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Index
 What is the difference
between cash and budget authority?
Cash is generated through revenues/fees assessed for the
provision of a good or service. Cash is the driving force
behind auxiliaries and local funds, thus the key to financial
sustainability. All expenditures whether salaries, other
personnel services, expense or operating capital outlay in
nature are paid for from cash balances. A negative cash balance
is indicative of a problem that needs to be addressed immediately
to prevent the problem from getting worst and in order to
avoid negative balance interest penalties which will make
the deficit grow. One of the primary goals of any auxiliary
should be to maintain a healthy cash flow and preferably
to grow bottom line cash balances. A healthy operating cushion
can provide funds for a slow down or an unexpected charge.
The full understanding of cash balances in the Auxiliary
Trust Funds and Local Funds is central to operations and
any remaining questions should be forwarded to the University
Business Office without hesitation.
Budget authority is an estimated dollar amount used for
planning revenues and expenditures in the beginning of the
fiscal year. This figure does not have to equal actual cash
balances on hand. The main difference is that while cash
is a real figure, budget authority is an estimation of operational
activities during the fiscal year. As a safety feature, all
departments are required to have both cash and budget authority
in order to spend. Neither cash nor budget authority by themselves
are sufficient to safeguard financial integrity. A reliance
on cash only would eliminate the operational planning aspect
thus making it almost impossible to determine whether or
not goals and objectives are being achieved. A reliance on
budget authority only could result in expenditures being
approved up to a planned amount with the risk of revenues
falling short forcing a real cash deficit situation on the
Trust Fund. It is from the dual requirement of the planning
aspect of budget authority and cash generated from real transactions
that fiscal integrity is maintained. Note, budget authority
is specific to operating categories unlike cash. Therefore,
it is possible to have sufficient cash but have a requisition
rejected due to a lack of budget authority in OCO if a computer
were being purchased without the appropriate OCO budget authority
in place. In a situation like this, budget authority can
be transferred from another category if available or a request
for additional budget authority can be submitted to the University
Business Office. [ Back
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What is the difference between the Auxiliary Trust
Fund and E&G?
The Auxiliary Trust Fund is a self-supporting entity generating
revenues from the sales of services and goods to other entities.
In essence, the auxiliary units operate under similar financial
guidelines as that of private sector companies. An auxiliary
which fails to generate sufficient revenues faces critical
factors such as operational cutbacks, restructuring and possibly
layoffs if recovery measures fail to take hold. In essence,
there are no guarantees of continuing existence into the
future and all monies are earned through market transactions.
On the other hand, E&G is appropriated by the State through
lump sum appropriations funded by sales taxes, student fees
and lottery funds. This type of funding is mostly incremental
by nature with some additional monies usually added to the
base funding level. Currently, E&G funding is not based
on actual performance standards. The funding level from the
previous year will likely be the base for the following year
with the possibility of some additional increment applied.
In summation, the stakes are higher for auxiliary units but
the greater risk is rewarded with greater flexibility and
the ability to determine a units own destiny by how much
revenue is generated. [ Back
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How do I start a new auxiliary?
All new auxiliaries must complete the “New Auxiliary
Account Request Form” which ask for basic supporting
documentation, “New Auxiliary Position Request Form” also
known as attachment 1 if a salaried position(s) is going
to be funded from the account, “Auxiliary Financial
Projections” attachment 2 which is a three year forecast
and a signature authorization form which is sent to the Controllers
Office once the first three forms are approved by the University
Business Office. All forms are available on this website
under the toolbar heading of (online forms). Any question
regarding the completion of any of these forms should be
directed to the University Business Office (UBO) at extension
1122. Once forms are properly completed and accepted, the
estimated turnaround for the account to be fully operational
is one to two business days. [ Back
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How do I hire a new employee in an existing auxiliary?
Attachment 1 “New Auxiliary Position Request Form” and
attachment 2 “Auxiliary Financial Projections” must
be completed and submitted for approval to the University
Business Office PC520. Due to the recurring nature of employee
cost, the economic viability of the operation must be reassessed
to determine whether or not the additional cost will impact
long-term financial integrity when a position(s) are requested.
