Managing Departmental Budgets
As chair you are the financial manager for your department. This means you are responsible
for all accounts associated with your department, including educational & general
(E&G), indirect cost recovery (IDCR), grants, foundation, and revenue accounts. Not
all departments have all those types of accounts, but most do. One of the first tasks
you should tackle as a new chair is to meet with your staff and review the accounts.
If you have questions, do not hesitate to call the dean's business officer. S/he will
be happy to spend as much time as necessary familiarizing you with your account information.
At the end of the fiscal year (June 30), surpluses or minuses in your accounts are
carried forward into the next year. You want to be sure you don't have minuses. Minuses
in IDCR and grant accounts that fall under your department will be charged to your
Routine budget tasks
Meet with your staff at least once a month and verify they have attended to the bulleted
items below. If these things are not being done, you are flirting with disaster. Ask
questions! Actually look at the budget reports yourself. Set priorities and timelines
for resolving budget issues.
- Review payroll records after each payroll. There are three payrolls each month: one
for salaried employees and two for hourly-paid employees. Make certain your department
has paid the appropriate people. Remember, 93% to 97% of your departmental budget
is in payroll expenses.
- Reconcile travel and operating budgets.
- Move funds between account codes to cover deficits.
Basic budget terms and definitions
- Education and General (E&G) funds represent the portion of the university's budget
supplied by the State of Tennessee and student tuition.
- Carry forwards are budget surpluses or deficits that roll into the next fiscal year.
The carry forward roll typically occurs early in the fall semester.
- Indirect Cost Recovery (IDCR) funds are charged to grants in order to support faculty
research infrastructure. The Principal Investigator (PI) and the PI's department each
receive a share of the IDCR from a grant. Each PI and each department has an IDCR
- Salary recovery funds are recouped by the department when a portion of a faculty member's
salary is charged to a grant. Salary recovery funds are deposited directly into the
main departmental account and may be used for departmental needs.
- Buyout is another term commonly used to describe the salary recovery funds a faculty
member brings in from grants. Use this term interchangeably with salary recovery.
- Faculty incentive pay is available to faculty who bring in salary recovery funds from
their grants. The faculty member is eligible to receive a maximum of 50% of the salary
recovery funds s/he brings to the department, minus any costs the department incurs
due to the loss of the faculty member's effort. For example: The department pays $2,025
for a part-time instructor to cover one of the PI's classes. The $2,025 should be
subtracted before the faculty incentive payment is calculated.
- Release time is a percentage of time a faculty member may be released from duties
(teaching or other). Buyout is a form of release time, but not all release time is
buyout. For example: A faculty member is released from teaching a course one semester
because s/he is chairing the department curriculum committee. This is release time,
but it is not buyout because the department receives no money.
Some important miscellaneous budget tips:
- Benefits and graduate student fee waivers follow the account to which the salary is
charged. If salaries are charged to E&G accounts, the university covers the benefits
and fee waivers. If salaries are charged to a budget with any fund number other than
110001 (E&G), the budget must also support the benefits and fee waivers. In other
words, if you buy a postdoc or graduate assistant using start up or IDCR, the benefits
and fee waiver charges are also charged to that account.
- Lapsed salary for vacant positions is not returned to the department. Staff salary
lapse goes 85% to the financial planning office and 15% to the provost's office. Faculty
salary lapse goes 100% to the provost's office. The dean's office may make a request
to recover salary lapse for special needs, but the answer is frequently a resounding
'No!'—especially in the second half of the fiscal year.
- Computers must be purchased through the university's procurement department. You cannot
buy a computer at a retail outlet and be reimbursed by the university.
- Purchases over $5,000 must be bid out by the university.
- There are tons of rules regulating purchases at the UofM. Check with your staff before
you buy anything. If in doubt, call the dean's office.
- Get a travel authorization (on-line travel purchase order) BEFORE you travel. If you
travel out-of-state without having the travel authorization in place, you will be
stuck with the bill.
- There are many year-end budget deadlines between April and June. Pay attention to
email notices coming from the vice-president for finance or the financial planning
office. They are not kidding around.
- University funds may not be used to purchase alcoholic beverages or flowers. For other
types of purchases, use good judgement. If you would be embarrassed to read about
it in the Commercial Appeal, don't do it.