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Budgeting

This section provides a window into budgeting of the various funds at the University of Toronto. More detailed information can be found in the specific budget processes below:

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Operating Fund


The operating fund includes teaching and administrative activities supported mainly by government operating grants, student fees and sales of goods and services.

Overview of the Development and Implementation of the Operating Fund Budget

The original budget for the operating fund is created through the annual budget process. After an extensive review process, using a combination of bottom-up and top-down flow of information, a detailed budget plan is completed by the Planning and Budget office during the months of February and March for presentation to Governing Council. Once approved by Governing Council, the detailed budget plan is entered into FIS by departments (audited by the Planning and Budget Office) and becomes effective May 1 st of the new fiscal year. More information on the budget development and implementation process as well as information on the monitoring and forecasting process for the operating fund budget can be found in the section Budgeting and the Operating Fund .

The following sections also provide information on managing divisional budgets:

Budget Changes

  • The Decision Process – Provides guidance on how to determine when a change to the budget is appropriate versus the use of a journal entry to effect changes to “available budget”.
  • Divisional Carryforward – Provides information on the University’s practice to carry forward divisional over/under spending in the operating fund budget to the following fiscal year. The policies, procedures, calculation and reporting of carryforwards are covered in the section Divisional Carryforward .

Budget Policies and Guidelines
In addition to the guidelines mentioned above, the following policies govern budgeting in the operating fund:

Additional assistance
If you require more information on the operating budget, specifically completing your annual original budget or changes to the budget, contact your divisional financial officer or the Planning and Budget Office .

Ancillary Operations

Ancillary operations include service ancillaries (residences, food and beverage services, parking, and Hart House) and business ancillaries (Residential Housing and University of Toronto Press).  All ancillary assets, liabilities, net assets, revenues and expenses are recorded in this fund.

Overview of the Ancillary Fund Budget Process

The budget for the service ancillaries is created annually along with the long-range plans. After the consultation process, a detailed budget plan is prepared during the month of December and January.  The budgets for Service Ancillaries at St. George are reviewed by the Service Ancillaries Review Group (SARG) and presented to the University Affairs Board (UAB) for approval in March.  The UTM and UTSC service ancillary budgets are reviewed by FSD and presented to their respective Campus Affairs Committees.  The Campus Affairs Committeee make recommendations to the Campus Councils and the budgets are approved by the Campus Councils subject to the confirmation by the Executive Committee of Governing Councils.  Once the budgets are approved, the detailed budget plans are entered into FIS by ancillary operations (reviewed by the Planning and Budget Office) and becomes effective May 1 st of the new fiscal year. More information on the budget development and implementation process for the ancillary budget can be found in the section below Development and Implementation of the Ancillary Fund Budget.

The budget for the residential housing is first reviewed by the Financial Services Department and the Vice-President, University Operations. The Vice-President, University Operations will present the budget to the Business Board for approval. Once approved by the Business Board, the detailed budgets are processed in FIS similar to service ancillaries.

The University of Toronto Press has its own audit committee and management board which approves their operating budgets annually. This budget is brought to the University Business Board for information purposes only and the budget is not entered into FIS since University of Toronto Press has its own financial system.


Development and Implementation of the Ancillary Fund Budget

  • The service ancillaries’ annual budgets and long-range plans are reviewed by a number of local committees and councils.
  • Membership in these committees and councils include students who play an integral part in the overall consultation process.
  • Following this consultation process, the Financial Services Department reviews the management reports submitted by each ancillary. The Financial Services Department analyzes the reports for completeness, adherence to fiscal policies and financial feasibility. Financial Service Department also assesses the progress made by measuring their performance against the four financial objectives established for ancillaries. Issues requiring further action will be identified by Financial Services Department and addressed by the ancillaries.
  • The budgets for the Service Ancillaries at St. George Campus are then reviewed by the Service Ancillaries Review Group (SARG), which includes three members of the University Affairs Board. The SARG provides advice and formulates recommendations on the operating plans for all service ancillaries.
  • The University Affairs Board approves operating plans, capital budgets and schedule of rates or fees for all service ancillaries on an annual basis.
  • The budgets for the Service Ancillaries at UTM and UTSC are then presented to their respective Campus Affairs Committees.  The Campus Affairs Committee make recommendations to the Campus Councils and the budgets are approved by the Campus Councils subject to the confirmation by the Executive Committee of Governing Councils.

