The budget of the University of Tennessee is the approved formal plan for financing the academic and support programs for the fiscal year beginning July 1 of each year. The budget is prepared prior to the beginning of each fiscal year and is approved by the president and the Board of Trustees in advance of its implementation. The Tennessee Higher Education Commission and the State Department of Finance and Administration also review and approve the university's budget.
In late August or early September of each year the university prepares and submits its requests for state appropriations. Separate requests are prepared for the formula and non-formula units of the university. Formula-generated requests are prepared for each of the major campuses, Chattanooga, Knoxville, and Martin. Non-formula requests are prepared for all other budgetary entities, including the Memphis campus and the Space Institute.
Formula-Generated Requests for Appropriations. The
Tennessee formula attempts to allocate equal state dollars to all institutions
for the conduct of the same types of activities but does not assess the
quality of activities. The process measures costs and needs for funds
at the individual program level but does not measure the effectiveness
of offerings or the outcome of programs.
Expenditures and revenues are the two primary divisions of the Tennessee formula. The formula relates only to unrestricted Educational and General monies and does not include restricted funds or Hospital or Auxiliary Enterprise funds.
The formula generates expenditure requirements for each institution.
Revenues from sources other than state appropriations are projected
and subtracted from formula expenditures to arrive at the requested
level of state appropriations.
Although the formula addresses only five of the nine major expenditure categories, the five formula-addressed categories account for some 85 to 90 percent of the total Educational and General expenditures of the formula campuses.
Non-Formula Requests for Appropriations. The non-formula elements of the formula units as well as appropriations requests for the non-formula units are based on projections of revenues and expenditures. The projected revenues and expenditures for each unit are analyzed and evaluated in light of current and historical patterns. The excess of projected expenditures over locally-generated revenues constitutes the requested level of state appropriations for these programs and units.
The university's internal budget process is conducted during the second half of each fiscal year for the purpose of preparing the budget for the coming fiscal year. The process begins with the president's annual budget memorandum, which sets forth the general budget guidelines and policies. Pursuant of the president's memorandum, the chancellors and other chief administrators issue similar memorandums containing specific instructions and guidelines for the particular unit.
Following receipt of the campus or unit budget memorandum, each department head is expected to prepare a budget request for submission to the chancellor or chief campus or unit administrator. Budget hearings are normally held between the appropriate academic and non-academic administrators. Although such hearings are instrumental in arriving at a final budget allocation for each department, they serve an added purpose in that they provide non-academic administrators with a more in-depth view of the programs and plans of various departments.
Upon completion of the budget reviews by campus-level administrators, the budget is transmitted to the chief financial officer (or designee) for review by the president and his staff.
Upon approval by the president, the budgets of all entities are entered into the accounting records of the university. The budget is also summarized into the Budget Document, which is submitted to the Board of Trustees for approval at the annual June meeting.
The budget of each department or unit is divided into six principal budget
categories, namely, Professional Salaries, Summer School Salaries, Clerical
and Supporting-Salaried, Clerical and Supporting-Hourly, Operating
and Miscellaneous, and Equipment and Capital Outlay. The appropriations for
each purpose are the maximum amounts which may be expended or obligated for
payment during the period covered by the budget. The appropriations are for
services and materials required for current year operations, and any amounts
not required for current operations may not be used to stockpile supplies
for the subsequent fiscal year. Appropriations for Personnel Services Operating
and Miscellaneous and for Capital Outlay are subject to independent budgetary
control, and any balance in one appropriation may not be considered as authorization
or justification for overspending any other appropriation.
Strict adherence to budgetary limits is required. Responsibility for control
of expenditures within budgetary limits rests with the dean or administrative
head of each division or unit; however, the details of carrying out this
responsibility may be delegated to the department head or other supervisory
Due to the variance in size, scope, and nature of the numerous university departments and activities, no standardized procedure is specified for maintaining financial records within each department. However, each department or control unit should develop and maintain record procedures which will afford accurate and effective budgetary control of departmental
expenditures. Upon request, the Treasurer's Office will advise and assist departments in setting up acceptable departmental financial records.
At the close of each month, the Controller's
Office will furnish each dean or administrative head with a detailed DEPARTMENTAL
BUDGET AND EXPENDITURE REPORT for each appropriation account
under his jurisdiction (see Appendix A). These reports should be promptly
checked against departmental records and the Treasurer's Office notified in
writing of any discrepancies.