The aforementioned forms are available under the (online
forms) section of this website. Since salaries are typically
70% of most operations, the material significance of this
action warrants full review. The University Business Office
encourages any dialogue or questions regarding this issue
to be discussed with the UBO. Please refer to the “Contact” heading
in the toolbar for a list of names and numbers that are available
for assistance if needed. [ Back
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What happens to my cash balances on June 30th fiscal
year end?
The auxiliary ending cash balances on June 30th are rolled
over as beginning cash balances on July 1st. Therefore, unlike
E&G accounts that have there available balances swept
at the end of the fiscal year, auxiliary accounts rollover
all of their unused cash with no time limitation for spending
of those funds.
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What type of budget methodology is used in the Auxiliary
Trust Fund?
The Auxiliary Trust Fund is based on a zero-based budgeting
methodology (ZBB). Under this type of system, departmental
units should use their historical actual performance as a
reference to estimate next fiscal years revenues and expenditures.
Historical actual expenditures are used as a base when requesting
budget authority for a given fiscal year. Requested increases
beyond the historical years using an assigned threshold percentage
(ex. 10%) are required to be supported by documentation that
fully explains the reasons for the requested increases. The
ZBB methodology is used in the Auxiliary Trust Fund since
past performance is no guarantee of future results. In other
words, it is possible to have a stellar year followed by
a less prosperous one. [ Back
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What is a modified zero-based budget?
A modified zero-based budget is an extension of a typical
zero-based budget that includes “What-If” contingency
planning scenarios. For example, three versions can be submitted
that include one budget scenario if allocations were reduced
by 10%, a status quo departmental request and an allocation
scenario depicting how resources would be used if a 10% increase
were granted. In summation, this methodology ask unit managers
what would they do if faced with a budget reduction or increase
of varying percentages. The prudent financial manager should
always be prepared to answer this type of question as well
as scanning the horizon for eminent changes. Since the environment
is dynamic (ever changing), the answers to these type of
questions should be re-evaluated on a regular basis. [ Back
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What are the operating dates of the fiscal year?
The fiscal year for all funds is July 1st through June 30th
of the following fiscal year. For example, the 2002-2003
fiscal year begins on July 1, 2002 and ends on June 30, 2003.
[ Back to top ]
How can I request additional budget authority during
the fiscal year?
Any auxiliary which does not have any budget authority available
for shifting from one category to another or from another
account may request additional budget authority from the
University Business Office. Please complete the form titled “Request
for Additional Budget Authority” available in the (online
forms) section of the website. Once completed, the form can
be hand delivered, faxed or e-mailed to the UBO for review
and processing. [ Back
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Why is auxiliary overhead charged to my account?
In 2002-2003, the auxiliary operations will generate approximately
$60 million dollars in transactions. In order to offset the
E&G personnel cost that this volume of transactions creates,
positions are funded through auxiliary dollars in departments
such as Purchasing, Controllers Office, Human Resources,
Computing and the University Business Office. The overhead
charge began its authorization through a Chancellors Memorandum
stating that each university shall establish an appropriate
overhead charge which will ensure that all Non-E&G budget
entities assume fiscal responsibility for the costs of support
services. Presently, the overhead charge applied is 4% on
actual expenditures in the salary, OPS and expense categories
only. [ Back to top ]
What does the auxiliary budget cycle encompass?
The auxiliary budget cycle will begin in March/April and
begins with a set of documents sent to every auxiliary operation
at the University. The documentation will include actual
performance figures as current as possible, a list of filled/unfilled
positions by department and a memorandum with detailed instructions
of what is new for the approaching fiscal year, policies
and procedures, submittal dates as well as contact information
for questions and where to submit completed request forms.
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What happens if my cash balance becomes negative?
Auxiliaries that experience a deficit cash balance need
to address this issue immediately. The University Business
Office is available for assistance with this matter. Therefore,
not only is a negative cash balance a signal of fiscal and
operational instability, but will only get worst if not addressed
due to the interest income penalty. [ Back
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What is meant by the term cash flow?
