Budgeting and Accounting

The first step to remember in creating a budget is that a budget is a planned estimate of revenues and expenses. Thus, each budget, whether a program, conference, earnings, etc., should have two major sections: Sources/Revenues and Uses/Expenses.

Depending on the project at hand, sources could encompass items like conference registration fee, funding support from internal Ohio State departments, internal cash allocation, etc.

Uses may include items like staff time and effort, composite benefits, overhead and POM rates, graduate student stipend and fee authorizations, supplies, services, travel, equipment, etc.

Creating a program budget is easy if you have a program description or a clear vision of your program. As such, a simple step-by-step approach is to:

• Make a list of all expenses: To ensure you capture everything, read through your program description and consider all elements that will cost money or time. For example, if your staff will attend outreach events, consider the costs of staff time, mileage, vendor fees, brochures and business cards for the table, tent rentals, etc. If you haven’t developed a program description yet, think through all the activities required to plan for and implement the program. As you’re thinking through all those activities, write down all the expenses for each one.

Once you have your list, review it to ensure you didn’t miss anything. This list should include absolutely every expense:

• Categorize the expenses: Once you have a list of expenses, it’s time to categorize them. The major categories at Ohio State are:
  • Salaries
  • Composite/Fringe Benefits
  • Fee Authorization (Tuition)
  • Student Aid (Scholarships)
  • Supplies
  • Services
  • Travel
  • Other Expenses
  • Equipment
     
• Determine the cost of each expense: Now that you’ve identified and categorized all your expenses, it’s time to determine the cost of each item.
  • For salaries and benefits estimates and fee authorization, reach out to your fiscal team and we can help you.
  • You can gather the costs for all supplies, services, equipment and other expenses by checking out prices on the vendor’s website, or by requesting quotes for larger items.
  • You can determine all your travel expenses online by checking out the average cost for airline tickets and allowable lodging and per diem rates by city.

Once you’ve determined all the costs, simply add them all together, and you’ll have your total program cost.

Consider all revenue sources: Now that you know how much your program will cost, it’s time to consider your revenue sources. Just like you did with the expenses, make a list of all the current revenue you have that could support this program. Consider all your existing revenue sources first (e.g., internal allocation from general funds and/or gift funds). Then determine how you might secure the remaining amount (cross-subsidies/support from other units on campus, participant fees, etc). For each source, write down the amount that will be provided. Add each source with the amount and status into a table, and you have a complete program budget.

• Document planning assumptions for each expense or cost – At some point, you’ll have to share your program budget with others, including your unit leaders, fiscal team, and other staff members, so it’s important that you include brief details about each expense within your program budget. For example:
   

What are Earnings Operations and how should I go about setting one up?

In general terms, Earnings operations are self-supporting university entities that derive their revenue from the sale of goods and/or services. 

Earnings operations are divided into four categories: 

• Auxiliaries (Fund FD200): Auxiliaries are totally self-supporting entities whose customers are students, faculty, staff or the general public. Their services are considered ancillary to the institution.   
• Service Units (Fund FD120): Service units sell needed services or goods to other university departments. Telephone services provided by the Office of Telecommunications and Networking and office supplies sold at Stores are examples of the goods and services provided to university customers.  
• Departmental Earnings (Fund FD122): Departmental earnings operations earn revenues by providing goods or services that are related to the primary purpose of an academic or administrative department.   
• Conferences (Fund FD121): When a university department organizes a conference that charges registration fees, the expenses and revenue related to the conference are tracked separately from the department’s other activities in a conference fund. 

For all earnings categories, earnings activity means:  

• Earning revenue from the sale of goods and services, and 
• Incurring the expenses necessary to earn the revenue.   

Earnings funds are assessed university overhead on revenue. This monthly expense reimburses the university for the costs of centrally provided services such as accounting, police services, snow removal, etc. The overhead rate is calculated annually and applied to an earnings operation’s gross margin (total revenue minus approved cost of sales). 

Criteria for Establishing an Earnings Operation 

Earnings operations should provide incentives for the most efficient use of scarce resources and exist only for the following reasons: 

• To support the primary mission and goals of the institution: instruction and research. Examples are the Optometry Clinic, Dental Clinic, and Veterinary Medicine Clinics.
• To provide a needed service to the university community for which general funds are inappropriate. Service units fall into this category. 
• To provide services of a highly specialized nature. Examples include the Supercomputer Center and University Laboratory Animal Resources. If the operation under consideration does not meet one of these criteria, an earnings fund cannot be established. 

To request new Earnings Operations, we work with Financial Planning & Analysis (also known as FP&A or the university’s central budget office). Detailed instructions are outlined in the Earnings Operation Policy.

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The university funds can be organized into Current Funds (Unrestricted and Restricted), Non-Current Funds, and Agency Funds.  

Current Funds

• Current Unrestricted Funds: The General Fund provides the money that sustains the university's core instruction, departmental research, instructional support, related general administrative costs and facilities expenditures. Funds may be used for any legal and reasonable purpose in carrying out the mission of the institution: instruction, research and public service. Other current unrestricted funds include designated funds, earnings funds, and conference funds.
• Current Restricted Funds: Current Restricted Funds must be spent only for the purpose intended by the outside entity that established the restriction. Because the university has a legal stewardship obligation to abide by fund restrictions, it is essential to be aware of the restrictions and monitor the funds for appropriate use.
• Endowment Fund restrictions can be found on the web site of the Office of Financial Services, or in The Advancement System (TAS), an inquiry system made available by the Office of University Development.
• Restrictions for Current Use Gifts are established when the gift fund is established. The units maintain these funds and monitor them for appropriate use according to the restrictions. The Office of Advancement's business office maintains copies of the documents, which can be accessed online using TAS. For more information, refer to the Development section.
• Restrictions on grants and contracts can be found in the relevant grant agreement or contract. For more information, refer to the Grants section.

Non-Current Funds

Non-Current Funds are monies that have a longer timeframe than Current Funds. Typically, they are not spent in the current operating cycle but may be held for many years. Examples include Principal Endowments, Annuity and Life Income, Loan funds, etc.

Agency Funds

Agency Funds do not belong to the university but are managed by a university employee. Money coming into Agency Funds is generally payment from external entities.
Example: A faculty member is an editor for an academic journal. Payment is accepted for subscriptions and printing, distribution and other expenditures are recorded, but the funds ultimately belong to the organization that publishes the journal.

More information on funds and funds usage can be found here on the Ohio State Business and Finance website.

Additional information on accounting at Ohio State and other important links can be accessed here.