Objectives   

The four financial objectives established for service ancillaries are:

  1. To operate without subsidy from the University’s operating budget;
  2. To provide for all costs of capital renewal including deferred maintenance;
  3. Having achieved the first two objectives, create and maintain an operating reserve (excluding capital requirements) at a minimum of 10% of annual operating expenditures
    (net of cost of goods sold, capital renewal costs and deans and dons’ expenses) as protection against unforeseen events which would have a negative financial impact on the operation; and
  4. Having obtained the first three objectives, service ancillaries could contribute net revenues to the operating budget.

SARG Budget Submission Package
The SARG Budget submission package includes:

  • Management report
  • Statement of Operating Results (prior year actual, current year forecast, budget and forecast for the next four years subsequent to budget)
  • Statement of Operating Results
  • Statement of Reserves
  • Major Maintenance
  • Statement of Capital Expenditures
  • Schedule of Rates
    • Residence
    • Food Services
    • Parking
    • Hart House

Key Dates for 2016-17 Budget Review Process:

October, 2015 Preliminary SARG meeting scheduled with individual Service Ancillaries.
October, 2015 Information package sent to Service Ancillary Operations.
November & December Preliminary SARG meetings.
January 7, 2016 UTM Campus Affairs Committee meeting
January 7, 2016 Ancillaries at St. George campus to submit a soft copy of the budget package to the Financial Services Department for review.
February 4, 2016 UTM Campus Councils meeting
February 8, 2016 UTSC Campus Affairs Committee meeting
February 11, 2016 SARG Meeting
February, 2016 Chief Financial Officer distributes Service Ancillary Report to President and Vice-Presidents (PVP). PVP reviews the ancillary operating plans as tabled by the Chief Financial Officer.
March 1, 2016 UTSC Campus Councils meeting
March 15, 2016 University Affairs Board meeting. The Vice Provost Students brings forward the ancillary operating plans to the University Affairs Board for final approval.


How are the budgets for ancillaries entered into the system (FIS)?
Ancillary “Operating” Budgets – approved operating budgets for each ancillary are entered in the same way as budgets within the operating fund, i.e.

  • staff in the ancillary operation will enter the budgets into the cost centre plan in FIS;
  • the Planning and Budget Department will verify that the original budget is entered into the cost centre plans accurately;
  • the cost plans are loaded automatically into the FM budgets prior to May 1. B6 plans are entered manually by the departments.

Ancillary “Capital” Budgets – approved capital budgets are entered into FIS by the Financial Services Department.


How can ancillaries effect changes to the system budgets?
Operating Budgets

  • The head of an ancillary operation (Director, or otherwise titled) has the authority to transferoperating budgets within an ancillary operating budget, except from specifically allocated budgets which may not be used to augment other budgets.
  • All budget increases, i.e. those offset by additional income and those not offset by additional income, shall be authorized by:
    • the Vice-President, University Operations on the recommendation of the Management Committee / Board, if one exists, or
    • the President and the Vice-President, University Operations in the absence of a Management Committee / Board.
  • Once approval is obtained, the form is forwarded to the Financial Services Department for review, and then to Planning and Budget for processing.
  • Budget transfer/Revision form


Capital Equipment Budgets

  • Unbudgeted major equipment acquisitions are permitted within a fiscal year with the approval of:
  • The Management Committee / Board of the ancillary operation, if one exists, or
  • The joint approval of either the President or the Vice-President and Provost, together with the Vice-President, University Operations for ancillary operations without a management committee/board to the following limits:
    • Replacement of existing equipment $50,000
    • Additional (as opposed to replacement) equipment $25,000

Such acquisitions, the justification, the method of financing and the impact on the operating budget shall be reported for information at the first appropriate meeting of the Business Board.

