How to Budget Revenue
When entering data into the Planning budget system, revenue items (e.g., Tuition, Gift Income, Resource Transfers-In) should be entered as negative numbers, while contra-revenue items (e.g., Resource Transfers-Out) should be entered as positive numbers. The numerical signage in Planning data entry is the same as in BEN Financials. Planning data entry results are viewable through online Planning reports and through Smart View ad hoc queries via the Excel add-on. The Planning summary reports, which round to the thousand dollars, flip the numerical signage from the original revenue data entry: revenues are displayed as positive numbers and contra-revenues are displayed as negative numbers. Smart View ad hoc queries display the same numerical signs as the original data entered into the Planning system.
Tuition revenue is processed through Penn’s tuition distribution (TD) system before being recorded in school accounts. All tuition is distributed through the TD system based on the home school of the student, the teaching school of the course, the number of courses taken, and the amount collected. Fees and other charges are handled separately. For documentation regarding the tuition distribution process, please see https://www.sfs.upenn.edu/TDPennProcess/index.htm. In general, tuition for each term is distributed using the following methodology:
- 20% to the University subvention pool (not assessed on PhD tuition)
- 20% to the home school(s) of the student (25% of PhD tuition)
- 60% to the teaching school(s) of the course (75% of PhD tuition)
At the beginning of each budget cycle, the Budget Office pre-populates Associated Investments Fund (AIF) income in Obj-4710P based on updated market values and parameters. We strongly recommend that you do not attempt to change these amounts in the Planning system. The endowment income lines are calculated using Penn’s two-factor spending rule formula for the AIF, which bases 70% of the upcoming year’s spending on the current year’s projected spendable income plus an inflation factor and 30% on the market value at the close of the previous year times the target spending rate. Although the target spending rate is now 5% for both financial aid and non-financial aid endowments, the reliance on the previous year’s income means it will be a while before the effective payout rates of these two groups of funds converge.
Use the S1 form in Planning to enter the following:
- Gifts to permanently restricted (NAC-2) endowment: Enter projected payments (numerical sign should be negative) in the Gifts to Endowment row. Planning calculates the resulting investment income in Obj-4710G and assumes a half year of income in the first year and a full year of income in subsequent years.
- Liquidate quasi-endowment: Enter projected liquidations (numerical sign should be negative) in the Obj-1710 row. Planning calculates the impact to investment income in Obj-4710C. Schools and centers must notify the Vice President for Finance and Treasurer three months in advance for liquidations of $1M or more and one month in advance for liquidations of less than $1M.
- Reinvest unspent income or invest operating surpluses in quasi-endowment: Show planned buy-ins (numerical sign should be positive) in the Obj-1710 row. Planning calculates the resulting investment income in Obj-4710C and assumes a half year of income in the first year and a full year of income in subsequent years.
Investment income transfers, typically from an endowment fund to an unrestricted fund when it is clear the donor restrictions will be met, are not populated automatically in Planning. Actual transfers should be arranged with the Treasurer’s Office and projections should be entered in Obj-4709 in Planning. In most cases, Obj-4709 projections should net to zero within a school or center. Note: In the RCM template, Obj-4709 falls within the Resource Transfers category rather than the Investment Income category.
The data entry described above can be entered in Planning in the particular endowment fund or in a surrogate fund if the fund number is not yet known:
- Endowments subject to overhead: Fund-479998
- Endowments not subject to overhead: Fund-479999
- Student Aid Endowments not subject to overhead: Fund-479997 (generates investment income in Obj-4710D)
The Planning system calculates the investment overhead for funds coded by the Treasurer as subject to overhead (including income generated from Gifts to Endowment) and displays this value in Obj-4792 as a debit (positive number). The calculation assumes a 20% default overhead rate unless other arrangements have been made with the Treasurer. Each night, Planning sums Obj-4792 in the school or center and enters that value as a credit (negative number) in Obj-4793 in the school or center surrogate org in Fund-000000, Program-0000, and Cref-0000.
