Budget Toolkit

The following budget information pertains to Winona State University’s annual budget, budget presentations, resources and annual approvals.

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Budget Resources

Appropriation: An authorization by the legislature to make expenditures or enter into an obligation for specific purposes. A general fund appropriation is backed with taxpayer dollars.

Asset: The entries on a balance sheet showing all properties, both tangible and intangible, and claims against others that may be applied to cover the liabilities of a person or a business. Assets can include cash, stock and inventories.

Auxiliary Enterprise: An entity that exists to furnish goods or services to students, faculty or staff. These enterprises are financially self-supporting and do not receive tuition revenue or a General Fund appropriation. Auxiliary enterprises are supported by charging for the services provided. Revenue is generated through cash sales and student fees.

Base Budget: In an incremental budget environment, there is usually a consistent funding level from year to year for various programs. The base budget is the portion of the budget that is identified to fund ongoing operating costs, rather than short-term projects. While base budgets are dependent on resource availability, as are all budgets, the intent of the base budget is an ongoing allocation.

Biennium: A two-year period used by the state for financial and budget purposes. It includes two fiscal years, running from July 1 in an even-numbered year to June 30 of the next even-numbered year.

Budget Balance Available: Total budgeted amount minus the encumbrances and expenses.

Chart of Accounts: A chart of accounts facilitates recording transactions appropriately.

Debt: All long-term or short-term credit obligations. The University is not allowed to go into debt other than through the State of Minnesota.

Debt Service: The amount of principle and interest that must be paid yearly for 20 years to retire debt assumed to construction improvements of a capital nature and for which general obligation bonds were sold. State law currently requires Minnesota State to pay one-third of all debt service payments on capital improvement projects, and Minnesota State requires the individual campus to pay one-half of Minnesota State's obligations. The first year's payment for debt service can be approximately figured by multiplying the principle amount by 1/6 then dividing that subtotal by 20 and multiplying the new subtotal by 2 accounting for interest.

Encumbrance: A financial obligation against an approved budget. A commitment to pay for goods or services. The encumbrance transaction is associated with purchase orders.

Endowment: A pool of funds intended to be kept permanently and invested to generate income for the support of the University’s educational, research and other related missions.

Fixed Asset: Typical categories include furniture, equipment, fixtures, machinery, land, buildings and leases. These are subject to depreciation criteria.

Fund:An accounting entity established for the purpose of carrying on specific activities or attaining certain objectives in accordance with special regulations, restrictions or limitations

Full Year Equivalent (FYE): Number of credit hours sold per school year divided by 30 (theoretical full credit load of an undergraduate student) provides the full year equivalent student population. Substitute 20 credit hours for a full credit load to complete a similar calculation for graduate students.

General Fund:The General Fund is the predominant fund for financing state government programs. The primary sources of revenue for the General Fund are the personal income tax, sales tax and corporation taxes. The General Fund is a major funding source for higher education.

Grant:An award of funds or other property by a sponsor to achieve some general or specific purpose.

Headcount:Total number of students attending a specific institution calculated over the course of an entire year.

Instruction: State program classification that includes all "funds expended for activities which are part of the institution's instructional program" (e.g., courses and experiences for degree-seeking students).

Institutional Support: State program classification that includes support for the day-to-day operations of the university. Examples include: Executive Management, Fiscal Operations, General Administrative Services and Public Relations and Development.

ISRS: Integrated Statewide Record System. Minnesota State developed information technology system that is used by all of the campuses as well as the Office of the Chancellor.

Minnesota State Allocation Model: A complex model that moves the state appropriation from the system level to the individual campuses. Primary components are instruction, academic support, institutional support, student support, library, research and public service.

Object Code: A code for recording and summarizing financial transactions such as expenditures, revenues, assets, liabilities and net assets.

One-Time Budget: An allocation that is non-recurring; one-time allocations are generally made to cover unexpected expenses or to fund short-term projects. Personnel-related expenses are generally not funded by one-time money.

Operating Budget: The State of Minnesota has two types of budgets, an operating budget and a capital budget. The annual operating budget guides the University's everyday activities.

