Approved by Board of Trustees
Effective Date: June 5, 2017
Responsible Division: Business and Finance
Responsible Office:  Business and Finance
Responsible Officer:  Associate Vice President, Business and Finance

I.  Purpose

It is widely recognized that budget control is essential for effective financial management of any organization. In view of this, this policy provides clear and specific responsibility for proper management and control of the operating budget for Middle Tennessee State University (MTSU or University).

MTSU operates under the authority of a Board of Trustees (Board) and follows the fiscal policies and procedures set by that Board. Although the University receives its state appropriation as a direct item from the State Legislature, the Tennessee Board of Regents (TBR) has authority over, and shall give final approval to, the operating budget for MTSU pursuant to T.C.A. § 49-8-203 (a)(1)(C). The University develops budgets for three (3) types of funds: Current Unrestricted Funds, Current Restricted Funds, and Capital Funds.

The University shall develop budgets for each major fund groups to:

A.  Ensure that authorized spending levels and anticipated financial commitments are within available resources;

B.  Implement Board directives related to budget; and

C.  Comply with legal, regulatory, and contractual requirements governing the proper use, budgetary control, and financial reporting of University funds.

II.  University Budget

The University budget covers a fiscal year from July 1 through June 30 of the following year.  Preparation of the budget involves three (3) submissions:

A.  July Proposed Budget. Detailed operating budgets are submitted to the Board in the spring of each year for approval at the second (2^nd) quarterly Board Meeting. These operating budgets request funds for each departmental budgetary unit. The operating budget, when approved by the Board, TBR, Tennessee Higher Education Commission, and Department of Finance and Administration, goes into effect on July 1 of that year. Upon final approval, notification of the approved total allocation for the fiscal year is given to administrative heads along with approved salaries for all budgeted positions.

B.  October Revised Budget. Mid-year adjustments to the July budget are submitted for Board and TBR approval in October of each year for approval at the fourth (4^th) quarterly Board Meetings. It is prepared after actual fall enrollments and other estimated costs and closing balances from the prior year are known. The October budget goes into effect on January 1 of the fiscal year. Administrative heads are notified of approval in their monthly budget reports.

C.  Spring Estimated Budget.This budget is the final budget submission for the fiscal year. It is submitted each spring at the same time as the July proposed budget to the Board of Trustees and TBR. This is the final approved budget for the fiscal year and contains the control totals against which final year end amounts are compared.

D.  It should be noted that the approval of a budget does not waive statutory, policy, or other restrictions for expending funds.

III. Budget Allocations

The University budget is divided into various indexes, which generally constitute a department or activity. For budget control purposes, each index number is considered separately.  Each index number is assigned to one responsible person, although any higher level official in the same organizational line may also approve or disapprove budget actions for an index. Each index budget is divided into the account codes. The amount allocated for each account code is the amount planned to be spent (or obligated) during the period covered by the budget.                                                                   

Although some funds are budgeted in account code pools, actual expenditures are always recorded by detailed account classifications. A list of all authorized account codes and a description of each is included in the Banner Account Codes Reference Guide.

The responsibility for ensuring that all expenditures remain within the amounts budgeted rests with the administrative head of the unit to which funds have been allocated. Final budgetary responsibility rests with the heads of each administrative division: President, Academic Affairs, Business and Finance, Information Technology Division, Marketing and Communications, Student Affairs, and University Advancement.

IV. Monthly Reports

After the close of each month, the Office of Business and Finance will send an email to all Finance users announcing budget reports and salary reports are available via the report repository.

The FZRBDSC Budget Status report contains a summary of amounts budgeted, expended and committed by account code. The FZRODTA Organization Detail Activity report lists each transaction made to each account code during the month. The budgetary head should check this report promptly and notify the appropriate administrative department of any discrepancies. The NZRBUDG Salary Budget Report lists the amounts budgeted in each authorized position within the department’s accounts, the current encumbrances (obligations), and expenditures charged to each position. Salaries of regular full and part-time employees are budgeted by position number, so over-budget conditions in individual position numbers can be monitored. Group positions (i.e., overtime, adjuncts, extra compensation, summer school, etc.) are budgeted on finance only.

The following items on these reports should be given particular attention:

A.  budget revisions have been entered;

B.  expenditures listed were properly chargeable to the account; and

C.  budgets have not been over-expended.

After the Salary Budget Report has been reviewed, the budgetary head should date and sign the report. Copies should be maintained in the department for six (6) months after the end of the fiscal year.

V.  Budget Revisions

Forms and instructions for preparation of budget revisions may be obtained from the Budget and Financial Planning Office website. 

