Glossary of terms

Auxiliary Enterprise Programs
Board designated funds
Capital assets
Capital funds
Cash and investments
Clinical, Educational and Research Services Agreement (CERSA)
Deferred inflows and outflows
Designated funds
Education and General (E&G)
Endowment
Facilities and Administrative (F&A) Revenue
Facilities and Administrative Cost Recovery (FACR)
Fiscal year (FY)
Foundations
Fringe benefits
Grant
Gift
Indirect costs
Liabilities
Net Position
Operating Service Agreements (OSA)
Operational funds
Overhead costs
Procurement
Qatar Campus
Receivables
Responsibility/Revenue Center Management (RCM) Budget Model
Restricted funds
State and tuition supported funds
Student financial assistance
Sponsored programs
Unrestricted funds

Auxiliary Enterprise Programs

An Auxiliary Enterprise is an entity which exists to furnish goods or services to students, faculty, or staff. Each institution‘s auxiliary system, as well as its intercollegiate athletic program, must meet the test of self-supporting, including direct and indirect costs.

At VCU, Auxiliary Enterprise Programs are principally comprised of: VCU Athletics, Residential Life and Housing, VCU Dining Services, Parking and Transportation, and student activities. For these programs, the state does not provide any funding support, either for operating, maintenance, or construction of facilities. See more here.

Board designated funds

Refers to specific financial reserves or allocations set aside by a governing board or board of directors within an organization. These funds are earmarked for particular purposes, projects, or contingencies as determined by the board. The designation of funds by the board allows for a clear and deliberate allocation of resources to meet specific financial goals or address identified needs.

Capital assets

Capital assets, also known as long-term assets or fixed assets, are significant, durable assets that a business or organization acquires to use in its operations and generate revenue over an extended period. These assets are not intended for immediate sale, and their benefits are expected to be realized over several years. Capital assets are essential for the functioning and growth of a business and are typically recorded on the balance sheet.

Capital funds

Capital funds are monies typically earmarked for long-term investments and expenditures that are expected to benefit an organization over an extended period. These funds are used to acquire or improve assets, such as buildings, equipment, infrastructure, or other long-term investments that will enhance the organization's capacity or capabilities. The projects or investments funded by capital have a longer lifespan and provide benefits over several years or even decades. These funds are not intended to be fully expended within a single fiscal year. VCU’s capital expenditures must be used for capital projects, meaning none of this funding can be used for general operating purposes. See more here.

Cash and investments

In the context of a university's financial statements, cash and investments refers to a category that includes the university's liquid assets and financial investments. These are resources that the university holds to meet its short-term and long-term financial needs, as well as to generate returns on its investments. Let's break down the components:

Cash: This represents the actual physical currency on hand or deposits in bank accounts that the university can readily access. Cash is a highly liquid asset and is crucial for covering day-to-day operational expenses.

Investments: Universities often have a portion of their funds invested to generate income and potentially grow the value of their assets. Professional investment managers manage VCU’s investments, governed by an Investment Policy, adopted by its Board of Visitors. The primary investment objective is to provide a framework for prudent investment management, while allowing for sufficient flexibility to capture investment opportunities as they may occur.

For a university, the combination of cash and investments provides financial flexibility. Cash is immediately available for any unforeseen or short-term expenses, while investments offer the potential for long-term growth and income. See more here for cash and investments at VCU.

Clinical, Educational and Research Services Agreement (CERSA)

CERSA is the agreement between some of the schools (School of Medicine, Massey Cancer Center Oncology Clinic, School of Dentistry, etc.) to provide support for clinical, educational and research activities to the hospital.

Deferred inflows and outflows

Deferred inflows and deferred outflows are accounting concepts used in governmental accounting and financial reporting. They represent certain revenues and expenses that are recognized in a reporting period but are not yet realized or fully earned. These concepts are part of the accrual accounting method, which aims to provide a more accurate representation of an entity's financial position and performance.

