Documenting and Journalizing Under RCM

Documenting & Journalizing Procedures under RCM

Created: March 3, 2015

Algonquin College

Finance Department

Effective: For the Fiscal year 2015/16 budget year, in BUS and PeopleSoft (or replacement)

Contents

Introduction – Purpose and Objective of RCM Model

Collecting Data & Validating

Information Necessary

Data necessary for RCM Model

Validating Information

Inputting Data into the Model

Step 1: Data from BUS (Tab #8)

Step 2: Weighted Funding Units (Tab #2)

Step 3: Central Administration Costs (Tab #3)

Step 4: Facilities Costs (Tab #4)

Breakdown of Tabs and Formulas

Allocations (Tab #1)

Academics

Non-Academics

Weighted Funding Units (Tab #2)

Central Administration Costs (Tab #3)

Facilities Costs (Tab #4)

Grants & Revenues (Tab #5)

Current Format (Tab #7)

Original Data from BUS (Tab #8)

Ancillary (Tab #9)

Summary of Direct Costs (Tab #10)

Journal Entries

Revenue Allocations

General Purpose Operating Grant (Account 39998), Growth Grant (Account 3999) and Subvention Funding (Account 39999)

Expense Allocations

Central Administrative Costs (Account 49997)

Space Costs (Account 49998)

Woodroffe Operating Costs (Account 49999)

Introduction – Purpose and Objective of RCM Model

This model for the RCM project was created in order to allocate revenues and expenses through a fair and more accurate process. The intent is to generate the contribution each Academic must achieve under RCM. The current format is intended to be used after the close of the budget. It highlights the Central Administration costs, as well as the Physical Resources costs to be allocated to the Departments at Algonquin College. This model also appropriates the grants accordingly to the Academic Departments through a traceable and precise process.

Collecting Data & Validating

Information Necessary

Collect and input the following information from BUS into the RCM Model for All Departments regarding revenues and expenses by activity. Beside each activity is the code for BUS.

• Funded (E)
• Contract (C)
• Ancillary (H)
• International (U)
• Strategic Investment Priorities. (S)
• All (A)

The BUS data includes all revenues and expenses per department for each of the above stated activities, the contribution margins will populate themselves within the model.

Additional information to be collected and input into RCM Model;

• Full-Time Weighted Funding Units (WFU) from Manager of Academic Planning & Operations, (Need Timeline)
• Part-Time Weighted Funding Units (WFU) from Ministry of Colleges, Universities and Training (MTCU), in October
  • From MTCU report, received from Krista Marsden, Coordinator – Curriculum and Reporting in Registrar’s Office.
• Assignable Square Footage from Physical Resources, Janet Sauriel, Facilities Planner, Physical Resources, October 1st.
• Percent of Utilization for open classroom space from the Cristy Richards, Manager. Academic Operations & Planning. Taken from the “Program Costing” report, to be completed by the end of May. Breakdown of Physical Resources Allocations – In B.U.S. under Physical Resources, detailed report.

The above mentioned reports will be requested annually and updated in the model as necessary.

Validating Information

Each piece of information stated above needs to be validated (signed) by the appropriate Vice President, Dean or Director.

• BUS Validation – Director, Finance & Administrative Services
• Full-Time Weighted Funding Units – Senior Vice President, Academic
• Part-Time Weighted Funding Units – The report from the MTCU, as received from Registrar’s Office
• Square Footage Allocation – Director, Physical Resources
• Utilization of Open Classroom Space – Report from Registrar’s Office

Inputting Data into the Model

Step 1: Data from BUS (Tab #8)

1. Once in BUS choose the appropriate menu item, College Revenue by Area for revenues and College Expenses by Area for expenses. Here you can find separate categories for different activities;

Activity Code in BUS

• Funded (E),
• Contract (C),
• Ancillary (H)
• International (U),
• Strategic Investment Priorities (S).

