Agency funds are established for outside activities that support or enhance the mission of the University and where there is mutual benefit in the University acting as the fiscal agent. Agency funds are not considered University monies or charitable contributions to the University. The University has no claim on these funds, but rather acts as a paymaster. Examples of appropriate agency funds include student and faculty organizations sanctioned by the University, workshops, conferences, seminars, symposiums, and etc., hosted by an outside organization whereas the School or University department serves as the facilitator.

Agency funds are assigned Banner organizations (indexes) beginning with 88. Most follow the same rules as local funds as far Allowable and Non-Allowable Expenditures, with the exception of organizations funded with student fees. Student fee organizations (partially or full funded) are considered State funds and follow State rules and regulations. Banner index series 880XXX and 882XXX are reserved for student and faculty organizations. Agency funds should be used for legitimate organizations and not to accumulate funds (i.e., coffee fund). This index series is also used for workshops, conferences, seminars, symposiums, etc., hosted by an outside organization whereas the School of University department serves as the facilitator. Registration fees and related expenditures are recorded in the index. After all expenses are settled, any remaining balances are returned to the outside organization.

Banner Index series 881XXXX is reserved for use by the School of Medicine for Clinical Operations and Services Agreements (COSA) between the Hospitals and MCV Physicians. These services include medical administration, indigent care, supervision of graduate medical education, clinical operations, joint operations and special initiatives.

Agency fund organizations are are supported by cash deposits or transfers, the budget balance available in the Banner system equals the actual cash balance. Once the balance is spent, no further funds are available unless other deposits are made. Any remaining cash balances at fiscal year end will roll forward in Banner as adopted and adjusted budget. It is the responsibility of the department head, fiscal administrator and/or responsible person to ensure that adequate funds are available for expenditures in individual agency fund organizations prior to executing any type of expenditure transaction. Please see: Deficit Monitoring Policy. Agency fund deficits may not be offset with expenditure transfers to state or local (University) funds.

Auxiliary Enterprise Programs provide services to students, faculty, and staff. Although the spending authority is established through the appropriation process, auxiliary enterprise units are self supporting. Revenues are derived from fees for services and from students. The fees charged for services are related, but not necessarily equal, to the cost of the services provided. In many cases, auxiliary units receive revenue from the University Fee.

The operating budgets for Auxiliary Enterprises are developed by the responsible line managers and are recommended by the area's Vice Present to the Executive Budget Committee and President's Council. The expenditure budgets reflect the projected direct operating costs as well as a share of the general and administrative expenses provided by Educational and General Programs. The Commonwealth has established guidelines requiring units to set aside an amount from current year operations as a reserve to be used to fund revenue shortfalls and special needs (primarily equipment replacement), facility repairs and renovations. The Auxiliary Enterprise budgets are incorporated into the University's Consolidated Biennial Budget Plan.

Budget administration policies for Auxiliary Enterprise Programs address the annual operating budget and the use of fund balances for both State and University Auxiliary Funds. While Auxiliary Enterprise Programs are essentially run as businesses and expenditures must remain within revenues and accumulated fund balances, the budget is important as it represents authorization by the Board of Visitors and University management as to the scope and size of the Auxiliary operations. In addition, the State exercises control over the revenue/expenditure level and FTE associated with these programs. Auxiliary Enterprise managers should ensure that the permanent budget represents the base budget of on-going commitments and the current budget represents the projected operating plan for the fiscal year.

Initial permanent and current operating budgets are established based on the Consolidated Budget Plan approved by the Board of Visitors.

Please see: Definitions of Permanent, Current and Adjusted Budget

During a fiscal year, changes may be made to individual enterprise organizations subject to the following policies and procedures. Budget and Resource Analysis will provide staff support and serve in a coordinative role in the preparation of budget reallocations. All budget reallocations will be reviewed for compliance with State and University policies, procedures and restrictions.

• Budget Reallocations within a given Auxiliary Enterprise must be reviewed and recommended by the appropriate line manager and approved by the senior executive officer for the area. Senior executive officers may delegate their approval authority to a dean/director.
• Increases or decreases in excess of 20 percent of an organization's total budget or $250,000, whichever is smaller, require the approval of the Vice President who may delegate this approval authority. Reallocations of $500,000 or more which change program direction require the joint recommendation of the Vice Presidents. Departments should not split budget reallocations to circumvent the approval requirements.
• Permanent budget may not be reallocated to/from instructional and administrative/professional faculty or classified positions without the approval of the appropriate senior executive officer. The budget for a non established faculty or classified position may be reallocated to wages.
• Budget may not be reallocated from fixed cost budgets to other areas of expense without an accompanying impact statement addressing future year funding requirements. This impact statement must be approved by the appropriate senior executive officer. This authority cannot be delegated.
• Any increases or decreases requested for budget revenues must identify the matching budgeted operating expenses being increased or decreased. Budget & Resource Analysis may request the approval of the appropriate senior executive officer should achievement of increased revenues be considered doubtful.

