Handbook of Business Procedures

3.5. CAPITAL BUDGET

A. Introduction

The University of Texas at Austin formally budgets for capital outlay and debt service at a high level. Individual departments maintain their own detailed capital expenditure plans, with the exception of construction that exceeds $4 million. These larger construction projects are separately disclosed in the Capital Improvement Program (see F below). The Budget Office coordinates the amortization schedules and debt forecasts for the university, which is used by the departments to budget the annual debt service.

B. Unexpended Plant

The annual operating budget rules require the university to budget the estimated noncapitalized expenses in Unexpended Plant. The university uses a high-level estimate provided by Facilities Services of annual repairs and temporary fixes for the basis of this budget. The noncapitalized repair/rehabilitation expense is a minor subset of the Operations & Maintenance expense reported within the Unexpended Plant fund group in the Annual Financial Report Exhibit B. To access a high-level report, see Reports to the State. Click Annual Financial Report (for any year), and scroll down to Exhibit B – Statement of Revenues, Expenses, and Changes in Net Assets (SRECNA).

C. Capital Equipment

Planned capital equipment acquisitions are included in the gross annual operating budget. However, capital outlay, which is forecasted from historical trends, is reversed out in the adjustments to the Operating Budget Summary. This reversal helps to align the operating budget with the Annual Financial Report's accrual reporting basis.

D. Depreciation

The university budgets depreciation expense based upon historical trends adjusted for capital construction activity.

E. Debt Service

Principal and interest are budgeted separately. These budgets are derived from a combination of amortization schedules and forecasted debt issuances. Note: Debt for service centers, such as Utilities, is excluded from the operating budget because it is included as an operating expense in other fund groups.

F. Capital Construction Budget

The capital budget for construction activity exceeding $4 million is called the Capital Improvement Program (see 2.2.8. Unexpended Plant Funds—36-Accounts.) Note: The Capital Improvement Program is maintained separately from the annual operating budget.

Part 3. Budget - Table of Contents