2. These categories can be further broken down into the following areas (Area as per BUS);

• Human Resources (Area 1),
• Finance & Administrative Services (Area 2) ,
• Student Services (Area 3),
• International (Area 4),
• Academics (Area 5),
• President & Board of Governors (Area 6),
• Advancement (Area 7),
• Dedicated Funds (Area 8)
• Strategic Investment Priorities (Area 9)

3. Input all data from BUS into the appropriate or matching cell of the model. This data includes all revenues and expenses for each Department. The revenues and expenses are broken down into Funded, Contracted, Ancillary, International and Strategic Investment Priorities columns.
4. Notes on model:
   • Learning and Teaching Services includes Mobile Computing and Personal Development,
   • Office of VP Academic includes Educational Services,
   • Office of VP Academic includes Academic strategic Planning,
   • Finance and Administrative Services includes the Vice-President of Finance and Administrative Services.
   • Community Partnerships & Engagement is found under Area 5, Office of the VP of Academic
   • International Expenses include the VP of International,
   • Strategic Investments Expenses includes Appropriations,
   • Student Aid and Contingency Funds are found under Dedicated Funds,
   • General Purpose Operating Grant, Growth Grant and OCAS Fee Processing are found under Area 8, Dedicated Funds.
     • Then going into the detailed report under Corporate Revenue until you get to the Unit Level. Here you will find the OCAS Fee Processing.
     • In a further detailed report of Corporate Revenue you will find the GPOG and Growth Grant.
     • All Other Revenue under this area are used in the Other Revenue Column.
   • Special Funds are made up of Contributions in Kind (Under Dedicated Funds), as well as Special Projects (These are found by going into the College level, Special Projects area).
   • For Student Support Services, add VP of Student Support Services,
   • For Human Resources, add VP of Human Resources
5. The contribution margins will populate automatically.
6. These numbers can then be verified at the bottom by inputting the total revenues, expenses and contribution margins at a college level from BUS. Put these numbers in the “Total from BUS” row at the bottom of the page. If these numbers balance to zero (0), the numbers are accurate. The Overall Contribution Margin of the entire College should balance to near 0, give or take one or two dollars.
7. Run BUS at “All” revenue and expense levels to validate each department

Step 2: Weighted Funding Units (Tab #2)

1. Input all Full-Time Weighted Funding Units and Part-Time Weighted Funding Units in their appropriate columns. This will generate the Total WFU column.
2. Next it will pull the dollar ($) amount per Weighted Funding Unit from the Allocations tab and calculate the total dollar ($) amount of the grant for each school.
3. The next column shows the amount of the grant the school will receive. (The grant allocation percent may change as RCM progresses.)
4. The dollar amount per WFU is calculated by the total Grant divided by the total WFU’s.

Step 3: Central Administration Costs (Tab #3)

1. Input Physical Resources Allocations, located in the bottom half of the tab.
2. These numbers are taken from BUS, Under College Expenses by Area,
   1. Finance & Administration,
   2. Physical Resources,
   3. Then going to the detailed report by UNIT.
3. The numbers from BUS are split between General Allocations (Column F) and Woodroffe Specific (Column G).

Notes

• Operations & Maintenance includes Emergency Management
• Directors Office must deduct revenues under Directors Office
• Grounds Services currently must deduct revenues under Grounds Services
• Building Services, must deduct revenues under Building Services

Step 4: Facilities Costs (Tab #4)

This tab includes all of the square footage for all Academic and Non-Academic departments. Be sure to input the square footage in its corresponding column. EG. International has space at Woodroffe as well as Leased.

• Faculty of Arts, Media and Design includes College & Career Prep,
• Finance & Administration and Office of VP Finance & Admin,
• Human Resources includes Continued Online Learning, OPSEU and VP’s Office,
• Student Recruitment includes Sales, Student Recruitment and,
• Student Support Services includes VP of Student Services Office,
• Office of VP Academic includes Vice President Academic and Assistant Vice President Academic

At the bottom of the page there is an area to input the space utilization in hours as received from Registrar’s Office. The report includes all hours used, dedicated space needs to be removed before the allocation for open space can be completed.

The hours booked for each School will be calculated as a percent for each school, and then multiplied by the Total Academic Space to allocate open classroom space to each school.

The above mentioned will be added to each Schools total square footage, under the column (J) Classroom Space.