  • Unbudgeted major equipment acquisitions in excess of the above limits during the fiscal year require approval of the management committee/board, if there is one, and the business board prior to implementation, except in the event of an emergency when delay would adversely affect operations. In such an event, the approvals in the previous section are permitted, with reporting for information to the first appropriate meeting of the Business Board.
  • Changes to the Ancillary Capital Budget Request Form ( coming soon ).

Once approval is obtained, the form is forwarded to the Financial Services Department for review and processing.


Responsibilities for overspending
Ancillary operations are responsible for any overspending. In contrast to the operating fund, ancillary operations do not automatically get their surplus funds loaded into next year’s operating budget (as is the case with the operating fund “carryforwards”). In the case of ancillary operations, their surplus / under-spending is moved into a “reserve” on the balance sheet, and made available for spending through the annual budgeting process.

Who to call with questions on budgets?
If you have any questions regarding the processing budgets for ancillaries, contact Ancillary Accounting in the Financial Services Department.

Capital Fund

The capital fund includes all capital assets – land, buildings, furnishings, computers, etc – except for those of the ancillary operations. Contributions to the University for capital assets other than ancillaries are recorded in this fund (e.g. research grants for capital assets and donations designated for capital assets). When restricted funds are provided for, or spent on, capital assets, they are recorded in the capital fund.

Budgets in the Capital Fund
The approval process for capital projects is governed by the Capital Planning and Capital Projects Policy . Regardless of the amount, once formal approval is received the Planning and Budget Office creates the project budget in FIS. Capital Accounting will prepare journal entries to transfer the divisional contribution to the capital projects.

Project Approvals

All projects requiring short and long term financing:

  • If a project will require financing as part of the funding, the project proposal must be considered by the Business Board.

Project Budget $3 million or less: (Approval Level 1):

  •  Authority to approve projects on the St. George campus, with a value less than $3 million and for all other applications that fall under the responsibility of the CaPS Committee is delegated to the CaPS Committee established by the Vice-President University Operations.
  • Authority to approve projects with a value less than $3 million on the UTM and UTSC campuses is delegated to the UTM Space Planning and Management Committee and the UTSC Campus Design and Development Committee established by the Principal and Vice-President of the respective campus.

Project Budget over $3 million and up to $10 million (Approval level 2):

  • Capital projects over $3 million and up to $10 million will be considered by the Planning and Budget Committee for projects at the St. George campus and by the respective Campus Affairs Committees and Campus Councils for projects at University of Toronto Mississauga, and University of Toronto Scarborough and recommended to the Academic Board for consideration. It is expected that such projects will be placed on the Board’s consent agenda and be confirmed by the Executive Committee of the Governing Council. Execution of such projects is approved by the Business Board.
  • All projects over $3 million and up to $10 million are submitted to the CaPS Executive Committee for review and recommendation to the VP & Provost and the Vice President Operations.

Project Budget over $10 million (Approval level 3):

  •  Proposals for capital projects exceeding $10 million must be considered by the appropriate Boards and Committees of Governing Council on the joint recommendation of the Vice President and Provost and the Vice President, University Operations. The Planning and Budget Committee will consider projects at teh St. George campus and the respective Campus Affairs Committees and Campus Councils will consider projects at University of Toronto Mississauga and University of Toronto Scarborough and recommend them to the Academic Board for consideration.  Normally, they will require approval of the Governing Council. Execution of such projects is approved by the Business Board.
  • All projects over $3 million and up to $10 million are submitted to the CaPS Executive Committee for review and recommendation to the VP & Provost and the Vice President Operations.

Project Budget Increases 

  • For projects requiring Level 3 approval, any budget increase exceeding the lesser of 10% or $3M of the original total project cost, and where funds are available, must be approved by the Business Board.
  • Project budget increases required for projects receiving Level 1 and 2 approval must be approved by the same authority providing the original authorization. In a case where a budget increase pushes the project into the next approval level, and funds are available, the spending increase must be approved by the authority of that higher level.

