17.7 Budget and Financial Management

General

Rochester University maintains a goal of operating with strong, positive cash flow. The operating budget is one of the most important documents in maintaining sound fiscal management. The operating budget represents a detailed financial strategy developed to meet the institution’s goals and objectives. Additionally, it serves as the principal tool for expenditure control and accountability.

Each year the President presents an annual operating budget to the Board of Trustee’s for approval. The budget is a working document and is subject to regular revision as financial and operating circumstances warrant. The President is ultimately responsible for budget control and accountability.

Rochester University operates using a budget concept termed zero-based budgeting. Zero-based budgeting is a process that requires each budgetary unit to justify all of its expenditures every year as if the unit’s operations were just starting. This methodology prepares a budget “from the ground up” and establishes control techniques for cost and expenditure inflation.

Zero-based budgeting approves expenditures on an item-by-item basis. Funds are approved for specific equipment, supplies, or activities. Shifting of funds or spending is prohibited without the approval of the supervising administrator and concurrence from the Vice President for Finance & Operations.

An annual budget is established for each fiscal year (June 1 through May 31) and funds may not be carried over to subsequent fiscal years. The following process summarizes the budget process. Detailed guidelines are provided during the budget preparation cycle.

• By January 30, the initial budget request forms will be distributed to the budget directors. The directors will distribute the forms to various departments and intermediate levels as necessary.
• Budget directors will complete and return the budget request forms to the Vice President for Finance & Operations for initial review and preparation.
• The Vice President for Finance & Operations and administrators will jointly review all budget details and prepare a draft budget.
• Additional reviews will be accomplished until a final budget is developed.
• The final budget is presented to the Board of Trustees at the spring meeting for Board action and approval.

During the fiscal year, each Administrator is responsible for managing their department’s budget. Monthly reviews will be accomplished by the administrators and the Vice President for Finance & Operations to evaluate actual budget trends against targeted budget goals. The Business Office will provide regular reports to each Administrator or Department Director.