For Information

is

FRASER UNIVERSITY

REVISED

To:

Senate

Subject: Operating Budget 1993/94

Principles and Processes

From: Roger W. Ward

Vice-President

Financial Services

Date:

October 14, 1992

In March of this year Dr. Peter Meekison presented his report "Resource Allocation and

Management System Study" containing recommendations with regard to the budget preparation

and budget management processes at the university. This report has been reviewed and discussed

by the Vice-Presidents, Deans and SCUB.

The attached "Operating Budget 1993/94 Principles and Processes" has been developed in

response to Dr. Meekison's first recommendation concerning the budget preparation process. Dr.

•

Meekison recommended that such a document "should be prepared by the Vice-President,

'Financial Services for discussion and review by SCUB and the Senate and final approval by the

Board". Accordingly, I am forwarding this document which has been reviewed by the Vice-

Presidents and presented to SCUB for information and discussion at the next meeting of Senate.

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5.

In order to balance the operating budget, opportunities to increase revenue should be

utilized to the extent appropriate and, where possible, expenditures should be

controlled by realizing efficiencies within existing activities.

6.

Budget pressures demand that choices be made from among existing activities and

that units be treated selectively in the budget process consistent with the University's

mission.

Other mechanisms for selective treatment may be employed in accordance with this

principle. The creation of a Budget Adjustment Fund (by taxing all units) is one such

instrument that could be used. Reallocation from the BAF would be made on a selective

basis.

7.

The University will continue to provide a Non-Recurring Budget as resources permit.

The Non-Recurring Budget is a vehicle for responding to special one-time or short-term

needs. Its primary source of funding is the salary annualization fallout from the previous

year.

•

8. The development of budget policies and practices will take into account both the need

for flexibility and initiative at the unit level and the interests of other units and the

institution as a whole.

Considerable discretion will continue to be exercised at the Faculty and budget unit level.

For example, the operating budget allocation to a Faculty will be distributed internally by the

Dean, subject to applicable University policies.

Policies governing restrictions on budget adjustments, position control, overheads,

conditional grants, etc., must continue to strike the appropriate balance between the

interests and priorities of the units, and the requirements for fiscal responsibility at the

institutional level.

provide stability for individual unit budgets during that year.

A stable and workable operating reserve policy will be developed with the intent of

providing a means of dealing with unfavourable balances of revenues and expenditures

which may occur during a budget year. Contingencies will be established within the

University's budget to provide short-term and continuing discretionary funding for particular

needs. The current carry forward policy, governing funds carried forward from one year to

the next

,

by individual units, will also continue.

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.

Work begins in October on budget estimates, which present the global budget at levels of

•

aggregation which allow maximum reliability of projections. The budget estimates

concentrate discussion on global issues such as across-the-board and selective expenditure

reductions, size of tuition fee increase, size of contingencies, size of salary increases, etc.

The preparation of the budget estimates is an iterative process which uses the published

budget from the previous year as its base. The estimates incorporate known changes and

planning assumptions which are refined as better information becomes available. Vice-

Presidents will develop budget planning guidelines based upon information generated by this

process.

Budget planning guidelines are normally issued by the Vice-Presidents to their respective

Faculties and units in November or December. Discussions regarding plans and budgets

follow, with input on Faculty/unit budget needs and issues normally in the hands of the

appropriate Vice-President by mid-January to provide adequate time for consideration.

Academic departments will communicate through the appropriate Dean.

The University expects to receive later this year or early in the new year a statement, from

the Minister of Advanced Education, Training and Technology, of the size adjustment in the

provincial operating grant. This figure is used to refine the estimate of the scale of the

global actions that will be required to balance the budget in the coming year. This will lead

to the development of specific budget recommendations by the Vice-Presidents for the units

within their jurisdiction, taking into account any budget reductions that have been

.

determined by the President and the Vice-Presidents. Throughout this iterative process

updated global budget projections will be presented to the Vice-Presidents, Deans, and

SCUB for their review and advice. Finally the proposed operating budget is recommended

by the President to the Administration/Finance Committee of the Board for recommendation

to the full Board for final approval.

At the same time

the recurring operating budget is being developed, decisions will be

made by the President with respect to any supplementary sources of funding. In the past,

two supplementary sources of funds have been budgeted. The Non-Recurring Budget is for

one-time and few time allocations to meet priority but non-recurring expenditures. The

university contingency funds are used to deal with temporary or permanent funding

problems. The creation of a Budget Adjustment Fund (BAF) funded by a BAF tax on all

units would provide a reallocation vehicle.

2. Unit Budget Confirmation

Detailed budgets are prepared on an incremental basis. The first step will be to confirm the

base budgets, both salary complements and non-salary total, at the departmental level. The

working papers which show this level of detail will be circulated to departments in

December for return in January. After the base has been confirmed, adjustments will be

incorporated for base changes, decreases or increases. This detail will then be summarized

and matched with the proposed global budget.

4

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