Final Fund Consolidation Memo for FY13 - Madison Budget Office

Budget & Planning
780 Regent Street, Suite 241
Madison, Wisconsin 53718
(608) 263-4422 (608) 265-2090 Fax
e-mail: budget@uwsa.edu
website: http://www.uwsa.edu
Date: October 13, 2011
To:
From:
Budget Officers
Renee Stephenson
Budget Director
Re: Fund Consolidation Under the Block Grant for 2012-13
As you know, the 2011-13 Biennial Budget requires the Board of Regents to fund UW
institutions through a block grant. After the signing of the budget bill, the UW System
convened a group of Budget Officers and Controllers to make recommendations to the
Chief Business Officers (CBOs) regarding the implementation of the block grant, with
the understanding that, although mechanically the UW couldn’t accomplish the full
implementation of the block grant for Fiscal Year 2012, we need to prepare for the
implementation in Fiscal Year 2013.
The Budget Officers and Controllers suggested establishing four working groups
(Auxiliary and Program Revenue General Program Operations; Financial Aid; Gifts,
Grants, and Federal Aid; and UW-Extension Funding) to include those that manage funds
in the respective areas. These groups met in September and their recommendations were
reviewed by the CBOs at their October 5 th meeting.
With the understanding that the recommendations of the working groups could be
changed in the future to further roll-up funds that are currently recommended to be
maintained, the CBOs approved the recommendations of the working groups with one
exception.
The Financial Aid Working Group had recommended rolling-up three General Purpose
Revenue (GPR) financial aid funds (107-Student Aid, 173-Study Abroad, and 175-Fee
Remissions) into a single fund for GPR financial aid. The CBOs felt that these funds
could be properly accounted for in each institution’s GPR General Program Operations
Fund (101 at the Doctorals, 102 at the Comprehensives, 103 at the Colleges, and 104 at
Extension) by using the Financial Aid Program Code 9.
Attached is a revised summary of the final fund consolidation for 2012-13. The System
Budget Office will be working with The Division of Information Technology (DoIT) to
roll the funds up as provided in the attached document when loading the 2012-13 Annual
Budget. We will also be meeting in the next week with those from the Shared Financial

System (SFS) and Human Resources System (HRS) to begin discussions on the full
implementation of the funding consolidation for each of the respective Systems
beginning in Fiscal Year 2013.
It should also be noted that the Working Group on Auxiliaries and Program Revenue
General Program Operations recommended changes to what should appropriately be
charged to Fund 128 (Auxiliary Enterprises) and Fund 136 (General Operations
Receipts). That recommendation was also accepted and the meeting notes which explain
the new definitions are attached. Institutions should submit their 2012-13 auxiliary
budgets in line with these recommendations. Financial Administration will update all
related Financial Policies by July 1, 2012.
At the recommendation of the UW-Extension Funding Working Group an additional
working group (or working groups if needed) will be established to review the Academic
Information Series (ACIS) 5 and Board of Regent Policy Section 18 regarding the
interinstitutional agreement process, how UW-Extension related funding should be
allocated, budgeted, and accounted for, and to clarify the differentiation between the use
of Fund 189 (Credit Extension) and Fund 131 (Academic Student Fees).
The Working Group on Utilities will also continue to work throughout Fiscal Year 2012
to provide the CBOs with principals and funding distribution recommendations.
If you have any questions regarding the fund consolidation please let me know.
CC:
Chief Business Officers
Auxiliary Budget Officers
Fund Consolidation Working Group Members

University of Wisconsin System
Fund Consolidations Under the Block Grant
Auxiliary and Program Revenue General Program Operations Working
Group
Meeting Date: September 9, 2011
Notes Prepared by: System Office of Budget and Planning
Meeting participants were:
Madison: Donna Halleran
Milwaukee: Peter Alexopoulos, Dave Rice
Eau Claire: N/A
Green Bay: SuAnn Detampel
La Crosse: Kristen Stanley
Oshkosh: Petra Roter, Randy Hedge, Jean Kwaterski, Rose Ziebert, Jennifer Bergman
Parkside: Scott Menke, Carol Kinsley, Beth Frederick
Platteville: Jim Mueller, Cathy Reidl-Farrey
River Falls: Gregg Heinselman
Stevens Point: John Birrenkott, Bo DeDeker
Stout: N/A
Superior: N/A
Whitewater: Aimee McCann, Faye Skelton
Colleges: Colleen Godfriaux
Extension: Daniel Malacara, Carol Edquist
System Administration: Freda Harris, Renee Stephenson, Ginger Hintz, Laurie Grams,
Ralph Thiede, Jane Kraus, Luke Nelson, Paige Rusch
Funds 128 (Auxiliary Enterprises) and 136 (General Operations Receipts)
Maintain funds 128 and 136 separate under the block grant.
Financial Administration will continue the practice of requiring department ids for
tracking segregated fees and reporting reserve funds per statute 36.41 (1).
For financial reporting purposes program codes will continue to be used to
differentiate between sales and services of auxiliary enterprises, sales and services of
educational activities, and other sources as defined above under past practice for fund
128.
Define the activities that must be included in 128 in accordance with the NACUBO
Financial Accounting and Reporting Manual (FARM) 703.11 definition for auxiliary
operations for student, faculty and staff, and intercollegiate athletics (703.111 to
703.113). FARM 703.11 is below.
The remaining FARM 703.11 auxiliary categories (703.114 to 703.117) for other
auxiliaries, self-supporting enterprises, and information technology will be accounted
for in 136 unless an institution believes, given the definition of auxiliaries in the
previous bullet, they would more appropriately be 128.
If approved, Financial Administration will make the appropriate changes to the UW-
System’s financial policies.

