Managing Departmental Budgets

As chair you are the financial manager for your department. This means you are responsible for all accounts associated with your department, including educational & general (E&G), indirect cost recovery (IDCR), grants, foundation, and revenue accounts. Not all departments have all those types of accounts, but most do. One of the first tasks you should tackle as a new chair is to meet with your staff and review the accounts. If you have questions, do not hesitate to call the dean's business officer. S/he will be happy to spend as much time as necessary familiarizing you with your account information.

At the end of the fiscal year (June 30), surpluses or minuses in your accounts are carried forward into the next year. You want to be sure you don't have minuses. Minuses in IDCR and grant accounts that fall under your department will be charged to your departmental account.

Routine budget tasks

Meet with your staff at least once a month and verify they have attended to the bulleted items below. If these things are not being done, you are flirting with disaster. Ask questions! Actually look at the budget reports yourself. Set priorities and timelines for resolving budget issues.

  • Review payroll records after each payroll. There are three payrolls each month: one for salaried employees and two for hourly-paid employees. Make certain your department has paid the appropriate people. Remember, 93% to 97% of your departmental budget is in payroll expenses.
  • Reconcile travel and operating budgets.
  • Move funds between account codes to cover deficits.
  • Basic budget terms and definitions
  • Education and General (E&G) funds represent the portion of the university's budget supplied by the State of Tennessee and student tuition.
  • Carry forwards are budget surpluses or deficits that roll into the next fiscal year. The carry forward roll typically occurs early in the fall semester.
  • Indirect Cost Recovery (IDCR) funds are charged to grants in order to support faculty research infrastructure. The Principal Investigator (PI) and the PI's department each receive a share of the IDCR from a grant. Each PI and each department has an IDCR account.
  • Salary recovery funds are recouped by the department when a portion of a faculty member's salary is charged to a grant. Salary recovery funds are deposited directly into the main departmental account and may be used for departmental needs.
  • Buyout is another term commonly used to describe the salary recovery funds a faculty member brings in from grants. Use this term interchangeably with salary recovery.
  • Faculty incentive pay is available to faculty who bring in salary recovery funds from their grants. The faculty member is eligible to receive a maximum of 50% of the salary recovery funds s/he brings to the department, minus any costs the department incurs due to the loss of the faculty member's effort. For example: The department pays $2,025 for a part-time instructor to cover one of the PI's classes. The $2,025 should be subtracted before the faculty incentive payment is calculated.
  • Release time is a percentage of time a faculty member may be released from duties (teaching or other). Buyout is a form of release time, but not all release time is buyout. For example: A faculty member is released from teaching a course one semester because s/he is chairing the department curriculum committee. This is release time, but it is not buyout because the department receives no money.

Some important miscellaneous budget tips:

  • Benefits and graduate student fee waivers follow the account to which the salary is charged. If salaries are charged to E&G accounts, the university covers the benefits and fee waivers. If salaries are charged to a budget with any fund number other than 110001 (E&G), the budget must also support the benefits and fee waivers. In other words, if you buy a postdoc or graduate assistant using start up or IDCR, the benefits and fee waiver charges are also charged to that account.
  • Lapsed salary for vacant positions is not returned to the department. Staff salary lapse goes 85% to the financial planning office and 15% to the provost's office. Faculty salary lapse goes 100% to the provost's office. The dean's office may make a request to recover salary lapse for special needs, but the answer is frequently a resounding 'No!'—especially in the second half of the fiscal year.
  • Computers must be purchased through the university's procurement department. You cannot buy a computer at a retail outlet and be reimbursed by the university.
  • Purchases over $5,000 must be bid out by the university.
  • There are tons of rules regulating purchases at the UofM. Check with your staff before you buy anything. If in doubt, call the dean's office.
  • Get a travel authorization (on-line travel purchase order) BEFORE you travel. If you travel out-of-state without having the travel authorization in place, you will be stuck with the bill.
  • There are many year-end budget deadlines between April and June. Pay attention to email notices coming from the vice-president for finance or the financial planning office. They are not kidding around.
  • University funds may not be used to purchase alcoholic beverages or flowers. For other types of purchases, use good judgment. If you would be embarrassed to read about it in the Commercial Appeal, don't do it.