A RECOMMENDED Rssmmcs HALL. BUDGET
FDRM AND mocsouae FOR reams INSTITUTE

Thesis for m Degree of M. A.
MICHSGAN STATE UNIVERSITY

Max Edmund Smith
1958

- NIIIHJIIIHIll!“IUH”IHIHHHIUIHWIIHIlHlUIIHHI

301389 0177 I

 

LIBaARY
smchigan State
3 University
I

.—__

 

 

PLACE ll RETURN BOX to move this ohookout {tom your noord.
TO AVOID FINES return on or Moro duo duo.

 

D6]? DUE DATE DUE DATE DUE

Wl

 

3’ "Us
0 9’ 0:3“.

I- -
"—1F—I—‘l

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

MSU It An Affirmativo Action/Equal Opportunity Inflation
Wanna-m

 

 

1 RECOMMENDED RESIDENCE HALL BUDGET EDRM.AND PROCEDURE

FOR FERRIS INSTITUTE

By
MAX EDMUND SMITH

AH ABSTRACT
submitted to the School for Advanced Graduate Studies of
nicfiigm State University or Agriculture and Applied Science
in pnrtial fulfillment of the requirements
fur the degree of

MASTER OF ARTS

School of Hotel, Restaurant and Institutional management

195 8

Approvod'hy

 

This thesis is primarily concerned with a study of practical
procedures and forms for developing a budget to be used in college or
university housing and food service programs. The objective of this
stuck was the development or a system of budgeting as a method of finan-
cial and administrative control which would allow more accurate prognosis
of the total financial picture as it involves food service and housing
operations or Ferris Institute. Ferris Institute, a college owned and
operated by the State of Michigan, was chosen because the author had ac-
cess to much of the information involved and considered this college's
prcblelaa typical of the problem faced by other institutions.

In preparing this work, the author has drawn on the published
literature pertaining to budgets, accounting, and finance) and also sur-
veyed the procedures and toms of residence hall budgets at other insti-
tutions. Assistance was gained by extensive studies of institutional ao-
oeunting procedures and by personal contact with specialist engineers re-
garding utility costs. From the above mentioned sources, tempered by the
author's practical experience, have evolved the policies, procedures, and
torus for budget use proposed to meet the actual Operating situation at
Farris Institute.

Deve10pnent of policies at Ferris Institute or am educational
institution is of paramount importance, for they are the basis of the
entire program. Such policies must be clear for they establish the frame-
work and linita within which the program must operate. The philosoptv and
purpose of la'erria Institute is established in the mandate of the legisla-
ture in the cabling not making Ferris a state college. The Board of Con-
trol and the President execute the over-sell educational policies within

Max E. Smith

which the various departments Operate. Budget policies establish the
source of income and authorize disbursement. Preparation, execution,
control, and use of the budget are all factors determined by policy and
objectives. I

An important objective is the derivation of budget forms and
the procedure for their use which are consistent with the policies of
the institution and compatible with the philosophy of the school. The
accounts and records incident to the Ferris Institute housing and food
service Operation are described herein, together with the necessary con-
trols and use of the budget. To be meaningful, the budget accourts should
correlate with the general ledger accounts which are the basis for finan-
cial reports to the Board of Control and the bonding agency. The fact
that Ferris Institute utilizes the multi-type housing and food service
necessitates the use of. a tri-fold operational budget. The first, the
unit budget, specifies in detail the anticipated income and eXpenditures
of the individual housing or feeding unit. The second is the administra-
tive budget which lists the titles, positions, and proposed salaries of
the administrative staff; the total of which will be allocated to each
unit budget. The master budget, thirdly, is the consolidation of each
unit budget. It contains the estimzt. ed transactions of the housing and
food service program Ior the coming year.

The budget is presented as a plan within the franemrk of an
educational institution. Therefore, as an instrument for administrative
control the procedures for its fomulation, modification, and applica-
tion serve a two-fold purpose. First, it is the means of liquidating

loans and preperly maintaining the physical plant; secondly, maximising

Max E. Smith

educational Opportunities for students without weakening the financial
structure. Most important. of all, perhaps, is the recognition of the
importance of the internal organization that shares budget responsibility
with the chief administrator of an institution. The budget preperly ad-
ministered is thus an instrument of major importance in the total manage-

ment of a residence hall program.

."\

1' n-v ' p
va).I..LJ

1{"“')'°?"“ r-«w'r 1 war: x'[ aru-T 1"“«4 ~" '
A (‘1' ‘ L..-A~A,; 5.4) J Aks‘i;u- .4..\J1_J r‘ti --\1.-"\'AII 1‘ ‘IALJ: £.."s J i. go‘k} no—

I
‘7
-—d— -

pr. . Vr‘i“; , x 'a'.‘-' Tn???”
IJF. 1 .4.I~) I-£-‘f_..U¢L;:J

“'1
'1
V

xa' v.<rr)s"'v71
.il .LJ—J.U'1"L t.) iii;

Submitted to the Scfiool for Advanced Graduate otuuics of

Michigan State inivcrsi‘ty of Agriculture and Applied Science

in partial fulfillment of the require ants

for the degree of

liJTZR OF ARTS

‘.