For Auxiliary Enterprise organizations, deficits occur when expenditures exceed current revenue budget. Departments must resolve the deficit as soon as possible. As with E&G accounts, resolution includes initiating the appropriate paperwork. If the deficit is caused by a temporary timing difference, the Auxiliary Enterprise manager would document this information for Budget & Resource Analysis and indicate when the difference will be resolved or if the deficit is to be resolved by the use of fund balances.

In order to fill a vacant position (faculty or classified), sufficient permanent and current budget must be allocated to support the salary and fringe benefits to the selected candidate. Employment offers cannot be made until full funding is identified.

• In order to process part-time or wage appointments, sufficient current budget must be allocated to the support projected annual costs for the fiscal year. Departments are required to identify the annualized cost of each hourly wage or part-time appointment in the comments section of the PAF and process a budget reallocation if sufficient current budget is not available in the organization/index..
• Auxiliary Enterprise units are expected to generate and retain fund balances. The State Council of Higher Education for Virginia (SCHEV) supports the accumulation of fund balances for emergencies, normal maintenance and renovation of facilities, and operating revenues to alleviate fluctuations in cash flow during the fiscal year. SCHEV has established a range for the amount of fund balance. If institutions stay within the range and fully recover into E&G the indirect costs associated with Auxiliary Enterprise operations, the State will return interest earnings on State cash balances to Auxiliary Enterprises to be used to limit charges to users. Internally, interest earnings are returned to the appropriate Vice President who has responsibility for allocating these funds consistent with State intent.

In general, fund balances (with the exception of restricted funds) are University monies to be administered by the President upon the recommendation of the appropriate Vice President. Because General Funds cannot be used to defray the costs of repairs and renovations of Auxiliary Enterprise facilities or major equipment acquisitions, the University recognizes the need for Auxiliary Enterprises to generate and retain fund balances for these purposes. Priority for use will be given to those units generating the funds but this does not ensure that these units have an exclusive right to the funds.

The allocation and use of fund balances may have a significant impact on the University's cash and allotment balances. A plan is to be developed on a biennial basis (and updated in the second year) identifying anticipated fund balances and any planned uses of these balances. This plan is incorporated into the Consolidated Budget Plan. To use fund balances to meet a current year's operating deficit, the plan must address the impact on future year's budgets. Budget & Resource Analysis will confer with the University Controller's Office on State allotment restrictions or cash flow implications and advise the senior executive officer. Any amendments to this plan of $500,000 or more require the approval of the President upon the recommendation of the Vice President.

Budget Administration includes the development, implementation, review, control and maintenance of the University's operating budget. It represents those activities necessary to ensure the efficient and effective use of VCU's financial resources. Budget administration relates to the projection and allocation of revenues as well as expenditures. While emphasis is placed on the annual operating budget, recognition also is given to the potential impact on revenues and expenditures of future budgets.

These procedures are a function of the budget process wherein the Board of Visitors approves a Budget Plan and budget allocations are made to schools, departments, and divisions based on that plan. Exceptions to these procedures may be authorized in writing by the President and Vice Presidents.

The University operates on a fiscal year beginning July 1 and ending June 30. The University, as well as all of its schools, departments, and units, is required to maintain a balanced budget.

Individual Vice Presidents have oversight responsibility for monitoring and controlling operating budgets for units under their purview. The Senior Vice President for Finance and Administration has overall responsibility for ensuring that the University as a whole remains within authorized budget levels.

Annually the President of the University certifies to the Board and the Governor that he recognizes he can be held "personally liable for the full amount of [any] such unauthorized deficit and, at the discretion of the Governor, shall be deemed guilty of neglect of official duty and be subject to removal therefore."

Budget and Resource Analysis is responsible for central University monitoring of deficits in Educational & General Programs, Facilities and Administrative Cost Recovery Programs, Auxiliary Enterprise Programs, Local Funds Programs, and Hospital Service Funds Programs. Grants and Contracts Accounting is responsible for central monitoring of deficits for Sponsored Programs.

