Policy 7203 — Budget Development Principles & Guidelines | Mount Allison

Policy 7203 — Budget Development Principles & Guidelines

Policy section:
Section 7200-7299 Budgets, Investments and Expenditures
Policy number:
7203
Subject:
Budget Development Principles and Guidelines
Group:
Institutional
Approved By:
Board of Regents
Approved date:
May 15, 2001
Effective date:
July 1, 2001
Revised:
April 12, 2012
November 27, 2009
December 5, 2003
February 7, 2020
Administered by:
Vice-President (Administration)

1 — PREAMBLE

As Chief Executive Officer of the University, the President is responsible for the preparation and development of the annual University Budget. This Budget, which is developed through a process established by the President, shall be forwarded in April to the Finance and Administration Committee of the Board of Regents. Once recommended for approval by the Finance and Administration Committee, the Budget will be forwarded to either the Executive Committee or the Board, or to both, for approval by the date of the May meeting of the Board.

The Budget is composed of the General Operating Budget, the Ancillary Operating Budget, the Endowment Fund Budget, the Special Programs Budget, and the Capital Budget. The main objective of the Budget is to allocate resources in a manner that will enable the University to achieve its strategic goals and objectives.
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2 — GUIDING PRINCIPLES

The Finance and Administration Committee will ensure that the Budget proposed by the President will respond to Board of Regents, government, donor and other applicable guidelines for the generation and expenditure of funds. Such guidelines include, but are not limited to, the following principles:


i. The Budget must respect generational neutrality which is to say that the cost of educating the current generation must not be deferred to future generations.

ii. The Budget must be balanced such that planned expenditures do not exceed expected revenues.

iii. A degree of conservatism must be incorporated in the Budget to reduce the risk of year-end deficits by including in the budget all expected cost increases and additions.

A contingency fund for revenue shortfalls and emergencies within the General Operating Fund will be maintained in the Special Purpose Fund as described in Policy 7202.

In the Ancillary Operating Budget the emergency reserve shall be at least 2% of the ancillary operating expenditure budget, and the provision for revenue shortfall shall be at least equal to 5% of the budget for residence accommodation fees.
    
iv. One time or short term funds must not be used to cover ongoing expenditures.

v. Revenues generated in the Ancillary Operating Fund must not be transferred to the General Operating Fund, and vice versa, except to the extent that the transfers represent internal cost recoveries for services provided. These internal cost recoveries must be reasonable and justifiable.
    
vi. Transfers of spending allocations from endowment funds to operating budgets or to the endowment expendable budget shall, subject to special Board-approved conditions, occur at the rate allowed by Board policy and only for the purposes established by external donor or internal Board of Regents’ restrictions.
    
vii. Unrestricted bequests and endowments are not to be used for operating purposes. All such bequests or endowments shall be fully recapped until such time as the Board approves a restricted use for them.
    
viii. Sufficient provision must be made in each of the General Operating Fund and the Ancillaries Operating Fund budgets for alterations and renovations to the physical plant and grounds. In the case of the General Operating Fund, the alterations and renovations budget for the 2013 fiscal year will be $2,268,000 and will increase each year thereafter by inflation plus an additional $135,000 in 2013 dollars until the budget equals 2% of the replacement value of the facilities maintained by the General Operating Fund. In the case of the Ancillary Operating Fund, the total of the alterations and renovation budget and the budgeted appropriation for capital projects must equal 2% of the replacement value of the facilities maintained by the Ancillaries Operating Fund. An effort should be made each year to supplement these provisions from other sources with a view to ensuring that in total 4% of the replacement value of facilities is spent annually on alterations and renovations.

ix. There must be sufficient provision for the acquisition, repair and replacement of teaching equipment, computers, and other equipment.

x. There should be an appropriate balance maintained among all areas of the University.
 
xi. Accountability for the effective management of the Budget rests with the President, who ensures that proper controls and budget management policies are established. The President has the authority to change budget allocations during the fiscal year in order to accommodate the needs of the University provided that no deficit results from the re-allocations. Any such changes will be communicated to the Finance and Administration Committee through the quarterly financial reports. However, the President must receive prior approval from the Finance and Administration Committee for expenditures in excess of one per cent (1%) of the General Operating Fund expenditure budget which have not been approved in the original budget allocations. The President may not expend any unrestricted funds which have not been approved in the original budget without approval of the Finance and Administration Committee and of the Executive Committee of the Board of Regents.

3 — COMPLIANCE

The Finance and Administration Committee will scrutinize the proposed budget to determine whether it accords with the above guidelines for budget development. If it is determined that the proposed budget is not fully in accordance with such guidelines but that it should be approved as presented, the Finance and Administration Committee will notify the Board of the guidelines that have not been followed.

To aid the Board in its determination of whether to approve the budget as presented, the Audit Committee of the Board shall engage the external auditors to report on specified procedures as agreed upon between the Auditors and the University and approved by the Finance and Administration Committee. The Auditors will conduct the specified procedures once the draft budget is completed in early April and present a report to the Finance and Administration Committee for their meeting in April to approve the budget. Nothing in this policy prevents the Auditors or the Budget Director from bringing forward any finding or concern they may have regarding the development of the University's budget.