Presentation toPresentation toProvost’s Department Chairs Provost’s Department Chairs

Leadership ProgramLeadership Program

Suzanne BardoucheSuzanne BardoucheNovember 29, 2007November 29, 2007

Fiscal Management fromFiscal Management fromthe the DepartmentalDepartmental Point of View Point of View

Fiscal ManagementFiscal Management ResponsibilitiesResponsibilities

Day – to – DayDay – to – DayAccounting (especially, Accounting (especially, fundfund accounting) accounting)PayrollPayroll

Management, Oversight and PlanningManagement, Oversight and PlanningBudgeting (planning)Budgeting (planning)Management informationManagement information

What is the What is the Chair’s Role Chair’s Role

in Fiscal Management?in Fiscal Management?

Fund AccountingFund Accounting

Fund = the “flavor” of moneyFund = the “flavor” of moneyWhat kind of money is this? Where did What kind of money is this? Where did

the funds come from? the funds come from? Examples:Examples:

1856 (U of M Foundation)1856 (U of M Foundation)1043 (indirect cost recovery)1043 (indirect cost recovery)

Fund AccountingFund Accounting

Applies to all funds, both sponsored and Applies to all funds, both sponsored and non-sponsorednon-sponsoredCommon practice for public organizations Common practice for public organizations with multiple funding sourceswith multiple funding sourcesCurrent accounting system and structure Current accounting system and structure is CUFSis CUFSJuly 2008 U of M will use PeopleSoft July 2008 U of M will use PeopleSoft FinancialsFinancials

Words of Advice Words of Advice from a Seasoned Chairfrom a Seasoned Chair

“When I was chair (and I think dinosaurs roamed the earth) there were two things about budgets that I found essential:

There were numerous sources of revenue and you needed to have an accounting for all of them or else you would panic, and

I needed a single sheet summary of revenues and expenses to avoid getting lost in the details and understand if we had problems or not.”

Department of AlchemyFiscal Year 2007 (2006-07)Annual Overview of Non-Sponsored Funds

fund type1003 1043 1198 1856 1898 totals

RESOURCES

carryforward from previous year 22,000$ (500)$ 14,000$ 27,000$ 80,000$ 142,500$

state support (central allocation) 950,000$ -$ -$ -$ -$ 950,000$ transfers in 75,000$ -$ -$ -$ -$ 75,000$ various donated funds -$ -$ -$ 63,000$ -$ 63,000$ Donald Trump endowment earnings -$ -$ -$ -$ 165,000$ 165,000$ sales of created metals 13,000$ student lab fees, other misc. -$ -$ 28,000$ -$ -$ 28,000$ ICR allocation -$ 12,000$ -$ -$ -$ 12,000$ TOTAL resources received during fiscal year 1,025,000$ 12,000$ 41,000$ 63,000$ 165,000$ 1,306,000$

-$ Total + carryforward 1,047,000$ 11,500$ 55,000$ 90,000$ 245,000$ 1,448,500$

USESacademic salaries 600,000$ -$ -$ -$ 75,000$ 675,000$ academic fringe 180,000$ -$ -$ -$ 22,000$ 202,000$ grad assistant salaries 75,000$ -$ -$ -$ 28,000$ 103,000$ grad assistant fringe 35,000$ -$ -$ -$ 14,000$ 49,000$ staff salaries 65,000$ 4,000$ -$ -$ 20,000$ 89,000$ staff fringe 18,000$ 900$ -$ -$ 6,000$ 24,900$ 1,142,900$ 83%student aid -$ -$ -$ 32,000$ -$ 32,000$ office supplies, phone, copying 25,000$ -$ 1,000$ -$ -$ 26,000$ alchemy lab remodeling -$ -$ -$ 42,000$ 42,000$ base metals purchases -$ 33,000$ 45,000$ -$ 78,000$ travel 7,000$ -$ -$ -$ 8,000$ 15,000$ computers and software 7,000$ 2,500$ 6,500$ -$ 16,000$ 32,000$ lab equipment 4,000$ 3,000$ -$ -$ -$ 7,000$ space rental & other misc. 4,000$ -$ -$ -$ -$ 4,000$ transfers out 3,000$ -$ -$ -$ -$ 3,000$ 239,000$ 17%TOTAL USES 1,023,000$ 10,400$ 40,500$ 77,000$ 231,000$ 1,381,900$

BALANCE 24,000$ 1,100$ 14,500$ 13,000$ 14,000$ 66,600$

“It's very helpful to have a good overall sense of the budget so that you can plan strategically for big and little things - i.e., I use budget meetings with our accountant not just to check that account balances are as expected (that's the quick part) but also to get a better sense of how we historically have spent money and do projections for the future.”

