Ancillary Guidelines for the fiscal years 2015/16, 2016/2017, 2017

17 Pages·2015·0.16 MB·English

Ancillary Budget Guidelines 2015/16

MCMASTER UNIVERSITY

GUIDELINES FOR PREPARATION OF BUDGETS BY ANCILLARY DEPARTMENTS

For the Fiscal Years

2015/16, 2016/17 and 2017/18

This document is also available at http://www.mcmaster.ca/bms/BMS_FS_Budgeting.htm
November 26, 2014
Ancillary Budget Guidelines 2015/16

TABLE OF CONTENTS

A.  INTRODUCTION ........................................................................................................................................ 3 
B.  HYPERION ............................................................................................................................................. 3 
1)  Operating Expense Planning using Hyperion ............................................................................ 4 
2)  Labour Planning using Hyperion ............................................................................................... 4 
C.  SUBMISSION TIMETABLE ......................................................................................................................... 5 
D.  FORMAT OF BUDGET SUBMISSION .......................................................................................................... 5 
E.  DETAILED CALCULATIONS ...................................................................................................................... 7 
1)  Revenue, Recoveries and Transfers ........................................................................................... 7 
2)  Compensation Expense .............................................................................................................. 8 
3)  Contribution to the Operating Budget ........................................................................................ 9 
4)  Interest Rate Charged on Reserves in Deficit .......................................................................... 10 
5)  Space and Facility Charges ...................................................................................................... 11 
6)  Technology Expenditures ........................................................................................................ 11 
7)  Capital Expenditures ................................................................................................................ 11 
8)  Reserves ................................................................................................................................... 12 
F.  CONTACT INFORMATION ....................................................................................................................... 12 
APPENDIX A – SUMMARY OF BENEFITS BUDGET ASSUMPTIONS .................................................................. 13 
APPENDIX B – ONGOING VS. ONE-TIME EXPENDITURE GUIDELINES ............................................................ 14 
APPENDIX C – LABOUR/BENEFIT ACCOUNT MAPPING .................................................................................. 16 
APPENDIX D – TRANSFER ACCOUNTS ........................................................................................................... 17
Ancillary Budget Guidelines 2015/16

A. INTRODUCTION
This document provides the guidelines for the development of ancillary department budgets for
2015/16 to 2017/18. The multi-year budget provides the future financial planning within business
units. Three templates should be completed for submission to the Budget Committee – a Word
document with the departmental synopsis, and an Excel spreadsheet form in Hyperion that contains all
the required columns to enter numerical data, as well as the standard report template that will be
generated using data input through the form.

Budget submissions should include projections for 2014/15 and budgets for 2015/16, with high-level
projections required for the following two years 2016/17 and 2017/18. The 2015/16 budget should be
based on a detailed analysis by account which will be used as the benchmark for actual results, while
the two following years may project revenue and expenses at the budget unit level, incorporating
major changes. The specific approval will be limited to the 2015/16 budget while the future years
remain a working document. This plan should include the business unit’s mission and objectives in
support of Forward With Integrity, the Emerging Landscape, and McMaster’s Strategic Mandate
Agreement and discuss the quantitative and qualitative aspects of the operation including appropriate
benchmarking and indicators; and any future plans that may impact the appropriations (also referred
to as reserve) balance. Include also all relevant assumptions employed in the development of the
budget that are not identified in Section D (Detailed Calculations).

The expectation of the Budget Committee is that business units present a budget that balances ongoing
revenue and expense projections throughout the planning period. Please note that reserves are not
intended to fund ongoing operations and that no expenses should be charged directly to the reserve
accounts. Any one-time revenue and expenses should be included in the one-time point of view
(POV) on the budget form. One-time deficits will be approved only if covered by sufficient carry
forward balances.

This will be the first year that Hyperion will be used for entering and managing budgets. The 2015/16
submission in Hyperion will be transferred to PeopleSoft Financial General Ledger after the budget
process for the 2015/16 budget cycle has been finalized.

B. HYPERION
Hyperion is a budgeting tool that allows entering budget and forecast by multiple time periods (fiscal
year or Monthly), and by different General Ledger Chartfields: Department, Program, Fund and
Account. Hyperion interfaces directly with PeopleSoft. The actuals are taken from PeopleSoft
Financial General Ledger as well as Human Resources (for Salaries) and populated into Hyperion for
up to October 2014. Budget, 5 Month Review and 8 Month Review are taken from Hyperion and
populated into PeopleSoft Financial General Ledger.