Executive Level Responsibility

The President is the chief executive budget officer and has delegated the primary responsibility for budget administration to the senior executive officers. Senior executive officers are defined by the following titles: Vice President, Provost, Vice/Associate Provost, Associate/Assistant Vice President, Associate/Assistant Vice Provost and Executive Director. All deans, directors, and department heads share the responsibility for budget administration. While central administrative staff in Finance & Administration provide technical assistance, management of the University's resources is primarily the responsibility of the senior executive officers.

Senior Officers may issue supplemental budget administration policies for areas within their management control. The policies set forth here do not alter those policies but establish the framework by which the University's central administration will administer all budget allocations. When a senior executive officer issues a supplemental budget administration policy statement, a copy of this policy should be approved by the appropriate Vice President and filed with Budget and Resource Analysis.

Administrative Office Responsibility

Budget & Resource Analysis and the University Controller's Office provide staff support for budget activities and prepare budget and financial reports for use throughout the University and for distribution to appropriate State agencies.

These Finance & Administration staff consult with the Office of the Associate Vice President for Finance and Administration, the Senior Vice President for Finance and Administration, the President and the senior executive officers throughout the budget administration process. Budget & Resource Analysis is responsible for assuring timely and accurate development, implementation, and administration of University budget policies, plans and objectives. The office maintains the University position control function and evaluates and reports on financial and staffing performance relative to approved budget allocations. Staff serve as liaison to state agencies on issues regarding the execution and administration of the operating budget appropriations. The staff serve as support to salary adjustment process, year-end close out procedures, and State sponsored programs such as the Eminent Scholars Program.

University Controller's Office is responsible for recording all receipts and disbursements, ensuring compliance with fiscal and accounting polices and procedures and the maintenance of the chart of accounts within the Banner accounting system.

Departmental Budget Responsibility

Department heads and fiscal administrators are responsible for reviewing the budget information in the Banner accounting system for accuracy and ensuring that sufficient permanent and current (adjusted) budget is available to support the activities of the fiscal year. Budget reallocations should be processed as necessary in accordance with budget administration policies. Please see the following programs for more specific information on budget administration:

• Educational & General Programs
• Facilities & Administrative Cost Recoveries (FACR) Programs
• Auxiliary Enterprises Programs
• Local (University Funds) Programs
• Sponsored Programs (Post Award)
• Agency Funds

State Impact on Budget Administration

As a state supported institution, the University is required to comply with the laws, policies, regulations, and procedures of the State, many of which impact the budget administration process. The majority of the University's resources are subject to the budget process resulting from Legislative Appropriations. The Legislative Appropriations include Education and General Programs, Auxiliary Enterprise Programs, Student Financial Aid, Sponsored Programs (which includes Facilities & Administrative Cost Recoveries) and Hospital Programs. State regulations impact most areas of budget administration, including but not limited to: setting the level of spending in a fiscal year, the disposition of cash balances at the end of the fiscal year, and the number of positions which can be filled during the fiscal year.

Various central State agencies administer these regulations. Among those affecting the budget administration process are: Department of Planning and Budget (DPB), the Department of General Services (DGS), the State Council of Higher Education for Virginia (SCHEV), the Department of Accounts (DOA), Department of Treasury, and the Department of Personnel and Training (DPT).

Operating Budget Planning and Development Process

The University's budget planning process is synchronized with that of the Commonwealth of Virginia. Educational and General Programs, Auxiliary Enterprise Programs, Student Financial Aid Programs, and Sponsored Programs (including Facilities & Administrative Cost Recoveries) are appropriated by the General Assembly. The General Assembly exercises significant control with respect to Educational and General Programs.

The University's budget planning process is conducted annually and is submitted by the President to the Board of Visitors for final approval in the Spring.

Permanent Budget

The permanent budget is the permanent or annual funding commitment (base budget) of the University to a specific department or program. The permanent budget is used as the basis for development and implementation of the University's internal budget as well as for projection purposes. Permanent budget is not shown on INB (internet native) Banner forms. In Banner, permanent budget is calculated as (Adopted Budget plus Adjusted Budget) minus Temporary Budget.

Tip: Fiscal staff who wish to view a report on permanent budgets are encouraged to login to MyVCU portal, click on eServices/VCU Self Service. Select Finance>Budget Queries and Retrieve Existing Query named Permanent Budget Calculation (Shared). You will need to change the fiscal year and organization code. Reports that include permanent budget are also available through the VCU Reporting Center.