Breakdown of Tabs and Formulas

Allocations (Tab #1)

Academics

The Allocations tab is a breakdown of revenues and expenses to each department. It includes all tuition revenue, direct revenues and expenses for each academic department on the top half of the page. These numbers are pulled from the “Original Data from BUS” tab (#8).

The WFU’s are brought onto this page and used to allocate the Total Provincial Grant to each department based on a percent which is a variable. The allocation percent will fluctuate each year.

Note: This percent can only go as high as 95% as the remaining 5% is allocated to the bursary required by the MTCU.

After the grant is allocated to each academic department, they are charged the Central Admin Charges based on the percent of their direct expenses from the Summary of Direct Costs (Tab#10, Column E).

Then each academic department is charged the Facilities Charges, which is the allocation of Physical Resources to each department based from the Facilities Costs (Tab# 4). This is a total of the Facilities Charges for General (Tab #4 Column “P”) and Woodroffe Specific (Tab #4 Column “Q”).

Once the new contribution margin is calculated, the Academic Departments are given a percent of the Subvention. This Subvention is calculated on the Subvention tab for F2015-2016 only.

After the Subvention is allocated appropriately, the Academics are given a “stretch” contribution margin. The total of this contribution margin for F15/16 is input into the Strategic Investment Priorities funds. The allocation of this contribution margin will change in the future.

Non-Academics

In this section of the Allocations tab, found on the bottom half of the page, there is the Direct Revenue & Expenses and the contribution margin of each Non-Academic department directly from BUS.

Then they include the Internal Revenue, which from the “Central Admin Costs” tab (Tab #3) is the cost of the department as per BUS plus the additional Facilities Costs incurred by that department.

The next column is the expense of the Facilities Costs (Tab #4). This is taken from the “Central Admin Costs” (Tab #3 Column H). This is a product of the General Overhead and Woodroffe Specific Overhead for each Non-Academic Department, as calculated on the Facilities Costs Tab.

The contribution for the Non-Academics is made to equal $0 through RCM except for Ancillary, International and School to College Work. These three departments do not receive internal revenues from the Academic Departments and generate their own contribution margin.

Weighted Funding Units (Tab #2)

The Weighted Funding Units (WFU’s) tab includes information regarding the WFU’s assigned to each Academic department. These numbers are received from the Manager of Academic Operations and Planning for Full-Time WFU’s, as well as the MTCU report for Part-Time WFU’s.

The WFU’s are a representation of the allocation of the General Purpose Operating Grant (GPOG) and Growth Grant. For each WFU, there is a cash dollar amount attached, this amount changes each year depending on the MTCU. Each Academic Department then receives the appropriate amount of the grant based on the WFU’s in their department.

Note: Cash value of the grant is equal to the total Grant(s) divided by the total WFU’s (Part-Time & Full-Time).

Central Administration Costs (Tab #3)

Tab #3, the Central Administration Costs Tab regards the distribution of the central admin costs. The column labelled “To be allocated under RCM – Total net costs budget” (Column F) shows each departments costs as stated in BUS, less the “Facilities Costs” (Column H). The “% of total budget” (Column G) shows the percent each Department consumes of the total central admin costs.

At the bottom of the Central Admin Costs Tab (Tab #3) there is a section which breaks down Physical Resources total costs into General (Column F #38-45) and Woodroffe Specific (Column G #38-45). These numbers are taken from BUS, Under College Expenses by Area, then Finance & Administration, then Physical Resources, then going to the detailed report by UNIT

The “Facilities Cost Column” (Column is a function of total physical resources and Woodroffe specific physical resources allocated to each specific department. The Woodroffe specific physical resources only apply to departments using space within the Woodroffe Campus. This is calculated on the “Facilities Costs” tab using General Physical Resource allocations from the bottom of the “Central Admin Costs” tab, times the percent (%) of square footage used by each department found on the “Facilities Costs” tab.

Formula: (% of square footage used by department X General Physical Resources allocated) + (% of square footage used by department X Woodroffe Specific Physical Resources allocated).

