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Q&A Carryforward Spending Plan

Education & General Carryforward Spending Plan

Florida Statute 1011.45(3) details specific items that would be expected in the Education & General (E&G) Carryforward Spending Plans that must be approved by university board of trustees by September 30 and submitted to the Board of Governors for review and approval by November 15. Below is a compilation of questions from university staff that will be updated as needed related to E&G funding and the reporting of planned uses of university E&G carryforward fund balances.

1) Language in Florida Statute 1011.45(1) stipulates that each university shall maintain a minimum carryforward balance of at least seven percent of its state operating budget. Do the universities need to adjust their 7% reserve amount when administered funding (health insurance, retirement, etc.) is added to their E&G state budget during the year?

Answer: Yes, the language in F.S. 1011.45(1) states that universities must maintain at least a 7% balance in state operating funds, or submit a plan to the Board of Governors to attain the 7% balance within the next fiscal year. As a university’s E&G state budget allocation for the fiscal year increases, so does the amount necessary to satisfy the 7% minimum reserve requirement. A university’s state operating budget is defined as the funding sources included in the annual General Appropriations Act. The sources are currently General Revenue, Educational Enhancement Trust Fund (Lottery), Student and Other Fees Trust Fund, and the Phosphate Research Trust Fund (Florida Polytechnic only).

2) The E&G Carryforward Spending Plan template tab to be used for providing details of planned expenditures has a section for “estimated timeline for completion” of the expenditure item. Should this be based on calendar year or fiscal year?

Answer: The reporting templates were designed for reporting your E&G Carryforward Spending Plan information using a fiscal year period.

3) A renovation project totaling $5 million was started with auxiliary funds. As a part of the remodel, we would like to use $2 million in E&G carryforward to renovate some of the space to house Police and Emergency Management. Is this allowed?

Answer: Yes. Pursuant to Section 1011.45(3)(b), F.S., E&G carryforward funds can be used for renovation as long as the project is consistent with s. 1013.64(1) F.S.

4) Our university will likely have deviations in the E&G Carryforward Spending Plan line items during the fiscal year. Will we need to bring these spending variances back to the Board of Governors for approval?

Answer: You are not required to bring amendments to your initial approved E&G Carryforward spending Plan back to the Board of Governors during the fiscal year. The Chancellor will be asking for a final reporting of actual activity subsequent to the end of the period. You will be asked to explain deviations in your actual spending from the original approved plan. Board staff will send out the original Carryforward Spending Plans to each university at the end of the fiscal year with an extra column on the “summary tab”, there you will report the actual activity.

5) Are universities required to provide a separate E&G Carryforward Spending Plan for each entity as funded in the annual General Appropriations Act?

Answer: Yes, the E&G Carryforward Spending Plan is intended to report planned expenditure of accumulated fund balances in each of the E&G funding categories, with the exceptions of Nursing Education (PIPELINE), Risk Management Insurances and Student Financial Assistance which should be consolidated into the reporting of the entity that benefited from the funding. These categories include the university main campuses, UF-IFAS, the health science centers/medical schools, the FAMU-FSU Joint College of Engineering, Florida Postsecondary Comprehensive Transition Program (UCF), the Community School Grant Program (UCF), and the Enterprise Cybersecurity Resiliency Programs (USF).

6) On the “Carryforward Fund Balance Composition” report that universities were required to submit as supplemental information with their annual operating budgets up to and including FY 2018-19, there were provisions for expenditures to date and encumbrances to date in the July 1 beginning fund balance section. These categories are not included for the “E&G Carryforward Spending Plan” template. Why is there a different beginning fund balance presentation for the reporting requirements in F.S. 1011.45?

Answer: The previous years’ reporting of university E&G carryforward composition that accompanied your annual operating budgets was different in several ways, most notably in the “as of” reporting date and the intent of the reporting. The operating budget supplemental report was as of the budget files due date (August), while the new spending plan reporting is for your E&G fund balance as of July 1 of the fiscal year. Since the report is as of July 1, “expenditures to date” doesn’t apply and F.S. 1011.45 mandates that you report an estimated cost per planned expenditure for every E&G dollar above your 7% minimum reserve carryforward balance. The encumbrances recorded in your university accounting systems are earmarked amounts that should be included in your upcoming planned expenditures. In summary: old report = composition of remaining carryforward balance at August xx less expenditures and encumbrances to date, new report = accounting for the planned expenditure of every E&G carryforward fund balance dollar by funding entity as of July 1 in excess of 7% of your state operating budget, with a projected timeline for the expenditure to occur.

7) Our university is planning to use a portion of our E&G carryforward balance for fixed capital outlay (FCO) projects as provided in Section 1011.45(3), F.S. What is the correct way to reflect this use of funds on the E&G Carryforward Spending Plan documents?

Answer: There are categories on the E&G Carryforward Spending Plan template for those FCO uses that are defined in Section 1011.45(3), F.S. You would report the planned use of your E&G carryforward dollars on the operating report and then report a corresponding entry on your university’s Fixed Capital Outlay budget template so that the use of funds is reflected on both the operating and FCO budget reports. The Board Budget Office will be checking for agreement between the operating and fixed capital outlay budget reports.

8) Section 1011.45(3), F.S. outlines the permissible uses of E&G carryforward fund balances for certain fixed capital outlay expenditures. May current-year E&G funding be utilized for FCO expenditures?

Answer: No. Unless otherwise provided by law, current-year E&G funding is to be used for E&G operating activities only. Design costs, building permit fees, and actual hard construction costs are not appropriate uses of current-year E&G funds. As a general rule, any items required to obtain a Certificate of Occupancy for a project would not be an approved used of current-year E&G funding.  

9) A state university experienced an electric panel fire which resulted in material damage to the building. The building is included as Education and General (E&G) space in the Board of Governors Space File. Can payment for the necessary repairs be made from E&G funds?

Answer: Yes, repairs to an E&G building may be funded from university E&G sources. It would be the university’s discretion to utilize either current-year funds or university carryforward for this type of nonrecurring expenditure.

10) When reporting budgeted E&G expenditures on the annual operating budget “Summary Schedule I”, where should planned expenditures for fixed capital outlay projects using E&G carryforward funds be reported?

Answer: Any planned use of E&G carryforward funds should be included on the line item “Carryforward (From Prior Period Funds)” regardless of the type/category of the expenditure. There should be no capitalized expenditures for building construction or other fixed capital projects from E&G funds except where expressly provided by law.

11) Are we allowed to use Carryforward dollars to fund the FCO maintenance escrow accounts?

Answer: Pursuant to Section 1011.45(f), F.S., a university board of trustees may choose to fund maintenance reserve escrow accounts using E&G Carryforward funds. Universities shall reserve funds with carryforward dollars equal to 2% of the total value of the building. Each year you will report the new incremental amount of carryforward dollars used on maintenance escrow reserve on the Carryforward Spending Plan under the “FCO Reserves” tab. Please note you will only show the new incremental amount being added to the maintenance escrow accounts each year, no the cumulative total. Each project’s maintenance escrow accounts must be maintained so that detail reporting may be provided if requested.