Budget

Office of University Budgets and Financial Planning
Western Michigan University
Kalamazoo MI 49001-5221 USA
(269) 387-4275

Approved Budget Rules

training manual section 3

The following rules were approved by the SDSC on Oct. 6, 2020. 

3.1 Revenue

A breakdown of the budget rules is available here.

Allocations will be determined by using a two-year smoothing average. They will be transferred to the colleges based on a schedule that calls for 80% of the revenue to be transferred at census, 10% of the revenue to be transferred at the end of the semester/session and any remaining revenue to be transferred after all adjustments and write-offs have been made at the end of the fiscal year.

State appropriation, tuition and course fees

State appropriation, tuition and course fees are to be allocated to the college RUs as explained below:

  • State appropriation - State appropriation will be allocated by college of primary program based on FTE.
  • Undergraduate tuition - Excluding differential tuition, undergraduate tuition is to be pooled and netted with institutional financial aid; 100% of the revenue will be allocated to the college of instruction based on student credit hours.
  •  Graduate tuition - Graduate tuition will be allocated to college of program of study based on FTE.
  • Differential tuition - Differential tuition will be allocated to the college assessing the tuition.
  • Course fees - Course fees will be allocated directly to unit.

Facilities and administrative cost recoveries

Facilities and administrative cost recoveries will be allocated based on the current central administration-approved guidelines recommended by the Research Policy Council:

  • Colleges: 90% (College central office:70%, department:10%, and primary investigator:10%)
  • Office of Research and Innovation research initiatives:10%

Assigned revenues

Assigned revenues (i.e., course fees, departmental revenues and auxiliaries) are allocated directly to units.

Other designated revenues

Other designated revenue, such as conferences and other one-time events, will be assessed the auxiliary RU’s university participation assessment (“UPA”).

 

3.2 Expenses/assessments

 

Direct operating expenses

Direct operating expenses, including RU-specific services and support expenses (i.e., dean’s office and advising), will be allocated directly to each RU.

Space costs

Costs for space, including maintenance, custodial services, utilities and debt service, will be allocated based on net assignable square footage, unless it is included as a direct expense to a unit.

  • Shared business resource space and unassigned space will be included in the central pool, but it will be shown as separate categories of space.

General fund service unit expenses

General fund SU expenses (indirect expenses allocation) will be allocated to the college RUs and auxiliary units as part of the UPA. 

  • College RUs will be assessed on revenues at a rate to cover 97.5% of general fund SU expenses.
  • Auxiliary units will be assessed on revenues at a rate that will be sufficient to cover 2.5% of general fund SU expenses.

 

3.3 Strategic investment allocation

A strategic investment allocation covers the shortfall between allocated revenues and expenses. Strategic investment allocations may also serve to fund institutional priorities and achieve institutional goals.  They may assist in compensating for disparities in costs of academic programs, serve as incentives to develop sound program plans, and/or provide startup funds for new ventures. Strategic investment allocations can also promote collaboration by encouraging stakeholders to achieve balance between what is best for a unit and what is best for the University as a whole.

Year 1 strategic investment allocations (transition year)

All units (RUs and SUs) are held harmless from impacts of SRM. This includes auxiliary units that may result in a deficit due to space cost allocations that currently are not assessed.

Year 2 and after

The provost will determine the method to be used for allocating strategic investments to the colleges within college pool resources. The president, with input from the cabinet after the provost has consulted with the deans, will decide how to strategically determine the method used to distribute to SUs any revenue growth or revenue decline allocations to the central pool.

Auxiliary units that need strategic investments due to space cost allocations will need to determine a financial plan to cover those costs or submit a request for consideration of ongoing strategic investments. The president and cabinet will determine whether it is a priority for the University to maintain the auxiliary activity and if the strategic investment allocation is to be provided.

 

3.4 University participation assessment, strategic initiatives and renewal/replacement reserves


Responsibility units' university participation assessment

College RUs will be assessed a UPA on total general fund revenue (course fee revenue, including enrollment fees, will be moved to the general fund) and will be sufficient to cover:

  • General fund SU expenses
  • Strategic initiatives
  • Renewal/replacement reserves
  • Auxiliary unit strategic investment allocations

Auxiliary units will be assessed a UPA on revenues at a rate that will be sufficient to cover overhead charges.

Designated fund (fund 23) activities will be assessed a UPA at either the College RU UPA rate or the auxiliary unit UPA rate depending on the type of activity.  Any designated fund activities similar to tuition will be assessed the college RU UPA rate and all other activities will be assessed the auxiliary unit UPA rate.

University strategic initiatives

University strategic initiatives will be held harmless in times of declining revenues (establishing a $3 million target) but will be increased as revenue growth occurs in proportionate share of the central pool increase. Initiatives brought forward for funding consideration can be one-time requests, multi-year commitments (such as program seed money) or permanent funding requests.

Academic affairs strategic initiatives

Academic affairs strategic initiatives, under the discretion of the provost, will be a separate account from the University strategic initiatives and will be established with a UPA increase over 3 to 5 years to build the reserve (with a $3 million target).

Renewal/replacement reserve

 A renewal/replacement reserve will be a separate department (cost center) from strategic initiatives and will be established with a UPA increase over 3 to 5 years to build the reserve (with a $4 million target). This reserve will be held harmless in periods of declining revenues and will be used for both deferred maintenance and technology infrastructure needs.