SUBJECT:  Budget Procedures

PROCEDURE NO.:  2D:01:02A                    DATE:   March 1, 1993

SUPERSEDES PROCEDURE NO.:  2D:01:02A         DATED:  July 1, 1991


A.  Summary of Content
B.  Introduction
C.  Budget Administration
D.  Re-Budgeting Salary Funds from Regular Positions
E.  Budget Discounts
F.  Processing of Budget Revisions
G.  Approval of Budget Revisions
Attachment  I - Valid Budget Object Codes/Object Code Pools Table

A.  Summary of Content

    Item                                              Section   

    Introduction and Purpose............................ B        
    General Budget Administration....................... C.1,2,3
    Overexpenditure/Overobligations..................... C.4,5,6  
    Carryforwards-General............................... C.4,7        
    Carryforwards-Equipment............................. C.7
    Proper Accounting of Expenditures................... C.5
    Budget where Revenue/Expenditure are Equal.......... C.8 
    Salary Lapse General................................ D.1,4        
    Salary Lapse from Recoveries........................ D.2          
    Salary Lapse other than Recoveries.................. D.3
    Base Salary Funds................................... D.5,6
    Funding of Promotions, Transfers,
      Reclassifications, etc............................ D.7
    Personnel Turnover.................................. D.5          
    Budget Discount General............................. E.1          
    Budget Discount - Creating a Discount............... E.2
    Budget Discount - Repayment of a Discount........... E.3
    Processing of Budget Revisions - General............ F. 1 - 6     
    Reversing a Budget Revision which has 
      been Processed.................................... F.7          
    Approval of Budget Revisions - President............ G.1
    Approval of Budget Revisions - Vice President or
      or Provost........................................ G.2
    Approval of Budget Revisions - Dean/Director........ G.4
    Approval of Budget Revisions - Department Head...... G.4
    Object Code Pools and Detailed Object Codes......... Attachment 1

B.  Introduction

    The University of Memphis prepares an annual "Operating Budget"
    which serves as a guide for financial expenditures for salaries
    and wages, travel, equipment, and other supplies and operating
    expenses.  The Operating Budget will be strictly adhered to in the
    administration of fiscal affairs.  No official is authorized to
    make firm commitments or incur obligations unless budget provisions
    have been approved.

    This procedure applies only to current funds (Ledgers 1, 2, 3, and
    4) and to restricted funds (ledger 5, grants and contracts from
    outside sponsors) to the extent that those funds are not covered by
    other procedures.

    Any exceptional situation to these procedures should be directed to
    the Office of Financial Planning.  

C.  Budget Administration

    1.  The University budget is divided into various "accounts" which
        generally constitute a department or activity.  For budget
        control purposes, each account number is considered separately. 
        Each account number is assigned to one designated responsible
        individual.  Any higher level official in the same organizational
        line may also approve or disapprove budget actions for an

    2.  Each budget account is divided into different areas for budget
        control purposes.  Funds are budgeted by detailed object codes
        or by object code pools per Attachment I, but expenditures are
        always recorded by detailed object classifications.  Specific
        accounts may be subject to different control groupings when
        approved by the Accounting Office.  Adherence to budget limits
        for each position or control area is required.
        The Account Administrator is responsible for and will take
        immediate action to correct any overexpended/overobligated
        condition.  The Office of Financial Planning will be informed
        and an Administrative Budget Revision will be processed to
        correct the overexpended/overobligated condition if the
        condition is not cleared in a timely manner.

    3.  Any specific requirements or conditions imposed upon the
        allocation of funds when approved will be followed. 

    4.  A budget administrator may overexpend and/or overobligate an
        account as defined below by five percent (5%) of the total
        amount budgeted or $5,000, whichever is less.  The budget for
        the following year will be reduced by the actual amount of such
        overexpenditures.  A carry-forward of unexpended budget amounts
        into the following fiscal year will also be provided up to 5%
        or $5,000, whichever is less.  The carry-forward of unexpended
        amounts is subject to availability of funds University wide.

        The amount subject to this provision is the net of supplies and
        other operating expenses, travel, and departmental revenues. 
        Not included in the amounts subject to this provision are
        salaries, staff benefits, and equipment.  Certain entire
        accounts are excluded from this provision; these include service
        departments, auxiliary enterprises, self-supporting or break-
        even activities, and other accounts budgeted for a specific
        fiscal year.   
    5.  Expenditures will be charged to the correct account or activity
        and to the correct object classification based upon an objective
        determination of the charge without regard to available budget
        balances.  If necessary, budget revisions will be processed to
        transfer funds to the proper account or budget control area.