School of Hotel, Restaurant and Institutional Management

1958

TABLE CF QOTJFENTS

I. L‘ITRO‘U’CTION.0000000000000000.0000...1
II. CRITERIA 1223?. Bums“ JE‘JI-ILOPI-EIJT . . . . . . . . . . . . . . . . 12

III. BHS-‘i‘13fifl1380 POLICIES AID OBJECT? 2‘78 FOP. R1051: FHCS HALL
BUDGETIJG JflT EFL.IS ISTFI‘UTE Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q 31

IV. BUDGET FOR?'TS AND PHQUEDUH‘LS T0 livid EI-h‘LOYiD AT F‘EthiiiIS IniSTIIUT'fl. h],
V. COEKICLU'SI‘IFIS AND RECOI-E‘IEI‘IDATIQHS . . . . . . . . . . . ._ . . . . 6p
BIBLIOGImL-‘HY 69

APPEI-ITHCES
A. Distribution of Annual Budget by Calcium]? I-‘ionth . . . . . . 72

B. Budg€Bt Fozms C O O O O O O O O O O O O O O O O O O I O 0 O 92

ii

Table

LIST OF TABLES

Progress of Single Student Housing at Ferris Institute .

General Administrative lgXpense Distribution by Unit . . .

HealCount..............o.o...ooo

Yearly Heating Cost for Residence Hall "A" . . . . . . .

Budget Estimates for Use of Steam Operated Kitchen Equipment

Hot Water Consumption in Dormitories

iii

0 O C O O O O O O I O O

Page

LIST OF FIGUngg

Figure Page

I. Residence Hall and Food Service Organization Chart . . . . . . 10

II. Budget Calendar by Irving Tenner

O O O .0 O O O O. O O O O .23

III. Budget Calendar for Ferris Institute

0 O O O O O O O O O O O O 1‘14

iv

Chap tor I

113.30 MAJTI'N

The problem to be dealt with in this study is the development
of a system of bud etinz as a method of fin ncizzl con orol which will give
an accurate prediction of the financial situation in the food service and
housino Operations of Ferris II titute, a college owned and operated by
the State of fiichigan. A director of food service and housing operations
must be in a position to predict with reasonable accuracy the probable
operating results of a r1 iven unit in order to properly control the opera-
tions involved and meet the obligations azsi"ncd to him.

The results gained from such budget "y and Operating controls
should provide valuable as.istance in dctc'niiwag:

l. The financial feasibility of constructing new facilities.

2. A financial plan which can he not iron the operation or

op sI‘utiN‘u sinvolved.

3. The char e necessary to meet operating costs including

financing in View of the Operating standards to he followed.

b. An orrsnizod, lonr-tcri «Inn for Operation 0. the facilities

involved,

5. A method of chec ting on opera” ng r to me M: sure that

the 10 iv-ter 11 plan is follow ed.

0. A means of evaluating th.e p::r;‘ Jiu'n*5 of management personnel.

2.

i’h‘miihfliii starters; IN rm firmware OF THE moons-‘4

The data and materials for this study were compiled from a re-
view of existing literature on budgeting, accounting, and finance; inves-
tigation of residence hall budget procedures at other institutions; and
by studg'i.; the 12udsct needs of t ‘Ie hoes ing aid fooo service Operations
of Ferris Institute. This particular state college was chosen for the
purposes of this study because the author had access to die information
involved and considered its problems typical of the problems faced by'
similar institutions.

To estat lish critelia for the develop. nent of a budget, the
author made extensive use of various works by established authorities
such as John Jele .ius sell and 1h: d L. Hunfate on bud 7,etary procedures;
Irving Tanner and Howard s. Noble for accounting and budget forms; and

'

the American Accounting »ss ociation's hoodid s in Cos tACCOURtlng1,LUde

 

eting,_snd Control for financial re )OTt:3. Heatinr,_Ventilotinc, Air

 

 

Conditioning 'uide provided vzzluaele ini‘orna tion concerning the meas ure-

 

ment of the cost of heating buildings.

Periodicals such as Sellers and fiosioess and Institutions also

 

 

were of assistance as to the importance and value of buorets for resi-
dence halls and food service Operations. Residence hall budgets and pro-
cecurcs employed at sectorn flichican University and the University of Il-
linois were investigated and also incorporated in this study. Finally,

in determining the buoget needs for fine housing and food service operation

at Ferris Institute, a study was made with the assistance of Jo :In R. Smith,

3.

the comptroller; Donald K. miller, chief engineer; and Lawrence Lutz,
master electrician.

From flue criteria thus established the author developed poli-
cies, procedures, and forms for budget use in an actual operating situa-

tion.

