Building a half-billion-dollar budget from scratch — as the University of Wyoming did in preparation for fiscal year 2018 — is a complicated process.
Before its May meeting, the UW Board of Trustees hosted budget hearings — during which, the various colleges, administrative offices and other units at UW presented their reconstructed budgets to the board’s budget committee.
“This kind of accounting had never been created before,” said Chris Boswell, vice president for community and governmental affairs. “This is all part of our new fiscal system at UW. This kind of formal budget review has not occurred down to the level that it occurred this year.”
During this review, deans, vice presidents and others in charge of university divisions had to lay out how their division would spend its available funds. They were also tasked with identifying their division’s reserves and cash carry-overs from fiscal year 2017.
With all this completed, the board passed an additional motion to sweep 80 percent of the $62 million in reserves spread across campus into centralized reserves. This pool of money — about $49.7 million — was slotted for use in establishing a litigation reserve fund, a residence hall account, an endowment fund for one-time bonuses, recruitment and retention and a sinking fund account with about $11.7 million for other projects. Additionally, about $10.5 million will be used to fill out funds for capital construction and unrestricted operating expenses.
The remaining 20 percent of the $62 million in reserves would stay within the individual divisions of the university.
At the June meeting — during which the board passed a budget for fiscal year 2018 — administrators argued while sweeping these reserves was necessary, doing so without a policy in place dictating where the funds were coming from was irresponsible.
The board moved to sweep the funds.
By the board’s July meeting, faculty members were concerned about a particular category of reserves — known as indirect funds — that, if swept, would endanger the university’s ability to conduct research.
“Faculty run and manage their research programs based on external funding contracts, internal support and this return of indirect funds,” said Michael Barker, president of the faculty senate. “In the management of their research programs, they’ll use those three sets of funds to support students or labs or equipment or research.”
Boswell said there was some accounting of these indirect funds during the budget review process, but all of the funds had not been thoroughly identified.
“I think where we ran into some difficulties was in identifying what reserves were encumbered in some fashion and-or what reserves were affiliated with indirect costs and therefore there might not be the flexibility to move that into central accounts held by the university,” Boswell said.
So, at the board’s July meeting in Rock Springs, UW administration brought forward a motion to exempt the $15.5 million in indirect funds spread across campus from being swept into the centralized reserves.
“I think there was some confusion with the faculty and staff that the funds would be collected and used at the board’s discretion,” Barker said. “But this is a learning process and after the effects of collecting that money was explained to the trustees and what that money was used for, to support the research activities at UW, I believe the board passed the exemption of indirect funds unanimously.”
Given the complexities of the budget and the novelty of the new financial system, UW division leaders are likely to find other areas that might need categorical exemption from sweeping, but Boswell said he does not expect these other exemptions to be anywhere near as large as $15.5 million.
“We’re all learning as we implement a very massive and a very significant change to the way we handle our budgeting and accounting,” Boswell said. “And it’s inevitable there will be a need for adjustments going forward.”