Changes to project budgets are processed in FIS by the Planning and Budget Office.

Changes in Scope

Monitoring
Project Management manages and oversees all major construction and renovation projects for all three campuses at the University of Toronto. Project managers assist clients in defining the project scope within schedule and budget constraints, and in meeting funding commitments. Procurement practices related to delivering projects strictly adhere to the UofT fair bidding policies executed through competitive processes and are used to ensure best value for the UofT.

Divisions/departments should review scope, revenue, cost, time and quality of their capital project against approved budget during the entire life cycle of a project.

Additional assistance 
If you require more information on the budget for a capital project, contact the Planning and Budget Office. If you require detailed information regarding the progress of a capital project, contact the project manager through the Project Management Office. If you have questions regarding actual costs or revenues posted to a capital project, contact Capital Accounting in the Financial Services Department.

The approval process for capital projects is governed by the Capital Planning and Capital Projects Policy. Projects with a cost of $2 million and greater are approved by Governing Council, while projects between $500,000 and $2 million are approved by the Accommodations and Facilities Directorate (CaPS). Regardless of the amount, once formal approval is received the Planning and Budget Office creates the project budget in FIS. The divisional contribution to capital projects are transferred via budget transfer by the Planning and Budget Office.

Research


Restricted funds include donations (including endowments), research grants and contracts. Each research grant is recorded in its own fund and managed in accordance with the terms and conditions required by the sponsor of the funds.

Research grants for capital assets are recorded in the capital fund; refer to the above section  “Capital Fund” for guidance on budgeting in this fund.

Awarding of Research Grants
The budgeting for research grants begins with the award process, where the approved application for research funding includes a budget proposal. For detailed guidelines on preparing a budget proposal, refer to The Award Process.

When a successful proposal has resulted in a research award, Research Services prepares a Funded Research Digest (FReD), which details the budgets established for the fund expenditures, and summarizes the terms and conditions of the research grant. Research Services establishes funds and budgets in FIS based on the information in the FReD.

More information on the creation and change to research budgets can be found in the section Managing Successful Research Awards .

Additional assistance
If you require more information on research budgets (creating or changing a budget), contact the staff member in Research Grants responsible for the sponsor of the research grant.

Non-Research Grants and Contracts


From time to time a University faculty member will apply for funding which might not fall under the terms of reference of Research Services (i.e. not research or not an international collaborative project), nor is the funding a student award. These awards are referred to as non-research grants and contracts .

Budgeting
The budgeting for non-research grants and contracts begins with the award process, where the application for funding includes a budget proposal. For detailed guidelines on preparing a budget proposal, refer to the section Preparing a Budget Proposal in the section Non-Research Grants and Contracts.

When a successful proposal has resulted in the awarding of a non-research grant or contract, the trust accountant in the Financial Services Department will set up the budget(s) based on the fully signed grant or contract, or the copy of the award notification form with a copy of the application for funding provided by the unit, making these funds available for spending.

Budget changes
Budget changes occur when new funding has been obtained from the sponsor. Budgets will be revised when additional funds have been received or when fully signed documents from sponsor authorizing amendment of the budget have been received.

Responsibility for deficit
The Chair of the department is ultimately responsible for all financial activity authorized by a member of the department’s faculty or staff; therefore, the department is required to absorb a deficit in these funds using other funding sources. A deficit may be caused by overspending or by non payment from a sponsor.

Unspent award funds
Unspent funds are either returned to the sponsor or can be applied towards other uses depending on the terms of the grant or contract. When the agreement is silent on this point, written approval should be obtained prior to applying the unspent funds for other uses.

Additional information
For more information on the above topics, refer to the section Non-Research Grants and Contracts .

For questions or assistance with budgets for Non-Research Grants and Contracts, contact the  Senior Trust Accountant, Financial Services .