Deferred inflows represent resources that the government has received or will receive but has not yet earned or recognized as revenue. The deferred outflows of resources have a positive effect on net position similar to assets.

Example of deferred inflow: A government receives a grant in advance for a specific purpose, but the conditions for recognizing the revenue haven't been met. The unearned portion of the grant is treated as a deferred inflow.

Deferred outflows represent costs or expenditures that have been incurred but will be recognized as expenses in future periods. The deferred inflows of resources have a negative effect on net position similar to liabilities.

Example of deferred outflow: If a government incurs costs related to issuing bonds (e.g., bond issuance costs), and those costs will be recognized as expenses over the life of the bonds, the unamortized portion is treated as a deferred outflow.

These deferred inflows and deferred outflows are reported on the balance sheet, typically as separate line items. They are part of the broader category known as "deferred items" and are intended to show the timing differences between when a transaction occurs and when it impacts the financial statements.

Designated funds

Designated funds refer to specific financial resources that an organization sets aside for a particular purpose or use. These funds are earmarked or designated by the organization's management or governing body to fulfill a specific objective or address a particular need. The designation of funds provides transparency and accountability in financial management and helps ensure that resources are allocated according to the organization's priorities and strategic goals.

Examples of designated funds may include:

Program-specific funds: Allocated for the development, implementation, or enhancement of a specific program or service.
Capital funds: Reserved for capital expenditures, such as the construction or renovation of facilities, acquisition of major equipment, or infrastructure development.
Endowment funds: Invested to generate income in perpetuity to support specific activities, such as scholarships or research.
Restricted funds from donors: Donations received with specific instructions on how the funds should be used, creating designated funds for those purposes.

The purpose of designated funds is to ensure that financial resources are aligned with the organization's goals and to provide clarity to stakeholders about the intended use of those funds. Transparent financial reporting often includes disclosures about the existence and purpose of designated funds in an organization's financial statements.

Education and General (E&G)

Educational and General Programs are the core instructional related activities of higher education institutions, including instruction, student services, libraries, administration, and maintenance of facilities. Revenue includes state appropriations, tuition and fee revenue, including sales and services such as fees from dental clinics. See Education and General at VCU.

Endowment

Monies set aside (invested) to earn revenue. Endowments are usually permanently restricted funds. In most cases, their principal cannot be spent, and only a specified percent of the interest that they earn can be spent per year. Furthermore, there are restrictions on how the interest can be spent.

Facilities and Administrative (F&A) Revenue

Also referred to as indirect costs, those costs incurred in support of many activities and that cannot be identified with a single sponsored project. The cost of operating and maintaining buildings, use of equipment, general and departmental administrative expenses, sponsored projects’ administration, and library costs are usually considered F&A costs. These costs are essential in the support of sponsored program activities. In accordance with regulations and principles promulgated by the federal Office of Management and Budget (“OMB”), institutions of higher education are permitted to recover F&A costs associated with supporting sponsored programs. See the VCU Facilities and Administrative Cost Recovery Policy.

Facilities and Administrative Cost Recovery (FACR)

The university retains a portion of the facilities and administrative costs recoveries centrally and the remainder is allocated to the schools. The dean of each school or college determines the allocation of the school’s share. See the VCU Facilities and Administrative Cost Recovery Policy.

Fiscal year (FY)

Any twelve-month period for which annual accounts are kept. VCU's and the Commonwealth of Virginia fiscal year is July 1 through June 30; the federal government's fiscal year runs October 1 through September 30.

Foundations

VCU has four philanthropic affiliated foundations. The College of Engineering Foundation, the School of Business Foundation, and the VCU Foundation, are affiliated with support of the Monroe Park Campus (MPC). The Medical College of Virginia Foundation is affiliated with support of the Medical Campus (MCV). These entities are independent 501(c) (3) organizations with their own boards and bylaws. They accept and invest gifts in support of the university, and the university receives annual payouts from each of the philanthropic foundations based on their spending policy. See more here.

