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BUDGETING


FRS accounts may exhibit two types of budgeting at the University. The 2 types are Automatic Budget Reallocation (ABR) and Line Item Budgeting. Only the FRS subsidiary ledger accounts (a.k.a. SL accounts) are given budgets as they are the only accounts that have expenses and revenues associated with them. The SL account subcodes reflect expense, revenue and budgeting activity. An SL account may use both types of budgeting simultaneously. In other words, the SL account may have budget pools that will reallocate budget dollars (ABR) to cover expenses for some subcodes under the SL and it may also have subcodes that do not take money from a pool, but instead have their own budgets (line-itemed).

ABR budgeting reallocates dollars from a budget pool to subcodes that follow the specific ABR rule. These pool dollars must be spent or encumbered immediately. Line-item budgeting means that the subcode does not take money from a pool, but instead has been setup with its own budget from which it will cover its expenses. Subcodes that are line-item budgeted do not follow an ABR rule. All subsidiary ledger subcodes will either be assigned to take money from a pool or have their own line-item budgets setup. Therefore, SL accounts will often display both types of budgeting.

How can you tell if a subcode follows an ABR rule or is line-itemed budgeted? Go to screen 41. This screen is viewed by entering a 10-digit account, which means you must enter the 6-digit base of the SL account along with its 4-digit subcode, the detail of an expense or revenue. So, if we wanted to view the type of budgeting that occurs on subcode 1010 for account 288000, I would need to go to screen 41 and type in the account number 2880001010 to get my information. Here's an example:

Example 1

The 1010 subcode for account 288000 follows the ABR rule 3, which means that this subcode will get any dollars it needs to cover expenses from the pool assigned to it by ABR rule 3. For subcodes that are line-item budgeted with their own budget dollars and do not take money from any pool you would see a "zero" in this field. A zero means that the subcode does not follow an ABR rule since they have their own budgets. The example below shows that subcode 2100 for account 288000 has its own budget and no money is reallocated from any pool to it. Notice the '0' under the ABR column indicating that the subcode does not follow an ABR rule since it is line-item budgeted.

Example 2

The budgeting methods are described in detail below:

Automatic Budget Reallocation (ABR)

This type of budgeting occurs when a subcode that is evenly divisible by 1000 is setup as a budget pool to fund the dollar needs of subcodes in its pool range. There is an ABR rule assigned to each SL account. An ABR rule of 3 indicates that any SL account assigned this rule would conceivably have 2 budget pools, the 1000 and the 2000 pool. These pools cover the dollar needs of subcodes falling within their ranges (see the ABR rules under "Useful References"). These pools reallocate dollars to the subcodes within their ranges only if the dollars needed will be encumbered or spent immediately. So, as a subcode needs dollars, they will be reallocated from the pool to the subcode's expense and/or encumbrance columns found on screen 19. Let's look at an example.

We will use SL account 288000. The ABR code for this account can be found on screen FS6 on FRS. It is located in the upper right hand corner of the screen and is underlined in RED below:

Example 3

Looking at our ABR table you will see that ABR 3 consists of 2 pools; the 1000 pool and the 2000 pool, each covering two different ranges of subcodes. Account 288000 has an ABR rule of 3, so any subcode that takes money from the 1000 or 2000 pools will have an ABR of 3 on screen 41. This is what the ABR 3 rule looks like:

Pool 1000
Range 1001 -- 1999
Range 5320 -- 5329
Pool 2000
Range 2001 -- 5319
Range 5330 -- 9399

Notice that any subcode within the 1001-1999 range would have expense needs met by the 1000 pool. If you look back at Example 1 you will see that subcode 1010 has taken $145,921.96 from the 1000 pool so far. This value is found under the "ABR Amount" field. Another point to note is that the "ABR Amount" that subcode 1010 took from pool 1000 will equal the "Annual Budget" amount. This is because the 1010 subcode has a zero budget at the beginning of the year since dollars are reallocated to it from the 1000 pool throughout the year. The "Budget Balance Available" field for the 1010 subcode should always be 0 since a subcode that takes money from the pool must always spend or encumber the amount immediately. A subcode that follows an ABR rule must always use all the pool dollars immediately, therefore it will always have a BBA of 0.

