Important Budget Policies, Guidelines and Best Practices
End of Year Carryforwards and Sweeping of Balances
End of year cost center (account) balances and whether departments can carry over fund balances from the current fiscal year to the next is dependent on the source of funding in each individual cost center or grant project.
Generally, cost centers that are funded from state appropriations and tuition are considered annual budgets and as such, end of year balances are lapsed to original funding source. A few exceptions are made for specific allocations, such as faculty start-up funds and funds for equipment purchases.
The following are examples (not a comprehensive list) of cost centers that may roll over balances to the ensuing year: 1) Indirect Cost Recovery funds, 2) revenue generating departments, 3) gifts/donations (unless specified by donor), 4) sponsored projects (as specified by funding agency), 5) incidental fee balances within allowed parameter following policy. and 6) incentive funds.
Discretionary funds are allocations that can be utilized for non-funded initiatives that support students, faculty, and staff. Summer incentive distributions and special projects cost centers are considered discretionary funds.
To assist with identifying whether departments are allowed to roll over available balances to the ensuing year, Planning &Analysis provides a monthly operating budget overview with specific information on which cost centers carry forward budget. The report includes balances to assist budget coordinator with timely review.
Salary Savings from Vacancies and Salary Reserves
Based on revenue and budget projections for FY 2023, salary savings from vacancies and unused salary reserves will be temporarily swept.
A&P and Classified realized salary savings will be swept each month, starting with October close. Funds for new hires will still be available. Permanent reductions to positions to fund other positions are allowed but cannot be left below minimum. Funds cannot be moved out of wage budgets; they can only be moved within B1200, B1210, and B2100-TA Salaries and from one cost center to another cost center. Wages cannot be used for salary adjustments, scholarships or operating. Wages will not be swept. Staff Reserves will also be swept, but funds will be allocated as needed.
Faculty salary savings will also be swept but only after colleges reallocate funds for part-time faculty, one-year appointments, overloads, and other temporary instruction assignments for the Fall semester. Funds will be allocated for the Spring semester for temporary instruction needs. Overall, Colleges must spend only up to the original budget approved for FY 2023.
Cost Shares and Grant Buyouts
Cost sharing is a portion of a sponsor project's costs paid with university resources. Following UTRGV HOP Policy ADM 07-302, the university maintains separate accounting records on all approved cost sharing. Cost share cost centers are created within the same fund group as the funding source. Budgeting for cost share cost centers must occur in a timely manner to ensure reporting is accurate for both the university and to external project sponsors. It is the responsibility of the project manager, grant accountant, and staff assigned to assist with finances related to each grant to 1) identify appropriate source of funds for the cost share, 2) ensure a separate cost center is setup for cost share commitments, 3) transfer budget into to the cost share cost center in a timely manner, and 4) monitor expenses throughout the year to ensure monthly balances and expense activities are accurate.
A grant buyout refers to the transfer of an existing university expense to a sponsored project as approved by the sponsor and appropriate university personnel, i.e., a grant paying for a portion of a faculty salary. The proper process to transfer costs to and from grants is explained in UTRGV HOP Policy ADM 07-303.
Faculty Start-Up's
Faculty start-up funds are recommended at time of hire and approved by the appropriate dean and the Provost. Start-up funds are provided to new faculty hires, usually tenured and tenure-track, for research and faculty development support. Support can be provided for a single year or for multiple years, as approved by each respective dean. Generally, funds are provided for 1 to 3 years and include requests for research equipment, materials and supplies, faculty development, travel, and graduate assistants. The timeframe to spend down start-up allocations is set by each college. Therefore, cost centers are set up in Designated fund group, series 3100, to ensure end-of-year balances roll forward to ensuing year. It is highly recommended that a cost center is set up for each faculty member that receives a start-up allocation to easily track balances. Each college dean’s office is responsible for reviewing balances.
Faculty start-up allocations are specific to the needs of the faculty to support their research. As such, amounts vary person to person. Funding may be provided by the Dean, Provost’s Office, Division of Research, or external funding, if available. The Provost’s Office provides a template for faculty start-up requests.
New Academic Program Budget Development
Since the creation of UTRGV, as of Fall 2022 a total of 26 new academic programs have been developed and approved, including 8 doctoral. Estimating revenue and program-related expenses for the initial 5 years of the program is an important part of the new academic program submission and approval process. The Texas Higher Education Coordinating Board (THECB) provides templates for submitting new academic programs proposals that include 5-year start-up revenue and expense projection tables. THECB also provides an additional estimation tool spreadsheet to assist institutions with calculating revenue.
Planning & Analysis assists academic departments with the development of new academic program financials early in the development process and is also a member of the New Program Development Team to assist in the review and assessment of viable programs submitted for consideration.
In addition to the tools provided by THECB for new program revenue and expense projections, Planning & Analysis provides a pro forma template that calculates projected revenue and direct and indirect expenses based on estimated enrollment and budget submitted by the requesting academic departments and provides feedback on balancing revenue and expenses. Net operations cost and contribution margin in pro forma are reviewed by the Division of Finance and Business Affairs & the Provost to ensure the program is self-sustaining through its own revenue generation after the initial years of the program. New programs usually begin contributing to formula funding after the second or third year from when enrollment begins. Therefore, a program should generate sufficient revenue through tuition, formula funding, and/or external funding after its second or third year.
Once a program is approved, the 5-year revenue and expense estimates are included in the institution’s long-term financial planning documents and are reviewed during the annual budget cycle by Planning & Analysis, College Budget Coordinators, and appropriate Department Chair or School Director, Dean, and as needed with the Provost, to compare proposed revenue and expenses with actual enrollment and actual budgetary need for the ensuing year. Budgets are then aligned for the following year based actual program needs, considering all budgetary restrictions for the ensuing year.