Fringe benefits

Employee benefits paid by the employer (e.g., FICA, worker's compensation, withholding tax, insurance, etc.). VCU’s current fringe benefit rate and terms can be found on the Controller’s Office website.

Grant

A type of financial assistance awarded to an organization for the conduct of research or other program as specified in an approved proposal. A federal grant, as opposed to a federal cooperative agreement, is used whenever the awarding office anticipates no substantial programmatic involvement with the recipient during the performance of the activities. The PI of a research grant has significantly greater flexibility in making changes to the research plan than the PI of a research contract. As with any agreement, a grant has terms and conditions that must be followed. See the VCU Establishment of Sponsored Project Subcontracts and Subawards Policy.

Gift

Monies given with few or no conditions specified by the donating party. Gifts may be provided to establish an endowment or to provide direct support to research, for existing programs, or to establish a scholarship. Gifts can be restricted or unrestricted funding.

Indirect costs

Costs related to expenses incurred in conducting or supporting research or other externally-funded activities but not directly attributable to a specific project. General categories of indirect costs include general administration (accounting, payroll, purchasing, etc.), sponsored project administration, plant operation and maintenance, library expenses, departmental administration expenses, depreciation or use allowance for buildings and equipment, and student administration and services. (See also Facilities and Administrative (F&A) Revenue costs.)

Liabilities

In the context of a university's finances, liabilities refer to the obligations or debts that the university owes to external parties. Liabilities represent claims against the university's assets and are typically categorized into two main types: current liabilities and noncurrent liabilities.

Current Liabilities are short-term expenses expected to be paid within 1 year. These include:

Accounts Payable: Amounts owed to suppliers, vendors, or service providers for goods or services received but not yet paid for (outstanding invoices).
Accrued Liabilities: Obligations for expenses that have been incurred but not yet paid, such as accrued salaries, benefits, or utilities.
Short-Term Debt: Any loans or financial obligations that need to be repaid within a year.

Noncurrent Liabilities are long-term expenses not expected to be paid within 1 year. These include:

Long-Term Debt: Loans or financial obligations with repayment periods extending beyond one year. This can include bonds, leases, or other long-term loans used to finance capital projects.
Deferred Revenue: Funds received in advance for goods or services that will be provided in the future, such as prepaid tuition or research grants.
Deferred Compensation: Pension and post employment benefits; liability for the Faculty Early Retirement Incentive Plan (FERIP).
Subscription based technology arrangements.
Funds held for others such as student organizations.

Liabilities are a crucial aspect of a university's balance sheet, one of the primary financial statements. The balance sheet provides a snapshot of the university's financial position at a specific point in time, showing its assets, liabilities, and equity.

Net Position

The net position is the difference between the total of assets and deferred inflows of resources, and the total of liabilities and deferred outflows of resources. It is the financial snapshot of the University including all assets and liabilities in the financial statement.

Operating Service Agreements (OSA)

Operating Service Agreements (OSA) are executed annually to support charges to VCU Health Services for services provided by VCU. The VCU Controller’s Office is responsible for gathering updates and coordinating with the VCUHS for approval of the OSA. See the Controller's Office website on the OSA.

Operational funds

Operating funds are used for day-to-day expenses and the ongoing operations of an organization. These funds cover expenses like salaries, utilities, rent, supplies, and other routine costs necessary to maintain the organization's regular functions. These funds are used for short-term needs and are typically spent within the current fiscal year. They are replenished regularly to ensure the organization can continue its day-to-day operations.

Overhead costs

Another term for Facilities and Administrative (F&A) Revenue costs.

Procurement

Under federal law, the process that leads to a contract, as opposed to assistance. The purpose is to procure the contractor's goods and services to meet a governmental goal. The Office of Procurement Services is responsible for managing procurement processes, including accounts payable and vendor relations, contracts management, corp card usage, travel booking, and reimbursement activities at the Virginia Commonwealth University (except VCU Medical Center-funded activities).