Line Item Budgeting

This type of budgeting occurs when a subcode has been given its own budget. Subcodes that have been given their own budgets do NOT receive money from any pool. No automatic budget reallocation occurs when the subcode needs dollars, therefore, no ABR rules apply to these subcodes. Once these subcodes have spent their budget dollars, the fiscal manager needs to process an A1 transfer to move dollars into these subcodes to avoid overspending. Please visit the Budget website, http://www.budget.uconn.edu/, to learn about the A1 transfer process.

If you look back at Example #2 for subcode 2100 under account 288000 you will see that the value under the ABR field on Screen 41 is "0", meaning that subcode 2100 is Line Item Budgeted. The $500 budget dollars that this subcode was granted at the start of the year appears in the "Annual Budget" field. You will also see under the "Budget Balance Available" field that the subcode has a remaining budget of $298.38.

 

PUTTING IT ALL TOGETHER

So, what does all this mean with respect to managing your accounts? Well, it is always nice to know if you have enough money for your expenses, right? Screen 19 is what gives us our budget balances available for all the account's subcodes at a glance. Here is screen 19 for account 288000. Notice all subcodes under this account including the pools are listed to the far left and the budget balances for each subcode are listed in the far right column. Remember that this account is ABR rule 3 and so will have two budget pools, the 1000 (Sal&Wage Budget) and the 2000 (Cntrctl Budget). You will see the summary lines for each of these pools in the example below. As displayed below, "Salaries & Wages" has spent $565,859.34" and encumbered $423,908.89 with a budget balance available of $22,188.14. This also happens to be the balance of the 1000 pool, which makes one think that subcodes 1010 through 1730 are funded by the pool as it is required that these subcodes never have a budget balance. This is not necessarily the case, however, if you use screen 41 and view each on an individual basis.

Viewing screen 41 for each subcode in the 1010 thru 1730 ranges shows that subcodes 1120, 1630 and 1730 are line-item budgeted meaning that they were granted their own budgets at the start of the year and do not receive any dollars from the 1000 pool. A budget balance available of zero for these three subcodes simply means that they have spent all of their budget dollars already. It is fine for line-item budgeted subcodes to have a value in the Budget Balance Available column. We must be careful that the budget is not overspent, which would make the balance negative. Once a budget balance of zero is reached for line-itemed budgeted subcodes it could easily become negative. If we had additional expenses under them, we would need to fill out an A-1 form to move dollars from another pool (2000 in this case), another line-item budgeted subcode or another SL account into these subcodes in order to prevent them from going negative .

The remaining subcodes under the "Salaries & Wages" category follow ABR rule 3 as indicated on screen 41. These subcodes will always display a 0 balance since as they receive their money to cover expenses from the 1000 pool and must spend or encumber them right away. Therefore, we always look to make sure that the pool contains enough budget dollars to cover the expense needs of the subcodes it supports. If not, an A-1 form will need to be filled out to transfer dollars into the pool. Again, we want to prevent the budget balance available from going negative. It just happens to be the pool's balance this time instead of a line-item budgeted subcode such as 1730.

The ultimate goal, therefore, of the fiscal manager is to insure that your budget balance available column reflects either 0 or a balance. Here are the items to be aware of:

  • If the subcode is a Pool, you would like to be sure that the budget balance available always reflects enough dollars to cover the expenses of the subcodes that the pool reallocates dollars to. The pool budget balances should not go into the negative. They should either have a balance or be zero (as at the end of the fiscal year).
  • If the subcode is a Line-Item Budgeted subcode, you will need to make sure that the budget balance available never drops below zero.
  • If a subcode receives its dollars from a pool, the budget balance must always be zero.
  • To prevent negative balances in your pools and line-item budgeted subcodes use the A-1 form.

Remember, it is screen 41 that tells you how budgeting occurs in a particular subcode.

      
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Last updated: 11/21/11