Auxiliary Enterprise Programs provide services to students, faculty, and staff. Although the spending authority is established through the appropriation process, auxiliary enterprise units are self supporting. Revenues are derived from fees for services and from students. The fees charged for services are related, but not necessarily equal, to the cost of the services provided. In many cases, auxiliary units receive revenue from the University Fee.
The operating budgets for Auxiliary Enterprises are developed by the responsible line managers and are recommended by the area's Vice Present to the Executive Budget Committee and President's Council. The expenditure budgets reflect the projected direct operating costs as well as a share of the general and administrative expenses provided by Educational and General Programs. The Commonwealth has established guidelines requiring units to set aside an amount from current year operations as a reserve to be used to fund revenue shortfalls and special needs (primarily equipment replacement), facility repairs and renovations. The Auxiliary Enterprise budgets are incorporated into the University's Consolidated Biennial Budget Plan.
Budget administration policies for Auxiliary Enterprise Programs address the annual operating budget and the use of fund balances for both State and University Auxiliary Funds. While Auxiliary Enterprise Programs are essentially run as businesses and expenditures must remain within revenues and accumulated fund balances, the budget is important as it represents authorization by the Board of Visitors and University management as to the scope and size of the Auxiliary operations. In addition, the State exercises control over the revenue/expenditure level and FTE associated with these programs. Auxiliary Enterprise managers should ensure that the permanent budget represents the base budget of on-going commitments and the current budget represents the projected operating plan for the fiscal year.
Initial permanent and current operating budgets are established based on the Consolidated Budget Plan approved by the Board of Visitors.
Please see: Definitions of Permanent, Current and Adjusted Budget
During a fiscal year, changes may be made to individual enterprise organizations subject to the following policies and procedures. Budget and Resource Analysis will provide staff support and serve in a coordinative role in the preparation of budget reallocations. All budget reallocations will be reviewed for compliance with State and University policies, procedures and restrictions.
- Budget Reallocations within a given Auxiliary Enterprise must be reviewed and recommended by the appropriate line manager and approved by the senior executive officer for the area. Senior executive officers may delegate their approval authority to a dean/director.
- Increases or decreases in excess of 20 percent of an organization's total budget or $250,000, whichever is smaller, require the approval of the Vice President who may delegate this approval authority. Reallocations of $500,000 or more which change program direction require the joint recommendation of the Vice Presidents. Departments should not split budget reallocations to circumvent the approval requirements.
- Permanent budget may not be reallocated to/from instructional and administrative/professional faculty or classified positions without the approval of the appropriate senior executive officer. The budget for a non established faculty or classified position may be reallocated to wages.
- Budget may not be reallocated from fixed cost budgets to other areas of expense without an accompanying impact statement addressing future year funding requirements. This impact statement must be approved by the appropriate senior executive officer. This authority cannot be delegated.
- Any increases or decreases requested for budget revenues must identify the matching budgeted operating expenses being increased or decreased. Budget & Resource Analysis may request the approval of the appropriate senior executive officer should achievement of increased revenues be considered doubtful.
For Auxiliary Enterprise organizations, deficits occur when expenditures exceed current revenue budget. Departments must resolve the deficit as soon as possible. As with E&G accounts, resolution includes initiating the appropriate paperwork. If the deficit is caused by a temporary timing difference, the Auxiliary Enterprise manager would document this information for Budget & Resource Analysis and indicate when the difference will be resolved or if the deficit is to be resolved by the use of fund balances. Please see: Deficit Monitoring Policy.
- In order to fill a vacant position (faculty or classified), sufficient permanent and current budget must be allocated to support the salary and fringe benefits to the selected candidate. Employment offers cannot be made until full funding is identified.
- In order to process part-time or wage appointments, sufficient current budget must be allocated to the support projected annual costs for the fiscal year. Departments are required to identify the annualized cost of each hourly wage or part-time appointment in the comments section of the PAF and process a budget reallocation if sufficient current budget is not available in the organization/index..
- Auxiliary Enterprise units are expected to generate and retain fund balances. The State Council of Higher Education for Virginia (SCHEV) supports the accumulation of fund balances for emergencies, normal maintenance and renovation of facilities, and operating revenues to alleviate fluctuations in cash flow during the fiscal year. SCHEV has established a range for the amount of fund balance. If institutions stay within the range and fully recover into E&G the indirect costs associated with Auxiliary Enterprise operations, the State will return interest earnings on State cash balances to Auxiliary Enterprises to be used to limit charges to users. Internally, interest earnings are returned to the appropriate Vice President who has responsibility for allocating these funds consistent with State intent.
In general, fund balances (with the exception of restricted funds) are University monies to be administered by the President upon the recommendation of the appropriate Vice President. Because General Funds cannot be used to defray the costs of repairs and renovations of Auxiliary Enterprise facilities or major equipment acquisitions, the University recognizes the need for Auxiliary Enterprises to generate and retain fund balances for these purposes. Priority for use will be given to those units generating the funds but this does not ensure that these units have an exclusive right to the funds.
The allocation and use of fund balances may have a significant impact on the University's cash and allotment balances. A plan is to be developed on a biennial basis (and updated in the second year) identifying anticipated fund balances and any planned uses of these balances. This plan is incorporated into the Consolidated Budget Plan. To use fund balances to meet a current year's operating deficit, the plan must address the impact on future year's budgets. Budget & Resource Analysis will confer with the University Controller's Office on State allotment restrictions or cash flow implications and advise the senior executive officer. Any amendments to this plan of $500,000 or more require the approval of the President upon the recommendation of the Vice President.