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Process Info

IMPORTANT CHANGES AND COMMENTS FOR 2010/11

  • Process Change
    The capital budget process has been modified again for 2010/11 so that the VP's need to merely revise and update the prior year's VP Area Summary (Schedule H1) for any changes.  No detailed Capital Expenditure Request (Schedule H) must be done except for projects submitted for the first time.  No new capital projects should be submitted unless they meet specific criteria outlined in the Capital Budget cover memo from the Budget Office.  (See Process Steps & Schedule)

  • 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.

  • 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 They have been replaced by Yr.1 through Yr.5.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 = 2010/11; Yr.2 = 20011/12; Yr.3 = 2012/13; Yr.4 = 2013/14; and Yr.5 = 2014/15.)

  • Amortization Schedules Required on all new projects submitted for the first time (when borrowing is needed).
    Amortization Schedules of debt principal and interest must be submitted for every new 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 2010/11  (To be used to calculate debt and interest amortization on Schedule H.)
    Under 5 years = 5.75%
    5 to 20 years = 6.25%
    20 to 30 years = 6.75%

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PROCESS STEPS & SCHEDULE

  • The 2010/11 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".

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FORMS

The forms that you will need to complete your capital requests along with completed samples 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.

 If unapproved project requests from the prior year's process are being re-submitted (on Sch H1) in the 2010/11 capital budget process, update the electronic files of those prior requests for year affected, cost changes, etc. The Budget Office will send electronic copies of the previous H1's to the VP's and their budget coordinators.

  • Schedule H - Capital Expenditure Request and Justification Form. A separate Schedule H must be completed for any capital request submitted for the first time. 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.  No Schedule H must be prepared for any project being re-submitted on the VP Area Summary (Schedule H1).

     

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DUE DATE

 Vice Presidents must submit their revised Summary of VP Area Prioritized Capital Requests (Schedule H1) along with any Capital Expenditure Request Forms (Schedule H) to the Budget Office by December 4.

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CAPITAL BUDGET PROCESS FLOW CHART

Step 1

Late September

VP's receive prior year's Summary of VP Area Prioritized Capital Requests (Schedule H1) electronically from the Budget Office.

Step 2

Late September to Early December

VP's confer with their Deans & Directors and revise & update their VP Area Summaries (Schedule H1).  Submit each VP summary (Schedule H1) and related Schedule H's for any newly submitted projects to the Budget Office.  Note: All new projects submitted must meet the criteria listed on the Capital Budget cover memo from the Budget Office.

Step 3

Early December to Early January

Budget Office reviews Schedule H1's and H's prepare a consolidated capital project request summary and submits to the Budget Committee.

Step 4

Early January through February

Budget Committee reviews capital requests and arrives at an approved Capital Budget.

Step 5

Early March

VP Administration and Finance presents capital highlights to the Board of Directors as appropriate.

Step 6

Early June

President and V.P. for Administration and Finance present Proposed Capital Budget to the Borad of Directors

During Fiscal Year 

  To  initiate capital projects, administrators follow normal University procedures for "Project Endorsement Forms" and spending approvals.

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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.

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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 submitted for the first time 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)