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[ Guidelines for Budgeting Revenue ] View PDF VersionBudgeting Revenues Be sure to use a minus sign when entering most revenue numbers, as well as Resource Transfers In and Expense Credits. Do not use a minus sign for Transfers Out, which is a contra-revenue item. Budgeting Tuition Budget Tuition in the appropriate object codes spread equally across the fiscal year. This payment timing is in accordance with to the tuition distribution process introduced for Academic Year 2006-2007. For documentation regarding the Tuition Distribution Process, please see http://www.sfs.upenn.edu/TDPennProcess/ or the following overview of the distribution itself http://www.budget.upenn.edu/dlDocs/tuition-financialaid.pdf. Effective FY2007, budget tuition using the new object codes 4105-4018 for Fall and Spring and 4115-4118 for Summer. Budgeting Investment Income The current budget PLANNING parameters reflect the revised Spending Rule that was implemented in FY2007. This rule is based on a hybrid spending formula whereby income is based on prior year income adjusted by an inflation factor (70% weighting) and ending market value, lagged on year, multiplied by a 4.7% spending rate (30% weighting). The actual amount of Investment Income that will be available for spending each fiscal year may vary slightly due to adjustments in your holdings under the Spending Rule. In PLANNING we’ve converted the AIF income object code (4710) into a parent, consisting of three children:
During the start of each budget cycle, the Budget Office will pre-populate your AIF income in 4710P based on updated market values and parameters. Unlike Pillar this object code does not have read-only access so we strongly urge that you do not change these amounts. If you are adding a gift to an endowment, we have created a special account in PLANNING called Gifts to Endowment where you can record new payments on gifts. The Gifts to Endowment account is not a part of the RCM template in the Object dimension and will not appear on any report. The amount in this object code will calculate the incremental AIF income in 4710G for a particular Org-Fund-Program-Cref combination for the current year and subsequent outyears. (Please do not use object 4400 to show your gifts to endowment. The calculation script will not produce the incremental increase based on additions to this object code.) If you are planning to reinvest income or to invest operating surpluses in quasi endowment and/or to liquidate quasi endowment, use object code 1710 to show the planned buy-in or liquidation in the appropriate month and year.
Process for budgeting Investment Income: Please use form "S1. Endowment Additions & Liquidations" in the Revenue and Expense folder to budget your gifts to endowment (you can use form "C. Investment Income" to budget your SIF and TIF Income.). In this form new gifts must be budgeted as a CREDIT () in a particular month to produce additional AIF income. Budget in the amount in the month you expect to buy into the AIF pool; you receive the additional spending rule income in the month following the buy-in. (e.g. A school expects to receive a gift to an endowment in December. Budget the gift in December and the additional AIF income will be present in January.) The appropriate spending rule income will be calculated in 4710G when you launch the business rule "FlowAIF." You can your the same S1 form to budget reinvestments or liquidations. Similar to the Gift to Endowment account, budget any reinvestments or liquidations in Object 1710 in a particular month. For a reinvestment input a DEBIT for the calculation to produce additional income from the reinvestment. For liquidations input a CREDIT to create the reduction in AIF income. Once you hit the Business Rule "FlowAIF"; the amount in this object code will calculate the AIF increase or decrease. Budgeting for Investment Overhead Income Each night, PLANNING will calculate the Investment Overhead for funds that are coded as subject to Overhead and will place the total as a debit in Object 4792. The calculation assumes a 20% overhead rate. Each night, the process sweeps the 4792 as a credit to Object 4793 in the School’s surrogate organization, 000000 Fund, Program 0000 and CREF 0000. Two investment income fund surrogates are available to budget new gifts. Use Fund 479998 for new gifts that are subject to Overhead. Use Fund 479999 for new gifts that are not subject to Overhead. The Investment Overhead Income calculation is as follows. Budgeting Gift Income Use this form to enter the gifts you expect in NACs 0 and 1. For gifts to true endowment, which occur in NAC 2, use the PLANNING assumption "Gifts to Endowment" which appears on form S1, and then run the business rule "FlowAIF". Please budget your planned level of Designated Gift Funds income for the upcoming fiscal year using Object Code 4400, whether or not you plan to spend that projected income in the coming year. Budget in Fund 649999 for Operating Gifts and in Fund 659999 for Capital Gifts unless you are quite certain that gift income will be received in the coming fiscal year in a particular Designated Gift Fund. As with the budgets for the Designated Investment Income Funds, these summary income amounts will be loaded into the Original Budget in the General Ledger. If you budget Designated Gift Fund income at a summary level in your Original Budget, understand that your individual Designated Gift Funds have no authorized spending level in the General Ledger. Prior to authorizing any spending from these unbudgeted funds during the fiscal year, you are required to budget to the detailed ORG/FUND combination level in the Current Operating Budget using the Budget Journal Entry screen. If you wish to maintain the accuracy of your total level of planned spending in the Current Operating Budget, you should reduce the amount budgeted in Fund 649999 each time you submit a detailed ORG/FUND budget in the Current Operating Budget (assuming the ORG/FUND expenditure detail you are adding was included in your original summary expenditure forecast in Fund 649999). Alternatively, you may elect to exclude Fund 649999 from your totals when adding up the Current Operating Budget.
