Understanding Cost Centers October 6, 2009

Understanding Cost Centers October 6, 2009

Objectives Understand what is a Cost Center. Fully define Chartfield Value. Understanding the various components that make up a cost center. Know how to create the right cost center.

What is a Cost Center? A cost center defines whose money it is (department id - responsible party), what type of money it is (fund code - fund source), and what type of activity it is being spent to support, (program code - function of entity).

What is a Cost Center? Composition of PeopleSoft Cost Center is a series of components used to create a Chartfield Value Account Code Business Unit Fund Code Department ID Program Code Budget Reference Project / Grant ID Chartfield 1

Understanding a Chartfield Value Account Code Definition - “the labels used by accountants to accumulate the amounts produced from similar transactions” (Needles 32). UH uses a five digit numeric code as an account code. The first digit of the five digit account code determines the account value as one of five account types. The remaining four digits are used to designate more specific account classifications within the broad groupings. (A complete listing can be found on http:// www.uh.edu/finance/pages/References.htm under Accounts)

Understanding a Chartfield Value PeopleSoft General Ledger Account Code Categories Balance Sheet Items 1XXXX Asset: a probable tangible or intangible future economic benefit obtained or controlled by a particular entity as a result of past transactions or events. 2XXXX Liability: probable future sacrifices of economic benefits, arising from present obligations of a particular entity to transfer assets or provide services to other entities in the future as a result of past transactions or events. 3XXXX Fund Equity: the difference between a fund's assets and liabilities. Income Statement Items 4XXXX Revenue: are increases in net current assets and are recognized in the accounting period in which they become measurable and available. 5XXXX Expense: decreases in net total assets. Expenses represent the cost of operations Budget Items B4XXX Revenue Budget B5XXX Expenditure Budget

Understanding a Chartfield Value Business Unit Definition - Each of the University of Houston System (UHS) components is identified by the state as a separate agency and is an individual Business Unit in PeopleSoft. The Business Unit is a five-digit numeric code that incorporates the state agency code (UH Finance Glossary http://www.uh.edu/finance/Glossary.htm ).

Understanding a Chartfield Value UHS Business Units 00730 - University of Houston 00759 - UH Clear Lake 00784 - UH Downtown 00765 - UH Victoria 00783 - UH System Administration 00797 - UH System Consolidated

Understanding a Chartfield Value Fund Code Definition - The Fund Code is a Chartfield in PeopleSoft that classifies transactions in terms of fund type. Each Fund Code is four-digits in length with the leading character designating the fund group to which it belongs, followed by three characters that are unique to a specific source of funds (UH finance webpage glossary). Each fund is a balanced ledger. Funds are coded by source or type of monies they represent. Funds can be STATE (funding sources from state support) or Local (tuition, fees, gifts, sales & services, etc.)

Understanding a Chartfield Value UHS Fund Groups 1XXX State Funds appropriated by the legislature for the General Revenue Fund of other funds in the State Treasury. 2XXX Designated Funds arising from sources that have been internally designated by management and approved by the Board of Regents to be used for special purposes. The funds are collected locally and deposited in University of Houston bank accounts. This includes designated tuition and investment income, which are available to the President for central allocation. These funds are also composed of student lab and course fees, whose rate and use is determined by the colleges. 3XXX Auxiliary Funds for activities that furnish services to students, faculty, or staff for which charges are made that are directly related to the cost of service, such as residence halls, intercollegiate athletics, and food services.

Understanding a Chartfield Value o UHS Fund Groups continued 4XXX Restricted Scholarship and fellowship funds, primarily gifts and endowments. Use restricted by donor or other outside entity. 5XXX Grants Contract and grant funds, primarily research, managed by the Office of Contracts and Grants. 6XXX Endowments & Loans The principal of the endowment is recorded in this fund. principal of the endowment can only be spent on or after a predetermined date or period of time, or the occurrence of a specified event.

Understanding a Chartfield Value UHS Fund Groups continued 7XXX Plant (rarely used in departments) Capital projects, which are a portion of the Plant Fund group, are used for construction, rehabilitation, and acquisition of physical properties for institutional purposes. 9XXX Agency (not used in departments) Funds belonging to an Non-UH organization. The Non-UH organization determines how the funds are used.

Understanding a Chartfield Value Department ID Definition - The Department ID is a Chartfield in PeopleSoft that classifies transactions in terms of the responsible party. (UH Finance Glossary) Each UH department is assigned a unique five digit code. Leading alpha character for campus. Four numeric characters assigned sequentially.

Understanding a Chartfield Value UHS Department IDs HXXXX UH departments CXXXX UHCL departments DXXXX UHD departments VXXXX UHV departments SXXXX UHSA departments

Understanding a Chartfield Value Program Code Definition - The program code is a Chartfield in PeopleSoft that classifies transactions in terms of the function of the entity. Consists of five digits that are used to uniquely identify a cost center either within or across departments. First digit tells the purpose of the program by expenditure function (Expenditure function is related to required NACUBO reporting).

Understanding a Chartfield Value UHS Program Codes AXXXX Instructional programs Expenses for all activities that are part of the institution’s instruction program, including expenses for credit and noncredit courses; academic vocational and technical instruction; remedial and tutorial instruction; and regular, special and extension sessions. BXXXX Research programs Research programs Expenses for activities specifically organized to produce research, whether commissioned by an agency external to the institution or separately budgeted by an organizational unit within the university. CXXXX Public Service Expenses for activities established primarily to provide non-instructional services beneficial to individuals and groups external to the institution, such as conferences, institutes, general advisory services, reference bureaus, and radio and television.

