General Information about Operating Funds

Budgets for Operating Funds are divided into two categories:

• Fund Type 1A – Operating/University Allocation:

Funding source is the University Operating Budget. The units to receive a university allocation are typically in the programs of Teaching, Academic and Support Services. The annual budget for all units is determined and allocated via the FBI Planning and Budgeting process, at the Faculty or Vice-President level. Additionally, the HR-Budget feed mechanism funds tenure stream appointments. The annual budget allocations are made at the Faculty or Major Unit level. The distribution to individual departments is made by the Dean (for faculties), the Director of Libraries, and the relevant Vice-President (for academic and support services).

• Fund Type 1B: Operating/Self-Financing:

Funding source is revenue or internal recoveries generated by the unit. Typically, the units who are self-financing are those in the Community, Student and Ancillary Service programs. Expenditure levels must not exceed the revenue produced by each unit, or specifically designated to them, unless authorized. Detailed estimates of revenues and expenses are submitted by these units, to be included in the annual Budget Report submitted to the Board of Governors.

Prior to the beginning of the University's fiscal year, and normally in the month of February, the Budget Distribution Process begins. This process is supported by McGill's Budget Development Module in Banner. There are several levels of budget development:

• Allocation Control

Allocation Control represents a Faculty or Major Unit annual allocation, whereby the Faculty or Major Unit can distribute budget to the individual departments, and is detailed at the Fund-Org-Program level. Banner Form FZABDFO (Budget Development Allocation Control) provides automatic balancing and sign-off upon completion at this high level.

• Budget Summary

This level supports budget distribution by FOAPAL. Banner Form FZABDFP (Budget Development by FOAPAL) provides each unit with the ability to break down to the account, activity and location detail. The total of all FOAPALs must balance to the high level FOP allocation control amount.

• Budget by Position

This level supports budget development down to the position level for all salary accounts (codes starting with ‘6'). Banner Form FZABDPN (Budget Development by Position) requires both permanent and temporary budgets to each position. The total of all positions must balance to the total budget dollars assigned to each salary account code.

The completed and balanced Budgets are signed off by the Faculty or Major Unit. After analysis and review by Analysis, Planning and Budget, all approved budgets are posted as transactions into the McGill Budget Maintenance Forms and subsequently, overnight, into the Finance System.

This process occurs annually for fund type 1B - Operating / Self-Financing funds. The ending year permanent budgets of fund type 1A – Operating / University Allocation funds are rolled forward to the new fiscal year, in May, in the years when there is no such exercise.

All budgets contain two columns in which amounts are entered for each item of expenditure (or cost recovery). One column is for the Permanent Budget, the other is for the Total Requested Budget. Where an expenditure item is ongoing, and therefore not confined to the fiscal year in question, the full annualized cost must be entered in the Permanent Budget column. The actual amount to be expended in the fiscal year is entered in the Requested column. Two examples illustrate this procedure:

• Provision is included in the budget for an appointment at $60,000/year, commencing on August 1st. The full annual amount of $60,000 will be entered in the Permanent column. The amount in the Requested column will be $45,000 (for 9 months).
• An entry is included in the budget for a staff member earning $36,000/year, who will retire on October 31st, without replacement. There will be no amount in the Permanent column, but $15,000 in the Requested column for the 6 months.

When resources are allocated, separate amounts are shown for the Permanent Budget and the Requested Budget. These amounts may not be exceeded. For areas funded from their own revenue, or by specially designated funds, the estimated income must be sufficient to cover the higher of the amounts in the Permanent and the Requested Budget.

Temporary budgets are used on a transactional basis and are one time amounts, specific to the current year. The sum of Permanent budget and Temporary budget equals Requested budget.

All active positions must be adequately and appropriately budgeted for annually. Each unit is responsible to provide for the full cost of each salary, except in the case of tenure track positions. Tenure track salaries are automatically funded by the Academic Renewal Envelope (HR-Budget feed mechanism).

Incremental budgets are allocated to each position (at the FOAPAL level), for salary policy purposes, as each policy is implemented by Human Resources. Additionally each fund receives a permanent budget to offset the cost of employer benefit costs. For fund type - 1B Operating / Self-financing funds, these units must provide for both these costs from within their annual budget.

No unit, at the major unit level, in the University is permitted to over-spend the total budget allocation made available to them. Ongoing over-expenditures are followed up regularly by Analysis, Planning and Budget.

Apart from special procedures relating to salaries, referred to below, it is permissible to over-spend the allocation in any specific expenditure account, provided that the total budget allocation at the major unit level is not exceeded.

Hiring for a new or unfilled position, in the administrative and support groups, is subject to the Administrative and Support Staff Posting and Hiring Guidelines. Budgets should be earmarked and available at the onset of the hiring process in order to proceed with hiring. For such matters always consult with the Faculty or Major Unit Financial Officer.

In general, additional resources are not allocated from central administration during the year. However, in truly exceptional circumstances, such requests may be made to the Office of the Provost, through the appropriate Vice-President. If approved, a budget transfer will be initiated.