In accordance with regulations and principles promulgated by the Federal Office of Management and Budget (OMB), institutions of higher education are permitted to recover from research and training grants and contracts indirect costs associated with supporting Sponsored Programs. The State Appropriation Act controls the general allocation of the Facilities & Administrative Cost Recoveries for Virginia's institutions of higher education. The Act stipulates that thirty percent of the funds recovered shall be transferred to the Educational and General revenues of the institution and seventy percent shall be retained by the institution as an appropriation of funds by the General Assembly for the conduct and enhancement of research and related requirements.
The Biennial Budget Plan for FACR is prepared in accordance with the guidelines approved as part of the Consolidated Biennial Budget Plan. Guidelines are:
- The funds are to be used to foster research and research related activities.
- The funds are divided into specific allocation pools, including but not limited to:
- Academic Vice Presidents and Schools
- Research Support Services (including Grants-in-Aid)
- Library Support
- Student Aid
- Research Centers
- Computing and Other Technologies
- Capital Outlay Projects
- Special Allocations
- Contingency Funds
- The Budget Plan is prepared jointly by the Provost and Vice President for Academic Affairs and the Vice President for Health Sciences in consultation with the Vice President for Research, Budget & Resource Analysis and the University Controller’s Office.
- The allocations to the Academic Vice Presidents and Schools are based on a set percentage of total indirect costs generated by specific schools and departments. The Academic Vice Presidents determine the percentage share or amounts allocated to schools which, in turn, determine specific allocations to departments. The allocations are to be made in such a manner as to encourage research by providing incentives for expanding research in the areas generating the direct Sponsored Programs activity. The allocations to the Academic Vice Presidents and schools are to receive the highest priority for retention should a shortfall in revenues exist.
- All other pool areas are budgeted based on specific program plans and institutional research and research related priorities.
- Depreciation Reserves must be research or research related and consistent with the University’s planning priorities. The reserves can be used to make principal payments of debt incurred to acquire assets that are used directly for organized research activities or to acquire, repair, renovate, or improve buildings or equipment directly used for organized research. If the Building and equipment are not exclusively used for organized research, only the appropriate proportion can be funded with the reserve.
Initial permanent and current operating budgets are established based on the Consolidated Budget Plan approved by the Board of Visitors. The permanent budget serves as the base for the execution of the budget and is used as the base budget for future years. Typically, final approval of the budgets at the State level and internally by the Board of Visitors is received in April or May of each year, with an implementation date of July 1. The new fiscal year budgets are then loaded into the Banner financial system.
Please see: Definitions of Permanent, Current and Adjusted Budget
Facilities & Administrative Cost Recoveries(FACR) are State funds and may not be used for expenditures such as gifts, alcohol or social memberships. Please see Allowable and Non-Allowable Expenditures for a complete list.
During the fiscal year, changes may be made to individual departmental budgets subject to the following policies and procedures. Budget & Resource Analysis will provide staff support and service in a coordinative role in the preparation of budget reallocations. All budget reallocations will be reviewed for compliance with State restrictions.
- All reallocations must be reviewed and recommended by the appropriate dean/director and approved by the appropriate Vice President. If a reallocation crosses executive levels, both areas must approve the transactions. Reallocations of $250,000 or more which change program direction require the joint recommendation of the Vice Presidents. Departments should not split budget allocations to circumvent the $250,000 approval requirement.
- Permanent budget may not be reallocated to/from instruction and administrative/professional faculty or classified positions without the approval of the 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 expenditures without an accompanying impact statement. (Fixed costs are defined as technical service costs, energy costs, rent and insurance costs, family practice payments and library books and periodicals.) This impact statement must address future year funding requirements and be approved by the appropriate senior executive officers. This authority cannot be delegated.
Unless specifically restricted, senior executive officers and deans/directors may delegate their approval authority. Delegation of authority must be documented and kept on file in Budget & Resource Analysis for use in review of allocations.
Reallocations of up to $250,000 from the contingency fund are to be approved by the President or jointly by the Provost and Vice President for Academic Affairs and the Vice President for Health Sciences. Allocations of $250,000 or more must be approved by the President upon the recommendation of the Provost and Vice President for Academic Affairs and the Vice President for Health Sciences.
Budgets must not be overspent at the organizational level. In the event that a Banner org/index goes into a deficit, the deficit must be resolved as soon as possible but no later than the next month-end. For purposes of administering this policy, resolution may include initiating the paperwork necessary to resolve the deficit. 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 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 Personnel/Position Action Form (PAF) and process a budget reallocation if sufficient current budget is not available in the account.