposed reallocation of current base budgets between major areas; proposed new or amended revenue sources; proposed expansion or reduction of existing programs or services; and proposed new initiatives, programs, or services; and proposals for nonrecurring expenditures for the budget year. Any such proposal is expected to demonstrate and document its relationship to the university's strategic direction and priorities.
Permanent internal reallocations within and/or between units under a major area are generally at the discretion of the major area vice president. At the same time, it is essential that consultation occur among major areas prior to implementation of reallocation initiatives when such initiatives have potential impact beyond the major area considering the implementation of such an initiative.
Any proposed reallocation between major areas is anticipated to be jointly identified by the major areas affected. Such proposals will be reviewed by the President relative to institution-wide implications. The President must approve all reallocations between major areas.
Investment pools targeted at specific strategic priorities are typically used to allocate funding for new initiatives. Investment pools may be general in nature, such as Student Success, or more specific, such as academic advising. Although these investments pools may be identified at any time during the budget process, the amount of funding available by investment pool is typically determined once state appropriations are known and tuition rates are established. Once an investment pool has been identified, the most appropriate method for requesting funds from the investment pool will be determined.
Presentation to the Campus Community and Board of Regents
All budget decision making occurs within a broad context of statewide higher education issues and priorities, university strategic directions and priorities, continuing institutional commitments, and constituent concerns. One or more forums are anticipated with the campus community focusing on institutional directions and resource issues impacting the current fiscal year budget. Finally, it is anticipated that the President will present the annual budget recommendation to the Board of Regents for approval at the May or June board meeting.
Operating Pool Alignment Process
The operating pool alignment process provides Budget Managers the opportunity to align expenditure budgets with their budget plan by operating pool commitment item. During this process, Budget Managers may only move funds within an individual unit’s operating pool (moving funds from one funds center to another is not allowed).
Communication of Budget Decisions
The President sends a budget letter listing all budget allocations and reductions approved during the budget process to each Vice President at the end of the university budget process. Each Vice President should review this letter closely. If an approved allocation or reduction approved during budget process does not appear in the letter, please communicate the necessary changes to the Budget Office immediately.