Developing a Business Plan and Annual Budget Request

When developing the annual budget request, key responsibilities of a Budget/Review Officer include:

• Developing the budget based on a business plan for the upcoming fiscal year
• Estimating Restricted Use (RU) revenue collections for the fiscal year
• Budgeting realistically for both resources and expenses by org., fund, and account that will be used to achieve operating goals
  • The State of Kansas requires state agencies to budget appropriately by account for both expenses and revenue. For example, placing all of your OOE budget in a single account that is not reflective of your actual revenue or expense activity isn’t an appropriate practice.
• Review officers must coordinate with their budget officers to give them guidance and expectations regarding the upcoming budget cycle. Colleges and departments often have their own internally established budget development procedures, so if in doubt on the expectations of your college or department, first visit with your leadership and/or business manager.
• Please note that the Budget Office does not budget orgs. or funds on behalf of the Budget/Review Officer, budget development/request responsibilities rest with the budget officer

Budget/Review Officers are responsible for development of the business plan that their annual budget request is founded on. Your business plan may take the form of a written document, a well thought outline, or may not be written down in a formal structure at all. Regardless of what form your business plan takes, there are some fundamental elements that should be included. Once your plan is in place, then you’re ready to develop your annual budget.

Common Elements of a Business Plan
Purpose	The plan should be based on a solid understanding of how the services delivered fit within the university’s strategic plan and overall goals. This may take the form of a mission statement.
Resources	Understanding the level of resources (revenue) available is an essential component of developing both the business plan and later the budget. This should include recurring and one-time revenue collections, as well as cash balances. Only by having realistic estimates of the resources available during the upcoming fiscal year, can realistic goals and objectives be created.
Goals	The plan should define your key goals and be directly related to the purpose of why your services are delivered at the university.
Objectives/Action Items	After developing your goals, the plan should outline your objectives in relation to achieving each goal.  Objectives define the key outcomes desired and should be important, actionable, measurable, and achievable with the resources available. Next, the plan should list the actions, funded by your resources, that will deliver the listed objectives.
Determining Success	How will you know if you’ve been successful? Every plan should include a set of Key Performance Indicators related to the plan’s objectives. These metrics will help the Budget/Review Officer assess the achievements of the plan throughout the fiscal year and consider revisions when appropriate.
Opportunities/Environmental Scan	The plan should reflect on realistic opportunities that haven’t yet been pursued, but if they were, could have significant impact on delivered services. It should also reflect any external/internal concerns that may impact how existing services are delivered. This could include (but not limited to) new legal requirements, changing accreditation standards, or changes in funding practices.

In March of each year, the Budget Office provides each Division or College/Department a GU Base Budget Target.  This table is intended to reconcile the budgetary changes throughout the year in which you may have received additional budget authority, shifted budget authority/positions to another College/Department, or funding for onetime projects.

Wichita State uses incremental budgeting which is a traditional budgeting method whereby the budget is prepared by taking the current period’s budget, with incremental amounts then being added or subtracted for the new budget period as a base.  For example, say a department had budgeted salaries totaled $1,000,000 in the current period.  Next year, employee salaries will increase by 2% and they will hire one new employee, who will receive a base salary of $50,000.  The formula for the new budget period base will be: Current year salary + % of increment on current salary + Salary of new employee = New Period’s Budget.  ($1,000,000 + $20,000 +$50,000 = $1,070,000). The incremental budgeting approach is widely used by educational institutions, governments, and large organizations that allocate funds to departments due to its ease of use, consistency and operational stability, and funding stability.

In the Spring semester of each year, the Wichita State Budget Office distributes to each Division or College/Department, depending on the structure of the Division, a General Use (GU) Base Budget Target.  The GU Base Budget Target is intended to reconcile the budgetary changes throughout the year in which you may have received additional budget authority, shifted budget authority/positions to another College/Department, or funding for one-time projects.   GU funds are derived from two separate funding sources: State General Fund and General Fees.  New GU resources (state funding, tuition rate, student mix, etc.) and new required GU expenses (contractual increases, prior year budgetary shortfalls, strategic investments, etc.) play an important role for determining any increase or decrease to a Colleges/Departments GU Base Budget Target.