Ferris Institute

Ferris Institute, located in Big Rapids, Aichigan, had an en-
rollment of approximately two thousand four hundred students in the spring
of 1958, according to figures obtained from the Registrar's o fice of the
Institute.1

The Institute has established a unique reputation in the field
of higher education through its seventy-four years of service; first as
a proprietary school, later a non-profit institution, and for the last
eight years as a state college. From its founding in look and thereafter,
its early purpose and record of service labeled Ferris an "opportunity
school" close to the needs of fine peeple of Michigan-a heritage from its
founder, woodbrioge N. Ferris, which is retained in Spirit and in program
to this day. Since its early educational pioneering, Ferris Institute
has been characterized program-wise by flexibility and adaptation. Jedi-
cated at all times to serve its students by ‘ulfiliing the need for prac-
tical education, the college has grown in evolving fashion, moving in an
ever-increasing scape to provide useful vocatiunal and technical training

for students of all ages and abilities.

b.

Founded in ldoh by noodbridnc N. Ferris and called the big do -
ids Industrial School, in a few months it became known as the Ferris In-
dustrial School, and in 1699 it assumes its present name. "The firs
classes were taught in rented rooms and during the first year of opera-
tion wne hundred fifty individual student registrations were tabulated.
New offerings attracted more and more students, and by 1907, after twenty-
three veers, more than twenty-five thousand different students had taken
business, commerce, and science courses at the institute. Today its for-
mer students number over seventy thousand."2

In 1926, Ferris sold most of his stock in the school to derrit
Masselink and bert Travis, two of his associates. Hasselink, who became
the collwge's second president, died in 1923. "As the depression came
on, the school fOund itself in financial difficulties. To meet the emer-
gency in 1931, a group of forty Big Rapids businessmen, acting as a Board
of Incorporators, in an attempt to insure the perpetuation of its singular
service, underwrote the proposition of taking the college out of private
ownership md operatinr it as a non-profit educational institution, {gov-
erned by a Board of Trustees. In 1949 the college, with assets of more
than one million dollars, ves offered to the State of Michigan as a gift
and accepted in Public Act 1114."3

Fire struck the Ferris campus February 21, 1050, completely de-
stroying the Pharmacy Building and the larger of two classroom areas.
Fortunately, the Alumni Building'was saved and the college offices were
relocated there. The remaininr Space was develogcd into classrooms, suit-
able for instruction in the sciences. Eight army surplus barracks were

converted for classroom and laboratory use. New construction has removed

5.

temporary, reconverted, and inadequate facilities. The new buildings have
been constructed on a revenue bond basis and the conetzuction has provided
needed facilities.

As more flichigan students found at Ferris the type of educational
program they were seeking, enrollment made spectacular gains far in excess
of the past eight years' trend toward larger student bodies.h Enrollment
nearly quadrupled, jumping from six hundred forty-eight enrollees in 1953
to two thousand three hundred fiftybsix in 1957-56, according to records
in the Registrar's office of the Institute. It has been noted that this
rate of {rowth is greater than any other established college in the Mid-
west.S

In addition to providing classroom facilities after the fire in
1930, the Board of Control faced another problem; that of providing hous-
ing for the steadily increasing numbers of young peiple desiring to attend
Ferris Institute. In 1953, the officers of the institute undertook plan-
ning for the construction of housing and feeding facilities for a part of
the student body. The rapid increase in enrollment and the predicted enp
rollment forecast for the future made this action necessar . An extensive
survey was made, the results of which underlined the need for campus hous-
ins.

The Legislature of fine state of nichiren has rarely provided
tax funds for the construction of income producing facilities. Ferris
Institute as a state-owned college was, therefore, forced to finance the
cost of its residence hall construction program through the sale of reve-
nue bonds to be retired from income rrouuccd by the structures built. Such

projects are sometimes classified as self-liquidating. Mobster defines the

6.

term self-liouidating as "a commercial transaction in which the normal

"6

course of business leads to the conversion of goods into cash. "Trans-
lated into modern educational context, however, the term assumes a slightly
different meaning. It might be said that a self-liquidating project is one
in which a building is constructed and financed in whole or in part, over

a prescribed period of years, through revenue created by the Operations of

the building."7

The next consideration after establishing the need and method
of financing'wus to determine the cost of due project. Plans were devel-
Obufi and bids secured. Next came the checking of has cost of financing
and such problems were posed as: How much must be borrowed? Probable rate
of interest? Term.of loan? The amount of the annual payment? Finally,
the sum of money available annually for debt service had to be estimated.

After investigation of housing and feeding programs at many
other colleges and universities, it seemed most feasible to the Ferris
administration that the multi-unit type of operation was the most eco-
nomical and practical program the college could undertake. A multi-unit
Operation consists of the housing of students in two or more dormitories
and feeding them at a central food unit.

