Policies

9.27 Advance Commitment Funds

Purpose

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

Policy
  1. There are two primary purposes for which development of advance commitment funds will be permitted:
    • 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, defered maintenance, investment in new programs and projects, and library materials.
    • 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 7.03 A. (5), the University will fully expend appropriations components of the general university funds before expending non-appropriations components of general university funds.
  3. General university funds unexpended in a given fiscal year may be carried forward by a division or a college 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.
  4. 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% if the general fund operating balance of the given Division.
  5. Advance commitment funds provide 'one-time' funding opportunities only.
  6. Advance commitment control accounts are permitted for each division and college only.
Procedures
  1. Divisions and colleges 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 Vice President for Administration and Financial Services.  Divisions and colleges are responsible also 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. As part of the budget development process, divisions and colleges are responsible to provide a business plan for inclusion in the University's annual budget submission document for any proposed advance commitment funds.
  4. Advance commitment accounts are budgetary control accounts.  In accordance with an approved business plan, these funds must be transferred to General Fund operational accounts to be expended.
  5. As part of the year end closing process, divisions and colleges are responsible to prepare temporary budget adjustments to transfer unexpended/unencumbered balances to their respective advance commitment account.  Each division and college will have a separate control account identified by activity code, 9200, Advance Commitment Funds.  Divisions and colleges are responsible to be complete these adjustments by the end of the third week of July.
  6. At the beginning of each new fiscal year, divisions and colleges 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 and college to distribute 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 with a section for advance commitments.  Each Vice President is responsible to provide for this report information about plans related to advance commitments, and to provide this information by the deadline established by the Vice President for Administration and Financial Services.
  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 to provide for this report information on how advance commitment funds were used in the previous year, and to do so by the deadline established by the Vice President for Administration and Financial Services. 
  3. The Amended Operating Budget is provided annually to the Board of Regents and includes an update based on advance commitment spending plans.  Each Vice President is responsible to provide information for this report, and to do so by the deadline established by the Vice President for Administration and Financial Services. 
Vice President for Administration and Financial Services, approved March 26, 2010 President's Cabinet, approved April 19, 2010