Colleges/Departments are required to make sure their total budget entered into the TM1 Budget System (TM1) match the amount on the GU Base Budget Target provided.  A check can be done through the “General Use (GU) Base Budget Targets” link under the Budget Request Input Forms section on the TM1 landing page.  In the instances where a College/Department has multiple units responsible for their individual budgets, they must communicate with each other to ensure their overall target is met.  No Division or College/Department is allowed to go over their budget.  Changes in employee benefit costs do not impact GU Base Budget Targets from one year to the next.  Instead, benefits are budgeted in the Central Fringe Benefits Pool.  This is done to not penalize a department for when an employee changes benefit selection or if they hire new employees who have higher benefit costs than their predecessors.  While benefits are shown on the GU Base Budget Target, they are removed at the end of the calculation.

This table lists the Divisions or College/Departments who receive GU Base Budget
Targets and are required to ensure their budgets are in balance when working in the TM1 Budget
System.

As part of the annual budget development process, the call for General Use Funding Proposals provides an opportunity for colleges/departments within each university division to coordinate with their vice president to request new General Use funding. The proposals may be in support of new projects, or existing operations. The call for submissions is normally released in late December, with submissions due in early February.

Once received by the University Budget Office, proposals are separated into one of two categories based on the following definitions.

• Strategic proposals: Implementation of a new service, operation, or academic program that is not currently in place, or changes that are specifically tied to long-term goals and outcomes within the universities strategic plan.
• General operating proposals: Enhances or requests additional resources in support of a service, operation, or academic program currently in place.

Strategic proposals are reviewed by the university’s Budget Advisory Committee, which then formulates guidance/recommendations to the Provost, VP of Finance & Administration, and President for funding consideration.

General operating proposals are reviewed by the Provost, VP of Finance & Administration, and President for funding consideration.  

When submitting a request, please keep the following steps in mind:

• Prior to submission to the University Budget Office, the proposal must be coordinated with and signed by your Divisional Vice President.
• Any previous proposals being resubmitted must be updated and submitted in the form for the new budget year.
• For proposals involving new positions, make sure to include in the summary an outline of job duties and include performance/outcome measures that demonstrate the need for the position(s).
• Funding to implement proposals will always be limited. Please ensure that only the highest prioritized proposals within your area of the university are submitted for consideration.
• Failure to complete sections or poorly documented justifications may result in the request not being considered.

To submit a General Use Funding Proposal, this link will take you to the form, as well as an example of a hypothetical request.

For most university budgets, the largest and most important expense to plan for is positions and other personnel costs. The method of budgeting for personnel costs is different depending on the type of position and the type of related cost.

• Benefits eligible positions are budgeted by specific position. The budget placed on these positions are then assigned to one of three accounts, depending on the type of position:
  • 1000 – USS Salaries Permanent
  • 1100 – Unclassified Salaries Permanent
  • 1105 – Unclassified Salaries Stipend (compensation related to a specific job duty that is permanent in nature, but the faculty/staff assigned to full fill those duties may change from one fiscal year to the next – for example, a dept. chair often has a stipend related to fulfilling those responsibilities)
• All other personnel costs are budgeted in aggregate by account, and not by position. These costs often fluctuate and would be difficult to accurately estimate if budgeted by position/employee. Examples include:
  • 1110 – Unclassified Salaries – Seasonal and Temporary
  • 1020 – USS Salaries – Overtime
  • 1115 – Unclassified Salaries - Additional Compensation
  • 1150 – Grad Assistants – Direct Instruction
  • 1160 – Unclassified Salaries - Overtime
  • 1200 – Student Salaries Regular

When preparing the personnel budget within the budgeting system, there are some very important considerations to keep in mind:

• You can change the budget on vacant positions at the salary level it is anticipated to be filled at, as long as the budgeted salary is at or above the position minimum. Changes should be in accordance with existing HR policies (if in doubt, contact your HR Business Partner). Vacant positions can be re-assigned to different fund(s) and organization(s) within the budgeting system, but please see the bullet below regarding changes to “home org.” assignments.
• For filled, benefits eligible positions, any changes must be done through the appropriate HR forms (ex. PAR or HR200), which can be accessed on the HR website. Deadlines for form submission as part of the budget process will fluctuate each year, but it is normally around May 20^th. Forms received after that date will not be included in the budget.
  • HR200: Used to change a current employee’s status regarding a funding change (org./fund split adjustment), name change, position reclassification, etc.
  • Position Action Review (PAR): Used for promotions/demotions/transfers, off-cycle pay changes, employee searches, etc.
• To create a new position, contact HR.ServiceCenter@wichita.edu to start the PAR process and have the position added to Banner.
• To change the “home org.” assigned to a position while developing your annual budget request, contact your budget analyst if the intent is for it to be effective the beginning of the upcoming budget/fiscal year. If effective immediately, submit the proper HR form. The home org. represents the organization responsible for managing the position, not necessarily the organization funding the position.
• Fringe benefit costs are calculated automatically within the budgeting system.  You can find the current rates here.

