Standard 7.A -- Financial Planning
There are two levels of financial planning and budgeting. One is on the Montana University System (MUS) level, the other on the MUS unit level. Budgeting for the MUS begins approximately a year before a biennial legislative session and involves regular discussions between the Office of the Commissioner of Higher Education, the Governor’s Office and Montana legislators. The Board of Regents (BOR) Budget Committee and the Fiscal Officers of the MUS begin discussions of issues needing to be addressed during the next biennium: inflationary costs, new costs, etc. Once MUS officers have developed draft budgets for each unit of the University System, work with the Legislative Fiscal Division and the Governor’s Budget Office begins. This process is a change from the previous budget development and allocation models prior to 2005. The change was made to discontinue the previous funding model based on Full-Time Equivalent (FTE) student enrollment and institute more of an institutional base level funding plus inflationary factors. This will allow the individual units to maintain a base-level of funding in the face of expected declining numbers of high school graduates.
The Governor recommends a combined higher education/K-12 education budget to the Legislature. The Legislature considers the budgets and makes changes before approval. The Board of Regents then allocates the budget as presented by the MUS Fiscal Officers to the various units.
The centralized process has system-wide advantages, but also limits the options financial planners have on the University level. Still, University-level financial planning and budgeting is ongoing. Directors, deans and department chairs meet with their division/college faculty and staff to determine budget needs. These needs are forwarded to the Vice Chancellors. The Chancellor’s Executive Budget Committee meets regularly to develop future budgets and review status of the current budget.
Evidence: BOR/OCHE Budget Cycle Calendar
Standard 7.A.1 - Statewide Fiscal Organization
The State of Montana appropriates a lump sum to the Board of Regents for the Montana University System, which is then allocated as explained above.
The State Legislature and the Board of Regents give the units the autonomy to spend as they need with a high level of overview. MSU Billings has complete autonomy in financial planning and budgeting for non-appropriated funds, e.g. fees, grants, contracts, etc. The internal allocation of funds is at the discretion of the MSU Billings administration and allocated in accordance with priorities outlined in the strategic plan as well as recommendations from university constituents. Budget allocations are made in a series of budget meetings during which proponents of various budget items explain how their proposals address the strategic plan of the unit. A review of the budget development summary shows “additional investments” and “budget reductions” according to the strategic plan. The Board of Regents has final approval of individual MUS unit budgets.
As with any educational institution, much of the MSU Billings budget is expended for salary and wages. The Montana Legislature approves a cap for state salary increases. Salary and wage rates for faculty, classified staff, and trades people are determined by collaborative negotiations but remain within the state approved cap. Salaries for administrators and professional staff are set by the administration with approval by MSU Bozeman, the Office of Commissioner of Higher Education (OCHE) and the BOR, depending upon the type of position.
Evidence:
- 6.4 BOR Policies and Procedures Manual (http://mus.edu/borpol/ default.asp more specifically BOR Policy 205.2.1 Chancellor’s Duties and Responsibilities);
- 7.13 Budget Development Summary
Standard 7.A.2 - Budget Planning
Biennial budget planning for FY2008 and FY2009 is complete, and FY2010 and FY2011 are in process. Until recently, MSU Billings employed a five-year budget model. This model was suspended with the Business Process Redesign (BPR) process through which the MSU system will develop a long-term budgeting model. Because the model has not yet been fully developed, MSU Billings fiscal officers will be redesigning the five-year budget model.
In February, the fiscal officers attended a workshop updating them on the new aspects of the five-year budget model. The University submits long-term plans for building needs to the Montana Legislature every biennium according to needs indicated in the University Master Plan. The five-year budget and capital-improvement plans reflect the University’s Strategic Initiatives.
Capital funds are received through the Legislature or through the issuance of bonds or other debt instruments. The funds are for specific purposes contained in the MUS unit long-range building plan and are specified at the time of the request to the Legislature or time of the debt issuance. Prior to issuance of bonds, debtservice requirements including pledged revenues and debt payments are scheduled for the life of the bonds.
Evidence:
- 1.1 Mission Document;
- 7.1/Table 7.1 Current Funds Revenues; 7.2/Table 7.2 Current Funds Expenditures and 7.3/Table 7.3 Summary Report of Revenues and Expenditures;
- 7.6 Table 7.10 Capital Investments
Standard 7.A.3 - Annual Internal Budget Process
Chart 7.1 - MSU Billings General Operating Budget Expenditures by Program/FY 2008 Budget
Chart 7.2 - FY 2008 Operating Fund Revenues
Chart 7.3 - Summary of Expenditures/FY 2008 Budget
An annual operating budget is approved by the BOR. The operating budget is distributed to all fund controllers at the beginning of each fiscal year. Detailed instructions are included with the operating budget. All budget amendments are processed on a timely basis, are made on the Banner Finance/Budget system and can be reviewed online. All budget amendments are approved by the Fund Controller, Dean, Vice Chancellor, University Budget Officer, and the Chancellor (depending upon the amount and nature of the amendment).
Gaining appropriate input from University contingencies regarding the budget remained a chronic challenge. The Chancellor, Provost, Administrative Vice Chancellor and Vice Chancellor for Student Affairs are reviewing this process to make improvements. Over time, varying strategies have been employed, such as instituting the Academic Senate Budget Committee, University Budget Committee and faculty representation on the Executive Budget Group.
Evidence:
- 7.13 Annual Operating Budget with Instructions; “Budgeting 101” from the Budget Office;
- MUS Operating Budgets website (http://mus.edu/ data/operating_budgets/OperatingBudgets.asp
Standard 7.A.4 - Financial Statements and Reporting Mechanisms
The University submits an annual report to the BOR detailing all outstanding debt for the institution.
Since 1994, revenue bond issuances for all units of Montana State University are consolidated and cross-pledged, resulting in more favorable interest rates and credit ratings. A memorandum of agreement states that each campus will continue to service its own share of debt requirements. Before any debt is issued, the Administrative Vice Chancellor, Budget Officer, and Financial Services Director review the debt plan and repayment sources to ensure they are adequate. All debt is disclosed in the Financial Statements. An independent auditing firm audits bond indebtedness every year. Bond payments are made from pledged revenue sources derived from auxiliary operations and student fees. As a result, there is no depletion of resources available for educational purposes due to bond payments.
Evidence:
- 7.7 Debt Service Schedule; 7.10 Revenue Bond Report;
- 7.12 Financial Report;
- 7.7 Montana Code Annotated (MCA) 20-25-402, 20-25-405, and 20-25-302;
- 7.7 Montana Board of Investments Intercap Program (http://www. investmentmt.com/Programs/Intercap/default.asp); Bonded Indebtedness Report