In September, lQZS’ Ferris students occupied the first housing
and feeding unit which'was the beginning of a large quadrangle of dormi-
tories containing eirhty-six thousand seven hundred fifty-four square
feet and built at the cost of one million Four hundred fifty thousand dol-
lars. Modern and functional throughout, the two dormitories and central
food service structure were planned to provide the most building possible

at a modera+e cost to the student. This program'was developed into the

7.

present multi-unit type Operation where nine hundred eighty-five students
were housed in four buildings and were provided food service in a single
location. A second multi-unit center was constructed made up of two more
dormitories and a food service unit feeding fiwe hundred fortybfour stu—
dents. The progress of housing for single students at Ferris Institute
is Shown in Table I.

The total financial program for the housing Operation, as of
the spring of 1958, involved the repayment of borrowed funds totaling ap-
proximately five million one hundred thousand dollars over a period of
forty years. Annual Operating income and expenditures totaling approxi-
mately one million three hundred thousand dollars was collected and dis-
bursed and had to be adequately controlled.

The physical md financial Operations of the housing and food
service at Ferris Institute were co-ordinated by the director of Resi-
dences who in turn was responsible to the Comptroller of the college.

The Director's specific reaponsibilities were:

1. The employmcnt of professional help related to the
residences and food service.

2. Preparation, execution, and control of the annual
budget.

3. Establishing policy for the general Operation 0? the
housing and feedinc progrmn.

b. Approving all purchases.

5. The general maintenance of buildings.

6. Kaintainine a working r lati:nship with the Dean of
Students for the achievement of educational and social
objectives of a residence hall proyrmn.

The objectives of the housing and food service organization are

to provide clean, healthful living aeoomnolations in an environment which

8.

 

TABLE I. PROGRESS OF SINGLE STUJEJT HOUSING AT FERRIS INGTITUTE
Date . dumber of Number of
Name of Unit Constructed etudents Housed Students Fed

_.

Masselink Nest

Masselink East

Masselink Commons
(Food Service Unit)

Helen Ferris Hall
Masselink Cannons
(Food Service Unit)

Carlisle Hall

Vandercook‘Hall

Masselink Commons
(Food Service Unit)

Hallisy Hall
Masselink East Addition
Masselink Commons

(Food Service Unit)
Student Center

(Food Service Unit)

1957
1957

1955

+4»4
\0 \3
U“. U1
0) CO

F‘
q )
Ci

1955

202
lbs

26h
2&8

/

200
96

353

llhé

508

kl

 

9.

is conducive to stud;r and to provide appropriate food services. In addi-
tion to these provisions, the units of housing and food service must be
Operated in such a manner as to meet all costs of Operation and produce
enough surplus capital to maintain buildings and furnishings in good re-
pair. The operation must also provide mnds adequate to meet debt ser-
vice requirements.

Figure I on page 10 shows the orgzmizetion of the housing and

food service Operation at Ferris Institute.

 

 

 

 

 

 

 

 

 

 

 

fine eeflam as

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

nan: Manson «nausea headphooom _nu80hom commune
someone pwuuopm goo Momma.” avocado £5980
_
F4. _
heaaonoon I: uoaoohwa oowphom noon moowuouoeo homage:
A
H: ail

 

 

 

 

 

10.

 

 

 

 

 

 

gouge

 

 

 

 

 

$303QO mo 3&0th

 

 

 

 

 

 

90$?”ng
_

 

 

 

guesses

 

 

 

 

 

 

 

hoaooxuoom

 

 

 

 

/ 3333 we 50a

 

 

 

1L

58 ~8HH<NHP§8 woungmm moon and Add: ”muwmammm oH BEBE

 

I' II III III I I II I II I | ‘
n
I I I.
0
I I I l I o .
— IIIIIJ
.
— q Q C —
. ‘1” ol I I u u a
‘ .
+II III
C I III III
I ’3‘. u ‘
. I
.5 .I .I
ll - \. . ( .
_ \
\ o
. III I I I \ .I I I II I I III
. x.
\
. - .o
_ a I\
a . _ \\
—
rlv 1o - - p ..\
g \
\
. \
. \\
'III III I II II IIIIII IIII In IIIIIIIII ‘‘‘‘‘‘‘‘‘ III
.. _ \\ . .—
_ . a m \ . o
u \ -
o l n
. I IIIII I I III— ‘IIII I IIIIII. I .
.
_ u . —
. . . _
.0. I I I I I IIIIu III IIII IIIIII III- ! IIII I II. I III I I I. .I III
I III I I ..... IIIIIIII IIIIIII IIIIII I (I I III I I III II IIII I I-III I I II I. I I .
’I IIII III 1II III II II I I IIII IIIJ IIIIII IIII I III! IIIII
. .
. _ . . u
. _ . _
u ‘5 — o u -
u .
-IIII|I III IIIII .II II III A III. III I II I II II 9 III I IIII I III IIII I
III II III I IIIIIIIII IIIIII II IIIII I IIIIIII' II IIIJ . I I II, I- Q
.
. w _ I v —
a -
I III I I III I I IIIIII II I II IIIII I IIII III III4 I. I I II II I III II Io III I. I II I: II IIIIIIIIIIII'I
_ n 1 . . _ _. d
. o
. .
. m u . o a
I . \ - . .
u . u
. n .4 . u
. . . r . . u . v _
_ . a . . .
. _ . . .
III.I|I IIIIIIII III II .- 1III III II III III... 'I II I II II III I IIIIIIIIIII II

 

 

 

 

 

 

 

l I u I III I II III. '

2.