• You can find the current rates here.

OOE, or Other Operating Expenditures, includes all expenditures that are non-personnel related. These primarily include contractual, commodity, and capital outlay expenses, as well as interfund “cash” transfers.

As a state agency, many of our financial practices must follow the standards established by the state. One of these standards is to budget by account. Although a Budget/Review Officer may feel compelled to budget all of their OOE expenses in a single account, like 2990 – other contractual services, this is not an acceptable practice. Instead, the Budget/Review Officer must budget by account in relation to their business plan and the correct accounts that properly reflect how you will use your resources to accomplish your business plan.

As you develop your budget, please keep the following in mind:

• The budgeting system will reflect only the accounts you’ve recently used. But, you can add new accounts within the system. See the “Budget Office Information and Resources" section for additional guidance.
• There is never a reason to budget a negative amount on any revenue or expense accounts.

Just like budgeting for OOE, a Budget/Review Officer must budget for revenue collections by account as well. As part of developing both the business plan and the annual budget request, the Officer must estimate the amount of RU revenue anticipated to be collected for the upcoming budget year and budget it by account. As a state agency, the revenue estimates must be reasonable based on historical collection patterns, and current or anticipated changes in the variables that drive the revenue collections must be taken into account. For example, if a college is proposing a fee increase or a new fee, then the new revenue to be generated from the increase must be included in the budget submission.

As you prepare your budget request please keep the following in mind:

• The budgeting system will reflect only the accounts you’ve recently used. But, you can add new accounts within the system. See the “Training and Reporting Resources” section for additional guidance.
• Budgeted revenue collections must be consistent with the business plan for the next fiscal year based on realistic financial means available to achieve your overarching goals.
• Don’t inflate budgeted revenues to make your RU budget balance. Instead, consider budgeting cash if you have it available, or re-align your expenditure budget to realistic levels.
• Each budget by organization and RU fund must be balanced, meaning that resources (revenue + cash) are exactly equal to expenses.

Your business plan may call to use a portion of a Restricted Use (RU) fund’s existing cash balance in-order to fund one-time expenditures like software, equipment, furniture, or a capital improvement to existing facilities. When budgeting to use your cash balance, it is important to understand levels of recurring revenue collections, as well as the timing during the fiscal year of when expenditures traditionally occur and when revenues are collected (also known as cash flow) to ensure adequate cash is available at any given time, especially when considering one-time purchases.

It is not recommended that a RU fund’s cash balance be used in support of recurring operational expenditures, unless it is part of a carefully developed and deliberate business plan that calls for such action to either address operational anomalies or to act as a financial bridge until known increases in revenue collections occur.

Budgeting to use cash during your annual budget request

If your business plan calls for a draw on existing cash balances to fund one-time expenses or support general operations for a short period of time, you can budget the cash draw on account R70002 – Prior Year Carried Forward.

Budgeting to use cash post budget adoption

Often, this budget authority already exists and does not require any budgetary action to fund a new expense. When the adopted budget is loaded to Banner, the university’s standard practice has historically been to automatically budget the cash balance carried-forward from the previous fiscal year. This allows you to utilize the cash balance for OOE expenses that may not have been included in your adopted budget, without submitting a budget adjustment form. These transactions are posted on the revenue side in account R70002 – Prior Year Carried Forward and on the expense side in OOE account BALFWD – Balance Forward-Budget Only (please note, actual expenses should never be posted to this account).

Cash transfers between RU funds must be balanced, meaning the budgeted transfer-out of one fund exactly matches to the transfer-in from another fund. If you are transferring or receiving RU funds from another college/department, you must coordinate with them to ensure that you are both budgeting for the exact same amount. The Governor’s Budget Office and Legislative Research, who we submit our budget to, expects these to balance without fail.

