Background

Cost centers are designed to accumulate costs related to an operational department of the college or to a specific activity.  Within a department, there can be multiple cost centers for managers who handle multiple services.  A manager may want two cost centers within a department to assist in tracking and monitoring significant costs.  An example of using two cost centers is one cost center for human resources, with an additional cost center to track and monitor expenses related to recruitment.

Cost center numbers are determined using guidance from The National Center for Higher Education Management Systems, which identifies functions and where they are nationally accounted for in financial reports.  The major functions within the college are instruction (1), public service (3), academic support services (4), student support (5), instructional support (6), plant operations and maintenance (7), and scholarship and fellowships (8).  There are also several funds within the college: current (10, 11, 12, 13), restricted (20), agency (40), auxiliary (42, 60), and plant funds (70, 72).

Responsibilities

Vice Presidents - Area vice presidents oversee their budgets and those of their managers.  When acting as a cost center manager, each vice president is subject to the same responsibilities as cost center managers.

Cost Center Managers - The cost center managers are fiscally responsible for the transactions charged to the center.  The managers are responsible for developing the annual cost center budget of revenues and expenses for the upcoming year in conjunction with their vice president.

Cost center managers are responsible for properly coding revenue and expenses on accounting documents as detailed in the chart of accounts.  They must abide by all purchasing procedures.  They are required to monitor and review the monthly financial reports that detail expenses and revenues to verify the accuracy of the data contained in the reports.  Discrepancies are to be brought to the attention of the finance office, promptly, to assist in proper accounting of revenues and expenses by functional area.

Throughout the year, managers are responsible for the operations of their departments using the fiscal allocations within their cost centers.  They are required to follow written policies and procedures of the college and exercise fiscal responsibility when spending college funds.  Expenses should be necessary, reasonable, fully documented, and coded to the appropriated expense category within the managers’ budgets.

If a cost center manager will be away from campus, signature authority may be delegated to another individual in the area.  If this occurs, notification must be given to the finance office and the area vice president.  Delegation of signature authority does not relieve the cost center manger of the ultimate responsibility for the cost center.  If over expenditures of a cost center are made during this period, the cost center manager will be held accountable.

If cost center managers feel that funds in their budget are not sufficient to carry out the operations of the area, they need to address the issue with their vice president before any over expenditure is made.  If during the course of the year the cost center manager exceeds budget, either the manager's signature authority limit will be reduced, or the vice president will be required to sign for all purchases.

When cost center managers are requested to carry out new projects for which they will need additional funds, they must obtain a budget transfer into the appropriate budget before the expenditure is made.  If this does not occur, the cost center managers will be expected to cover the funds out of their budget.

Areas that must produce revenue to cover expenses must monitor cost center expenses closely.  If during the course of the year actual revenues are not adequate for the area to break even, the cost center manager will be expected to reduce expenditures so that a deficit will not be incurred in the area.

The vice president of the area will review circumstances where cost center managers overspend their budgets.  Actions taken may include ineligibility for merit increases or being subject to a conditional contract.

All new cost center administrators are required to contact the finance office within one month of their appointment to receive individualized training on purchasing procedures and budget management.

The Finance Office - The finance office (the business office) oversees and follows up on budget issues as they affect the financial status of the college as a whole.  It also monitors college expenditures for appropriateness and reasonableness and conducts formal financial training sessions for cost center managers through professional development twice a year, or on an as needed basis.

Budget Transfers

General

Within Cost Center Object Codes - Budget transfers within the cost center can be done throughout the year, as reallocations become necessary due to unanticipated situations or changes in operations.  Justifications for the changes are required, and the director of finance or designee must properly approve the transfer of funds before the expenditure is made.

Cost center managers can authorize transfers within the same cost center, between object codes.  If the vice president, president, or board of trustees has approved a purchase requisition or purchase order, the budget transfer does not have to be signed as well.  Instead, a copy of the signed purchase requisition can be attached to the budget transfer and used as authorization for the transfer.

Between Cost Centers within the Same Functional Code - Transfers between cost centers within functions can be done with the authority of the manager of the cost centers or the vice president for the functional area.  Justifications for the changes are required, and the director of finance or designee must properly approve the transfer of funds before the expenditure is made.

Between Cost Centers Not in the Same Functional Code - Budget transfers between functions are not allowed because of functional expenditure limits set by law.

Signature Authority for Transfers

With the exception of transfers within the same cost center as noted above, cost center manager budget transfer limits are based on their salary grade within the college.  Transfer limits are as follows:

College vice presidents and the executive associate to the president$24,999.99
Executive directors, associate vice presidents, and division chairs$14,999.99
Directors and cost center managers  $4,999.99
All specialists/coordinators/other authorized personnel   $2,499.99

Transfers $25,000 or greater must be approved by the president or designee. 

Policy Manual Review/Revision:  11/04/11