9.27 Advance Commitment Funds

Purpose

The purpose of this policy is to provide parameters under which General Education Funds (GEF) advance commitment funds will be created, approved, accounted for, spent and reported.

Policy Statement

  1. There are two primary purposes for which development of advance commitment funds will be permitted:
    1. To provide resources to fund strategic initiatives, undertake projects, or make purchases that are unaffordable in a single operating budget cycle.
      Examples include recruiting and start-up costs, retiree vacation/sick leave costs, temporary staff hires, equipment/furniture replacement, facility repair/refurbishment, deferred maintenance, investment in new programs and projects, and library materials.
    2. To provide resources that can be used to offset short-term revenue fluctuations or to smooth the adjustment to longer-term negative revenue trends.
      Negative effects of downturns in revenue sources due to declines in enrollment, sponsored project funding, investment income, and appropriation can be managed to preserve or restructure deserving programs and services.
  2. As authorized by Regents policy section 2.2(3.A.i.c.), the University will fully expend appropriations components of the GEF before expending non-appropriations components of the GEF.
Chapter 9: University Services
  1. General university funds unexpended in a given fiscal year may be carried forward by a Division as advance commitments to the following fiscal year, provided a business plan describing a specific need for which the funds will be used has been developed and approved by the Vice President of the given Division.
  2. Advance commitment funds are limited to no more than 1% of the total general fund operating budget of a given Division.  Approval by the President is required if a Division Vice President requests an advance commitment amount in excess of 1% of  the GEF operating balance of the given Division.
  3. Advance commitment funds provide 'one-time' funding opportunities only.
  4. Advance commitment control accounts are created for each Division for reallocation only.

Procedures

  1. Divisions are responsible to develop clear business plans that support the need for the advance commitment funds.  Plans must be developed and submitted in a format and according to a schedule prescribed by the Senior Vice President for Finance and Operations.  Divisions are also responsible for assuring that the plans are executed in a timely manner.  
  2. All advance commitment business plans require approval of the respective Vice President..
  3. Advance commitment accounts are budgetary control accounts.  In accordance with an approved business plan, these funds must be reallocated to GEF operational accounts to be expended.
  4. As part of the year end closing process, the Budget Office will determine the cumulative carry-forward balance for each Division.  A budget entry will be generated in July of the new fiscal year to reflect the allocation of these funds for each Division.  The budgetary control accounts will be identified by activity code, 9200, Advance Commitment Funds. At the beginning of each new fiscal year, Divisions are responsible for revising approved spending plans to indicate specific amounts of funding for each advance commitment.  Corresponding budget adjustments must then be prepared by each Division to allocate the advance commitment funds to the respective operational accounts.  Budget adjustments must clearly describe the purpose of the distribution and should be completed by September 30.

Reporting Requirements

  1. The University Annual Proposed Budget is provided annually to the Board of Regents and includes narrative concerning advance commitments.  Each Vice President is responsible for providing this report information about   their respective advance commitments, and to provide this information by the deadline established by the Senior Vice President for Finance and Operations.
  2. The University Annual Comprehensive Report is provided annually to the Board of Regents and includes reports on previous year activity which includes a section for advance commitments.  Each Vice President is responsible for providing how advance commitment funds were used in the previous year, and to do so by the deadline established by the Senior Vice President for Finance and Operations. 
  3. In years requiring Board of Regents approval of an Amended Operating Budget, the University is required to include an update on advance commitment spending plans.  Each Vice President is responsible for providing this report information, and to do so by the deadline established by the Senior Vice President for Finance and Operations.

Senior Vice President for Finance and Operations, approved October 7, 2016  
President’s Cabinet, approved November 14, 2016
President and Executive Management Team, approved November 21, 2016