In the Current Operating Budget, Designated Gift Funds are not normally considered budgetable until gifts have actually been received. However, at their discretion, Schools and Centers may allow Designated Gift Fund budgets to be entered in advance of gift receipt in order to document authorized spending levels. However, no expenditure should occur in any Designated Gift Income Fund unless actual gift income is available for expenditure, no matter what has been budgeted. Note that for Capital Gifts, gift income and the gift reclass (Object Code 4812) are booked to NAC 1 because the gift is temporarily restricted until the project is built. PLANNING, as currently configured, is defaults to NAC 0 and is incapable of budgeting NAC 1. In order to include Capital Gift budgets in your Original Budget, you should budget them in PLANNING in NAC 0. If the Gift Fund and the Program value for a capital project are known, please use them. If the gift fund is not yet established, use Fund 659999, which will be sent to the General Ledger. If the Program value for the capital project is not known, use Program 8999. If you can anticipate the timing of gifts with reasonable accuracy, then adjust your budget to project the receipt of gift income in a specific month or months. For example, many Schools and Centers receive most of their gifts in the 2nd and 4th quarters. Each night, PLANNING will automatically calculate a 20% gift overhead on all designated gift funds that are coded to give overhead. The calculation sums the revenue in appropriate object codes, multiplies by 20%, and places the result as a debit to OBJ-4402. OBJ-4402"= -.2 * ("OBJ-1230"+"OBJ-1238"+"OBJ-1780"+"OBJ-1781"+"OBJ-1782"+"OBJ-1838"+"OBJ-1858"+"OBJ-4400"+"OBJ-4401"+"OBJ-4404"+"OBJ-4410"+"OBJ-4811"+ "OBJ-4994"+"OBJ-4995"+"OBJ-4996") Each night, the PLANNING process will load the gift overhead to object 4405 in the Center’s 000000 fund, using the center surrogate org, PROG 0000 and CREF 0000. The Designated Gift Surrogate Fund (649999) is NOT coded for automatic Gift Overhead calculation. Centers may estimate the gift overhead expected on new gifts and manually load the debit to OBJ-4402. This amount will be swept to the zero fund with the calculated overhead income.
Budgeting Grant and Contract Income Please budget the entire amount of grant and contract revenue expected in either fund surrogate 599998 (non-Gov't G&C) or 599999 (Gov't G&C) using Object Code 4600. For Government grants, budget the entire amount of anticipated Indirect Cost Recovery in the School “Surrogate ORG” in Fund 000000, Object Code 5510. The budgeted amount in this fund should equal 81% of the budgeted amount in the Sponsored Program Funds in Object 5282 (Sponsored Grant/Contract Overhead Charge). Likewise, if you use budget non-government grants and contracts, then budget the entire amount of anticipated Indirect Cost Recovery in the School "Surrogate ORG" in Fund 000000, Object Code 5511. The budgeted amount in Object Code 5511 in the General Unrestricted Fund should equal 100% of the budgeted amount in the Sponsored Program Funds in Object Codes 5295, 5296, 5297, and 5298.
If you can anticipate the timing of grant expenditures with reasonable accuracy, you can adjust your budget to project Sponsored Program activity in a specific month or months. In most cases, however, allowing PLANNING to default to dividing any anticipated income by 12 to produce an anticipated monthly ICR income amount should not present any problems for your School or Center or for the University as a whole when budget-to-actual variances are analyzed. Since the amount budgeted in the Current Operating Budget in an individual grant fund is the amount of the entire award, and is likely to include expenditure activity that precedes or follows the current fiscal year, it probably will not be worth the effort for you to attempt to maintain and update the Fund surrogate budget totals during the coming fiscal year. Budgeting Other Income If you anticipate that your School or Center will realize a material amount of Other Income in the coming fiscal year, and you can predict the months in which this income will be realized, and the pattern of receipt is likely to be highly uneven, you should budget this income in the months in which you believe receipt is likely to occur. You should confirm with the Comptroller’s Office that these projected income sources will be recorded at the time and in the manner you anticipate. Budgeting Subvention and Commonwealth Appropriation You should normally budget Subvention and Commonwealth Appropriation as one annual amount and allow PLANNING to divide by 12 to spread these amounts evenly across the fiscal year.
Budgeting Resource Transfers Resource Transfers should be used only in situations in which a School or Center is giving general support to (or receiving general support from) another School or Center (or a different ORG within your own School/Center) and this support is independent of any specific reciprocal receipt of goods or services. When Resource Transfers are budgeted, supporting detail should be supplied in the PLANNING cell text fields, explaining the purpose of each anticipated transfer, the source of the transferred funds, and the anticipated recipient. All general Resource Transfer transactions should have a Resource Transfer In (Object Code 4820) on the credit side of the transaction, and a Resource Transfer Out (Object Code 4825) on the debit side of the transaction. Resource Transfers should be used for all transfers unless another School or Center is reimbursing you for expenses for services rendered on its behalf (in which case you should budget the transaction using Expense Credits). Budgeting University Bank Transfers If you have an operating surplus at year end, you have the option of depositing it in the University Bank Fund (Fund 000013) during the closing process. If you are PLANNING to use unspent balances from your School/Center Bank Fund account, you must use Object Code 4839 (University Bank Transfer) to record the transfer of these funds out of the Bank Fund, and enter an offsetting credit in the same Object Code 4839 in the Fund that will receive the transferred resources. Budgeting Capital Project Funding Transfers If you are PLANNING to provide funding for any capital projects, you must budget these planned funding transfers. To budget these funding flows, debit Object Codes 4821 (Capital Funding Transfer) or 4812 (Capital Gift Reclass) for the amount to be funded, using the appropriate Program in the Capital Programs (8000-9499) range. If a specific Program value has not yet been assigned for the project, use Program 8999 (Capital Project to be Determined). Centers cannot expense a Capital Gift fund that is certified as a Capital Project. Budgeting Funding from Allocated Costs Budget the amount specified in your guarantee letter, and allow PLANNING to divide that amount by 12 for you.
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