    6.  Overexpenditures or overobligations of $25.00 or less in an
        individual personnel position or budget control category do not
        require a budget revision.  

    7.  Outstanding purchase orders for equipment (costing $500 or more)
        made at the close of the fiscal year will remain encumbered. 
        The budget for the activity will be increased in the following
        year by the amount of the encumbrance or the unexpended balance
        in the equipment budget, whichever is less.  The carry-over of
        any other encumbrances will not be made. 

    8.  In some cases there is direct relationship between expenditures
        which will be incurred and the amount of revenues to be
        realized.  Budget administrators in these cases are responsible
        for maintaining the planned relationship or for submitting
        requests for budget revisions, detailing corrections necessary
        to the budget.

D.  Re-Budgeting Salary Funds From Regular Positions

    1.  "Salary Lapse" is the term applied to salary budgets which are
        not expended.

    2.  Beginning July 1, 1993, salary lapse generated as a result of
        salary charges to sponsored projects (restricted funds) may all
        be rebudgeted by the department/activity.  Priorities on use, in
        order, must be to provide services for the individual's whose 
        salary was charged off, graduate assistants and research related
        activities.  (Current temporary provisions remain in place through
        June 30, 1993.)
    3.  All other salary lapse may be re-budgeted by the department/ 
        activity to achieve the duties of the related position.  Of   
        the remainder, 25% may be re-budgeted by the department/activity.

    4.  Certain accounts and activities will continue to be responsible
        for their own unused salary budgets.  (Included are all
        Auxiliary Enterprises, service departments, and Centers of
        Excellence).  Budget changes cannot be made between these units
        and any other units.

    5.  Base salary funds of positions in any of the University's pay
        plans will revert to the University's general fund when
        personnel turnover occurs.

    7.  Increases for clerical personnel and positions in the Pro-
        fessional Pay Plan will be funded by the University when the
        increase results from promotion, involuntary demotion, voluntary
        demotion, transfer, reclassification, or re-evaluation.  Budget
        increases caused by exceptions to the hiring range will be
        funded by the division, department, or activity.

E.  Budget Discounts

    1.  "Budget Discount" is the term used to request an advance of
        budgeted funds with the anticipation that the funds will be
        replaced by salary lapse, salary recoveries, or other funds
        available to the department/ activity.

    2.  Discount amounts are budgeted as negative amounts in the
        following object classifications:

            1160 - Budget Discount - Administrative/Professional
            1260 - Budget Discount - Academic/Professional
            1360 - Budget Discount - Clerical/Supporting

        These budgets will usually be in one account for each dean/
        director.  There are no position numbers associated with
        these budgets, and they will not appear on detailed salary
        reports which are listed by position, but will appear on 
        monthly FAM 090 and screen #623 in the FRS.

        As amounts are available to satisfy the budget discount, a
        budget revision should be processed.  Typically, the revision
        will decrease one or more regular positions, with the offset
        being to the budget discount account and object code.  (Since
        the budget discount is a negative amount, an "increase" will
        cause the discount budget to become smaller.)

        Establishing a budget discount requires the approval of the
        Provost or area Vice President.

    3.  The budget administrator who established the budget discount is
        responsible for either applying unused salary dollars equal to
        the discount budget or covering the amount in some other way. 
        The following provisions also apply.

        a.  Budget discounts will be established by object classification,
            but it is the total budget discount which is to be satisfied.

        b.  Unused salaries from sponsored activities may be re-budgeted
            before the total payroll discount budget is satisfied so long
            as there appears a good probability that the total discount 
            will be met.

        c.  Amounts may be re-budgeted to other forms of salaries (students,
            graduate assistants, temporary employees, etc.) or to non-salary
            object classifications such as equipment, supplies, printing,
            or travel.  These budget changes will be for the current fiscal
            year only and are subject to any other temporary budget re-

        d.  All re-budgeting of unused salary must be consistent with sec-
            tion D.2.

        e.  Budget discounts may be satisfied by reducing non-salary object
            classifications if desired.

F.  Processing of Budget Revisions

    1.  When a change to the current approved budget for an activity is
        required, a "Request for Budget Revision" should be processed. 
        A revision is not final until approved by the Office of
        Financial Planning.  

    2.  Instructions concerning preparation of the "Request for Budget
        Revision" are available from the Office of Financial Planning
        or The Users Guide for Business and Finance Services.  

    3.  Requests for Budget Revisions should be initiated at the lowest
        possible level and signed (manually or electronically) in
        accordance with the approval process in Section G of this

    4.  All officials in the normal chain of authority should approve
        a revision when it requires approval at a higher level.
    5.  The Office of Financial Planning is responsible for reviewing
        all budget revisions to insure that the revision contains all
        of the required approvals, is accomplishing the intent of the
        revision, and is properly prepared.  (Some electronic budget
        revisions will be reviewed after being processed.)

