Process Info
IMPORTANT CHANGES AND COMMENTS FOR 2008/09
Schedule Change
The timing for the preparation of the capital budget requests is essentially the same as the prior year except in one respect. The 2008/09 schedule calls for the Budget Committee review of capital requests to take place in the fall, prior to the review of the operating budget requests. This allows for capital decisions which affect the operating budget to be made first. Committee capital decisions could be announced much earlier than in June as in the past.Requests Limited to $50,000 and Above
As in the prior year, only capital assets of $50,000 or more will be included. Do not submit capital requests under $50,000.New Project Requests Never Before Submitted Must Use the Current Schedule H shown on the website.
Save Time on Resubmitted Project Requests from Prior Year
Prior year files of "Unapproved" project requests will be returned by the Budget Office electronically to each VP area. If the project is to be re-submitted this year, these files can simply be updated as to years affected, cost changes, interest rate and amortization changes, funding source changes, and other changes. It will not be necessary to start "from scratch."NOTE: Instructions and the web address for linking the request to the University's strategic plan issues and goals remain unchanged and are found on Schedule H (I.C.)
Specific Years Removed from Forms
The specific years have been removed from column headings on the two forms, H and H1. They have been replaced by Yr.1 through Yr.5. (Yr.1 = 2008/09; Yr.2 = 2009/10; Yr.3 = 2010/11; Yr.4 = 2011/12; and Yr.5 = 2012/13.)Amortization Schedules Required (when borrowing is needed).
Amortization Schedules of debt principal and interest must be submitted for every project for which borrowing is required. Borrowing is required when:- No funding source is identified to acquire the asset
- Only a partial funding source to acquire the asset has been identified.
- A funding source is identified, but all or part of the source is not available "up front" to acquire the asset
(NOTE: A simple "Excel" calculator can be used as explained in the instructions on Schedule H, Section V.B., "Debt & Interest Repayment."
Interest Rate Guidelines for 2008/09 (To be used to calculate debt and interest amortization on Schedule H.)
Under 5 years = 5.50%
5 to 20 years = 6.00%
20 to 30 years = 6.50%
PROCESS STEPS & SCHEDULE
The 2008/09 Capital Budget Process Steps and Schedule, with specific details and dates, can be found on the Budget Office web site under "Budget Process - Capital Budget - Schedule".
A condensed flowchart of Capital Budget Process steps can be found below, after "Due Dates".
FORMS
The forms that you will need to complete your capital requests are provided on this web site under "Budget Process - Capital Budget - Forms".
Instructions for completing the forms may be found throughout the form itself in notes designated with red triangles. The notes should be read as the form is filled out.
- Schedule H - Capital Expenditure Request and Justification Form. A separate Schedule H must be completed for every capital request submitted. These forms provide all the required detailed information for each capital request. They will be completed by Schools and Administrative areas submitting capital requests to their Vice President.
The current Schedule H form must be used for new project requests never before submitted.
If unapproved project requests from the prior year's process are to be re-submitted in the 2008/09 capital budget process, much work can be saved by updating the electronic files of those prior requests for year affected, cost changes, interest and amortization changes, etc. The Budget Office will send electronic copies of the final reviewed files to the budget preparers.
- Schedule H1 - Summary of VP Area Prioritized Capital Requests. Vice Presidents must complete a Schedule H1 for his/her area, which summarizes and prioritizes all capital requests which the VP intends to submit to the Budget Committee. Related Schedule H's must also be submitted along with Schedule H1.
DUE DATE
Deans and Administrative Department Directors must complete and submit their capital requests of $50,000 or more on Schedule H to their Vice President by August 31 (or sooner if the Vice President designates).
Vice Presidents must complete a Vice Presidential area prioritized summary of any capital requests on Schedule H1 with all related Schedule H's to the Budget Office by September 10.
