I. PURPOSE

The purpose of this policy is to establish guidelines for developing College operating budgets.

II. POLICY

Fort Lewis College budgets are developed as a logical extension of the institution's planning process to support the mission of the College. These policies are to be applied in conjunction with the Board of Trustees for Fort Lewis College budget policies to provide a budgetary framework for operation of Fort Lewis College including the Education and General (E&G) Fund Budget and Auxiliary Budgets.

The budgeting process is predicated on a high level of consultation throughout the institution. All cost center managers (deans, department chairs, and administrative department directors) will be directly involved in the development of their department's budget. Each Vice President will establish and use appropriate processes to assure reasonable consultation in preparation of all budget recommendations.

A. Development of Education and General Fund Budget

1. Revenue Budget

a) The State Appropriations estimate is based on the forecast of state revenues and higher education funding utilizing data available from CCHE. This is prepared in cooperation with the Board of Trustees Budget Committee.

b) The Native American appropriation is based on estimated resident and non-resident Native American enrollment and tuition. The appropriation for any year is to fund the actual Native American tuition waived in the previous year.

c) Tuition income, excluding Native Americans, is based on the estimated resident and non-resident enrollment and tuition.

d) Other revenue is based on estimated interest income, indirect cost recoveries on grants and contracts, donations, and miscellaneous fees.

e) Institutional Roll Forward is based on estimates of Institutional reserves that will be available to carry forward into the next fiscal year.

f) All revenue estimates must also consider TABOR Amendment restraints as determined by the State Legislature.

The revenue projections are prepared by the Vice President for Finance and Administration and the Director of Budgets, and are reviewed and approved by the President's Budget Committee.

2. Expenditure Budget - The expenditure budget consists of the major categories as listed below:

a) Personnel Costs

1. Personnel costs include salary and benefits for all permanent employees, part-time faculty, summer session faculty, sabbaticals, academic medical reserve, summer advising center, assessment program, and writing programs.

2. Salaries for classified employees are determined by the Colorado Personnel System based on classifications of employees.

3. Salaries for faculty and exempt employees are approved by the President in consultation with the President's Budget Committee for the combined group. Individual salaries are determined by the President or Vice Presidents.

4. Filling position vacancies and adding an employee is done at the discretion of the President or Vice Presidents.

5. The Vice President for Finance and Administration and Director of Budgets shall monitor the total budget allocations each year for Personnel costs. The percentage of Personnel costs related to the total budget shall not be so high as to restrict necessary flexibility in developing budgets in future years.

b) Institutional Budgets

1. Institutional budgets shall be developed by the Director of Budgets and approved by the President in consultation with the President's Budget Committee. The Director of Budgets shall maintain adequate documentation to support institutional budget estimates.

2. The institutional general reserve shall be set at two percent of the state appropriation (both General Fund and Native American) and two percent of the estimated tuition reserve.

3. Use of the Institutional General Reserve is determined by the President.

4. The general reserve, which includes the TABOR Amendment tuition reserve requirement, may be used for:

• appropriation rescission
• actual tuition revenue less than estimated tuition revenue
• other unanticipated needs

5. Prior debt service budgets relating to computing (data capital acquisitions) shall be available for future computing/data capital needs.

c) Departmental Budgets

1. The President's Budget Committee shall budget an annual general allocation to the College's five major operating areas (President, Academic Affairs, Finance and Administration, Institutional Advancement and Student Affairs ) for operating expenses.

2. The President and Vice Presidents, in consultation with their department chairs and directors, shall develop departmental operating budgets at their discretion. This provides a high degree of flexibility in matching the funding to the areas of greatest need.

B. Development of Auxiliary Fund Budgets - Auxiliary budgets consist of several operating funds as listed below:

The Director of Budgets shall supply estimated enrollment data to cost center managers whose budgets are based on student fees. This shall be done by mid-February each year.