    6.  The Vice President for Business and Finance will review all
        revisions which must be routed to the President for approval.

    7.  Any higher level official may initiate a revision to reverse the
        effect of a revision with which he/she does not concur, but
        which did not require the official's signature on the initial
        revision request.

G.  Approval of Budget Revisions

    1.  President.  Revisions involving the following type items require
        approval of the President.  The President's approval may be in
        the form of a memorandum, contract, or other document which
        supports the budget revision when it is apparent that the
        President's signature on the supporting document recognized the
        need for and amount of the revision.

        a.  The creation of new, regular personnel positions or one-year
            appointments that will increase the total position count.

        b.  The establishment of a new activity or a major change in the
            scope of an existing activity.

        c.  The commitment of additional funding in future years.

        d.  Any shift of funds among or between Provost or Vice
            Presidential areas of responsibility.

        e.  All revisions affecting individual salaries or personnel
            positions not specifically delegated to other levels.

    2.  Provost or Vice Presidents.  Revisions involving the following
        type items will require approval of the appropriate Vice
        President or Provost.

        a.  Permanent shifts to base budgets, within the Provost or 
            Vice President's area.   
        b.  Current shifts among or between accounts under different
            Deans/Directors within the Provost or Vice President's 

        c.  Increases or shifts in the salary level of professional/
            administrative positions (staff) or the upgrade of
            salary levels in the Classification/Compensation plan,
            provided they are consistent with the University General
            Compensation procedure.  (Applies to Budget Revisions only,
            not to personnel actions.)

        d.  Re-budgeting of lapsed salaries, other than professional  
            recoveries from sponsored programs, to achieve the duties of
            the related position.
        e.  Establishing a budget discount.

    3.  Deans/Directors.  Revisions involving the following type of
        items will require approval of the appropriate dean/director.

        a.  Revisions shifting current year budgets among or between 
            departments or activities not under the same department
            head, but within the same dean/director area.

        b.  Revisions to the current year which include travel,
            equipment, revenue accounts (not "departmental revenue"),
            and transfers to other Fund groups.

        c.  Providing budgets equal to actual expenditures, where
            separate budget holding accounts are maintained (such as fee
            remissions, summer instructors, part-time instructors, and
            graduate assistants.)

        d.  All shifts within the area involving group salaries for
            part-time instructors, summer instructors, supplement pay
            (overload and extra compensation), and graduate assistants.

        e.  Providing increased revenues and expenditures when revenues
            are at least equal to expenditures and there is a normal
            direct relationship between revenues and expenditures.

        f.  All re-budgeting of lapsed salaries from professional
            recoveries on sponsored projects, consistent with the policy
            on use of lapsed salaries and the re-budgeting of the 25%
            portion of other salary lapses.                            
    4.  Department Heads.  Revisions not specifically requiring approval
        by the President, Provost, Vice President, or Dean/Director may
        generally be approved by the activity head.  The following type
        revisions may be approved by the department head.
        a.  Current year shifts to, from, and among supplies and expense
            objects, stores for resale, departmental revenue, longevity,
            clerical overtime and temporary salaries, and student  
            salaries, for accounts under the same department head.
        b.  Establishing "cost sharing" accounts where the sponsored
            project budget has already been approved in accordance with
            other University requirements.  Must be approved by the
            Grants and Contracts Section of the Accounting Office.

        c.  Revisions within restricted accounts permitted by the sponsor.

Attachment I


Salaries - Each position number is considered separately for budget
control purposes.  (Object Codes 1100 - 1999)

Employee Benefits (when applicable) - (Object Codes 2100 - 2199)

Object Code Pools -

Travel                                            3000        
Printing, Duplicating & Film Processing           4100
Communications and Shipping Cost                  4200
Maintenance/Repairs/Service by Others             4300
Professional and Administrative Services          4400
Supplies                                          4500
Rental and Insurance                              4600
Awards and Indemnities                            4700
Grants and Subsidies                              4800
Other Service and Expense                         4900
Equipment                                         8100

Detail Object Codes will be used for the following for both budget
and actual transactions:

Utilities and Fuels                               5110 - 5190
Motor Vehicle Operations                          5210 - 5290
Stores for Resale, Reissue, or Manufacture        6111 - 6120
Department Revenues                               7110 - 7710
Land                                              8211 - 8290
Buildings                                         8311 - 8312
Improvements other than Buildings                 8411 - 8499
Library Holdings                                  8511 - 8590
Capital Outlay - Transfers                        9110 - 9170
Other - Indirect Costs                            9211 - 9282