If it is necessary, the budgetary head may request revisions in the department’s budget. Budget revision requests can be made on Request for Budget Revision forms. If the budget revision involves several different departments, a spreadsheet with the appropriate information can be attached to the Request for Budget Revision form. Request for Budget Revision forms are to be signed by the appropriate approving authority as follows:

A.  Revisions within an index are properly authorized when signed by the responsible budgetary head.

B.  Revisions between indexes are properly authorized when signed by the responsible budgetary head and the next higher level of authority (normally a Dean or Vice President).

C.  Revisions within or between indexes, where the responsible budgetary head is the President or a Vice President, are properly authorized when signed by the responsible budgetary head.

D.  Revisions shifting funds between administrative divisions are properly authorized when signed by the Vice President of the division decreasing the budget or the President.

E.  Revisions creating a new, regular personnel position that increases the total position count are properly authorized when approved during the normal budget process.

After approval, the Budget and Financial Planning Office will assign a Budget Revision number (BRxxxx) and enter the revision into the administrative Finance and/or Human Resource system. Copies of the form with an indication of the action taken will be returned as early as possible to all persons concerned via email and scanned into the document imaging system.

VI. Budget Overdrafts

The over-expenditure of a budgeted account or position number is not recommended. It is the responsibility of the budgetary head to control funds allocated to them and to ensure that over-expenditures do not occur. Immediate action should be taken to correct any over-expended/over-obligated condition greater than one hundred dollars ($100.00) in an individual personnel position or account code. 

VII. Fiscal Year Closing Procedures

A.  Requisitions for purchases must be in the Procurement Logistic Services Office by the deadline communicated via email each year so bids may be secured and purchase orders issued to insure delivery prior to June 30.

B.  Prompt submission of expense items:

1.  The designated personnel in each department must insure all invoices, payrolls, cash items, and travel accounts are turned in promptly at the close of the fiscal year.

2.  Outstanding purchase orders, on which delivery has not been made before June 30, will remain encumbered. Funds for payment of these outstanding purchase orders will be automatically carried forward to the next fiscal year.

C.  Budget balances remaining at June 30 will be carried over to the next fiscal year as instructed by the President.

VIII. Plant Fund Budgets

A.  Unexpended Funds

1.  The purpose of the Unexpended Plant fund is to account for the resources from various sources to finance the acquisition of long-term plant assets and the associated liabilities. These funds will be used for capital projects such as major additions and/or renovations of physical facilities.

2.  Approval of transfer of funds to the Unexpended Plant Fund is obtained during the regular budgetary process by submitting a properly authorized budget revision.

3.  Commitments or expenditures for any capital project shall be in conformance with all applicable state laws and requirements of the State Building Commission.

4.  All project budget revisions and the utilization of reallocated project balances shall be approved by the Vice President of Business and Finance and reflected in each budget reporting cycle.

B.  Extraordinary Maintenance

1.  Within the Unexpended Plant Fund, an account for extraordinary maintenance is to be used for unusual or unanticipated maintenance needs.

2.  The annual budget shall include funding transferred from the operating budget into the extraordinary maintenance account. The minimum account balance shall be one hundred fifty thousand dollars ($150,000.00).

3.  All project expenditures from the extraordinary maintenance account shall be approved by the President.

C.  Renewals and Replacements

1.  The resources set aside for renewals and replacements, as distinguished from additions and improvements to plant, are accounted for in this fund group.

2.  To insure that auxiliary equipment can be replaced, a transfer of at least five percent (5%) of auxiliary gross margin is required to the renewal and replacement fund.

3.  Additions to this fund are to be set up in separate renewal and replacement indexes.

D.  Retirement of Indebtedness

1.  The purpose of this fund is to account for the accumulation of resources for interest and principal payments and other debt service charges relating to plant fund indebtedness.

2.  Additions to this fund are to be setup in separate debt service indexes.

IX. Guideline and Position Controls

A.  Position control is part of the personnel budget process.

B.  The number of authorized permanent positions is controlled within unrestricted education and general accounts and auxiliaries.

C.  Positions are classified as administrative executive, faculty/academic, administrative professional, and classified.

D.  Positions are reported to the Board each budget cycle.

E.  Authorized permanent positions are approved at the second and fourth quarterly Board meetings.

X. Fiscal Year-End Review

A.  At the end of each fiscal year, the actual year-end amounts will be compared to the Spring Estimated Budget, which is the final approved budget for the year.

B.  Functional expenditure totals will be analyzed for adherence to the approved budget.

C.  Financial information will be examined for compliance with all budget guidelines in effect for the fiscal year just completed.

D.  The President shall report any institutional deficiencies or non-compliance with budget controls and guidelines to the Board.

Forms:  

Request for Budget Revision

Revisions: none.

Last Reviewed: February 2022.

References: T.C.A. § 49-8-203 (a)(1)(C).