W&M Finance Basics

What are university funds and their common sources?

All monies received and expensed by the university:

• All monies received must be used for the benefit of the university and in support of its mission.
• All monies expensed must be justified based on a bona fide business purpose tied to the university mission.
• Although specific individuals by title or by type of fund may be authorized to determine how funds are used, all funds spent by the university are university funds.  Examples include: indirect costs allocated to individual principal investigators and faculty start-up funds. 

What are the most common sources of operating funds?

• State general fund dollars*
• Student tuition*
• Student fees*
• External sponsors through grants and contracts*
• Indirect cost recoveries (aka Financial &Administrative Cost Recoveries) from grants and contracts*
• Other user fees
• Gifts from private donors and philanthropic organizations
• Funds to support local programs or auxiliaries

How can I spend state vs. local funds?

The source of operating funds governs how those funds can be used.

State (appropriated) funds

Must be spent in accordance with state policies and procedures.

Local university funds

Must be spent in accordance with university policies and procedures.

What are specific types of state funds?

Those funds appropriated by the Commonwealth to support higher education:

• State general fund support from taxpayer dollars Tuition
• State auxiliary funds (dining, housing, parking, student rec, etc.)
• Grants  and contracts (sponsored research)
• Indirect cost recoveries from grants and contracts

What are local university funds?

Funds received by the university to support its mission that are not appropriated by the state:

1. Local program funds (e.g., fees to support the non-academic portion of travel abroad, W&M Choir Tour Fund, campus event revenue, etc.)
2. Gifts and donations to the university (e.g., BOV private funds)
3. Local auxiliary revenues (e.g., Highland, Tennis Center, Plumeri House, conference services, ID office, etc.)
4. Revenue transferred to W&M (or VIMS) from one of our affiliated foundations to support university activities

Gifts and donations

• Donors to William & Mary may designate gifts to the university or to an affiliated foundation.
• Although donors designate “new gifts” to an affiliated foundation, W&M has historical endowments that are managed directly by the and expendable funds that are deposited with the university. 
• Often referred to as “BOV private funds” in recognition that the Board of Visitors has fiduciary responsibility over the management of those gifts.
• Other gifts may be deposited to and managed by one of our affiliated foundations, including the W&M Foundation, Law School Foundation, Business School Foundation, Muscarelle Foundation, VIMS Foundation, etc.

Restricted vs unrestricted

Donors can designate gifts in the following ways:

Restricted

Given to the university for a designated purpose (e.g., scholarships, professorship, specific program support). There are minimums associated with each type of restricted fund. In general, there are two types of restrictions:

1. Specific Use
   • Pipe Organ Fund – to provide support for the purchase of a pipe organ for W&M’s music department.  Uses for this fund include the purchase, storage, delivery, installation and maintenance of the organ.
   • Sue Herzog Johnson Scholarship Fund in History – to provide scholarship support for a junior or senior level history major with a GPA of 3.5 or higher
2. Program General Use
   • Center for the Liberal Arts (CLA) Fund  - monies are to be used to fund various initiatives associated with the CLA, including, but not limited to, course design, teaching technology, and faculty fellowships

Unrestricted

Given to the university for the highest and best purpose (e.g., The Fund for William & Mary)

Tying funds to the four programs

Expenditures for funds must be tied to programs.

National standards classify university programs as follows:

1. Educational & General (E&G)
2. Student Financial Assistance (Scholarships & Fellowships)
3. Sponsored Programs (Grants & Contracts)
4. Auxiliary Enterprises (Ancillary programs that are not specific to the academic mission, but required to support the overall activities of the institution)

Educational & General (E&G) subprograms

Based on national accounting standards, E&G Programs are typically those that support the “academic mission” of the institution and are categorized into 7 related “subprograms”

1. Instruction
2. Research (not sponsored)
3. Public Services
4. Academic Support
5. Student Services
6. Institutional Support
7. Operation & Maintenance of Plant (O&M)

Chart of Accounts

The collective rules and classifications of funds, accounts, programs, and indices tied to the university’s organizational structure makes up the university’s Chart of Accounts.