Qatar Campus

Also known as VCUarts Qatar, the campus is an international school built in Doha’s Education City, which offers academic programs in the arts, with a focus on the liberal arts and sciences. VCUarts Qatar collaborates closely with VCUarts Richmond through semester exchange programs, shared courses, conferences, event programming and arts research.

VCU receives funding from the Qatar Foundation to operate the campus.

More information about Education City can be found here. More information about VCUarts Qatar can be found here.

Receivables

In the context of a university's finances, receivables refer to amounts of money that the university is entitled to receive but has not yet received. These are assets on the university's balance sheet, representing the right to collect funds from external parties. Receivables typically fall into two main categories: student receivables and other receivables.

Student Receivables:

Tuition and Fees: Amounts owed by students for tuition, course fees, and other charges associated with their education.
Room and Board Charges: If the university provides housing and dining services, amounts owed by students for these services.
Other Student Charges: Miscellaneous charges such as library fines, parking fees, or other student-related fees.

Other Receivables:

Grants and Contracts: Amounts due from external funding sources for research grants, contracts, or other sponsored programs.
Government Funding: Funds owed by government entities for financial aid programs, research grants, or other government-sponsored initiatives. From the Commonwealth of Virginia, this includes funding for capital projects and deferred maintenance as well as Higher Education Equipment Trust Fund (HEETF) reimbursement.
Contributions and Gifts: Amounts pledged or promised by donors that the university expects to receive in the future, including from university affiliated foundations.

Receivables are considered assets because they represent future economic benefits that the university is likely to receive. However, it's important to note that the university may not always collect the full amount of receivables due to factors such as student withdrawals, non-payment, or changes in funding availability.

Responsibility/Revenue Center Management (RCM) Budget Model

VCU uses a Responsibility Centered Management (RCM) budget model. RCM is a widely adopted budgeting tool in universities, aimed at efficient financial resource allocation and fostering fiscal accountability. Under the RCM model, the university's schools and colleges, designated as responsibility centers, are given a level of financial autonomy. Each responsibility center is tasked with revenue generation, achieved through the establishment or expansion of academic programs, and the management of associated program offerings. Additionally, they handle direct costs and contribute to the support of central units, such as facilities and IT, essential for the academic mission.

The RCM model's core principle is that responsibility centers retain a substantial portion of the revenue they generate, incentivizing efficiency and revenue growth. This decentralized budgeting approach empowers academic and administrative units to make financial decisions aligned with their unique goals. RCM is pivotal for its promotion of transparency, instigation of a sense of ownership and responsibility, and provision of a strategic resource allocation framework based on performance and productivity.

Faculty and staff may access an Overview and Guide on the University Budget Model on the VCU Wiki. Requires an eID to access.

Restricted funds

Monies (or an accounting category for such funds) with specific requirements or restrictions as to use or disposition. Grants, contracts, endowments, and cooperative agreements are considered to be restricted funds, while gifts can be restricted or unrestricted.

State and tuition supported funds

State and tuition supported funds are two sources of revenue that contribute to a university's budget. Public universities often rely on a combination of the two to finance their operations.

State supported funds come from the Commonwealth of Virginia government and are allocated to support the operations of public universities. State supported funds are derived from state taxes, appropriations, and legislative allocations. The amount of state support can vary based on state budget decisions, economic conditions, and legislative priorities.

Tuition supported funds are generated from tuition and fees paid by students for their education.

In VCU's budget, state and tuition supported funds are committed to the University's academic programs and support services, which include personnel, scholarships, maintenance of facilities, and more. (See Education and General, or E&G)

Student financial assistance

Student financial assistance is money given to students to pay for college from a variety of sources. These includes Pell, Work Study, tuition waivers, and need based and merit-based aid awarded to VCU students. See here for more.

Unrestricted funds

Monies (or an accounting category for such funds) with no requirements or restrictions as to use or disposition.