The following is a brief overview of the Operating Expense Planning as well as the Labour Planning
modules in Hyperion. More detail on the features of Hyperion are available under the Mosaic
Resources at http://www.mcmaster.ca/bms/BMS_FS_Budgeting.htm

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Ancillary Budget Guidelines 2015/16

1) Operating Expense Planning using Hyperion
 What If Versions allows planners to create different scenarios of the budget forecast for
analytical purposes only. The system offers: What-if High, What-If Medium and What-if Low
scenario planning in addition to the Working budget version. Planners can pre-populate the
what-if versions with any budget version as a starting point. Any of the what-if versions can be

later copied into the Working version before the process closes. Changes performed in a what-
if version are NOT moved to PeopleSoft. Only changes the final Working version is moved
into PeopleSoft

 Copy 8 Month review into Budget: The budget is originally pre-populated with the original
budget since it is the latest version available at the time of releasing the forms. Planners have
the option to use the 8 month review as the starting point of the budget by copying the 8
Month review into the budget scenario.

 Reports: Summary reports are available to preview the total forecast at a roll-up level.
Drilldown reports may be used to isolate any variances or anomalies. These reports are
intended for analysis and are not formatted for the final submission document as submission
reports will be available to planners and envelope managers.

 Workflow: After Planners are done with their changes, they submit the 8 Month Review and
Budget to the Envelope Manager for approval. Envelope managers have the option to approve
and submit to Budgeting Services or reject changes and send back to the planner for
modifications.

2) Labour Planning using Hyperion
 Principles of Labour Planning: Labour Planning is designed to handle the majority of
possible human resource situations which will have salary, wage and benefit assumptions
applied by employee type, e.g. TMG, UNIFOR, etc.. Labour planning in Hyperion is not
intended to replace labour distribution reporting though. This module also allows high level
adjustments, and uses a system applied “hedge” entry when necessary to balance to the
General Ledger (GL). A hedge is necessary for salary, wages and benefits to balance to the GL
whereby an amount has been paid through the HR system and a subsequent salary, wage
and/or journal entry was processed. Hyperion requires a hedge to balance its HR data upload
to the GL. When a hedge is preloaded in a department, program or project account the details
will be available in the GL.

 Assumptions: Budgeting Services will maintain the assumptions in accordance to the
collective agreements as well as Budget Committee guidelines with regard to percentage
increases based on the merit model.

 Data Elements: The labour budget forms will be prepopulated with employee master data as
well as payroll data from HR. Labour account totals including journal entries will also flow
from the General Ledger into Hyperion Labour Planning. Actual hours worked, salary and
benefits paid to each employee will be loaded monthly at month end. These date elements
together with the preloaded assumptions will allow planners to do forecasts by employee.

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Ancillary Budget Guidelines 2015/16

 Employee Adjustable Data: Planners may adjust some employee values in order to forecast
accurately the salary and benefit expense for each employee. Adjustable entries are employee
end dates, hourly rates, current standard hours, overtime hours, stipend amounts per pay as
well as stipend start and end dates. Note: overtime hours should only be entered for eligible
employees and after standard hours meet the regular pay maximum.

 FTE Calculation: For the 2015/16 budget, FTE’s will be calculated by Hyperion based on the
hours forecast for each employee. This calculation will be consistent with the FTE’s used as a
driver in the ABB model, which includes hours worked by all employees as recorded in the
HR payroll system through salary accounts. For more information, please see Section E 2.III.
C. SUBMISSION TIMETABLE
Below is the schedule for budget submissions to Budgeting Services and presentations to the Budget
Committee. All submissions must be reviewed and endorsed by the appropriate Vice-President before
being forwarded to the Budgeting Services then to Budget Committee.

Presentations to the Budget Committee have been scheduled for selected units. Managers of the
remaining units will be advised if a presentation is required once their submissions have been
reviewed. If required, the presentation will be scheduled on March 12, 2014.

Submit to Present to
Operation Budgeting Services Budget Committee
Continuing Education Fees November 26, 2014 December 10, 2014
Campus Stores April 1, 2015
Hospitality Services April 1, 2015 April 22, 2015 with
consolidated VP Administration
Housing & Conference Services April 1, 2015
operating and ancillary
Parking April 1, 2015
submission
Media Production Services April 1, 2015
Centre for Continuing Education February 4, 2015 March 11, 2015 if required
D. FORMAT OF BUDGET SUBMISSION
The Budget Committee requests that you provide the following information (current template in Word
format at http://www.mcmaster.ca/bms/BMS_FS_Budgeting.htm):
Narrative
• A brief statement of your unit’s mission and vision
• 2015/16 objectives and alignment with Forward With Integrity and the Emerging
Landscape and McMaster’s Strategic Mandate Agreement
• 2016/17 and 2017/18 plans and major strategic initiatives
• Significant cost pressures and plans to balance the budget, including anticipated future
operational changes, an analysis of capacity constraints, and any impact on
accomplishment of your mission
• Provide a total Staffing Plan by: Total FTE numbers and Total hours planned for the
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Ancillary Budget Guidelines 2015/16