Cash flow refers to revenues generated from the basic operating
activity of an auxiliary unit. A healthy cash flow balance
helps individual operations from regressing into negative
cash flow territory. Ideally, operating revenues should cover
operating expenditures in order to maintain positive cash
flow. The level of decline, stability or growth in cash flow
is indicative of management’s reaction to the environment
and how well opportunities are capitalized on or contingencies
are dealt with. It is important to note that cash flow does
not factor commitments such as encumbrances, accounts receivables
and/or accounts payable but rather transactions that have
been recorded resulting in a real inflow or outflow of cash.
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Can capital projects be financed by auxiliaries?
Capital projects are large scale, long-term projects requiring
significant cash commitments or debt service through pay-as-you-go
or revenue bond instruments for the most part. At a minimum,
a departmental unit or activity must demonstrate solid financial
strength presently and in projected cash flow typically five
to twenty years out depending on the amount and term of the
loan. All requests for capital project financing must be
approved by the University Business Office. [ Back
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What is the difference between a general obligation
(GO) bond and a revenue bond?
A general obligation bond is a debt instrument issued for
the acquisition of a capital project. This type of bond is
repaid by the issuing government body typically from sales
taxes at the state level and property taxes at the local
level. Since the full faith and credit of state and/or municipality
is at stake, the probability of default is extremely low.
This is “full-faith and credit debt” meaning
that the jurisdiction’s tax resources are pledged for
the repayment of principal and interest. GO debt requires
bond counsel blessing during the underwriting process and
is considered to be one of the most secure types of debt.
However, obtaining GO debt is not easy since voters must
agree to it by referendum. The University does not issue
GO bonds based on the fact that we are not a government body
collecting a pledgeable tax base.
A revenue bond is a debt instrument used to finance projects
from which a portion of the projects revenues are set aside
to pay back the loan. An example of this type of bond use
is housing projects from which a portion of occupancy revenues
are used to pay off the outstanding loan balance. Other examples
of revenue bond use include parking garages, municipal hospitals,
turnpikes and port authorities. Since this type of project
financing is significantly dependent on the projects operating
performance for repayment, the underwriting process for this
type of bond is more comprehensive than that of general obligation
bonds. Revenue Bonds are riskier than GO debt and typically
carry a slightly higher interest rate. It is important to
note that in light of tight operating budgets, the trend
reflects a decline in general obligation debt and an increase
in revenue bond usage. [ Back
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What is Pay-As-You-Go financing?
This refers to capital projects or goods/services of large
dollar cost. This type of financing simply means that the
full brunt of the expenditure is absorbed at a single point
in time versus being spread out over multiple years. This
type of action requires a healthy bottom line both to absorb
the project cost and to maintain a sufficient working capital
for basic operational costs. One of the benefits to this
method is debt service interest savings since the project
is fully paid for upfront. [ Back
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What is interest income also known as investment
income?
Interest income is an amount paid on a semi-annual basis
to auxiliary units that maintain a positive average balance
over the prior six months. The rate of interest varies with
economic forces and investments and the corresponding interest
income returns are administered by the State Treasury. Negative
interest income on the other hand is assessed to departments
that maintain a negative cash flow balance over the same
duration of time. [ Back
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Are there limits to what auxiliaries can charge
for services?
While a defined ceiling is not specified, the amount typically
charged is an amount sufficient to cover all associated costs
with providing a good and/or service as well as some provision
for depreciation, capital funding and reserves. Every auxiliary
should strive to grow their bottom line in order to foster
a healthy operation that can weather a downturn in demand
while charging an amount that is competitive in comparison
to private sector providers. [ Back
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Can auxiliaries provide products or services to
the private markets?
The FIU auxiliaries do not provide products/services to
the open market due to the tax exempt status of the University.
Doing so would provide the University with an unfair competitive
advantage versus private sector companies that must collect
and pay taxes. The typical exception to this reference would
be the Continuing Education Activity. Since the University’s
mission is to extend knowledge to the community, this type
of activity is warranted and valuable due to the intellectual
benefits offered. [ Back
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How do I transfer budget authority?