Revenue: A revenue is any addition to cash or other current assets which does not increase any liability or reserve and does not represent the recovery or reimbursement of an expenditure. Revenues are not available for current expenditure until allocated or budgeted.

State Appropriation:Budget authority and funding granted by the Legislature to Minnesota State.  Minnesota State allocated the funds to the campuses based on the Minnesota State allocation model.

Surplus Property: University property that is excess to the needs of a department is considered surplus property. Disposal of surplus items is regulated by the State of Minnesota and Minnesota State.

Tuition: All tuition is receipted at the campus.

Vendor: A specific individual, group of individuals, company, corporation or organization which provides services, supplies or equipment to the university.

Acreage (Maintained): The amount of land in acres that is mowed, plowed, planted or otherwise played on for sports or extra-curricular recreational type activities. Maintained acreage is cared for whereas non-maintained acreage is land that is left in a natural state, such as prairie, wetlands, forested areas, etc.

Acreage (Non-maintained): Natural areas that are not closely maintained such as: wetland area, wilderness areas, forests, areas that are too steep for maintenance, areas planted with prairie or other grasses that do not require regularly weekly or monthly maintenance.

Acquisition:The act of acquiring something (real property). Also refers to something (real property) that has been acquired or gained.

Area Classifications for Buildings

Refer to the three following classifications and the varying methods for calculating square footages of a building.

  1. Assignable Square Feet or Net Assignable Square Foot (ASF or NASF): Sum of all space on all floors in a building available for assignment to an occupant for specific use according to the following room use categories: classroom, laboratory, office, study, special use, general use, support, healthcare, residential or unclassified

    Assignable Area:
    Total square footage of area classified as dedicated spaces measured from inside wall to inside wall.
  2. Net Useable Area or Net Square Feet (NSF): The sum of all areas on all floors of a building either assigned for a specific room use and areas necessary for the general operation (non-assignable area) of a building. Area taken up by structural building features should not be included in the calculation for Net Useable Area.

    Non-assignable Area:
    The area required for the general operation of a building such as: building service areas (restrooms and storage areas), circulation areas (common spaces and hallways), or mechanical areas (boiler rooms).

    Non-assignable Area:
    Building Service Space + Circulation Space + Mechanical Space.

    Net Useable Area:
    Assignable Area + Non-assignable Area (measured from inside wall to inside wall)
  3. Gross Square Feet (GSF): The sum of all areas on all floors of a building included within the outside faces of its exterior walls, including floor penetration areas. Gross area is calculated by physically measuring the outside faces of exterior walls.

    Gross Area:
    Assignable Area + Non-assignable Area + Structural Area, Net Usable Area + Structural Area

Asset Preservation: There is no legal or generally accepted definition for asset preservation, but the Department of Finance definition in their capital budget guidelines describes it as "committing necessary resources to preserving, repair, or adaptive re-use of current assets".

Such projects are identified by including a dollar amount in the renewal (or asset preservation) column on the Project Construction spreadsheet in the official capital budget submission.

Renewal in this context is defined as "expenditures to keep the physical plant in reliable operating condition for its present use, without programmatic change".

Capital Budget: Official request from the Trustees of the Minnesota State College and Universities to the Governor and Legislature for biennial funding for improvements of a capital nature through the sale of general obligation bonds.

The capital budget is submitted on forms and at times dictated by the State of Minnesota Department of Finance in accordance with applicable laws and constitutional provisions for debt obligation by the state.

Capital Budget Chart of Accounts: This is the form by which all projects are to be entered as a request to the Board of Trustees and the State Legislature through the Department of Finance.

This form is used in predesign and throughout all subsequent phase of the project. It contains major sections of Acquisition, Predesign, Design Fees, Project Management, Construction Costs, Percent for Art, Relocation, Occupancy and Inflation.

Current Replacement Value (of buildings): Current replacement value is the cost to replace the institutional, educational, student services, and general facilities.