Current Budget

The current budget is the operating budget for the current fiscal year. It represents the actual allocation of funds to a specific department or program in any given fiscal year. Here's an example of permanent versus current budget:

A position permanently budgeted at $30,000 is vacant on July 1 and subsequently filled on September 1 at a State salary of $30,000. The permanent budget must be set at $30,000, which corresponds to the salary. The current budget includes the commitment for the current fiscal year. Since the position was vacant from July 1 to September 1, there are two months of salary savings or $5,000 of available current budget. This amount may be reallocated, on a current basis only, to another budget pool (budget account). During implementation of the following year's budget, the $30,000 will be used as the base.

In Banner, the field name for current budget is Accounted Budget and is the basis for the Adjusted Budget shown on most Banner Finance forms. The Adjusted Budget is the current budget loaded for the fiscal year plus any department initiated budget reallocations.

Tip: Fiscal staff who wish to view a report on adopted, accounted, temporary and budget adjustments are encouraged to login to MyVCU portal, click on eServices/VCU Self Service. Select Finance>Budget Queries and Retrieve Existing Query named Budget 1 (Shared). You will need to change the fiscal year and add the organization, fiscal period and add V for chart of accounts. Reports that include current budget are also available through the VCU Reporting Center.

Adjusted Budget

An organization's adjusted budget, shown in the Banner financial system, is the total expenditure authority for the fiscal year. Adjusted Budget is a calculation based on the Current Budget and includes department initiated Budget Adjustments and any Temporary Budget transactions.

Tip: Adjusted budget can be found on Banner INB forms FGIBDSR and FGIBDST. Reports that include adjusted budget are also available through the VCU Reporting Center.

Budget Pools

In Banner budgets are established at either a budget pool level (5 digit Banner account) or at the specific account level (6 digit Banner account) depending on the type of account and ledger. Budget pools allow for the aggregation of similar expenditures (for example, all travel expenditure accounts) at a summary level. However, there may be some specific expenditure accounts for which a more detailed level of budgeting is required. In those cases, budget will be set at the specific 6 digit account level.

Educational and General Programs include all of the University's academic programs and support services. Revenues are derived mainly from state appropriations and student tuition and fees. Under the biennial budget process, the University submits funding proposals to the Commonwealth for operating and capital needs. These proposals are based on the University's proposals, the Governor's priorities, and an estimate of the total revenues expected to be available for appropriations. The Governor presents a budget for all state agencies and institutions to the General Assembly. The General Assembly appropriates funds for a two year period.

Commonly referred to as E&G Funds, Educational and General Programs are State funds and may not be used for expenditures such as gifts, alcohol or social memberships. Please see Allowable and Non-Allowable Expenditures for a complete list.

The Educational and General Programs Budget Plan is prepared in accordance with the assumptions used in the appropriation process. However, certain adjustments may be made to reflect University priorities and needs. Initial permanent and current operating budgets are established based on the Consolidated Budget Plan approved by the Board of Visitors.

Please see: Definitions of Permanent, Current and Adjusted Budget

Budget Reallocations

During a fiscal year, changes may be made to individual departmental budgets subject to the following policies and procedures. Budget & Resource Analysis will provide staff support and serve in a coordinative role in the preparation of budget reallocations. All budget reallocations will be reviewed for compliance with state restrictions.

a. All reallocations, both permanent and current, must be reviewed and recommended by the appropriate dean/director and approved by the appropriate senior executive officers. Reallocations of $250,000 or more for an organization or set of similar organizations require the approval of the appropriate Vice President. If a reallocation crosses executive levels, all areas must approve the transaction. Reallocations of $500,000 or more for an organization or similar set of organizations which do not change program direction require the approval of the President upon the recommendation of the Vice President for that area. Reallocations of $500,000 or more which change program direction require the joint recommendation of the Vice Presidents. Departments should not split budget reallocations to circumvent the $250,000 and $500,000 approval requirements.

b. Permanent budget may not be reallocated to/from instructional and administrative/professional faculty or classified positions without the approval of the appropriate senior executive officer. The budget for an non established faculty or classified position may be reallocated to wages. Reallocations requested in accordance with Outside Professional Activity and Employment, Research, and Continuing Education are exempt from this restriction.

c. Budget may not be reallocated from fixed cost budgets to other areas of expenditure without an accompanying impact statement. (Fixed costs are defined as technical service costs, energy costs, rent and insurance costs, family practice payments and library books and periodicals.) This impact statement must address future year funding requirements and be approved by the appropriate senior executive officer. This authority cannot be delegated.

d. Expenditure budgets supported by dedicated revenue accounts may be adjusted based on revised revenue estimates. If the permanent or current budget for an account is increased or decreased by more than 10 percent during the fiscal year, specific justification for the change must be approved by the appropriate senior executive officer for the area. Current expenditure budgets supported by revenues will be adjusted by Budget & Resource Analysis at year end on actual collections.

e. Unless specifically restricted, senior executive officers and deans/directors may delegate their expenditure authority. Delegation of authority must be documented and a copy kept on file in Budget & Resource Analysis for use in review of reallocations.

f. All reallocations from the University Contingency account must be approved by the President upon the joint recommendation of the Vice Presidents.