Common accounts used for fund transfers include:

• Revenue for the fund receiving the transfer: R80236: Transfer From Other Funds
• Expense for the fund transferring the funding: 7340: Intra-Agency Transfer (there are additional accounts used in specific situations, particularly within Research)

• Budget and Review Officers are responsible for the budgets that they are assigned to. The University Budget Office does not complete budget requests on behalf of Budget and Review Officers.
• RU Funds Are No Longer Balanced/No Longer Match the GU Base Budget Target - as positions are filled or other compensation changes occur, these actions do change your total budget request as the budgeting system updates overnight based on personnel changes entered into Banner. If the budget request is finished before the deadline, and the budget has vacant positions that are later filled, it is likely that that RU fund will no longer be balanced (resources no longer equal expenses). For Colleges and Departments with a GU Base Budget Target, recently filled positions may also cause you to no longer match to your GU target.

Even if finished, Budget and Review Officers must use the reports available in the system to ensure they still meet expectations as the final days of the process approach.

• Faculty of Distinction (FOD) Funding – generally speaking, faculty should be GU budgeted, with the FOD position funding re-assignments occurring after the budget is adopted. This is for two key reasons:
  1. creates GU discretionary funding for the college after the FOD position re-assignments are processed post budget adoption,
  2. actual funding allocations from both the State and Foundation can fluctuate significantly from one year to the next and aren’t known until the fiscal year starts.

FOD funding is received from two sources:

• Foundation - often deposited in a fund starting with a “D”. Expenses from these funds must be used in alignment with the donors guidance. If questions, please reach out to the Foundation.
• State of Kansas - a state match that is traditionally a smaller contribution than the Foundation, with the funding levels dependent on state investment returns from the previous fiscal year. These funds are often deposited in a fund starting with a “R” and can be used in support of the faculty member, OOE support, or staff supporting the faculty member. Because the revenue is dependent on investment returns, the funding can have significant fluctuations between fiscal years.
• Workstudy budgets for student employment assistance (fund R40041) have already been entered for you based on the funding distributions developed by the Office of Financial Aid, Financial Operations, and Career Development. The R40041 fund is unique in that it will not balance by org. due to the revenue being deposited in a single org. only.

The university’s budgeting practice for research organizations (orgs that begin with a 7*) is unique from the standards for all other organizations beginning with 10*. The reason for the difference is that research orgs often have grant funding awarded with timelines that are different from our own fiscal year (July 1^st to June 30^th). As a result of these timing differences, the university has found it easier to have the Office of Research and the Division of Industry and Defense to estimate their overall anticipated revenue, OOE expenses, and personnel expenses that are not position specific (ex. overtime, seasonal and temp. assistance, student salaries) for entry into the budget by state fund. Research assigned benefits eligible positions do remain assigned to their 7* org. in the developed budget and any changes to those positions should be pursued through the standard HR processes.

As a result of how research organizations are budgeted, Budget and Review Officers do not need to take any actions within the TM1 budgeting system during the budget development cycle.

The budget is consistent with the business plan for the next fiscal year based on the financial means available.

For RU funding, the bottom of the “Revenue and Expenses” form shows that revenues and expenditures by fund are balanced (unless the exception of intentionally planning to increase your cash balance as previously mentioned or workstudy as referenced below).

• You can also use the “Simple Budget Summary” report (or other reports). Select the appropriate org. (or division/college/department selections if you have access to all orgs within your division/college/department) and then select “Restricted Use (RU)” in the fund section.
• Workstudy budgets for student employment assistance (fund R40041) have already been entered for you based on the funding distributions developed by the Office of Financial Aid, Financial Operations, and Career Development. The R40041 fund is unique in that it will not balance by org. due to the revenue being deposited in a single org. only, while the expenses occur in multiple orgs.

For GU funding, the “General Use (GU) Base Targets” form shows that your “Total Request” is equal to your Base Budget Target (target input). This is relevant only to those who have access to see all orgs within a division/college/department. If you do not have such access, you must coordinate with your leadership to ensure that your budget entry is consistent with their guidance.

The business manager assigned to your college/department will be a key contact, depending on the guidance from your division or college/department leadership. Because colleges and departments have their own budget development procedures and expectations, the business manager is an excellent first source.

To contact your assigned Budget Analyst, please see the section titled “Budget Office Staff and Assignments.”