NACUBO Financial Accounting and Reporting Manual (Sept. 2011)
703.11 Auxiliary Enterprises, Auxiliary Enterprises—Other, and Other Self-
Supporting Enterprises
An auxiliary enterprise exists to furnish goods or services to students, faculty, staff,
other institutional departments, or incidentally to the general public, and charges a fee
directly related to, although not necessarily equal to, the cost of the goods or services.
The distinguishing characteristic of an auxiliary enterprise is that it is managed to
operate as a self-supporting activity. Over time, the revenues will equal or exceed the
expenses, although in any individual year there may be a deficit or a surplus. Examples
are residence halls, food services, intercollegiate athletics (if operated as essentially
self-supporting), college stores, faculty clubs, parking, and faculty housing. Student
health services, when operated as an auxiliary enterprise, also are included. Hospitals,
although they may serve students, faculty, or staff, are classified separately because of
their financial significance.
The auxiliary enterprise category includes all expenses relating to the operation of
auxiliary enterprises. Because of a desire to assess whether the enterprise is selfsupporting,
an allocation of expenses for operation and maintenance of plant,
depreciation, interest, and administration is included, even though that allocation is not
required of public institutions for financial statement purposes. (Independent
institutions, however, are required to make the allocation.) Also included are other
direct and indirect costs, whether charged directly as expenses or allocated as a
proportionate share of costs of other departments or units. To ensure that data regarding
individual auxiliary enterprises are complete and adequate for management decisions,
cost data should be prepared using full costing methods. Full costing means that the
costs attributed to each enterprise includes a portion of indirect costs related to that
enterprise, as well as the costs directly attributable to its operation.
The auxiliary enterprise classification includes the following seven subclasses:
· Auxiliary Enterprises—Student
· Auxiliary Enterprises—Faculty/Staff
· Intercollegiate Athletics
· Auxiliary Enterprises—Other
· Other Self-Supporting Enterprises
· Auxiliary Enterprises—Depreciation
· Auxiliary Enterprises—Information Technology
703.111 Auxiliary Enterprises—Student - This subclass includes expenses for
auxiliary enterprise activities primarily intended to furnish services to students. A
student health service, when operated as an auxiliary enterprise, is included. However,
intercollegiate athletics are excluded from this category.
703.112 Auxiliary Enterprises—Faculty/Staff - This subclass includes expenses for
auxiliary enterprise activities primarily intended to provide a service to the faculty,
staff, or both. Such activities include the faculty club, faculty-staff parking, and faculty
housing.

703.113 Intercollegiate Athletics - This subclass includes expenses for an
intercollegiate sports program when the program is operated in accordance with the
definition of an auxiliary enterprise (that is, it is essentially self-supporting).
703.114 Auxiliary Enterprises—Other - This subclass includes expenses for
auxiliary enterprise activities primarily intended to furnish goods and services that are
related to the higher education mission. Customers for these goods and services
generally are not students, faculty, or staff. Entities of this type are formed to meet the
geographic and public service needs of a region and generally relate to an institution’s
mission of teaching, research, or public service. Examples of such an entity would be a
drug testing center or a university press department.
703.115 Other Self-Supporting Enterprises - This subclass includes activities that
were established primarily to provide goods and services to other campus units on a
fee-for-service basis. The following characteristics assist in identifying these units:
· They are self-supporting units that, over time, operate on a break-even basis for
those goods and services offered to other units.
· They may provide, to a lesser extent, the same goods and services to faculty,
staff, students, and related entities.
· The goods and services are provided at an institutional level. This characteristic
excludes enterprises that only serve units within the same department. For example, a
telecommunications department that services the entire institution would be considered
a self-supporting enterprise while the chemistry stores department that only services
other chemistry units would be reported net within the academic support classification.
Expenses incurred under this subclass should be netted against revenues since the
predominance of transactions is internal. Use of this classification does not preclude
entities from reporting these and similar activities in other functional categories (e.g.,
research, academic support).
703.116 Auxiliary Enterprises –Depreciation - This subclass includes depreciation
expense for facilities, equipment, and infrastructure assets of the institution’s auxiliary
enterprises. Independent institutions are required to allocate depreciation among their
functional classes. Public institutions may report depreciation expense separately,
include it with operation and maintenance of plant expenses, or allocate it among all the
functional expense classifications. If a public institution chooses to report depreciation
as a separate line item or to include all depreciation in the operation and maintenance of
plant classification, this subclass would not be used.
703.117 Auxiliary Enterprises Information Technology - This subclass includes
expenses for formally organized and/or separately budgeted auxiliary enterprise
information technology. If an institution does not separately account for information
technology resources, the costs associated with the three primary programs—
instruction, research, and public service—will be classified as academic support and the
remainder as institutional support.

Fund 228 (Auxiliary Enterprises – Capital Projects)
Maintain fund 228 as it eases reserve reporting and allows for easy differentiation of
how the revenues should be used.
Fund 123 (Principal Repayments, Interest, and Rebates)
A program revenue appropriation will be required, however it has not been
determined what that fund will be.
UW-Madison will work with Financial Administration to decide if they will roll
funds 192 and 193 into the larger debt service appropriation due to some potential
technical constraints regarding the transfer of funding for fund 193.
UW-Platteville will roll fund 194 into the larger debt service appropriation.
Funds 120 (Physical Plant Service Departments), 129 (Stores), 528 (UW-
Madison Athletics Auxiliary Enterprises, and 530 (UW-Madison Non-
Income Sports)
These funds will roll into either fund 128 or 136 as each institution deems
appropriate.