Budget Deficits

Budgets may not be overspent at the organization (index) level. Individual Vice Presidents have oversight responsibility for monitoring and controlling operating budgets for units under their purview. The Senior Vice President for Finance and Administration has overall responsibility for ensuring that the University as a whole remains within authorized budget levels.

a. Normally, budget will be loaded and budget control will be established at the individual Banner org/index level. An individual Vice President may approve selected exceptions to budgeting at the individual E&G org level as long as (1) there are sufficient funds in the unit / executive level to support expected activity and (2) compensating budget control is in place. Any exception must be documented in writing and approved by the Office of the Vice President, with a copy on file with the University Office of Budget and Resource Analysis.

b. Departmental administrators and fiscal personnel are responsible for reviewing information in Banner Finance for accuracy and ensuring that sufficient revenue budget and expenditure budget is available to support the fiscal year activities. In the event that a Banner org/index goes into a deficit, the deficit must be resolved as soon as possible but no later than the next month-end. Budget and Resource Analysis is responsible for central University monitoring of deficits in E&G Funds and will work directly with the individual Vice Presidents’ offices regarding appropriate follow-up actions. There may be instances where it is necessary for a Banner org/index to go into a deficit. These deficits must be authorized in advance by the Senior Vice President for Finance and Administration.

c. In order to fill a vacant position (faculty or classified), sufficient permanent and current budget must be allocated to support the salary and fringe benefits to the selected candidate. Employment offers cannot be made until full funding is identified.

d. In order to process part-time or wage appointments, sufficient current budget must be allocated to support projected annual costs for the fiscal year. Departments are required to identify the annualized cost of each hourly wage or part-time appointment and process a budget reallocation if sufficient current budget is not available in the organization (org/index).

Transfers Between State and Local Funds

Since E&G Funds are state supported, transactions that debit (charge) E&G Funds and credit University Funds (also called local funds or cash accounts that belong to the University) are not allowed.

In accordance with regulations and principles promulgated by the Federal Office of Management and Budget (OMB), institutions of higher education are permitted to recover from research and training grants and contracts indirect costs associated with supporting Sponsored Programs. The State Appropriation Act controls the general allocation of the Facilities & Administrative Cost Recoveries for Virginia's institutions of higher education. The Act stipulates that thirty percent of the funds recovered shall be transferred to the Educational and General revenues of the institution and seventy percent shall be retained by the institution as an appropriation of funds by the General Assembly for the conduct and enhancement of research and related requirements.

The Biennial Budget Plan for FACR is prepared in accordance with the guidelines approved as part of the Consolidated Biennial Budget Plan. Guidelines are:

The funds are to be used to foster research and research related activities.

The funds are divided into specific allocation pools, including but not limited to:

• Academic Vice Presidents and Schools
• Research Support Services (including Grants-in-Aid)
• Library Support
• Student Aid
• Research Centers
• Computing and Other Technologies
• Capital Outlay Projects
• Special Allocations
• Contingency Funds

The Budget Plan is prepared jointly by the Provost and Vice President for Academic Affairs and the Vice President for Health Sciences in consultation with the Vice President for Research, Budget & Resource Analysis and the University Controller’s Office.

• The allocations to the Academic Vice Presidents and Schools are based on a set percentage of total indirect costs generated by specific schools and departments. The Academic Vice Presidents determine the percentage share or amounts allocated to schools which, in turn, determine specific allocations to departments. The allocations are to be made in such a manner as to encourage research by providing incentives for expanding research in the areas generating the direct Sponsored Programs activity. The allocations to the Academic Vice Presidents and schools are to receive the highest priority for retention should a shortfall in revenues exist.
• All other pool areas are budgeted based on specific program plans and institutional research and research related priorities.
• Depreciation Reserves must be research or research related and consistent with the University’s planning priorities. The reserves can be used to make principal payments of debt incurred to acquire assets that are used directly for organized research activities or to acquire, repair, renovate, or improve buildings or equipment directly used for organized research. If the Building and equipment are not exclusively used for organized research, only the appropriate proportion can be funded with the reserve.