For more detailed information on the Chart of Accounts, training is available in Cornerstone.

How do I procure and spend money?

1. Is there a bona fide business purpose?
2. Is this supporting standard university business?
3. If it’s being supported by gifts/donations in the foundation(s), do I have a local fund index to which I can transfer revenues from the foundation to support the gift?
4. If not, how do I create a local fund?

Why can't I spend money directly from a foundation?

• Separation of foundation/university – foundations created to support the mission, but are not intended to be an operating arm of the university
• State procurement law
• More transparency/better management - understanding the scope of our business

How do I create a local fund?

Identify the unit's source of funding

• If the fund will be supported by local program or auxiliary revenue, [[budget,contact the Budget Office]]. 
• If expenses will ultimately be supported by funds in the CWMF, [[cbbrow, Nellie Brown]] should be your first point of contact.
• If expenses will be supported by gifts to the university, Gift Accounting will work with the Budget Office to establish.

Budget Office

The Budget Office will work with foundation(s) and Data Control to establish in Banner with any necessary (e.g., donor) restrictions.

Does that mean everything has to go through the university?

Private gifts and donations at our foundations provide the university with funds that allow us to take our programs and activities to the next level of excellence and provide flexibility to address unique needs.

University policies and procedures recognize that there will be instances outside of normal business operations when our foundations may spend money on our behalf.

HOWEVER, the intent is for standard program expenses (personnel expenses, standard office supplies and materials, program expenses, business travel, business meals, etc.) to be managed through the university with the foundation providing funds as “revenue” to offset the cost.

Well, can’t I just “split fund”?

The state audits the university to ensure that we are following state and university policies and procedures. If the university has a policy that limits expenditures at a certain level, “split funding” is viewed as a deliberate attempt to work around the policy. In addition, split funding raises the likelihood of an invoice being paid twice.

If you have unique instances that “just don’t fit” standard university business, the Office of Finance will work with you to see if it qualifies for a reasonable exception under the university’s policies or whether you should consult with an affiliated foundation to determine whether they can support the activity directly.

So, how do I spend university dollars to accomplish my business purpose?

First question should be, “How do I initiate purchases?”

• Procurement Services provides support to campus for purchases of goods and services in accordance with laws of the Commonwealth and W&M.
• If goods and services are procured properly, payment will be easy. 

Procurement Training

If you have not completed Fundamentals of Procurement Training, sign up in Cornerstone.

Other resources

Purchasing@W&M and the Procure-to-Pay Matrix

Signing Contracts

Don't sign contracts unless specifically authorized to do so with a written delegation from SVPFA and/or Provost

• Even if delegated authority to sign, most delegations are CAPPED at $5,000
• For additional information on contract management, see Contract Administration Training

Purchases less than $5,000

Tools for business meals & catering

Chrome River

Business meals and Chrome River training are available in Cornerstone.

America to Go (ATG)

America To Go is the campus's online catering platform for on-campus food needs and is to be used for orders paid with university funds (state or local).

General expectations

Units will stay within budget.

If an unforeseen event places a unit in jeopardy of meeting budget, the issue should be elevated to the University Budget Office immediately to determine whether there are available resources to mitigate the issue or whether programmatic reduces need to be made.

Business units will reconcile all indices at least every 60 days.

No index should be in deficit for more than 60 days unless authorized by the Vice President for Finance & Technology.

Communicate early and often if there are problems.

Budget management tools

How can I see the complete budget picture for my area?

Qlik Sense budgets by fund, index and account with transaction information and trends (more functionality to come as tool is more fully developed).

If I’ve overspent in a given index/fund, how do I clear the expense?

Move the expense to an index with sufficient funds/budget. Recoveries from Foundations should be brought into local funds as revenue to offset expenditures in those funds. Expenses should not be offset using an expenditure recovery account unless that expense is truly being charged somewhere else.

If I’ve underspent my E&G funds, can I move expenses from other areas over to “use up” the funds?

Business units may not transfer expenditures from local funds to E&G funds. The expectation is that funds are charged originally to the correct fund source.