FUNCTIONNACUBO CODES WHAT ARE THEY AND WHY ARE

FUNCTION/NACUBO CODES – WHAT ARE THEY AND WHY ARE THEY IMPORTANT? May 25, 2016 Sheri Hardison, Asst. VP for Financial Affairs & Controller

What is a “NACUBO” code? • The National Association of College and University Business Officers (NACUBO) published the accounting literature standardizing the use of functional codes in higher education NACUBO codes • Functional Classification of Expenses • Required presentation in annual financial reporting • How is a University/government entity/non-profit spending its money? • How much money goes to programs versus administration? • Defined in the FARM (Financial Accounting and Reporting Manual – Section ¶ 703 and Appendix F for Activity Look-Up Table) • Updated by the NACUBO Accounting Principles Council

NACUBO Code Guidelines • NACUBO classification is based upon the primary purpose of the cost center • In People. Soft – set and controlled by the Speedtype/Speedchart • Classification is not set by individual transactions • Determines the expense category for financial reporting – Operating Expenditures on the Statement of Revenues, Expenses and Changes in Net Position (SCRENP) – Other schedules of the AFR – IPEDS (Integrated Postsecondary Education Data System) – Other financial reports

UTShare/People. Soft NACUBO Codes • Known as Function Codes in People. Soft • Listing • • • Instruction - 100 Research - 200 Public Service – 300 Academic Support – 400 Auxiliary Enterprises - 500 Student Services - 600 Institutional Support - 700 Operations and Maintenance of Plant - 800 Scholarships and Fellowships – 997 • Others were created that we do not use

What Function? • Mathematics department • INSTRUCTION • Study abroad • INSTRUCTION • Dean’s Office • ACADEMIC SUPPORT • Institute of Texan Cultures • ACADEMIC SUPPORT • Provost Office • INSTITUTIONAL SUPPORT

Instruction • Expenses for activities that are part of an instruction program • Example of use – Instructional costs per Student FTE • All kinds of courses/instruction - credit/non-credit, vocational, remedial • All types of sessions • Sub-classes – – – General academic instruction Vocational/technical instruction Community education Preparatory/remedial instruction Instructional information technology • Dean’s Offices excluded – primary activity is administration

Academic Support • Expenses to provide support services to the institution’s primary programs – Instruction * Research * Public Service • Sub-classes – – – – Libraries Museums & galleries Educational media services Ancillary support (e. g. demonstration program associated with an instruction program) Academic administration Academic personnel development Course and curriculum development Academic support information technology

What Function? • Institute for Cyber Security • RESEARCH • Research IT Support • RESEARCH • Vice President of Research • INSTITUTIONAL SUPPORT • Office of Community Outreach • PUBLIC SERVICE • Small Business Development Center • PUBLIC SERVICE • Vice President Community Service • INSTITUTIONAL SUPPORT • Research Service Centers • ACADEMIC SUPPORT • Grants and Contracts Financial Services • INSTITUTIONAL SUPPORT

Research • Expenses for activities specifically organized to produce research • Example of use – Texas Higher Education Coordinating Board reporting (with some adjustments) • Externally funded or not • Must be separately budgeted • Sub-classes – Institutes and Research Centers – Individual and Project Research – Research Information Technology

Public Service • Expenses for activities established to provide non-instructional services to individuals and groups external to the institution • Includes community service programs and cooperative extension services • Includes conferences, institutes, radio and television, consulting and similar non-instructional services to particular community sectors • Sub-classes – – Community service Cooperative extension service Public broadcasting services Public service information technology

What Function? • Office of Financial Aid • STUDENT SERVICES • Student Orientation • STUDENT SERVICES • Athletics • AUXILIARY • Student Life • STUDENT SERVICES • Housing • AUXILIARY • Parking • AUXILIARY • Student Advising • ACADEMIC SUPPORT

Student Services • Expenses incurred with the primary purpose of contributing to the students’ emotional and physical well-being • Contributes to intellectual, cultural, and social development outside the context of formal instruction • Includes student activities, cultural events, student organizations • Sub-classes – – – – Student services administration Social and cultural development Counseling and career guidance Financial aid administration Student admissions Student records Student health services Student services information technology

Auxiliary Enterprises • Expenses related to operation of auxiliary enterprises • Auxiliary Enterprise exists to provide good or service to students, faculty and staff and charges a fee related to that good or service • Managed to operate over time as a self-supporting activity • Our Auxiliary Enterprises – – – – Athletics Housing Food services Bookstore Parking & traffic Student Health Center Student activities Other

What Function? • Accounting Services • INST. SUPPORT • President’s Office • INST. SUPPORT • University Development • INST. SUPPORT • Provost – VP of Academic Affairs • INST. SUPPORT • VP Student Affairs • INST. SUPPORT • Office of Information Tech. • INST. SUPPORT/ACAD. SUPPORT (60/40) • Police • English department office renovation • OPER/MAINT. OF PLANT

Institutional Support • Expenses incurred for the central and executive-level activities concerned with the management and long-range planning for the entire institution • Example of use – Administrative Cost Ratio • Sub-classes – – – Executive management (President and all VPs) Fiscal operations General administration Public relations/development Administrative information technology

Operations and Maintenance of Plant • Expenses for the administration, supervision, operation, maintenance, preservation, and protection of the institution’s physical plant • Example of use – Facilities and Administrative rate charged to sponsored projects • Sub-classes – – – – Physical plant administration Building maintenance Custodial service Utilities Landscape and grounds maintenance Major repairs and renovations Security and safety Logistical services

Other Expenses • Scholarships and Fellowships – Includes expenses for scholarships and fellowships in the form of grants that neither require the student to perform service to the institution as consideration for the grant, nor require the student to repay the amount of the grant to the funding source. – Most scholarships are reported as a reduction again tuition and fee revenue; only some remain in expense • Depreciation and amortization – Recognition of the allocation of the cost of capital assets over the useful life of the asset.

Questions?