Initial permanent and current operating budgets are established based on the Consolidated Budget Plan approved by the Board of Visitors. The permanent budget serves as the base for the execution of the budget and is used as the base budget for future years. Typically, final approval of the budgets at the State level and internally by the Board of Visitors is received in April or May of each year, with an implementation date of July 1. The new fiscal year budgets are then loaded into the Banner financial system.

Please see: Definitions of Permanent, Current and Adjusted Budget

Facilities & Administrative Cost Recoveries(FACR) are State funds and may not be used for expenditures such as gifts, alcohol or social memberships. Please see Allowable and Non-Allowable Expenditures for a complete list.

During the fiscal year, changes may be made to individual departmental budgets subject to the following policies and procedures. Budget & Resource Analysis will provide staff support and service in a coordinative role in the preparation of budget reallocations. All budget reallocations will be reviewed for compliance with State restrictions.

• All reallocations must be reviewed and recommended by the appropriate dean/director and approved by the appropriate Vice President. If a reallocation crosses executive levels, both areas must approve the transactions. Reallocations of $250,000 or more which change program direction require the joint recommendation of the Vice Presidents. Departments should not split budget allocations to circumvent the $250,000 approval requirement.
• Permanent budget may not be reallocated to/from instruction and administrative/professional faculty or classified positions without the approval of the senior executive officer. The budget for a non established faculty or classified position may be reallocated to wages.
• Budget may not be reallocated from fixed cost budgets to other areas of expenditures without an accompanying impact statement. (Fixed costs are defined as technical service costs, energy costs, rent and insurance costs, family practice payments and library books and periodicals.) This impact statement must address future year funding requirements and be approved by the appropriate senior executive officers. This authority cannot be delegated.

Unless specifically restricted, senior executive officers and deans/directors may delegate their approval authority. Delegation of authority must be documented and kept on file in Budget & Resource Analysis for use in review of allocations.

Reallocations of up to $250,000 from the contingency fund are to be approved by the President or jointly by the Provost and Vice President for Academic Affairs and the Vice President for Health Sciences. Allocations of $250,000 or more must be approved by the President upon the recommendation of the Provost and Vice President for Academic Affairs and the Vice President for Health Sciences.

Budgets must not be overspent at the organizational level. In the event that a Banner org/index goes into a deficit, the deficit must be resolved as soon as possible but no later than the next month-end. For purposes of administering this policy, resolution may include initiating the paperwork necessary to resolve the deficit.

In order to fill a vacant position (faculty or classified), sufficient permanent and current budget must be allocated to support the salary and fringe benefits to the selected candidate. Employment offers cannot be made until full funding is identified.

In order to process part-time or wage appointments, sufficient current budget must be allocated to support projected annual costs for the fiscal year. Departments are required to identify the annualized cost of each hourly wage or part-time appointment in the comments section of the Personnel/Position Action Form (PAF) and process a budget reallocation if sufficient current budget is not available in the account.

Hospital Services represents University revenue and expenditures for services provided by the University to the VCU Health System and related activities. This accounting mechanism was initiated with the conversion of the Medical College of Virginia Hospitals from state agency status to an independent authority. At that time, a new state program, Hospital Services, was assigned to the University for recording this activity. The University has no claim on these funds, but rather acts as a paymaster.

The Hospital Services budget includes the Clinical, Educational, and Research Services Agreement (CERSA) between the Health Sciences schools and VCU Health System. The Hospital Services budget also includes funding from the Operations and Services Agreement (OSA) for a variety of administrative services provided to the VCU Health System by the University. For instance, the VCU Health System leases space from the University and the University contracts with the Health System through the Operating Service Agreement for operation and maintenance services for the leased space and other Health System facilities.

Hospital Services activity is a component of State funds and is recorded in Banner organizations (indexes) beginning with H8. Initial permanent and current operating budgets are established based on the Consolidated Budget Plan approved by the Board of Visitors.

Please see: Definitions of Permanent, Current and Adjusted Budget

Budgets may not be overspent at the organization (index) level. Individual Vice Presidents have oversight responsibility for monitoring and controlling operating budgets for units under their purview. Departmental administrators and fiscal personnel are responsible for reviewing information in Banner Finance for accuracy and ensuring that sufficient budget is available to support the fiscal year activities. In the event that a Banner org/index goes into a deficit, the deficit must be resolved as soon as possible but no later than the next month-end. Budget and Resource Analysis is responsible for central University monitoring of deficits and will work directly with the individual Vice Presidents’ offices regarding appropriate follow-up actions. In order to fill a vacant position (faculty or classified), sufficient permanent and current budget must be allocated to support the salary and fringe benefits for the selected candidate. Employment offers cannot be made until full funding is identified.