CAPITAL BUDGET PROCESS FLOW CHART
Step 1 | ||
Late July | Orientation sessions held with budget preparers as needed. Schedule and forms distributed. | |
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Step 2 | ||
Late July - Late August | Deans and Administrative Area Directors complete capital requests on Schedule H’s and submit to their VP. | |
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Step 3 | ||
Early September | VPs review capital requests (Schedule H’s) and prioritize and summarize for their area on Schedule H1. Submit each VPs summary (Schedule H1) and related Schedule H’s to Budget Office. | |
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Step 4 | ||
Mid September - Mid October | Budget Office reviews Schedule H1’s and H’s and distributes files to Facilities Management, Purchasing, DoIT, and Associate V.P. for Finance for review for reasonableness and completeness of requests. | |
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Step 5 | ||
Late October | Budget Office prepares consolidated summary of all requests and submits to Budget Committee. | |
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Step 6 | ||
Late October | VPs present their requests before Budget Committee | |
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Late October - Early December | ||
| Step 7 | |
March | President and V.P. for Administration and Finance present Proposed Capital Budget to Board of Directors | |
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During Fiscal Year | To initiate capital projects, administrators follow normal University procedures for "Project Endorsement Forms" and spending approvals. | |
GENERAL DEFINITIONS
- A Capital Asset has a useful life of more than one year and will be depreciated over its useful life rather than be totally expensed when acquired. Capital assets include building and land acquisitions, new construction, facility renovation and replacement, equipment, major system implementation.
- New Construction - Provides new space. Includes the structure, piping, wiring, permanent fixtures, architectural & engineering fees, inspection fees & permits, construction financing, interest expense, insurance during construction and costs of site preparation.
- Building Acquisition - This is for the purchase of an existing building. It may be new or used. It may require some renovation or other changes to get it ready for its intended purpose. All costs to get it ready for its intended use should be included in the total cost of the capital asset.
- Renovation - alters or changes existing space; changes the internal arrangement of existing space for a different functional use or meets a higher standard of quality or efficiency.
- Renewal/Replacement - renews or replaces components of an existing facility which have deteriorated to such a degree that the facility cannot be used effectively for its assigned purpose. For a replacement to be a capital asset, the item must increase the value and useful life of the facility. It must significantly improve the quality or value compared to the old item.
- Major Equipment – Cost includes purchase price, freight charges, installation costs, site preparation costs and all other costs essential to bringing the equipment to use.
- Major System - Includes system software, hardware required to run the system, all costs of implementation (consulting fees, outside programming costs, salaries of employees involved in the implementation, costs of setting up disaster recovery, data migration from the old to the new system, etc. (Examples would include such things as: Student System, Patient Billing System, Human Resource System)
- NOTE: Maintenance expenses are not capitalized. Examples would be repainting, plumbing or electrical repairs, cleaning, replacement of a part of a building with a new part of the same type and performance capabilities (e.g. replacement of carpet or a boiler). These things should not be submitted as a capital request.
SUBMITTING CAPITAL PROJECTS AFTER ANNUAL PROCESS
Procedures for Submitting Capital Projects After the Annual Capital Budget Process & Approval
All schools and departments must make every effort to submit capital budget requests during the annual capital budget process. Occasionally, circumstances may occur when it may be necessary to submit a capital request outside of the annual process. This should be infrequent and the exception to the rule.
Capital projects of $50,000 or more that are submitted after the annual capital budget process must provide the regular required information. This includes completing the “Capital Expenditure Request Form” (Schedule H) along with justification for the request. The project must be approved by the Budget Committee before submitting a requisition or a project endorsement form.
To submit a capital project after the annual capital budget process, please follow the following procedures:
1. Complete “Capital Expenditure Request Form” (Schedule H).
The form and completed samples can be obtained on the Budget Office web site under “Capital Budget/Forms/Schedule H". Instructions for completing the form are contained on the screen form under the red note markers.
2. Send the completed form (Sch. H) to the Budget Office with the appropriate signatures.
The Budget Office will review the form and submit it to the Budget Committee for approval. The Budget Office will notify the requestor of Budget Committee approval or disapproval.
3. Once notified of approval, complete and submit a requisition (for equipment or software) or a project endorsement form (for renovations, replacements, construction, etc.), according to normal procedures.
Note: All normal signature approvals still apply and must be obtained on requisitions and project endorsement Forms even though the project has been approved for addition to the capital budget.
4. Additional Clarification:
- All capital requests must have a Schedule H. This includes: equipment, software, construction, renovations, replacements, renewals, and systems over $50,000. See “General Definitions” above.
- Bulk purchase of like items under $50K individually, but over $50K collectively must have a Schedule H.
- Exception: Do not include a Schedule H for standard equipment required and issued to every student (e.g. Pharmacy laptops, Dentistry equipment from SIMS fee, equipment for M-1 medical students).
- Do not include a Schedule H for annual system maintenance or licensing fees over $50,000 after the initial installation of the system. (These would have a Schedule H as part of the initial installation of the system, but not in succeeding years.
- Refer questions relating to the application of these procedures to the Budget Office (Fred Nesler, ext. 2084)