3.
h.

S.
6.

7.

ll.

FJOENOTZS

Enmllnmnt Report for 19337-58, prepared by Harold ‘w’isner, Registrar,
based—fin {he ?1fth wcex of the lel enrollment.

 

 

gar-1’13 Institute 83193]. Fulifiin, Vol. XXXIII, No. 6, January, 1056,
(Big Rapids: Printing; Arts Jepartment, Ferris Institute, 1956),
PI 20

Ibido, p. 30
Ibid., pp. 10-1h.
Ibid.

Te‘fehster's New Collegiate Jictionargr, G. &-. C. E-ierriam Company, (Cam-
bridge, .-.a:;s.: he hiverside tress, 1956), p.707.

 

Building for Tozvmrrow through 5(31f'li'3fiiidaiinii E’roj ects, Michigan
babe boarj of L'Mucation, (hmsing: 1955): p. 1'

 

"\
I.)

CE 38.13th II

1 'm ‘0) h.- 13- -‘ \yf‘ y.“ "“Q-ryj- ‘1’.) ¢-—- (M
Chi 14.1.1115; F112“). L L L: ' .i. 212'; 4.113; £4,341

The needs of any given 0chm tion and the organization in which
it innctions must larzely dictate the budget forms and procedures to be
employed in its management. There are, a<n v:ever, certain general criteria
which may be used in evaluating budgets and their use. In this chapter
the autlor has reviewed certain reco~nized authoritative sources in an
effort to develop applicable standards and report, in sumla.y fonn, the

pertinent information collected.

yefinition of bud Qet.

Many excellent definitions of the budget have be en formulated.
John Dale Russell states that "the tndQet may be defined simply as a plan
for institutional income and expenditure covering a definite fiscal peri-
"1 4n 1 " '
0d. Another au nor, Irving Tanner, in hi_s boon, .unicipcl and Govern-

mental Accounting, expresses his opi ini,n in v is manner: "A budget is a

 

plan des ling with the proposed expenditures for a given period or purpose
and with the means of financing them. Budgets may be classil ied as long-
term and current. The long-term budget covers a period of at least five

years, w‘ile the current budget generall;v is prepared for a period of one

3,4
DJ

.0

13.

year."2 Thad L. Hungate, controller and professor of education at Teachers
College, Golumbia University, states that “the budget is an expression in
terms of money of what an institution wants to do and what it intends to
do within a given period of time. during this period the budget serves

as an instrument of managerial control and is adjustable, through amend-
ment, to dianging corditions and needs. It affords, in conjunction with
the accounts of actual income and erpenditures, a basis of appraisal of

financial plans for the period."3 Financial Reports for Colleges and Uni-

 

vorsitios, compiled by the National Committee on Standard Reports for In-
stitutions 0f Higher Education, states: "A budget is, furthermore, an
authorization to incur the expenditures and to collect the income."14
From.these opinions and definitions this author has based his
budget plans and procedures for this paper. It is believed that the foun-
dation for the budget is well contained in the fact that a budget is a
plan for income and expenditure covering a.definite fiscal period. Rus-
sell fUrther points out that the budget definition emphasizes three as-
pacts:
”In flhe first place, the budget must be a plan. It must be
carefully thought out in advance; the parts must'bs adequately'related
to each other, and like all other plans, it must be subject to some modi-
fication to cars for unforeseen conditions as the fiscal period develops.
"In the second place, the budget covers both income and expendi-
ture. In the thinking of some college executives the budget is limited
to one side of the operating statement, providing plans for expenditure
or only for income. An adequate budget, however, always treats both in-

come and expenditure and relates them effectively.

y‘

 

12;.

"In the third place, the definition refers to a Specific period,
with fixed Opening and closing dates. This period foremost institutions
is the fiscal year of twelve months. The important consideration, however
is that there shall be a clear understanding of the Specific period to

which the budget relates."S

Purpose of a budget.

 

It is essential that the reason for developing a budget to aid
in the operation of a business be well established before the actual planp
ning begins. Administrators should be quick to recognize the following:
"The general purpose of the budget . . . is to provide an instrument for
the administrative control of an institution."6 Specific budget purposes
may be noted as in he subdivisions of'this major general purpose.

