Lab Fee Budget Instructions from Dr. Wray 10/4/04

Although I know that all of the lab fee account managers develop annual budgets and all of the account managers do an acceptable to outstanding job in managing the funds in each account over the course of a fiscal year, we must move to a more formal budgeting process.  The reason for making this request is to ensure that we are able to continue to bring forward unused lab fee monies from one fiscal year to the next.

One of the conditions that some Board of Control members put on their vote in favor of allowing the unused lab fee accounts to be brought forward to the next fiscal year was that we must demonstrate that we budget for the money.  The principal concern was that we just charge a fee, accumulate a lot of money, and then bring it forward until we find a reason to spend it.  Obviously—to us—that is not the way we plan for or manage our lab fee monies.

There are two constraints that I am placing on the lab fee budgeting process.  The first constraint is that it can be demonstrated in a rational manner that there is a plan for spending the money that is acquired from the students each semester and that is carried forward into future fiscal years.  By “plan,” I mean that it has been determined how many years a certain piece or class of equipment will remain in use and how much it will cost to replace or upgrade it at that future time.  I will not prescribe the process by which you accomplish your budgeting and spending process , only that you be able to present the planning, budgeting and spending process  to a member of the Board of Control, if required, and that the Board member can understand the process and can acknowledge that there is a rational budget method being employed.  (By “rational,” I mean that the process is one in which money can be tracked as it is planned, acquired and expensed.)

The second constraint is that there must be a rational process for determining the amount of the lab fee.  Again, “rational” means that there is a process by which the total costs of providing the lab services to the student can be projected or estimated, the period over which the lab equipment will be in service or the usable life of the consumable items is predetermined, and the number of students who will benefit from the services the lab fee provides is reasonably estimated.  In short, be able to show a Board member that we can reasonably accurately project the cost and calculate an incremental fee that will result in an amount of money approximately equal to the projected cost when the replacement or upgrade action is taken.  Whenever possible, all lab managers must employ the same period of service for like kinds of items.

In order to satisfy a Board member that we aren’t “just accumulating a pile of money to spend on something at a future date,” we need to show our budget and expensing over a period of time.  This time line should show that we accumulated an increasing amount of money over a given period, at the end of which we spent approximately that amount on specific and planned new or upgrade equipment.  It is important to show that the accounts aren’t gradually accumulating an increasingly larger account balance over time (or that the account isn’t a deficit account over time).

In short, each account manager must demonstrate that there is a planning and budgeting method being employed, that the amount of incremental fees are determined in a planned manner; and that accumulated funds (unused funds brought forward) are expensed on a planned basis; and when the funds are expensed, the large positive balance of unused funds brought forward is reduced to a number near zero.  The method of planning and budgeting employed is not being specified and can be different on a unit-by-unit basis.