year; Total PTE’s numbers and Total hours planned for the year; Total Casual numbers
and Total hours planned for the year.
• Proposed fee and rate changes (if any)
• Additional revenue generation sources, including the amount and certainty of any
additional costs and revenue and an indication of what has been included or excluded
from the budget.
• Impact on other areas in the University, including transfer of workload. Income
generation strategies or cost reductions should not transfer labour or costs to other
University units.
• Where relevant, discuss in detail how you evaluate the quality and cost effectiveness of
the services provided by utilizing appropriate benchmarks and indicators of
performance
• A summary of your competitive position
• Justification of your revenue model
• Major opportunities and key risks to your operational plan
• Anticipated staffing changes, including justification for any increase in FTE’s
• Details and explanations of all one-time revenues and expenses ALL YEARS (see
Appendix B)
• Major assumptions. Please note that all assumptions must be consistent with these
guidelines, and no deviations are allowed. Any concerns should be highlighted in this
section.
• Explanation of variances between 2014/15 current projection and both 2014/15 original
budget and 2013/14 actual results
• A summary of your reserve policy, and categorization of your reserve balance, e.g.
capital purchase or replacement, renovation or new building, deferred maintenance,
reserve against future volatility
• Capital budget plans. Capital expenses are defined as equipment or goods (including
software) that are used to carry out the business of the university with a useful life of
greater than one year and a value of greater than $5,000 ($2,000) for computer
equipment.
• Narrative of envelope highlights which may be included in the consolidated budget
document – maximum 200 words.
• An appendix listing all transfers outside your envelope and balancing to your
submission, including amount and source/destination (i.e. the other side of the
transfer). Before including a transfer in your budget you must confirm that the
other side of the transfer has been budgeted. A Hyperion template showing the total
budgeted transfers in key accounts is available in “Documents” in Hyperion. This
template must be completed and pasted into the narrative document. Contact your
Budgeting Services representative if you have any questions.
• The narrative of each ancillary operation (excluding the Centre for Continuing
Education) will be consolidated into a single narrative). The narrative of these
ancillaries should thus not exceed more than 8 pages in total.
Hyperion Excel Document
• Call your Budgeting Services representative with questions (contact information in
Section E).

 Budgets must be entered using Hyperion to provide a consistent format for presentation
to the Budget Committee. Data in Hyperion will be pre-populated as follows:
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Ancillary Budget Guidelines 2015/16

 2014/15 projection will be equal to 2014/15 5 Month projection (For
faculties) and Original budget (support units) for ongoing, one-time
and FTE’s.
The budget is originally pre-populated with the 5 Month review
since it is the latest version available at the time of releasing the
forms.
 2015/16 budget: Planners have the option to use the 8 month review
as the starting point of the budget by copying the 8 Month review
into the budget scenario.

 2016/17 and 2017/18 projections will be left blank. Plans for
2016/17 and 2017/18 are required by type of expense but do not
need to be entered at the individual account level.

Important: Transfers to other funds need to be entered at the account level in order to balance on
a consolidated basis. Interest, debt repayment and occupancy costs should also be entered at the
account level.
A separate interactive report will be available in Hyperion to display actual and prior projection data.
A formatted report for submission to the Budget Committee will be available in “Reports” on the
Hyperion portal.
A notice will be provided when the forms and reports are available in Hyperion, expected to be during
the first week of December.

At the meeting with Budget Committee, assume Budget Committee members have reviewed the
material provided. Be prepared to highlight your key points by way of a brief introduction which
should be limited to 3-5 minutes. There will be a total of 20 minutes scheduled for introductory
remarks and a discussion of the budget submission with each manager.
E. DETAILED CALCULATIONS
1) Revenue, Recoveries and Transfers
Please present a justification for any price or fee changes. Discuss how any fee change will
impact operations and/or contributions to the University Operating Budget. Outline who
your major customers are and the impact on your proposed price or fee changes on other units
at McMaster.

Ancillaries may receive internal and external revenue and recoveries, and may have internal
transfers within the University. External revenue and recoveries represent new money to the
University, while internal revenue, recoveries and transfers move money around between
accounts.