Following is an explanation of the Department Budget and Expenditure Report. The report consists of the required descriptive heading information and a three-section financial report. The three sections consist of (1) budgetary and expenditure transaction information, (2) purchase order status information, and (3) a budget analysis section. Each of the three sections has a summary "TOTAL" line. (See Appendix B.)
Descriptive Heading. The information in the heading section includes the following:
Reporting Period. Since the report is issued on a monthly basis, June excepted, this will always be the first day through the last day of the indicated calendar month. June will have two issued--one through the 29th for general charges with the additional period for the fiscal year closing entries.
Addressee and Location. This is the name and campus address of the person responsible for administration of the account.
Account Name. This space is limited to a 30-character department or account name.
Budget Entity. This space is for identification of the campus or other major organization unit of the university to which the account relates.
Department. This space is for identification of the separately budgeted unit within a college or major organizational division of the university which has administrative responsibilities for the account.
College/Major Division. This space is for identification of the college or major organizational division of the budget entity through which administrative channels documents and reports must be processed when appropriate.
Function. This space is for identification of the functional classification of the account to facilitate institutional accounting and reporting requirements in conformance with accepted principles. The functional classifications are set forth in the Chart of Accounts.
Reporting Attributes. This section displays coding initiated by the Controller's Office which is essential for desired flexibility in accounting and reporting requirements. The attributes represented by codes are Fund, Budget Entity, College, Department, and Function as described
Account Number. The recording expenditure account number for the account. It is essential that this number be accurately indicated on all financial transactions relative to the account to ensure proper accounting treatment.
Status. This item indicates whether the status of the particular Report is interim or final.
Page Number. This is the page number reference for this individual account report. Normally, each account report will require from one to five pages each month.
Run Sequence. This is a computer-generated number that is used for filing purposes with the Treasurer's Office.
Run Date. This is the actual date on which the report was printed.
Detailed Budgetary and Financial Transaction Information. This section of the report sets forth detailed budget and financial transactions for the reporting period grouped according to the following six major budget categories:
Summer School Salaries
Clerical and Supporting--Salaried
Clerical and Supporting--Hourly
Operating and Miscellaneous
Equipment and Capital Outlay
On the report form, each budget category, in which there are prior or current transactions, consists of a beginning balance, current month's detailed transactions, and the ending balance. The total of all budget categories is printed at the end of this section. Information in this
section is organized under headings that are explained as follows:
Date. This is the date reference of the transaction document.
In-Transit Number. Provision has been made in the financial data base for the future inclusion of in-transit and accrual information on the report; however, these features have not yet been activated.
Purchase Order Number. This is the reference number of official purchase orders which have been issued for the procurement of materials or services or both.
Transaction Type and Reference Number. The following coding is employed to indicate the type of each transaction: PV--Payroll Voucher; DV--Disbursement Voucher; JV--Journal Voucher; CV--Cash Receipts Voucher; TV--Transfer Voucher; BV--Batch Voucher; PO-Purchase Order; PE--Payroll Encumbrance; LB--Ledger Budget; and RB--Restricted Budget. The reference number serves to identify the document source of the particular entry.
Description. This block reflects a brief description or further identification of the transaction. For example, for disbursement vouchers the name of the payee is shown; for payroll vouchers identification as monthly or biweekly is shown; and on transfer vouchers the description information as entered on the transfer voucher is displayed.
Budget. The amounts posted in this column reflect budgeted
direct expense for the account as taken from the Budget Document and
any revisions made through FORM
T-15 (see Appendix C).
In-Transit. The system for processing and recording in-transit transactions has not yet been activated.
Unpaid Purchase Orders or Encumbrance. This field displays activity on purchase prders issued, paid, and outstanding at the end of the reporting period. Salary commitments represent the amount encumbered to pay active employees through the end of the fiscal year.
Object Code. These codes denote the object or purpose of
each expenditure transaction and are standard for all university accounts.
Amounts are budgeted to only the two-digit level; however, actual
expenditures are broken down further by the use of a third digit.
Also, two additional object code digits are available to departments
for use on projects with specialized accounting or reporting requirements.
The object code descriptions are printed on the reverse side on the
BUDGET AND EXPENDITURE REPORT. Departments desiring
to use the optional additional object code digits should contact the
Office for further instructions.