The cost of replacement is defined as the requirement to duplicate the internal and external building envelope providing the same level of functionality based upon accurate local labor and material costs, as well as soft costs (design, program management, etc.). It does not include the value of land. Note: Insurance or book values should not be used.

Deferred Maintenance Backlog: The existing major maintenance repairs and replacement projects of buildings, grounds, fixed equipment, and infrastructure needs. It does not include projected replacement or other types of work associated with program improvements or new construction; these items are considered capital needs.

Design: (Refer to the Design Standards for explicit requirements, review times and submittals)

The three levels of design are as follows:

  1. Schematic Design: understood to be overall design intent, location of site, understanding of general floor plan, selection of exterior and interior materials, general layout outline specification of major systems: HVAC, utilities, structural system, technology feed, egress and exit, general locations of overall rooms and building materials.
  2. Design Development: more specific design issues: i.e. if Schematic gives you an office then Design Development locates the door and door swing, usually this is the last opportunity for user comment in the overall design.
  3. Contract Documents: the final 'working drawings' and specifications that form the basis for the bidding, issue and construction contract by which the terms of project are agreed upon and built.

Facilities Condition Audit: The results from evaluation of the cost and life expectancy of systems and the physical structure.

Facilities Condition Index (FCI): This is a term used to evaluate the usefulness of a building structure, defined as the ratio of building replacement divided by building deferred conditions, i.e. if the deferred maintenance is greater than the replacement cost, the structure might warrant demolition rather than just repair.

Facilities Condition Module: An input screen (module) which resides in ISRS (Database) and stores information about the condition of campuses’ buildings, grounds and utilities.

Green Building: The term used to define environmentally friendly products, issues and overall system management. It is taking the long-term view (30-50 years) on many products and designs.

I.e. If window shelves, skylights or tree plantings assist in shading a building and yielding natural light that limits reliance on electrical lighting or machinery there can be a component of 'green’. Using products to clean that are biodegradable can be a component of 'green’. See Sustainability within this definition.

Gross Square Feet (GSF): Refer to "Area Classifications for Buildings”.

HEAPR (Higher Education Asset Preservation and Replacement): MN Statute 135A.046 Subd. 1. Purpose. The legislature recognizes that post-secondary governing boards operate campus physical plants that in number, size and programmatic use differ significantly from the physical plants operated by state departments and agencies.

However, the legislature recognizes the need for standards to aid in categorizing and funding capital projects. The purpose of this section is to provide standards for those higher education projects that are intended to preserve and replace existing campus facilities.

  • Subd. 2. Standards. Capital budget expenditures for Higher Education Asset Preservation and Replacement (HEAPR) projects must be for one or more of the following: code compliance, including health and safety, Americans with Disabilities Act requirements, hazardous material abatement, access improvement, or air quality improvement; or building or infrastructure repairs necessary to preserve the interior and exterior of existing buildings; or renewal to support the existing programmatic mission of the campuses.
  • Subd. 3. Reporting priorities. Each post-secondary governing board shall establish priorities within its HEAPR projects.

    By January 15 of each year, it shall submit to the commissioner of finance and the legislature a list of the projects that have been paid for with money from a HEAPR appropriation during the preceding calendar year as well as a list of those priority projects for which HEAPR appropriations will be sought in that year's legislative session.
  • 16B.335 Letter - Following Schematic Design Approval: MN Statute 16B.335 Review of Plans and Projects Subd. 2: Other projects.

    All other capital projects for which a specific appropriation is made must not proceed until the recipient undertaking the project has notified the chair of the senate finance committee, the chair of the house capital investment committee and the chair of the house ways and means committee that the work is ready to begin.

Following Board of Trustee approval of the schematic design stage of a project the Minnesota State Office of the Chancellor composes a letter of notification to chairs of the capital investment committee requesting authorization for the advancement of a project to construction drawings.

Prior to proceeding with final construction drawings or specifications, this law insures that the legislature has the opportunity to revisit the original scope and cost of a project to verify that the project does not propose additional costs to the state beyond what was originally planned.

Lease: A contract for the use of land or buildings, but not for their ownership. Or, a contract for the ownership of something, but not for its ownership. A long-term loan of something in exchange for money.

