Planning & Budgeting

Budget Policies

Institutional Overhead Policy

Operating costs can be broken down into two categories: direct, and indirect or overhead. Direct costs are those charged to the benefiting function or organization. Costs generally applicable to a function, but not charged directly to that function, are referred to as indirect or overhead costs. Typically these are costs which benefit more than one function or organization and for which there is no convenient unit of measure to allocate the cost to the benefiting functions or organizations.

Overhead costs are legitimate costs of conducting the business of the University. Failure to recognize and properly apportion overhead costs results in hidden subsidies to some programs or users. While the University may wish to subsidize certain programs as a matter of policy, these subsidy decisions should be explicit and considered in the biennial budget process. This policy applies to overhead charges on cash income from sales of supplies and services and rental income. Grants Information Memoranda 13 (GIM 13) apply to overhead charges on sponsored agreements.

Please see the Institutional Overhead Administrative Policy Statement for a full description.

Please use the following link to access information about Activity Based Budgeting.

Deficit Resolution Policy

Carryover Policy

Carryover funds are defined for this purpose as General Operating Fund (GOF) and Designated Operating Fund (DOF) budget authority allocated in a given biennium that remains unspent at the end of the prior biennium. During FY15, a carryover policy was developed for administrative units and submitted to the Provost for approval. The first year of the policy’s implementation was FY16. Prior to that, funds were given back to units in the form of temporary DOF funds. Now, each administrative unit is asked to submit a carryover spending plan as part of the Provost’s annual budget process, using the following approach:

  1. Reserve 10 percent of their permanent ABB base (GOF and DOF ONLY). It is recommended that units hold 10 percent of their permanent base as an emergency reserve. This “emergency” reserve is calculated annually and derived from the previous June/July’s ABB base budget information to units.
  2. Set-aside “central” commitments from the reserve. Central commitments are defined as those coming from OPB, the President and/or the Provost. A list of these commitments is provided by OPB during the annual budget process.
  3. Explain any remaining temporary carryover balance by providing a list of intended use(s)/purpose(s) These will be differentiated according to intended use along the following lines.
    • Permanent expenditures funded with temporary funds.
    • Possible multi-year commitments.
    • Immediate, current year use.

Each unit annually submits its spending plan (a combination of items 1-3) to OPB and the Provost. OPB provides this information to the Provost as an inventory for each unit and, if requested, as a high-level summary. Each unit is given the opportunity to describe how its spending plan aligns with its overall strategic plan and to describe the implications of not doing the work outlined in the spending plan. Spending plan are discussed in conjunction with requests for Provost Reinvestment Funds.

Annual budget materials require that units account for unchanged or growing carryover balances. Units are asked specifically how their spending trends reflect their prior year’s spending plan commitments. Administrative units that fail to spend according to their spending plans may be asked to provide formal justification to the Provost before the provision of additional funds for salaries, benefits, reinvestment funds, etc. Permanent and/or temporary reinvestment fund allocations may be withheld if trends don’t reflect commitments from units. If spending patterns do not change over time, the Provost may exercise his or her rights to withhold temporary carryover balances back to the units.

Schools, colleges and other campuses (Bothell & Tacoma) are also asked to provide carryover spending plans on an annual basis. However, as the responsibilities, risks, and the composition of each academic unit can vary dramatically (more so than administrative units), appropriate reserve amounts are determined on a case-by-case basis.

Invested Funds Interest Distribution to Capital Projects Policy

The invested funds (IF) of the University of Washington is a pool consisting of the University’s operating funds and campus depositors have access to their funds upon demand with central administration assuming all market risk for the underlying investment strategies. Distribution rates are determined by UW Finance and the Provost, and the net available, after distributions to campus depositors, is allocated to the Provost, who spends the income in the DOF pool on required costs such as utilities, compliance issues, research support, legal expenses, compensation, etc.

In the past, capital projected listed on the One Capital Plan funded fully, or partially, with gifts from outside entities or donors would receive the campus depositor rate if requested. Most relevant instances were approved and the depositor rate would be allocated to the capital project. As such, from January, 2018, forward, all One Capital Plan projects funded fully, or partially, with gifts from outside entities or donors will receive the campus depositor rate. Details are available at the following brief:

Invested Funds Interest Distribution to Capital Projects