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FINANCIAL AFFAIRS

Allocations

Appropriations

Any surplus or deficit on your operating account at year end (appropriation) is or is not carried forward depending on the rules set out in your faculty/envelope. Please refer to the Operating & Ancillary budget policy at https://secretariat.mcmaster.ca/app/uploads/2019/06/Operating-and-Ancillary-Budgets-Policy.pdf

Budget Approval

The operating budget of individual budget units is received by the Budget Committee. When all individual budgets have been received, the Budget Committee recommends the University’s budget to the President and Vice-Chancellor for onward transmission to the Finance Committee of the Board of Governors, for ultimate approval by the Board of Governors, normally at the June meeting. The University’s budget policy can be found: https://secretariat.mcmaster.ca/university-policies-procedures-guidelines/

Budget Model

Details on the budget model can be found on the McMaster Budget Model webpage.

Ancillary Units are not included in the budget model as they work on a cost recovery basis and have been paying occupancy costs for several years. However, their occupancy cost internal rent charge is now derived from the budget model internal operating rate. For more information please visit McMaster’s Budget Model webpage.

Revenues and expenses in the budget model have been allocated to the Faculty level, not departmental level. Faculties can use a similar methodology to devolve the budgets but that is not part of the budget model and Faculties decide how to implement the model and allocate to departments. For more information please visit McMaster’s Budget Model webpage.

All budget allocations in the budget model will be net allocations. For more information please visit McMaster’s Budget Model webpage.

The University Fund is a percentage of total attributed revenue in the budget model (excluding indirect costs of research). The University Fund is the primary mechanism for allocations that support strategic plans. For more information please visit McMaster’s Budget Model webpage.

McMaster is known as a research intensive university and we value research. The RIF is intended to be a redistribution of operating allocations in the budget model to acknowledge the research focus of the University. For more information please visit McMaster’s Budget Model webpage.

General

Budget due dates and presentation schedules are available in the Submission Timetable section of the current Budget Guidelines.

The Consolidated Budget can be found here.

The Operating and Ancillary Budget Guidelines are sent out to Envelope Managers and Budget Unit Managers in mid to late November of each year. These are used in the preparation of your budget submission. Budget Guidelines can be found on the Budgeting Services website. For additional information call your Budgeting Services Representative.

The benefits charged to accounts are the employer’s share of costs. The amount is calculated as a percentage of salary. Actual charges may vary depending on if the employee has single or family coverage, and if they are part of the defined benefit pension plan or group RRSP. Please note that vacation pay is budgeted as part of salaries, not benefits.

Please see the following resources for additional details:
Operating Budgeting Guidelines
Ancillary Budget Guidelines
Benefit Rate Tables

One-time revenue or expenses are those that are not part of normal operations and unlikely to occur in the future. They may cover multiple years, but will not recur. A structural deficit occurs when the regular ongoing costs within a business unit exceed the regular ongoing revenue/allocation for that budget unit. This means the operations of a budget unit cannot be sustained. It is important to budget ongoing and one-time revenues and expenses separately so that the Budget Committee can determine that a budget unit is sustainable and does not need to take action to cut costs. Additional explanation and examples are available in the appendix of the budget guidelines at https://financial-affairs.mcmaster.ca/services/budgeting/budget-guidelines-and-templates

Professional Development Allowance (MPDA & PDA)

Please see the Guidelines for the Administration of PDA/MPDA here.

Terminology

The budget envelope is the core component of the University Budget, as the allocation of resources to an envelope reflects decisions about the funding level for the academic and/or operational plans of the several budget units which constitute the envelope. An envelope consists of one or more budget units. A budget unit typically represents a specific activity or area for which an individual is responsible. These budget units will also include all ongoing operations or activities which do not necessarily receive envelope funding. The budget policy and a list of envelopes and managers are available at http://www.mcmaster.ca/policy/General/Financial/Operating-Ancillary-Budgets.pdf

Salary accruals are done in Budgeting Services. If there are working days at the end of April after the last pay has been expenses, an accrual is done to expense the extra days. For example, if the last pay posted to PeopleSoft paid up to Saturday, April 27, an accrual will be done to expense the 2 days Monday, April 29 and Tuesday, April 30. This accrual is reversed in the new fiscal year so that the first pay in May will expense the 8 remaining days in the pay period.

FTE stands for Full Time Equivalent. We calculate FTE based on “hours” paid compared to FT scheduled hours annualized. For example, if an employee works 7 hrs/day for 5 days/wk = 35 hrs/wk = 1820 total year hours over 1820 annualized hours = 1 FTE or if an employee works 7 hrs/day for 4 days/wk = 28 hrs/wk = 1456 total year hours over 1820 standard annualized hours = .80 FTE