Revenues include the possibility of a gain or loss. External revenues would include sales to
students, hospitals, and other external entities. Internal revenues are generated when one
University unit provides goods or services to another and receives more than the direct cost
(i.e. receives a profit or overhead factor). This would include sales to internal departments.
External revenue is budgeted in accounts between 400000 and 439999, shown in Hyperion in
categories Grants, Tuition Fees, Research Overhead, Sales, and Investment Income. Internal
revenue is budgeted in accounts 470000 - 899999, included with Internal Recoveries in
Hyperion.
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Ancillary Budget Guidelines 2015/16

Recoveries represent a reimbursement of an actual cost, with no possibility of gain or loss.
Recoveries may be from internal or external sources. The amount received just recovers an
amount already paid, with no profit or overhead built in. This commonly includes all or part
of payroll, equipment or supply costs. Internal and external recovery accounts start with a
49XXXX, and are shown in the Recoveries category in Hyperion/PeopleSoft. Specific salary
and benefit recoveries (accounts typically start with 5001XX and 5101XX ) are categorized
with salaries and benefits in Hyperion/PeopleSoft.

Transfers can be used for any internal transaction with the exception of internal revenue.
Generally, accounts on both sides of the entry must be the same (see Appendix D). Any
transfers budgeted must be confirmed with the envelope on the other side. A Hyperion report
balancing to the transfers budgeted at the envelope level must be included in your narrative
budget submission.

2) Compensation Expense
I. Salaries and Wages
Tenure stream (tenure track and tenured), special stream (special and UNIFOR), teaching
stream (teaching track and permanent teaching), Contractually Limited Appointments
(CLAs), Graduate Teaching Assistants and Undergraduate Teaching Assistants are included
in separate accounts in the Budget Submission Form. A complete list of salary accounts
and related benefit accounts is provided in Appendix D.
Salary and wage increase assumptions as approved by the Budget Committee have been
built into the Hyperion. These assumptions are based on the collective agreements in effect
with McMaster University, government directives, and future across-the-board increases of
1.5%. Salary increase assumptions are for modelling purposes only.
For faculty salaries, a distinction must be made between Tenure/tenure track and
professional/teaching track and CLAs for budget management purposes. Separate accounts
have been set up to track these categories. Changes in faculty or staff complement should
be budgeted on the expected effective date of the change (normally July 1 for faculty).
Since the University’s fiscal year is May 1 through April 30, this may result in less than a
full year’s expense and FTE.

II. Benefits
A summary document of the benefit budget assumptions has been included for your
information in Appendix A. Benefit tables showing rates for each employee group at
multiple compensation levels are available as Excel spreadsheets at
http://www.mcmaster.ca/bms/BMS_FS_Budgeting.htm
III. Employee Full-Time Equivalent (FTE)
FTEs are the actual time worked compared to standard hours for that position. For
example, if 70 hours per week are worked in a department with standard 35 hours per
week, the department has 2 FTEs.

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FTEs are not head counts. For UNIFOR and TMG staff, FTEs are calculated based on
time worked, for example, using a standard 35 hour week totaling 1,820 hours per year:

35 hours/week for 52 weeks = 1,820 hours/year = 1.0 FTE
21 hours/week (3 days) for 52 weeks = 1,092 hours/year = 0.6 FTE
35 hours/week for 35 weeks (8 months) = 1,225 hours/year = 0.67 FTE

For employees working a standard 37.5 hour week totaling 1,950 hours per year, the
calculation would be:

37.5 hours/week for 52 weeks = 1,950 hours/year = 1.0 FTE
22.5 hours/week (3 days) for 52 weeks = 1,170 hours/year = 0.6 FTE
37.5 hours/week for 35 weeks (8 months) = 1,312.5 hours/year = 0.67 FTE

For the 2015/16 budget, FTE’s will be calculated by Hyperion based on the hours forecast for
each employee. This calculation will be consistent with the FTE’s used as a driver in the ABB
model, which includes hours worked by all employees as recorded in the HR payroll system
through salary accounts. FTEs are the actual time worked compared to standard hours for that
position. For example, if a department has 3 part-time employees working a total of 70 hours
per week with standard 35 hours per week, the department has 2 FTEs.

Information about actual paid FTEs for all employee groups is available to envelope managers
through Hyperion. Please note that FTEs for TAs and sessional faculty are based on a standard
1,820 hour year and not on head count, i.e. a full-time TA of 260 hours is a 0.14 FTE.
http://www.mcmaster.ca/bms/FTE_presentation_v1.ppt

3) Contribution to the Operating Budget
Ancillary operations make a critical contribution to the financial health of the University
Operating Budget. The contribution is based on a percentage of the two slip-year gross sales
by ancillary operation as detailed in the audited financial statements (i.e. the 2015/16
contribution is based on the 2013/14 audited statements).