Gift income should be entered in Planning in Obj-4400 for unrestricted (NAC-0) and temporarily restricted (NAC-1) gifts. Planning does not differentiate between NAC-0 and NAC-1. Permanently restricted gifts to endowment (NAC-2) should be entered as described in the Investment Income section. Types of gifts and their treatment in Planning include:
- Operating gifts, restrictions met: If restrictions are anticipated to be met during the year that the gift is received, show the gift income in an unrestricted fund such as Fund-01xx05.
- Operating gifts, restrictions not yet met: If restrictions are not expected to be met in the year that the gift is received, show the gift in Planning in the particular operating gift fund or in one of the surrogate funds if the fund number is not yet known: Fund-649998 for gifts subject to overhead or Fund-649999 for gifts not subject to overhead. The five-year projection in Planning should include the spending of these gifts when it is anticipated that the restrictions will be met.
- Capital gifts: Use the existing capital gift fund or the surrogate Fund-659999 if a capital gift fund has not yet been created. Use the program for the capital project or the placeholder Prog-8999 if a capital project program code has not yet been created.
Gift income transfers, typically from an operating gift fund to an unrestricted fund when it is clear the donor restrictions will be met, are not populated automatically in Planning. Actual transfers should be arranged with the Treasurer’s Office and projections should be entered in Obj-4409 in Planning. In most cases, Obj-4409 projections should net to zero within a school or center. Note: In the RCM template, Obj-4409 falls within the Resource Transfers category rather than the Gift Income category.
The Planning system calculates the gift overhead for funds coded by the Treasurer as subject to overhead and displays this value in Obj-4402 as a debit (positive number). The calculation assumes a 20% default overhead rate unless other arrangements have been made with the Treasurer. Each night, Planning sums Obj-4402 in the school or center and enters that value as a credit (negative number) in Obj-4405 in the school or center surrogate org in Fund-000000, Program-0000, and Cref-0000.
Grant revenue projections in the Sponsored Program Funds should be budgeted in the surrogate Fund-599998 (non-federal grants) or Fund-599999 (federal grants). Individual grant funds are not included in Planning (including Smart View ad hoc queries) for performance reasons.
The total revenue from the sponsor should be budgeted in Obj-4600 with budgeted overhead leaving the grant in Obj-5282. The School share of this overhead recovery (88.5%) should be shown in the school surrogate org in Obj-5510 in Fund-000000. Sometimes non-governmental sponsors will allow schools to charge overhead costs such as facilities costs and departmental/administrative expenses directly to the grants; in those cases, schools can charge those expenses to the grants using Obj-5295 through Obj-5298 and recover 100% of those amounts in Fund-000000 in Obj-5511.
Historical grant awards data from PennERA may help to inform grant revenue projections. Actual awards data are displayed on the Input Assumptions report in Planning and accessible through Smart View ad hoc queries.
General Resource Transfers: Use Obj-4820 Transfer-In (numerical sign should be negative) and Obj-4825 Transfer-Out (numerical sign should be positive) to indicate the transfer of general support within or between schools or centers at the University. General Resource Transfers should not be related to the receipt or giving of specific goods or services; in those instances, the appropriate current expense object code should be debited or credited to indicate the activity, with an offsetting entry in the applicable school or center for the other side of the transaction. Use the comment or note fields in Planning to document the purpose of the transfer and the other center or department involved. Other types of transfers include:
- Obj-4840 Final Year-End Adjustment: Use for year-end transfers to/from the central resource pools.
- Obj-4839 University Bank Transfer: Use for transfers to/from the school or center University Bank Fund-000013.
- Transfers to/from UPHS and other related entities: Use Obj-4823 for operating transfers in/out and Obj-4824 for non-operating transfers in/out.
- Obj-4409 Reallocation of Gift Revenue: See the Gift Income section.
- Obj-4709 Reallocation of Investment Income: See the Investment Income section.