By completing a budget transfer form and submitting the
request to the University Business Office. Budget authority
can be transferred within the same category such as salary
category to salary category as long as the department numbers
are different. Conversely, budget authority can be transferred
cross category within the same account or multiple accounts
such as salary to expense category. Budget transfer forms
for auxiliary and local fund transactions are available in
the (online forms) section of this website. In order to maintain
trust fund balance integrity, cross fund transfers are not
permitted. Examples of cross fund transfers include requesting
a transfer of funds from an auxiliary account to the sponsored
research trust fund, E&G and/or local funds. [ Back
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How do I initiate a cash transfer?
A cash transfer can be processed by completing the cash
transfer form available in the (online forms) section of
the website. It is important when requesting a cash transfer
that sufficient cash remain in the account to support operational
activity. Current departmental cash balances can be verified
by accessing (account balances) on this website. Requested
cash transfers that are properly completed and accepted will
be normally processed by the end of the next business day
with same day service provided as possible. [ Back
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What is depreciation?
In the auxiliary trust fund, purchases of equipment are
depreciated based on a five-year scale. A computer purchased
for $2,000 and depreciated for five years will result in
a straight-line depreciation schedule of $400 a year. At
the end of the first year, the remaining value of the unit
is $1,600, at the end of year two $1,200, etc. until the
value equals zero and the unit is fully depreciated. The
depreciation replacement account in the auxiliary trust fund
is designed to plan for the cash outflow necessary to replace
obsolete equipment once the useful life has expired. In other
words, departments are creating a set aside fund that spreads
the cost of replacing obsolete equipment over the useful
life of the original equipment in order to avoid a large
capital outflow from operating funds. This system also provides
a mechanism through which capital needs can be forecast as
well as minimizing the effects of forward shifting if a unit
manager is retiring soon. [ Back
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How do I prepare a business plan?
A business plan is a comprehensive document that reflects
the units mission, goals/objectives and strategies chosen
to ascertain the goals/objectives. Besides a fact sheet that
details the purpose of the business, financial forecast are
provided typically for three to five years with target dates
set for goal attainment. A business plan is integral to understanding
the components of an organization such as the inputs (labor,
materials, etc.), outputs (what was provided or produced
and how efficiently) and outcomes (how effective were the
goals and objectives achieved). Although outputs and outcomes
are estimated, they provide an analytical framework. In summation,
a business plan is a map describing specific courses of action
on how to navigate from point A to Z. [ Back
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Are there training sessions available on how to
use some of the financial management tools?
Formal training programs are not available at this time,
but will be provided in the future. However, any individual
seeking assistance with any aspect regarding their auxiliary
and/or local fund account is encouraged to contact and/or
visit the University Business Office for personalized assistance
at PC 520 or call extension 348-1122. [ Back
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When are next fiscal year’s budget request
initiated?
Historically, new year budget request were normally begun
in June with final year-end figures and a position listing
being distributed in the first week of July for estimating
purposes. However, the University is now formalizing budgets
for all entities earlier with final submission dates to the
Board of Trustees typically in May. This represents an added
responsibility of estimating next years budget without the
advantage of the prior years full activity available as a
guideline. However, departments can also review their historical
year-end figures for trend analysis. It is likely that current
and future budget cycle request will begin in March/April
in order to meet a May submission date. Departments are encouraged
to put together business plans that estimated revenues and
expenditures three to five years out based on a strategic
plan with identifiable goals and objectives. [ Back
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If this is my first time managing an auxiliary operation,
what should I do?
Becoming familiar with the terms in the glossary is a good
start. Paying particular attention to “What is the
difference between cash and budget authority” is essential.
Set up a meeting with University Business Office staff to
discuss essentials of managing an auxiliary operation. Please
see the (contact) section of this website for a list of names
and phone numbers. [ Back
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What if my account ends the fiscal year with a bottom
line deficit?