The ancillary contribution rate has been set throughout the budget period, as detailed below.
The contributions on sales exclude technical department sales under the Campus Store and
internal sales from Media Production Services to the Campus Store for further resale.

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Ancillary Budget Guidelines 2015/16

McMaster University
Ancillary revenue contribution transition 2014/15 2015/16
2013/14 Budget Projection Budget 2016/17 Plan 2017/18 Plan
Media Production Services* Sales 3,124,758 4,175,331 3,762,283 4,188,262 4 ,191,262
Less Custom Courseware 695,430 695,430 695,430 695,430 6 95,430
Base Sales 2,429,328 3,479,901 3,066,853 3,492,832 3 ,495,832
Operating Framework 72,900 105,450 138,000 157,200 1 57,300
*Sales 2013/14 fwd represent Student Affairs
sales to end customer, sales to Total Contribution 72,900 105,450 138,000 157,200 157,300
Campus Stores are excluded. Contribution/Sales 3.0% 3.0% 4.5% 4.5% 4.5%
Housing & Conference Services Sales 21,919,159 22,556,957 23,286,285 24,007,341 2 5,218,113
Operating Framework 657,570 922,735 1,047,900 1,080,300 1 ,134,800
Student Affairs 140,000
Total Contribution 797,570 922,735 1,047,900 1,080,300 1,134,800
Contribution/Sales 3.6% 4.1% 4.5% 4.5% 4.5%
Hospitality Sales 20,646,317 20,606,544 20,521,554 21,774,200 2 2,427,426
Operating Framework 619,390 962,945 923,500 979,800 1 ,009,200
Student Affairs 383,000
Total Contribution 1,002,390 962,945 923,500 979,800 1,009,200
Contribution/Sales 4.9% 4.7% 4.5% 4.5% 4.5%
Campus Store Sales 21,487,622 20,225,842 18,462,485 19,718,600 1 9,718,600
Less Net Technology sales 4,801,440 4,553,480 4,553,480 4 ,553,480
Base Sales 21,487,622 15,424,402 13,909,005 15,165,120 1 5,165,120
Operating Framework 644,630 694,100 625,900 682,400 6 82,400
Student Affairs 550,000
Total Contribution 1,194,630 694,100 625,900 682,400 682,400
Contribution/Sales 5.6% 4.5% 4.5% 4.5% 4.5%
Parking Sales 4,746,644 4,748,973 4,871,396 4,796,572 4 ,796,572
Operating Framework 142,400 180,800 219,200 215,800 2 15,800
Student Affairs
Total Contribution 142,400 180,800 219,200 215,800 215,800
Contribution/Sales 3.0% 3.8% 4.5% 4.5% 4.5%
CCE Sales 5,048,073 5,912,338 6,413,192 6,676,464 6 ,649,107
Operating Framework 151,440 220,020 288,600 300,400 2 99,200
Student Affairs
Total Contribution 151,440 220,020 288,600 300,400 299,200
Contribution/Sales 3.0% 3.7% 4.5% 4.5% 4.5%
Telecom Sales 2,674,707 2,654,415 2,487,208 2,639,530 2 ,639,530
Operating Framework 80,240 96,070 111,900 118,800 1 18,800
Student Affairs
Total Contribution 80,240 96,070 111,900 118,800 118,800
Contribution/Sales 3.0% 3.6% 4.5% 4.5% 4.5%
Total Operating Framework 2,368,570 3,182,120 3,355,000 3,534,700 3 ,617,500
Total Student Affairs 1,073,000 - - -
Total Contribution 3,441,570 3,182,120 3,355,000 3,534,700 3,617,500

Telecom, being part of UTS and not an ancillary by definition, is included only for
contribution purposes. Student Affairs’ base budget for 2014/15 has been adjusted to
accommodate the inclusion of the respective contribution income being now part of the gross
Ancillaries contribution to the Operating Budget.

The consolidated budget will include a table to illustrate the allocation of the ancillary unit
contributions to the operating budget under the new budget model. This additional table will
provide increased transparency with respect to the contributions made to support each of the
faculties.
4) Interest Rate Charged on Reserves in Deficit
The rate to be charged on reserve balances in a deficit position beginning May 1, 2015 will be
2%, this same rate should be used throughout the planning period.
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