1. Auxiliary Facility Income Fund - The Vice President for Student Affairs, in consultation with cost center managers and the Director of Budgets will develop the revenue and expenditure budgets for all departments. The departments include Administration, Auxiliary Operation & Maintenance of Plant, Utilities Distribution Systems Repairs/Testing, Cafeteria, Residence Halls and Apartments, Conferences and Summer Programs, Bookstore, Auxiliary Facility Use, Student Leadership Center, CUB Operations, Student Wellness, Parking, Child Development Center, Housing Custodial. The Auxiliary Facility Income Fund is planned to maintain an uncommitted fund balance of $500,000 as a means to absorb the potential negative effects of the instability or unpredictability of future cash flows. However, capital projects or unforeseen events may result in a fund balance below this desired level. In these instances, the fund balance will be restored to the $500,000 level as soon as practicable.

2. Athletics Fund - The President, in consultation with the Director of Athletics, the coaches, and the Director of Budgets, will develop the revenue and expenditure budgets for the Athletics Fund.

3. Recreational Services Fund including Student Life Center Bond Fund - The Vice President for Student Affairs, in consultation with the Director of Recreational Services and the Director of Budgets, will develop the revenue and expenditure budgets for the Recreational Services Fund.

4. Club Sports Fund - The Vice President for Student Affairs, in consultation with students, the Student Life Center Director, and the Director of Budgets will develop the revenue and expenditure budgets for Club Sports.

5. Health Fund - The Vice President for Student Affairs, in consultation with the Manager of the Health Center and the Director of Budgets, will develop the revenue and expenditure budgets for the Health Fund.

6. Associated Student Government - The Student Senate of the Associated Students of Fort Lewis College in consultation with the Director of Auxiliary Services, the Vice President for Student Affairs, and the Director of Budgets, will develop the revenue and expenditure budgets for the Associated Student Government.

7. Extended Studies - The Extended Studies administrator, in consultation with the Vice President for Academic Affairs and the Director of Budgets will develop the revenue and expenditure budgets for the Extended Studies Fund.

8. Revolving Funds - The Cost Center Managers of each revolving fund, in consultation with the Director of Budgets, will develop the revenue and expenditure budgets for each revolving fund.

All auxiliary fund budgets will be reviewed and approved by the President and Vice President for Finance and Administration before their implementation.

C. Budget Revisions

1. Operating budgets will normally be reviewed for revision in the mid-fall and mid-winter trimesters.

2. Revised funding will be determined by the President in consultation with the President's Budget Committee.

D. Budget Calendar

1. Initial Budget Assumptions (Fall trimester)

• Develop revenue projections of all funding sources.
• Determine initial planned uses, or allocation, of additional funds.

2. Operating Budget (February - June)

• Refine revenue projections of all funding sources.
• Determine allocation of funds for Personnel costs, Institutional budgets and Departmental budgets.
• Present to Board of Trustees for approval.

3. Supplemental Allocation (October and February)

• Analyze finances to determine if additional revenues exist for supplemental allocation.
• Determine allocation of supplemental funds in consultation with the President's Budget Committee.

E. Salary Savings

1. Salary savings result from the salary budgeted for any given position in any given year being greater than the actual salary paid during that year for that position. This may be caused by a person resigning their position and the College filling the position with a new person at a lower salary than the person resigning.

2. All salary savings will remain within the major functional unit (i.e., President, Academic Affairs, Finance and Administration, Institutional Advancement, and Student Affairs) for the remainder of the fiscal year. Since classified salaries are determined by the State and budgeted by position at the College, in the case of a vacated classified position, the applicable position will be "reset" to the minimum of the salary range for the appropriate classification in the subsequent fiscal year (or at the appropriate level if the position has been filled in the interim). Since faculty and exempt staff salary levels are at the discretion of the President or Vice President, salary savings for this category of employee will remain in the personnel base budget of the major functional unit.

3. Salary savings may be used within the major unit at the discretion of the major unit manager (President or Vice Presidents). The savings may be used for any funding needs except for the following condition:

• Classified salary savings may not be used to create a new permanent position. The only exception to this rule is in the case of a departmental restructuring that benefits the College as a whole. The restructuring plan must be approved by a group consisting of the President and Vice Presidents.

F. Roll Forward Policy

1. Introduction - The Education and General Fund (E & G) of Fort Lewis College is the institution's state appropriated fund. The primary mission of the E & G fund is the delivery of the instructional program and the support activities necessary to that mission. The revenue generated in this fund is provided by:

a) Fee for Service funds
b) Tuition (including COF stipend)
c) Indirect cost recoveries
d) Miscellaneous other revenues

Revenue collections in the E & G fund are pooled and do not accrue to any individual unit or cost center with the exception of course fees. In accordance with CCHE policy, course fees must go directly to the cost center where the related expenditure will be incurred. Thus, financial management is achieved primarily through the budgeting process. To provide an incentive for major unit managers to make sound financial decisions and to operate within the resources allocated through the budget process, the following budget principles will be followed.