The first specific purpose is to properly relate income and ex-
penditure to each other. This requires a careful review, by administrators,
of all sources of income and probable expenditures.

The second purpose of a budget is "a means for setting standards
of performance.“7 The net effect of all preposed activities should be
considered in proper planning for the budget.

The third purpose of a budget is to provide a plan for "measur-
ing actual results, and for guiding management to satisfactory achieve-
ment."8 This purpose allows management an opportunity to determine the
financial feasibility of constructing new facilities, the plan for their
Operation, and the erpansion of sales and the probable net return to in-

vestors.

15.

The fourth and last purpose of a budget "is to provide assurance
that the program will be limited to the resources available for its sup-
port."9 In his book, The Finance of Higher Education, John Dale Russell
emphasizes this last statement, with particular reference to budgets for
institutions. This author believes the point is well taken.whether it is
meant for institutions or a business. Most administrators recognize that
the service posaibilities of fleeir operation far exceed the services that

can be rendered with present resources.

Use of budget assumptions.

 

Budget assumptions, as formulated by housing administrators at
the University of Illinois, play an important role in budget planning.
At the time a budget is being prepared certain criteria may not have been
established due to: inaction on preposals by governing boards; the lack
of complete financial status of the year ending; or, in the case of a new
enterprise, the lack of any previous records. Other assumptions may be
the cost of raw material, employment periods for employees, or wage and
salary increases.

A list of budget assumptions answers many of the questions which
may be asked by the approving administrators or the governing board.

A few of the assumptions that may be listed are:

l. The assumed number of residence halls' beds in relation
to the anticipated enrollment for the ensuing year.

2. Anticipated rate for room and board.

3. A vacancy loss percentare based on contract enforcement
and school policy.

h. Policy regarding use of residence hall during the full
school year.

5. Assumption of food sales to conference groups.
6. Raw food cost.

7. Debt service payment-«based on room sales and board
sales.

8. Employment periods for all employees.
9. Food serving days.
10. Reserves for buildings and furnishings maintenance.

11. Wages and salaries.

Procedure in preparation of a budget.

 

Budgeting procedure, according to lussell,lo may be divided
into three defined steps: preparation, adOption, execution and control.
The first step, preparation, involves the making of the financial plan.
The second step, adoption, is an act by the Board of Trustees or other
controlling agency. The final step, execution and control, covers the
management of the budget during the period to which it relates.

The first stop, preparation, usually initiated by the chief
budget officer, involves the detern‘nation of the general policy for
the budget, estimating the probable income (which can usually be fur-
nished by the accounting office). As soon as income estimates are comp
plate it is wise for the budget officer to consult with his chief advi-
sers to determine the policy to be followed.

Estimating expense is best accoeplished by delegating this re-

sponsibility to the various heads of departments. This action tends to

17.

place the reaponsibility on the persons closely involved in the Operation.
"The actual formulation of the budget, however, should and usually does
involve the whole institution. Staff and faculty members within departs
manta, heads of divisions or schools, deans and officers of administra-
tion, as well as the central coordinating committee . . . all have respon-
sibility for contributing their thought to the improvement of the institu-
tion.through budget planning, and should be given the Opportunity to do
11

80.”
Budget as an interpretation of poliC'.

With reference to an institutional budget, Russell states, ”The
principle that the president shoulo be the chief budget officer, indicates
that the president's office . . . should be in charge of the work of pre-
paring the budget. The first step is to determine the general policy for
the budget of the ensuing year. This involves some preliminary estimates
of the probable income, which can usually be furnished by the business of-
fice. When this estimate is available, the presiaent, in consultation
with his advisers, can determine the general policy to be followed. If
the estimates of income indicate a shrinkage from that of the current year,
the budget policy will necessarily require retrenchments in services. If
the probable income is about the same as in the current year, the policy
will be to hold the total' expenditures within the limits of the former
budget. If a larger income seems.probable, the policy can permit a camp

4' l '- o ‘ "12
mensuraue increase in expenditures.

18.

Poliqy and the budget.

 

Institutional policy must be adhered to in formulating a reel-
dence hall budget. In.many institutions the counseling staff is budgeted
from funds other than those derived from the Operation of the residence
hall.

Policy in some institutions directs all personnel salaries and
wages required to operate a hall or food service must be budgeted from
the hall's Operating income. The amount allocated from room and board
income for maintenance of buildings and grounds varies from one institu-
tion to another. In.many instances in the past, funds apprOpriated from
state tax income have provided state colleges and universities of hichi-
gan with heat, light, and power for self-liquidating projects such as
dormitories and feeding services. However, this has been changed in the
last two years and today'most Michigan colleges' residence halls are re-

quired to pay for these services from earnings.

Use of the budget.

