Resource Allocation and Budgeting Procedure

Purpose

These procedures describe the resource allocation model used by the University and the processes and timelines for the budget cycle.

The University's system of budgetary and financial controls allows the devolution of financial responsibility to the individual Divisions and Departments within the University. Each Department has a key role in ensuring that University objectives are met and outputs are produced.

Definitions

EFTS

“Equivalent full-time student” is a unit of measurement of a student's enrolment and is the basis of the funding system for the University.

ITS

Information Technology Services Division

Content

Budget overview

The budget is prepared annually and is usually scheduled over four months, typically from July to October each year, and presented to the University Council for approval. Prior to this it is considered by the Senior Leadership Team and approved by the Finance and Budget Committee.

The budget preparation is an important process. Heads of Departments and Cost Centre heads advise the Divisional head of the resources required to produce the agreed level of outputs or service. This should be done in the standard budget submission document for service divisions. Academic Department Heads should take advice from the Divisional Office.

Budget Pack

A Budget Pack is prepared by the Budget Accountant and distributed annually. This pack contains the budget submission template for Service Divisions.

The following information is included for Academic Divisions:

• EFTS by paper
• Income summary
• PBRF information
• Cost driver information
• Funding model by cost centre
• Funding model summary

The following charges, previously distributed in budget packs and salary templates, are loaded into the budget module in Finance One:

• Base salary data and salary related costs
• Insurance
• ITS charges
• Internal charges (rent, energy, cleaning and car parking)
• Trust information
• Depreciation

Training

The Financial Services Division Training Programme includes training on the budget module which is timed to coincide with service division and academic division budget preparation.

Budget guidelines

Guidelines are prepared annually and are available on the introduction page in each budget pack within the budget module. The guidelines should be read prior to commencing the preparation of the budget.

Budget advice

Additional advice or assistance is available from the Division's Financial Analyst.

Budget review

The budget review takes place from April to June each year after enrolment and course changes are known. The Funding Model is recalculated to take into account the updated EFTS information.

The budget review is also used to correct any major errors and allow for any major changes in objectives and outputs. The approval process for the budget review is similar to that for that original budget.

Funding model overview

The purpose of the funding model is to allocate resources to the four Academic Divisions of the University.

The first step is the estimation of the income, for each Division, from the Government grant and student fees based on the forecast EFTS for the budget year.

The next step is the calculation of deductions from the income for the following items:

• Capital Component – a fixed amount per EFTS and is used to partially fund capital expenditure
• International Student Levy – an amount deducted for each international student providing central funding
• Service Divisions – deductions are made for service Division budgets
• Central Committees and contestable funds – deductions are made for each of the contestable Committee budget and contestable funds for special purposes
• Fiscal Strategy Adjustment – A deduction may be made to meet the fiscal objectives set by University Council.

Service Division allocations

The main function of the Service Divisions is to provide ancillary and support services to the Academic Divisions. Service Divisions are required to prepare zero based budgets for ongoing activity. These budgets are scrutinised by the Special Budget Committee to ensure that the ongoing budgets are reasonable for the level of service performance required.

The Non Academic New Initiatives fund is a contestable fund which is available for new initiatives put forward by the Service Divisions and Central Committees. The Vice-Chancellor invites bids for allocations from this fund.

Several departments within the Service Divisions are required to recover costs by directly charging for the services provided. These units are described as "Business Units" and the process is called “Full Cost Recovery”. Business Units are required to budget for break-even (income less expenditure equals zero). Expenditure includes depreciation but excludes capital expenditure. The Business Units include Property Management Unit, Information Technology Services, and Uniprint.

Central Committees and contestable funds

The Central Committees funded through the Funding Model are the Research Committee, Internationalisation Committee, Committee for the Advancement of Learning and Teaching (CALT), Risk Management Committee, Animal Welfare Committee and the Scholarships Committee. These Committees submit budget submissions based on forecasted need. A funding allocation is made after considering the strategic importance of outputs. The Research Committee allocates budgets to staff members for research projects based on the merit of proposals and to further the objectives set out in the University Research Plan.

The Internationalisation Committee promotes the achievement of the goals and objectives of the Internationalisation Management Plan and provides international scholarships and financial support for student exchange.

The Scholarships Committee provides funding for many of the University's awards and scholarships to promote excellence.

The Committee for the Advancement of Learning and Teaching promotes excellence in teaching, learning and assessment. The Committee supports innovative developments, internationalisation of programmes and curricula, and fosters and facilitates research into teaching.

Several contestable funds also exist to allocate funds for proposals that help achieve the University's objectives and outputs and where funding is not available elsewhere. The current funds are the Academic Development Fund supporting new academic initiatives and the Teaching Development Fund encouraging the development of new teaching methods. Interested Departments or staff members should contact the Divisional office in the first instance.

Related policies, procedures and forms

• Financial Monitoring and Control Policy
• Financial Monitoring Procedure
• Financial Delegations Policy
• Schedule of Financial Delegations

Contact for further information

For further information, contact:

Michael McAlpine
Senior Manager Strategic Finance
Tel +64 3 479 8222
Email michael.mcalpine@otago.ac.nz