2. First Principle - Unit Allocations - The E & G Fund is partitioned into major and secondary functional units, several of which are combined for State of Colorado and Board of Trustees reporting purposes. The major and secondary units are:

Each major functional unit shall be provided with a base operating budget allocation plus a personnel allocation. The personnel allocation is documented by the approved staffing pattern. Only in rare cases will an adjustment to the base operating allocation be made during the year. Adjustments to the operating budget of a major unit due to changes in revenue, savings or carry forwards special projects, or rescission do not alter the base allocation for the year.

Non-personnel allocations within the major units are the responsibility of the unit manager. These allocations can be altered from year to year or within a year to achieve the objectives of the unit.

3. Second Principle - Year-End Balances - The E & G Fund may not be in a deficit at the end of the year. Thus, major unit managers must ensure that cost centers within their control which overspend, are balanced by others which finish the year with a surplus. The College can, and does, retain funds which are not spent in one fiscal year. These funds are "rolled forward" into the next fiscal year and added to the available revenue in that year.

To provide an incentive for the management of operational resources, the College may allow major and secondary units to retain the operational surplus (deficit) which is accumulated in one year. This surplus (deficit) will be added to (subtracted from) the base in the next fiscal year following Board Approval. This addition (subtraction) does not change the base for subsequent fiscal years. This policy applies only to the operational budgets of the E & G units and does not address institutional budgets or a revenue surplus. The policy will also be modified if a revenue shortfall precludes the possibility of a College "roll forward."

a) Example A: Academic Affairs has an operating base of $750,000 in year 1 and $800,000 in year 2. Year 1 operational expenditures are $720,000. An additional $30,000 is made available for expenditure in year 2, but the base remains at $800,000.

b) Example B: Academic Affairs has an operating base of $750,000 in year 1 and $800,000 in year 2. Year 1 operational expenditures are $770,000. The authorized expenditures for year 2 are reduced by $20,000 to $780,000 (the funds were spent previously), but the base remains at $800,000.

Both of the preceding examples are predicated on the fact that the College was able to roll forward an amount globally which exceeds the sum of the operational roll forwards. If that is not the case, a proration of funds will be made.

4. Third Principle - Financial Responsibility - E & G major unit managers are expected to manage their operational budgets in a manner which will ensure that a deficit does not exist at the end of a fiscal year (June 30). While the Second Principle indicates that deficits will subtract from the next fiscal year's allocation, it should be understood that deficits will not be tolerated at the major functional unit level. All unit managers who end the year with a deficit will be required to prepare a report which explains why the deficit occurred, outlines what concrete action was taken to prevent the deficit, and what action will be taken to prevent the deficit from occurring again. The report will be submitted to the President.

G. Budget Control

1. The E & G fund may not be in a deficit at the end of the year. It is the responsibility of the President and Vice Presidents to end the year without a deficit in their consolidated budgets. Positive net balances may be rolled forward to the next fiscal year. (See Section F of Budget Policies.)

2. Each cost center manager is responsible for managing expenditures within the allocated budget. If there are developments which will negatively impact the ability of the cost center manager to operate within the budget, the Director of Budgets and the appropriate Dean or Administrative Director, and Vice President should be notified. A plan to resolve the problem shall be developed by the cost center manager in conjunction with the Dean (Administrative Unit Director) and appropriate Vice President.

3. Cost center managers, below the Vice Presidential level, are responsible for managing all budget items except permanent personnel costs.

4. The Director of Budgets provides access to financial information for each cost center showing budget allocation, expenditures to date, encumbrances, and revenues for auxiliary funds.

5. The Director of Budgets monitors all budgets on a continuing basis and notifies cost centers and the appropriate administrators of unusual variances. The Director of Budgets also meets with the President on a regular basis to review financial and budget issues.

6. The Controller reviews all expenditures and revenues quarterly for unusual variances from budget.