 

The budget is used primarily to control expenditures so that
they do not exceed the limits of the amount apprOpriated for each particu-
lar purpose. However, as Morey indicated: "It should not be regarded
solely as an instrument of economy ... . ."13 As Russell has said, the
budget Should be regarded as a useful, financial program.1h It should be
used as a guide to departments in planning and carrying on their work, as
'wcll as a guide to management in determining the feasibility of an expanded

program.

19.

Budget limitations .

 

It can hardly be seemed that a budget will be a "cure all" for
the financial ills md responsibilities that may encumber a business, but
it is an intelligent aid in good accounting procedures and its usefulness
cannotbe overeetated. Many are inclined to believe that a budgot's sole
objective is only the control of the flow of money. However, a budget must
also bring about effective conduct of a given program. As Peirce has re-
lated in his chapter, "The Budget Comes of Age,” 8 budget without applica-
tion of hmnan relations may also become a hindrance rather than an aid.
”Too frequently a well-designed budget system has collapsed after being
superimposed on a faulty base of administrative personnel policy. "15 "The
true control of the budget is through the people who ach'ainister it. Given
information, umerstanding, cooperation, and help, they can wield a vital
influence on the Spending program. If they are kept informed of the finan-
cial situation and the outlook, they will administer their areas far more

effectively than under a systen limited to control by mechanization. ”16

Budget Forms and Procedures
Kinds of budgets.

"The two major elements in the budget structure are capital out-
& (expenditures for land, buildings, and equipment) and current gera-
9.1.20.9; (expenditures for pregram and income each year that finances theraL,"l7

The capital budget is established in order to bring into existence new

20.

facilities. Included in a capital budget for residence halls are archi-
tect fees, construction, furnishings, interest during construction, and
land costs.

The Operational budget, with which this paper is primarily con-
cerned, was devised in order to determine: the feasibility Of construct-
ing new facilities; a financial plan'which could be met through the Opera-
tion; and the necessary rate to be charged for services rendered to meet
Operating costs and financing. The operational budget was established also
to set up a method Of checking on Operating results and supplying manage-

ment with a comprehensive guide.

The Calendar for Budget Preparation

”If the budget is to be an effective plan for the control of
finances during a fiscal period, its preparation should Obviously be com-
pleted prior to the beginning Of that period; otherwise the institution
would Operate for a part Of the period without the benefit Of the finan.
cial plan. The date for beginning the'work of preparing the budget for
the coming fiscal year is influenced by three factors.

"The first factor is the length of time required to draw up the
financial plan. ... . Ample time should be allowed for its preparation
in order that the process may not be unduly hurried at the last."18

The second factor relates to the major elements of the financial
plan which provide for fine location and hiring of new staff members and

for obtaining bids on merchandise and supplies, all Of'uhich must be vir-

tually decided upon several months in advance Of the Opening Of'the fiscal

Year-

21.

"The third consideration affecting the time of beginning work
on the budget is the fact that estimates of both income and expenditure
for any given fiscal period can be made with increasing accuracy as the
beginning of the period is approached."19 For example, it is easier to
estimate the probable incane from students for 1953-59 on June 15, 1958,
than on December 15, 1957. "Accuracy of prediction, therefore, is im-
proved by postponing the preparation of the budget to a point just as
near as possible to fine beginning of file fiscal pcriod."20

he author believes that sound financial planning requires that
preparation of the budget be started in time for its adoption before the
beginning of the period for which it applies. To insure that adequate
time will be allowed, a budget calendar should be prepared listing each
step in the budgetary procedure and the time allowed for its completion.
Irving Tanner presents, in the author's opinion, a good example of a
budget calendar. This figure is reproduced on the next pages of this

manuscript.
Assignment of Responsibility for Budget Preparation

Budget r63ponsibility.

 

Ultimate responsibility for the approval of file residence hall
budget at a given institution may rest with a Board of Control or Board
of Regents. Hith particular reference to budget responsibility for in-
stitutional budgets for colleges and universities, Hungate hikes the

following statements "within the institution the president bears final

DJ
[‘0

reaponsibility. The chief financial and business officer is generally made
responsible for estimating the income of the entire institution, for esti-
mating expenditures for those activities under his supervision, and for

"21

assisting in budget formulation.
Collection and unification of income.

In a.previous para :aph it was stated that the financial officer
of an institution Should provide the budget estimates for income, however
this estimate is subject to review by the chief budget officer. Tl; es-
timate should be one that is expected to be realized. In any event, for
each unit of finance, income should be classified by source. One of the
likely sources of information on income according to Morey is: "detailed
statements of income of previous years from all miscellaneous sources, on
the basis of which an estimate, always conservative, may be made of the
probable income for the succeeding year . . . ."23

College and university residence halls and food service gross
income estimates can be classified as "fixed income" in most instances.

25

9

According to Hungate‘h and florey verification of this income is made
by referring to past records and future enrollment predictions. The de-
velOpment of estimates for residence halls and food service will be dis-

cus:ed later in this paper.
Collection and verification of expense estimates.

In the institutional budget, estimates for departmental expense

23.

