Department Use of Funds
Fee accounts are established to provide departments with a means of controlling and pending department-generated funds. Each expense account should have a corresponding income (revenue) account. Departmental personnel, and personnel in administrative offices to which the department reports, are responsible for avoiding the incurring of deficits in departmental accounts and for eliminating overdrafts that may be incurred in such accounts.
To determine the current income/expense ratio at any time, use the following formula: Revenue Balance (reverse the sign) + Expense Balance = Income over expenditures. The result of this computation is valuable for two reasons. During the year, one can determine the rate of income to the rate of expenditures. If the result is negative, the department is spending faster than it is receiving. If positive, the department has income to cover additional expenditures. At the end of the year, the result will determine the amount brought forward to the next fiscal year. A negative balance will be brought forward as a reduction in the estimated expenditure allocation in Column #1. A positive balance will be brought forward as an increase in the budget allocation for expenses.
REMEMBER: To spend any additional income deposited over the original estimate, the department chairperson will need to request that the Budget Office increase the income and expenditure estimates. Income and expenditure estimates will not be increased unless the department is quite confident that the revised income estimate can be obtained.