The “To be allocated under RCM – Total Net Costs Budget” column is a function of the departments contribution margin taken from the “Original Data from BUS” tab, less the facilities costs amount calculated above.

Facilities Costs (Tab #4)

The “Non-Academic Contribution Margin under RCM” column includes the expenses per department as per BUS, and the Facilities Costs “owned” by that department.

The “Facilities Costs” tab is a breakdown of square footage used by all Departments within the college. It shows the square footage at Woodroffe, Pembroke, Perth and Leased space. The square footage for the departments is received from the Physical Resources Department and Registrar’s Office data. This tab is used to allocate the costs of Physical Resources.

This tab also includes;

• The percent of total College useable space,
• The percent of the Academic portion used College-wide,
• The percent of space used relating to Woodroffe only.

The Classroom Space column is a function of Total Classroom space available and the Open Hours only column from the table at the bottom for each specific department.

In the Overhead column, the Total General Overhead for the whole College is brought over from the “Central Admin Costs” tab. This column then shows the product of Total General Overhead and the percent of total College useable space. This amount will then be used in the “Allocations” tab along with the Woodroffe specific Overhead for a total of the Facilities Costs charged to each department.

General Overhead (Column P) Formula: % of square footage used by department X General Physical Resources allocated

Woodroffe Specific (Column Q) Formula: % of square footage used by department X Woodroffe Specific Physical Resources allocated.

In the Woodroffe Specific column the Woodroffe Specific Overhead is brought over from the “Central Admin Costs” tab. This column then shows the product of Woodroffe Specific Overhead and the percent of Woodroffe only square footage. This amount will then be used in the “Allocations” tab along with the Total General Overhead for a total of the Facilities Costs charged to each department.

The space that is not included in the above calculations includes the Students Association, Ottawa Police Services, common space, washrooms, hallways and stairwells.

Grants & Revenues (Tab #5)

This tab shows a summary of what the overall budget will look like under RCM.

The “Proposed Net Contribution” column brings forward the Contribution Margin for the Academic departments from the “Allocations” tab. It then brings in the other College expenses, Contingency funds, Ancillary and International Contribution Margin for a total Contribution from Academic, Ancillary and International.

Current Format (Tab #7)

This tab shows a comparison of the current budget allocations and the budget allocations under RCM, for Board reporting purposes.

Original Data from BUS (Tab #8)

This tab is all of the information entered in Step 1 and breaks down all revenues and expenses for each Department. It shows each Departments Funded and Contract revenues, expenses and contribution margins. It also shows Ancillary, International and Strategic Investment Priorities where applicable. This tab feeds into many areas of the model and therefore is crucial to the process.

Ancillary (Tab #9)

The Ancillary tab breaks down the contribution margin of Ancillary. It provides detailed information of their expenses and Reserve obligations as well as the net contribution from Ancillary. The purpose of this tab is to detail the overhead costs currently being paid by the College Ancillary Services Department.

Summary of Direct Costs (Tab #10)

This Summary of Direct Costs tab is used to allocate the Central Administrative Costs to each School.

• In the first column, each schools direct expense are carried through from the Allocations tab and further from Original Data from BUS tab. These are then totaled at the bottom of the column.
• Next shows each schools percent of direct costs as a whole.
• Finally, in the third column is the percent calculated above X the total direct costs, to give each school their respective Central Administrative Charge. These charges are then brought over to the Allocations tab.

Journal Entries

The following data can be retrieved from the Journal Entries tab within the RCM model.

Revenue Allocations – Academics

General Purpose Operating Grant (Account 39998), Growth Grant (Account 39999).

At completion of budget, close of B.U.S. and finalized budget. To be inputted into B.U.S. for Budgeted Annual Amount.

• Allocation of grant to the Academic department level only (Dean Level/Cost Center). Annual amount based on dollar value of WFU X budgeted enrollment X % of grant allocated in prorated distribution,
  1. School of Business Receives a portion of the GPOG Grant (39998), Growth Grant, (39999).
• Subvention allocation based upon agreed value from Senior Vice President Academics and the model.