Donated FundsDonated Funds

DemandDemandQuasi-endowmentQuasi-endowmentEndowmentEndowmentSpending is through CUFSSpending is through CUFSChair’s role in oversight and Chair’s role in oversight and stewardshipstewardship

“You need transparent and fair fiscal procedures with faculty so that they understand why they can/cannot have funds for what they have requested.”

Why should you present financial Why should you present financial information to your faculty?information to your faculty?

To dispel myths that you (or the dean) To dispel myths that you (or the dean) have money stashed in a closet have money stashed in a closet somewhere and the possibilities are somewhere and the possibilities are endless if only that stash were releasedendless if only that stash were releasedTo provide an accurate foundation for To provide an accurate foundation for discussions about the future directions of discussions about the future directions of the departmentthe department

“A yearly budget and planning document, whether required or not, is essential.It needs to be a consultative document with buy in from faculty and staff.”

“Vision without resources is a hallucination.”--Bob Bruininks

“Perhaps the first job of leadership is to help people face reality.”

--Al Sullivan

Grants ManagementGrants Management

Role of Department HeadRole of Department Head

Oversight from proposal stage Oversight from proposal stage through closeoutthrough closeout

Role of Certified ApproversRole of Certified Approvers

“One of the critical items is establishing a good relationship with the college budget officer and staff. 

Chairs who work to get to know therules and the general approach of the CFO will be in a much bettersituation to work collaboratively.”

What to Expect from Your Financial What to Expect from Your Financial StaffStaff

Regular reports on the status of Regular reports on the status of departmental financesdepartmental financesOrganized, systematic record keeping and Organized, systematic record keeping and tracking of commitmentstracking of commitmentsProjections for the next fiscal yearProjections for the next fiscal yearPreparation of annual budget in the spring Preparation of annual budget in the spring for the next fiscal yearfor the next fiscal year

Assistance with locating and interpreting Assistance with locating and interpreting policiespoliciesKnowledge of all departmental revenues Knowledge of all departmental revenues and expendituresand expendituresPro-active approach in bringing issues to Pro-active approach in bringing issues to your attentionyour attentionService orientationService orientation

“Once a month going through all accounts with the accountant or budget personworks for me, and results in few surprises.”

“Develop a good, working relationship with both your collegiate CFO and your departmental accounting contact.  This is critical.”

What your financial staff (including your What your financial staff (including your college’s CFO) would like from youcollege’s CFO) would like from you

Understanding that your role as head Understanding that your role as head involves financial oversightinvolves financial oversightTime to review reports and discuss areas Time to review reports and discuss areas of concern with youof concern with youSense of overall direction and priorities for Sense of overall direction and priorities for the departmentthe departmentAttention to budgetary concernsAttention to budgetary concerns

A good working relationship, with trust and A good working relationship, with trust and respect in both directions.respect in both directions.Support and leadership for solid financial Support and leadership for solid financial management principles, such asmanagement principles, such as– Separation of dutiesSeparation of duties– Written authorization and documentationWritten authorization and documentation– Adequate justification for expenditures (who, Adequate justification for expenditures (who,

what, when, where, why)what, when, where, why)

“I'm glad you asked because we recently had a case of fraud in the department. 

The best advice is: Ask questions, lots of them, and be sure, absolutely sure, you understand.”

“If you suspect that you've been told something must be done in a particular way, and you have doubts -- in fact, if you have doubts about anything – ask. Get to know your collegiate and central financial folks and don’t be shy about asking.”

“Realize that you are the ultimate steward of all departmental accounts, including faculty accounts, and keep an eye on them.  Faculty don't always pay attention to balances (both too high and too low).”

“Help faculty understand that "rainy days" may never come if they don't invest in their research programs -- i.e., if you don't make tenure, then those saved start-up funds don't matter. 

It is the chair's responsibility to coach faculty in making strategic investments in their research programs.  You would much rather a faculty member be publication rich and cash poor, than just the opposite (though faculty seldom understand this and think it counterintuitive).”

A Few Final SuggestionsA Few Final Suggestions

Build trust and relationshipsBuild trust and relationshipsCreate a departmental fact sheetCreate a departmental fact sheet““Other people’s money”Other people’s money”Share financial information with your Share financial information with your faculty and stafffaculty and staffFew decisions are just about moneyFew decisions are just about moneyAsk!Ask!