Understanding a Chartfield Value DXXXX Academic Support Expenses incurred to provide support services for the institution’s primary missions of instruction, research, and public service. It includes the retention, preservation, and display of educational materials in libraries and museums, and academic administration. EXXXX Student Services Expenses incurred for the offices of admissions and the registrar and activities with the primary purpose of contributing to students’ emotional and physical well-being and intellectual, cultural, and social development outside the context of the formal instruction program. FXXXX Institutional Support Expenses for central, executive-level activities concerned with management and long-range planning for the entire institution, such as the governing board, planning and programming, legal services, fiscal operations, administrative data processing, space management, employee personnel and records, safety, and security.

Understanding a Chartfield Value GXXXX Plant Expenses for the administration, supervision, operation, maintenance, preservation and protection of the university’s physical plant. It includes expenses normally incurred for such items as janitorial and utility services; repairs and ordinary or normal alterations of buildings, furniture, and equipment; care of grounds; maintenance and operation of buildings and other plant facilities. HXXXX Scholarship Payments made from either restricted or unrestricted sources for scholarship grants to students resulting from selection by the institution or from an entitlement program. IXXXX Auxiliary Expenses relating to the operation of auxiliary functions, which exist to furnish goods or services to students, faculty, or staff, and charge a fee directly related to, although not necessarily equal to, the cost of the goods or services. It also includes expenses for operation and maintenance of plant and institutional support that are attributable to auxiliary functions.

Understanding a Chartfield Value Budget Period Definition - Budget Period is the period of time for which expenditures are planned and authorized. Both the Budget Period and Fiscal Year begin on September 1st and end on August 31st. The Budget Period chartfield is a combination of the letters BP and year (BP2012) (from Finance webpage Glossary). Also referred to as Budget Reference.

Understanding a Chartfield Value Project /Grant ID Definition- The project id is a Chartfield in PeopleSoft that classifies transactions in terms of an assigned research grant and internal award and other university projects such as capital or building projects.

Understanding a Chartfield Value UHS Project ID GXXXXXX Grant or sponsored project. PXXXXXX Capital or building project (not generally used by departments. AXXXXXX Administrative project (not generally used by departments). IXXXXXX Internal Award project.

Understanding a Chartfield Value Chartfield 1 Chartfield 1 values are used to meet departmental reporting/tracking needs within and across a cost center within a specific department id. Maintained and created within the department. It contains five alphanumeric characters. Creating and maintaining chartfield 1 values can be found on the finance webpage Survival Guide at http://www.uh.edu/af/survival/Finance/cchartfielddefine.ht m

Understanding a Chartfield Value Non-Project/Grant Cost Center Example 00730-2063-H0066-A0838-NA Defined. 00730 Business Unit (UH) 2063 Fund Code (Designated Student Fees – Other) H0066 Department (Dean, Engineering) A0838 Program (ENGR Dean Cont Educ) NA Non project/grant

Understanding a Chartfield Value Project/Grant Cost Center Example 00730-1026-H0124-B0001-G000052 Defined: 00730 Business Unit (UH) 1026 Fund Code (E&G State Support Fund 1) H0124 Department (Political Science) B0001 Program (Research Grant) G000052 Project ID (Modified Nucleotide in Gene Re)

How to Use This Knowledge to “create the right cost center”? Determine the following: Business Unit Most common use for UH main campus is 00730 Department ID The department responsible for verifying cost center transactions determines these values Ex. Auxiliary Services is H0171 Fund code Field What is the source of funds? Is it state, designated funds such as fees or tuition, gift or grant Department ID The department responsible for verifying cost center transactions determines these values Ex. Auxiliary Services is H0171 Program Code What is the purpose of the cost center? Will it be used for expenses related to instructional, research or academic support ? Project field Is it a Grant? Or building project? Most commonly used fund codes within the College of Liberal Arts and Social Sciences State Designated Auxilary Restricted Grants

In a nutshell The following PeopleSoft Chartfields are used to record financial transactions: Business Unit—Fund Code— Department ID—Program Code—Project/Grant—Account—Budget Reference—Chartfield 1 Business Unit—Each UH System component is defined as a business unit. 00730—University of Houston 00759—UH Clear Lake 00784—UH Downtown 00765—UH Victoria 00783—UH System Administration 00797—UH System Consolidated Program Code—Five digits are assigned to identify a nonproject cost center. The five digits tell the purpose of the cost center by expenditure function. The expenditure function is related to NACUBO reporting. Fund Code—Are coded by the type of money they represent. AXXXX—Instructional programs BXXXX—Research programs CXXXX—Public service DXXXX—Academic support EXXXX—Student services FXXXX—Institutional support GXXXX—Plant HXXXX—Scholarship IXXXX— Auxiliary 1XXX—State 2XXX—Designated 3XXX—Auxiliary 4XXX—Restricted 5XXX—Grants 6XXX—Endow & Loans 7XXX—Plant 9XXX—Agency Department ID—Each UH department is assigned a unique department code. The leading character is for the campus. The four numbers following are assigned sequentially. HXXXX—UH Departments CXXXX—UHCL Departments DXXXX—UHD Departments VXXXX—UHV Departments SXXXX—UHSA Departments Project ID—Project cost centers use a common program. The uniqueness of the cost center is provided by the project id. Can be used for grants, capital and other projects. Project id is a seven-digit code. GXXXXXX—Grant or Sponsored Project PXXXXXX—Capital or Building Project AXXXXXX—Administrative Project IXXXXXX—Internal Award Project

Contacts/References Contacts Business Services– Linda M. Garza at 713-743-3269 or [email protected] References UH Finance web page at http://www.uh.edu/finance/ Survival Guide at http://www.uh.edu/af/survival/index.htm