As with all State funds, Hospital Services organizations may not be used for expenditures such as gifts, alcohol or social memberships. Please see Allowable and Non-Allowable Expenditures for a complete list.

All filled faculty and staff positions must be assigned a budget amount. The budget amount in Banner Position Budgeting is recorded on the NBAPBUD form, in total on the Salary Budgets tab, and distributed on the Labor Distributions tab. The budget amounts are to be consistent with the permanent salary requirement as shown on the Job Detail tab of the NBAJOBS form, and as distributed on the the Job Labor Distribution tab of NBAJOBS. In Banner Finance, the budget amount required includes both the permanent salary and fringe benefit components of a position.

Current budget in Banner Finance is the amount needed to support payroll expenses for positions, both salary and fringe benefits, during the fiscal year. When departments prepare PAFs (Personnel/Position Action Forms) it is their responsibility to identify the funding source needed to the support the actions. PAFs which increase commitments against controlled funds for a position, make new appointments, start or end a leave of absence, promote an employee, or make a change in an incumbent's salary grade require budget reallocations if the funding assigned to the position is less than that required by the change.

In order to fill a vacant faculty or classified position, sufficient permanent and current budget must to allocated to support the salary and fringe benefits of the selected candidate. Employment offers cannot be made until full funding is identified.

Budget Reallocations

Budget Reallocations are to be executed at the departmental level in Banner Finance for E & G, FACR, and Auxiliary Enterprise funds via the FGAJVCM form, for any position budget actions resulting from departmental or HR-initiated PAF adjustments impacting Banner NBAJOBS. Budget reallocations are executed by the department in Banner Finance using the BPE rule class code (permanent/original budget adjustment) reconciled with NBAJOBS (Payroll) for permanent/ongoing salary requirements.

Budget Reallocations are also processed by the department in Banner Finance using the BTE rule class code (current/temporary budget adjustment) to keep Banner Finance temporary budget (Adjusted Budget in Internet Native Banner, Temporary Budget in Banner eServices) in line with the department's current salary requirements.

Faculty Salary Administration and Classified Merit processes set permanent salary and funding for all permanent full-time and permanent part-time instructional faculty; all administrative and professional faculty; and all classified positions in the University. The standard or adjustable merit salary increase is read from Human Resources files, and will automatically increase budgets in Banner Finance by a like amount.

A change in a position's incumbent may require a department to process a budget reallocation to ensure that sufficient original adjusted (permanent) and temporary (current) budget are available to support the position and its new incumbent. Original adjusted budget must equal the annualized salary of the incumbent, while temporary budget must equal the projected fiscal year expenditures to be processed against the position. It is important to note that since the incumbent may change during the year, the current budget requirement may differ significantly from the permanent budget. Also, is a position is vacant, a department may choose to transfer any salary savings to another area of expenditure.

For under budgeted positions, departments must process budget reallocations so that sufficient budget is available to support the position. For over budgeted positions, departments are encourages to reallocate the budget surplus to other areas of expense. Permanent budget surpluses related to classified positions not reallocated may be lost during budget implementation.

Changes in Funding

Periodically, departments use the Banner PHAREDS form to change the distribution of organizations or amounts used to fund positions. These actions are due to either changes in effort, departmental reorganizations, or the receipt or continuation of a grant award with salary support. For labor distributions that affect controlled funds (E&G, Auxiliary Enterprise and FACR), a budget reallocation must be prepared to adjust the organizations affected.

A leave of absence, with or without pay, represents a special case of salary adjustment. In some cases, an incumbent's salary may be reduced or eliminated for a specific time period (during a leave without pay). These salary reductions release budget for reallocation purposes. Permanent budget in excess of the annualized amount of leave of absence payment may be moved to other positions. Current budget in excess of that needed to the support the payroll expenses of the incumbent may also be reallocated. It is the department's responsibility to ensure budget is available to fund the position when the incumbent returns from leave and is restored to full salary.

Position Budgeting Reports

Two reports are available through ePrint to help departmental administrators with position budgeting. Reports NZRMAN1-Banner Manpower Report and NZRMAN2-Summary Position Budget Comparison provide summary and detailed information on salary budgets versus expenditures for individual Banner organizations.

Sponsored Programs includes research projects, training grants, and similar activities funded by revenue received from governmental and private agencies for specific purposes. Sponsored programs are administered in accordance with the terms of the applicable grant or contract and the agency awarding the funds. Because grant awards often apply to more than one year or expenses may occur over more than one year, revenue and expenditures for sponsored programs in a fiscal year differ significantly from total awards. Sponsored programs should be monitored on a project to date basis.