Expenditures. This column reflects the beginning balance, the detailed amounts of individual expenditure transactions during this reporting period, and the ending period-to-date total expenditures by each budget category and, also, by grand total.
Free Balance. The amounts in this column represent the remaining balance of funds in each budget category, and in total, which have not been expended or encumbered by purchase order commitments as of the end of the report period. A minus (-) sign following an amount indicated an over-expenditure in that budget category or of the total budget.
Outstanding Purchase Order Information. This section schedules in detail the status of purchase orders issued against the account which have not been paid in full at the end of the reporting period. The headings, which for the most part are self-explanatory, are as follows:
Date. This is the date the purchase order was originally issued.
Detail of Purchase Order. This space reflects the name of the vendor.
Original Amount. This is the amount originally encumbered by the purchase order prior to any payment being made.
In-Transit. This item is not currently in use.
Paid-to-Date. This represents the amount of partial payments against the purchase order unless it has been paid in full.
Balance. The unpaid commitment or obligation represented by the outstanding purchase orders.
Budget Analysis Information. This section of the DEPARTMENTAL
BUDGET AND EXPENDITURE REPORT consists of a comparison
of account expenditures classified by object codes with the amounts as
budgeted for the corresponding object codes. This analysis is presented
under the following column headings.
Object Description. This is the name identification of the object code.
Expenditures This Month. This column reflects an analysis by object codes of expenditures on the account during the month covered by the report.
Budget. This column reflects the total amount of the current fiscal year budget classified by object codes.
In-Transit Items. This data is not currently in use.
Encumbrances. Salary and outstanding purchase order encumbrances as of the end of the period covered by the report.
Object Code. This is the budget and expenditure object code applicable to data appearing on this line.
Year-to-Date Expenditures. This column reflects an analysis by university object codes of account expenditures for the current fiscal year.
Free Balance. This column reflects the remaining unencumbered balance of funds, classified by budget object codes, available for expenditure on the account. A minus(-) sign following an account indicates an over-expenditure on a particular budget object code or on the total budget. The total of this column is the same as the Section 1 of the Report balance which is an analysis by major budget categories.
FORM T-15 is designed to facilitate
revision of the
financial data base budget system. Expenditure accounts are
to be revised on an object by object basis (a list of object codes is on the
reverse side of the form). See Appendix
Since revision of budgeted recoveries is the area most likely to create confusion, the following case is provided.
If the intent is to revise the budget recoveries downward from $5,000 to $4,000, the difference should be entered as a $1,000 decrease in budgeted recoveries. Likewise, if the necessary amount is to be revised upward from $5,000 to $6,000, the difference should be entered as an increase in
In most cases the budget increases and decreases will balance. Exceptions, however, will occur when revisions in estimated expenditures (Section 1) are offset by corresponding revisions in estimated revenues (Section 2).
Although both entries would appear in the same column, they may, for all practical purposes, be considered balanced. As a check, the net of the changes in the "Budgeted Expenditures" and "Budgeted Recoveries" column in Section 1 should agree with the net of the changes in Section 2.
Justification for the request should clearly define the purpose of the revision.
General Fund and Auxiliary Fund accounts should never appear on the same T-15.
Do not use cents on the amounts on the form.
The form should be signed by the originating authority and be forwarded to the chief financial officer (or designee) through approved channels. Upon approval by the vice president, distribution will be made as indicated on the form. If additional distribution copies are desired, additional copies should be completed from other sets of the form, with the desired distribution indicated on each.
T-15, REQUEST FOR BUDGET REVISION, is to provide a budgetary
allotment to an account in anticipation of needed expenditures which are subsequently
to be charged to the account. Obviously, if fund availability is to be added
to one account, such availability must already exist in some other account
from which it can be transferred.
T-16, TRANSFER VOUCHER, is used to transfer charges or
credits of expense and/or income between university accounts. These entries
may be to adjust expense charges charged in error to an improper account or
to record purchases, etc., from central stores, bookstores, etc. Expenditures,
in the final analysis, must always be charged to the appropriate account designed
to reflect the cost of an operation. Expenditures should never be charged
to an account merely because there is an unexpended balance in the account.
Expenditures for equipment, supplies, travel, and other items should not be made after May 15 of each fiscal year, unless such items are absolutely necessary for current operations before June 30th, the end of the fiscal year. Departmental requests must be approved by a vice president if there is any doubt as to the necessity of the expenditure.