Student Awards (established as Restricted Funds)


Student award funds include funds for scholarships, fellowships, bursaries, prizes and loans, and are designated either for undergraduate or graduate students. Many of these funds are endowments which are invested to generate income in perpetuity for the support of student awards. Note that many student awards are made from University operating funds, and only those funded by donations or a restricted grant are established as restricted funds.

Budgets
Budgets (funds available for spending) are set up when expendable donations are received or when investment income from LTCAP or EFIP are distributed annually in April. Occasionally, government, corporate or other grants have been received toward student awards. Funding from these organizations is not eligible for a donation receipt, and therefore are not processed as donations. In these cases, a copy of the deposit should be sent to the Senior Trust Accountant, Financial Services Department to set up the budgets.

Transfers
Transfers of funds between restricted funds are limited only to those that do not contravene donors’ terms and conditions, or are explicitly permitted by donors. Furthermore, transfers between restricted funds and other funding groups (operating, capital & ancillaries), referred to as interfund transfers, are only permitted when they have received approval from the Business Board of Governing Council.

Transfers should be kept to a minimum since they provide poor accountability to donors. Fund managers are strongly encouraged to disburse directly from the restricted fund to reduce the need for fund transfers. When a transfer is required, please send your request to .

Overspending
Student award funds have been provided with overdraft tolerance intended to cover the annual award payment. Since the annual award varies widely across accounts, a maximum tolerance of $10,000 has been provided to each fund to facilitate payments to students when donations are received after payments are made. It is crucial that fund managers review their funds and make award payments only when donations for prior awards have been received. Deficits in funds are the responsibility of the division and careful review by fund managers will limit the risk of potential default from donors.

Additional information
For more information on the above topics, refer to the section Student Awards .

For questions or assistance with budgets for Student Awards, contact the  Senior Trust Accountant, Financial Services .

Trusts


The term trust fund is generally used to refer to restricted funds OTHER than research awards, student awards and non-research grants and contracts. Trust funds, then, are donation funds with general or specific purposes other than those above. The signing authority for a trust fund is a principal, dean, director or chair.

Budgets
Budgets (funds available for spending) are set up when expendable donations are received or when investment income from LTCAP or EFIP are distributed annually in April.

Transfers
Transfers of funds between restricted funds are limited only to those that do not contravene donors’ terms and conditions, or are explicitly permitted by donors. Furthermore, transfers between restricted funds and other funding groups (operating, capital & ancillaries), referred to as interfund transfers, are only permitted when they have received approval from the Business Board of Governing Council.

Transfers should be kept to a minimum since they provide poor accountability to donors. Fund managers are strongly encouraged to disburse directly from the restricted fund to reduce the need for fund transfers. When a transfer is required, please send your request to Trust Accounting, Financial Services Department .

Overspending
Trust funds operate on a cash basis and do not have overdraft privileges; therefore, should a deficit occur, it should be investigated immediately. Trust fund deficits are the responsibility of the division and they should be eliminated promptly. Expenses in excess of donations and investment income can be moved to another funding source where these expenses are eligible.

Additional information
For more information on the above topics, refer to the section Trust Funds.

For questions or assistance with budgets for Trust Funds, contact the Senior Trust Accountant, Financial Service. Also see Fundraising and Donations, Monetary Donations for more information and other processing details.

Conference Accounts


When a University department organizes a conference (including colloquia and workshops) it may be appropriate to segregate the income and expenses for the conference from the department’s operating accounts. Where there is a requirement for segregation, this can currently be accommodated by using afund (for spending control) and an internal order (for detailed reporting). For more information, refer to the Conference Accounts page in the Establishing. Changing and Deactivating FIS Accounts, Financial Management section.

The Financial Services Department will advise the requesting department of the fund and internal order numbers which have been established. The budgets established for a conference are comprised of equal and offsetting revenue and expense budgets and should reflect the best estimate of anticipated revenues.

If contributing departments are not participating in the conference but are simply making a gratis contribution, e.g. a dean providing funding to a department, it may be appropriate to record this contribution as a budget transfer.

Additional information
For more information on budgets for conference accounts, refer to the section Conference Accounts.

Last revision December 2013