Grants & Contracts Accounting is responsible for maintaining cash controls for grant and contract organizations in accordance with an authorized expenditure level approved by the sponsor and prepares all budget reallocations. In general, approval of a budget by a sponsoring agency constitutes prior approval for the performance of activities and the expenditure of funds as detailed in the budget. Most agencies will allow the grantee to depart from the original budget provided that:

• the expenditures are necessary to the successful completion of the project;
• the expenditures are allowable under the governing cost principals and grantor policies; and
• prior approval is obtained when required.

Please refer to Post Award Changes and Approvals for further information and instructions for Sponsored Program budget reallocations.

The Office of Sponsored Programs is responsible for assisting in the negotiation of the grant or contract and providing technical guidance to researchers in the fiscal development of proposals. Principal investigators/project directors, subject to the policies of departmental chairmen and deans, are responsible for administering the budget for each sponsored program. The appropriate senior executive officer, the Vice President for Research, Budget & Resource Analysis and the University Controller's Office administer overall University budget policies and procedures relative to Sponsored Programs. Information concerning Sponsored Programs Roles & Responsibilities can be found here.

Budget Allocations for Sponsored Programs are subject to allotment restrictions imposed by the State as well as to the policies of the sponsoring agencies. Budget & Resource Analysis will administer State and University budget policies consistent with appropriate State regulations.

It is the responsibility of the department head, fiscal administrator, principal investigator and/or responsible person to ensure that adequate funds are available for expenditure transactions, including payroll. Should any account be in a deficit position for two consecutive months, no further transactions will be processed against the index until the deficit is eliminated. Exceptions to this policy will be granted only when special arrangements have been made in advance. Such arrangements must include a specific plan for eliminating the deficit on a permanent basis. Please see Post Award Cost Overruns for the entire policy.

All information relevant to the financial administration of sponsored programs can be found in Post Award Financial Administration Policies.

Student Financial Assistance includes scholarships, grants and fellowships awarded to students without requiring work or service, and work-related programs. Amounts for the Federal Work Study Program and Supplemental Education Opportunity Grants are federal matching funds and are included with Sponsored Programs. Related University portions are reported in the various budgets where the expenditures are incurred. Tuition waivers and the undergraduate scholars program are also excluded from Student Financial Assistance.

Funds received in support of Student Financial Assistance are administered in a manner consistent with Federal, State and University policies and procedures. Budget & Resource Analysis, University Controller's Office and University Enrollment Services are responsible for administering the budget for Financial Aid, with the primary policy responsibility being that of the Office of Financial Aid and the Provost.

A biennial budget plan for Financial Assistance is incorporated into the Consolidated Budget Plan. An annual budget plan documenting allocations to specific financial aid programs will be developed by the Office of Financial Aid and recommended by the Provost. The Financial Assistance budget will require the approval of the Vice President who may delegate authority to the senior executive officer. Changes over $500,000 or more require the approval of the President upon the joint recommendation of the vice presidents.

Budget allocations for Financial Aid programs are subject to allotment restrictions imposed by the State an to the financial aid policies of the Federal Department (Education and Health and Human Services), State, and other related agencies or sponsors.

University Funds include both restricted and unrestricted funds for which the sources of revenue are gifts to University departments, investment earnings, endowment income and foundation support, and other transfers. University Funds are deposited and disbursed through local bank accounts and are not included in funds appropriated by the General Assembly. Since University Fund organizations are supported by cash deposits, the budget balance available in the Banner system equals the actual cash balance. Once the balance is spent, no further funds are available unless other deposits are made. Any remaining cash (budget) balances at fiscal year end will roll forward as adopted and adjusted budget.

There are two different types of University Fund organizations. Organizations in the 4XXXXX series are unrestricted in use. No donor restrictions have been placed on the use of the funds. The allowable and unallowable expenditures policy would still apply, however. Due to the nature of these funds, University Fund indexes should be the last source of funds used by a department.

Organizations in the 6XXXXX series are restricted in use based on donor requirements. Department heads and fiscal administrators are responsible for ensuring that expenditures are made in accordance with the restrictions or designated purposes of these funds. Common types of restricted university organizations are scholarships and research fellowships.

It is the responsibility of the department head, fiscal administrator and/or responsible person to ensure that adequate funds are available for expenditures in individual local fund organizations prior to executing any type of expenditure transaction, including payroll disbursements. Banner organization deficits should be addressed immediately and offset with funding from an unrestricted local fund source. Transfers from a State supported source (E&G, FACR, Sponsored, Auxiliary and Hospital) are not allowed.