Master Plan: On-Going Long Range Facilities and Land Use Plan: Campus master planning is the prioritization of short and long-term academic programmatic needs that translate into site improvements, property acquisition, building expansions, renovations and preservation type projects.

The components of a typical master plan include information such as:

  • campus history
  • student demographics
  • economic and regional issues
  • regional and state demographics
  • planning processes
  • academic master planning,
  • analysis of existing facilities
  • proposed facilities improvements
  • analysis of existing site
  • proposed site improvements
  • project implementation
  • funding strategies and master plan updating strategy

Net Useable Area or Net Square Feet (NSF): Refer to "Area Classifications for Buildings" for the definition

Off-Campus Facility: A facility located some distance away from the educational institution that operates it.

Pre-design: Based on MN Statute 16B.335 (stated below) the process used for evaluating a project prior to it becoming a funded reality. A pre-design document explains the "who, what, where, when and why" of an intended expansion or renovation project.

The scope of project explains the purpose and contents of the design. The cost of the project includes hard construction, soft cost such as design, occupancy, inflation and long term operating expenses associated with the project.

The schedule of a project explains the "when", which is the time frame for design, construction, staging and occupancy of project.

Pre-design Statute 16B.335 Review of Plan and Projects: Subd. 1 Construction and major remodeling.

(a) The commissioner, or any other recipient to whom an appropriation is made to acquire lands or buildings or other public improvements of a capital nature, must not prepare final plans and specifications for any construction or major remodeling, or land acquisition in anticipation of which the appropriation was made until the agency that will use the project has presented the program plan and cost estimate for all elements necessary to complete the project to the chair of the senate finance committee and chair of the house ways and means committee and the chairs have made their recommendations, and the chair of the house committee is notified.

Any project over $500,000 must have a completed predesign document indicating the overall scope, cost and schedule.

Real Estate: Land, buildings and things permanently attached to land and buildings. Also called realty and real property.

Revenue Fund Buildings: Campus buildings that were funded by the sale of bonds by the State University System or its successor the Minnesota State Colleges and Universities. Such bonds are not secured by the full faith and credit of the state, but only by the revenues generated by the buildings.

The Board of Trustees alone holds a fiduciary responsibility to its bondholders to ensure that revenues generated will be sufficient to pay debt service on the bonds, and maintain the condition of the asset.

The State of Minnesota holds no obligation (general or moral) or fiduciary responsibility for any of these bonds or buildings. Examples of revenue fund buildings are dormitories and student unions.

Repair and Replacement (R and R): Systematic, day-to-day process funded by the annual operating budget to control deterioration of the plant facilities (structures, systems, equipment, pavement, grounds), including repetitive work (site maintenance, housekeeping, grounds keeping) and scheduled periodic work (preventative maintenance planned to provide adjustments, cleaning, minor repair and routine inspections.)

Room Use Codes:Higher Education Classifications deriving from the July 1992 Postsecondary Education Facilities Inventory and Classification Manual published by the National Center for Education Statistics of Classroom, Teaching Lab, Open Lab, Office, General Use, Special Use, Support, etc.

Society of College and University Planners (SCUP): National organization that offers seminars, conference and publications on issues relating to their namesake.

Space Utilization: The impact on assigned spaces within the overall capacity of a room. Indications of use are created from the institution's projections of FYE are reviewed and incorporated into modeling to express overall campus surplus and deficit in areas of classroom, laboratory, office, auxiliary and physical plant/storage space.

It is the hours per week a room is used, the number of seats filled and the space (in square feet) per student or faculty for that particular type of institution.

Space Needs Modeling: Number of students per campus and institution evaluated with the use of chosen guideline to establish a quantity of space that exceeds modeling factors or establishes a deficit of quantity of space that is less than modeling factors.

Sustainability: The ability to meet current needs without compromising the ability for future generations to do the same. Components of sustainability are recycling and solid waste issues, water, energy, purchasing, construction and development and grounds maintenance.

For further information, visit the United States Green Building Council or the State of Minnesota Sustainable Building Guidelines.