First, determine the root cause of the cash deficit. If
the source problem is of a recurring nature, then the viability
of the account or service must be reassessed. This may require
reducing costs, rescheduling projects and/or an assessment
of revenue collection, and pricing. The golden rule of responsible
financial stewardship states that current operating revenues
must cover all current operating expenditures. If conservative
revenue estimates are insufficient to cover anticipated expenditures
plus the bottom line deficit then restructuring actions will
be required. The University Business Office is actively monitoring
accounts for deficit balances since one of the goals is to
minimize accounts in this status. While account managers
are fully responsible for the performance results of their
departments, the UBO will pro-actively assist with the development
of solutions to the extent possible. If the source problem
is of a non-recurring nature or a one time occurrence, the
issue can be addressed through increased revenues, limiting
expenditures or variations of these two components. Note,
for activities with multiple accounts, cash may need to be
transferred between accounts to subsidize less performing
accounts. In either case, account managers are encouraged
to discuss options with University Business Office staff.
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How can I check my account balances on a daily basis?
Please refer to the (Account Balance) section of this website.
Note, the user name and password required are equivalent
to your SAMAS user name and password. If you do not have
a SAMAS user name, contact Jorge Gonzalez in the Controller’s
Office for access. The information on this site is updated
nightly to reflect transactions posted from July 1st cumulatively
up to the previous days activity. [ Back
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What is the Auxiliary Steering Committee?
The Auxiliary Steering Committee is a group of individuals
from the FIU community as well as the possible inclusion
of members from other government and/or private sector organizations.
The purpose of the committee is to provide a leadership role
in the review and recommendations analysis of auxiliary activities.
Members are typically seasoned individuals with broad knowledge
of financial and operational activities pertaining to the
University. The operational methodology of the committee
is to analyze data presented by individual auxiliary activities
followed by the formulation of recommendations to assist
with any issues identified. The recommendations are passed
on to the respective auxiliary activity manager and a follow-up
assessment date is typically set for further progress review.
While the committee may also review broader issues at the
macro and micro level, the aforementioned defines the general
purpose of the committee. [ Back
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What is operating revenue?
Operating revenue is monies earned from current fiscal year
sales of goods/services. The most common types of operating
revenue components include sales of goods/services to state
agencies, sales of good/services to state government, miscellaneous
receipts, interest income and rental income.
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What are operating expenditures?
Operating expenditures are monies actually spent during
the course of a fiscal year. The most common types of expenditures
include salary and benefits, other personal services (OPS),
expenses (supplies, copying, etc.) and operating capital
outlay (OCO). [ Back to
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What is the difference between a transfer-in and
a transfer-out?
A transfer-in is a positive infusion recorded as a non-operating
revenue that adds to an accounts bottom line cash position.
A transfer-out on the other hand is treated as a negative
in the non-operating expenditure section since cash is leaving
the account and thus reducing the accounts bottom line cash
position. Transfers-in are sometimes necessary to offset
a negative cash balance, to offset the cost of a large purchase
or to offset a decline in revenues. From an accounting perspective
transfers must net out. In other words, the minuses must
be offset by an equivalent amount of positives in posting.
During the budget process, the University Business Office
requires business plans to detail the specific accounts and
amounts where transfers-out are being shifted to. Note, a
single transfer out can benefit several accounts as long
as the minuses and pluses equal. [ Back
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What is a Quasi-Auxiliary?
A quasi-auxiliary is an operation that is not 100% self
sufficient, and requires some state or other revenue funding
to subsidize operations. An example of a quasi-auxiliary
operation would be one in which all or some of the salary
expenditures are paid for from E&G while other aspects
of the operation are paid for from auxiliary revenues. [ Back
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What is the difference between an Inter-Fund transfer
and an Intra-Fund transfer?
Intra-Fund transfers are transfers between accounts within
the same fund. For example, a cash transfer from one auxiliary
account to another auxiliary account within the same fund
would be considered an Intra-Fund transfer. An Inter-Fund
transfer is a cash transfer between two different funds such
as a cash transfer from an Activity & Service Fee fund
account to an agency account. [ Back
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