Monthly Journal Entry in PeopleSoft (or replacement),

• Take annual amount from B.U.S. and straight-line allocate over 12 months.

Expense Allocations – Academics

Central Administrative Costs (Account 49997)

To be completed at the completion of budget, close of B.U.S. and Finalized Budget. To be inputted into B.U.S. for Budgeted Annual amount. These are the Central Administrative Costs to be allocated to each Department as found in the RCM Model

• Allocation of total cost of Central Admin net budgets to the Academic Department level only (Dean Level). Annual amount based on % of total direct expenses of Non-Academic departments. (Excluding Ancillary, Physical Resources and International).

Monthly Journal Entry in PeopleSoft (or replacement).

• Take annual amount from B.U.S. and straight-line allocate over 12 months. Numbers do not change through the year.

Space Costs (Account 49998)

To be completed at the completion of budget, the close of B.U.S. and Finalized Budget. To be inputted into B.U.S. for Budgeted Annual amount. These are the allocations of General Space Costs to each Department as found in the RCM Model.

• Allocation of total cost of Physical Resources net budgets to the Academic and Non-Academic Department level only (Dean Level).

Monthly Journal Entry in PeopleSoft (or replacement).

• Take annual amount from B.U.S. and straight-line allocate over 12 months. Numbers do not change throughout the year.

Woodroffe Operating Costs (Account 49999)

To be completed at the completion of budget, close of B.U.S. and Finalized Budget. To be inputted into BUS for Budgeted Annual Amount. These are the allocations of Woodroffe Specific Costs to each Department as found in the RCM Model

• Allocation of total cost of Physical Resources net budgets to the Academic Department level only (Dean Level). Annual amount based on % of total direct expenses of the 17 Non-Academic departments. (Excluding Ancillary and Physical Resources).

Monthly Journal Entry in PeopleSoft (or replacement).

• Take annual amount from BUS and straight-line allocate over 12 months. Numbers do not change throughout the year.

Expense Allocations (Internal Revenues)– Non-Academics

Central Administrative Costs (Account 49997)

To be completed at the completion of budget, close of B.U.S. and Finalized Budget. To be inputted into B.U.S. for Budgeted Annual amount. These are the internal revenues as earned by the Non-Academic departments.

• Each Non-Academic department receives their internal revenue which is equal to that departments direct cost, their Space Costs and Woodroffe Operating costs. The purpose of this is to bring that department’s contribution margin to zero (0).

At the Director level only.

• Ancillary and International do not receive this internal revenue as they are surplus generating departments. Their costs are not charged back to the Academics.
• Physical Resources is part of the Space Costs and Woodroffe Operating Costs. They also are not included in the Central Administrative Costs and therefore do not receive this internal revenue.

Monthly Journal Entry in PeopleSoft (or replacement).

• Take annual amount from B.U.S. and straight-line allocate over 12 months. Numbers do not change through the year.

Space Costs (Account 49998)

To be completed at the completion of budget, the close of B.U.S. and Finalized Budget. To be inputted into B.U.S. for Budgeted Annual amount. These are the General Space Costs from the other departments and schools, being paid to Physical Resources as internal revenue.

• These revenues, along with the Woodroffe Operating Costs (as revenues), will bring Physical Resources contribution margin to zero (0).
• Ancillary already pays overhead and therefore is not charged again through RCM.

Monthly Journal Entry in PeopleSoft (or replacement).

• Take annual amount from B.U.S. and straight-line allocate over 12 months. Numbers do not change throughout the year.

Woodroffe Operating Costs (Account 49999)

To be completed at the completion of budget, close of B.U.S. and Finalized Budget. To be inputted into B.U.S. for Budgeted Annual Amount. These are the Woodroffe Operating Costs from the other departments and schools, being paid to Physical Resources as internal revenue.

• These revenues, along with the General Space Costs (as revenues), will bring Physical Resources contribution margin to zero (0).
• Ancillary is already charged overhead and therefore is not charged again through RCM.

Monthly Journal Entry in PeopleSoft (or replacement).

• Take annual amount from BUS and straight-line allocate over 12 months. Numbers do not change throughout the year.