FIGURE II. BUJGLT CALENJAR BY IRVING Tzuusi“

For Budget Year Begi

Date

Prior to October 1, 1958 . . . . . .

OCtOber 1 o c o o o c o o o o a o 0

October 1 to October 21 . . . . ...

OCtOber 22 o o o o o o c o o o o c 0

October 22 to November 1 . . . . . .

November 2 to November 30 . . . . .

December 1 . o o o o o o o o c o o 0

December 2 o o o o o o o o o o o o o

ruling January 1, 1959

Steps in Budget Procedure

Budget officer prepares estimate forms
and instructions.

Budget officer distributes estimate
forms and instructions among depart-
ments.

Departments prepare estimates. Budget
office prepares estimates of fixed
charges and other nondepartmental
items. Budget officer also prepares
estimates of taxes and other non-
departmental revenues.

Filleduin departmental estimate forms
are returned to the budget officer by
departments.

Budget officer consolidates estimates.

Budget officer conducts departmental
hearings. Budget officer confers with
chief executive, and the latter deter-
mines amounts to be finally recommended
to the legislative body. Chief GXPLZ-
tive also determines amounts to be
adopted as the official revenue esti-
mates of the municipality for the budget
year. Chief executive prepares budget
message. Budget officer prepares fi-
nal budget document for submission to
legislative body.

Budget document, including message of
chief executive, is turned over to
legislative body,

Legislative body turns budget document
over to its budget committee.

FIGURE II. BUDGET CALENJAR BY

Date
December 2 to December 15 . .
Decwberlc,’ 00000000-
Uecember 16 to Jecember 23 . .

December 23 . . o . o c'. . .

december 27 . . . . . . . . .

January2,l959 ounces.

Januaryé 0.00.0.0...

January 6 to January 15 . o o

Januf‘rz'y'lsoooooooooo

Januaryléooooo.ooooo

2

do

11mm Tarn-ma (continued)

Steps in Budget Procedure

'Budget committee corriucts public hear-

ings and makes rtcommendations con-
cerning the amounts to be apprOpriated.

Budget committee turns its recommenda-
tions over to the legislative body.

Lerislstive body considers the com-
ttee ' s rec02mz-ae11dations .

Legislative body adopts the budget by
passing an apprOpriation ordinance.
Legislative body levies taxes by pass-
ing a tax levy ordinance.

“equcst for allotments is sent out by
chief executive throvqh budget officer.

Acopted budget is recorded on the books.

Departments submit work programs and
allotment scheoules to budget officer.

Budget of”icer consolidates allotment
schedules and presents them with rec-
ommendations to chief executive.

Chief executive makes final revisions.
Department heads are informed of the

amounts alloted to them. Allotments
are recorded on the books.

7‘.)
U1

for departmental expense are usually assigned to deans or department
heads. Compilation of these estimates many times are arrived at by a
committee which includes all of the departmental staff.26 The assembling
of budget expense estimates is the responsibility of the financial offi-
cer who presents the requests to the president of the institution. It
is essential that fine chief budg,t planner, assuming this is the president,
acquaint the department heads with the resources of the institution. In
many'instances the chief budget officer hands out, "comparative uniform
statements analyzing the expenditures of all departments under standard
headings over a period of years, and, to a limited degree, comparative
statements of similar departments in various other universities of simi-

lar size, maturity, and scope of work.."27

Supporting data for the budget.

 

"No budget can be thoroughly considered unless all facts having
a bearing on it are assembled. . . . The information desirable to deal
8

with it adequately must be extensive and exhaustive."2 In the prepara-

tion of departmental expense, it is of vital importance that the recon»
mandations in the budget conform to the requirements of the program to be
followed. Salaries of employees should be listed and increases noted.

In the event new employees are to be added, justification should be pre-
sented to support the budget request. Two authorities, Hungate29 and

30

Morey, recommend an itemized statement of all positions to accompany

budget estimates for salary expense.

?6.

The University of Illinois Residence Hall Budget, reviewed by
the author, explains each item of expense as it is entered into the de-
partmental budget. This method substantiates income and expense entries,
leaving little to the imagination of fine budget approving officers. It

also aids in has control of the budget by management personnel.

Distribution of income and expense.

 

In the preparation of a budget it has been recommended by cer-
tain authorities that the budget estimates may'well be made an integral
part of the accounting system by being recorded in the general books of
account. The advantage of such procedure is to bring under control, as
a part of the general books, records relating to income not yet realized
and unexpended balances of appropriations. iithout preper distribution
of each item of income and eXpense it would be an impossibility to prep-
erly maintain such control over these items.

The importance of proper distribution of these expenses can
forther be emphasized in the fact that, for managerial control, the de-
partment manager or supervisor must be aware of each item as it is stated,
in order for him to preperly administer a budget. Without preper dis-
tribution of income and expense some divisions may be carrying the fi-

nancial load of others.

Budget review and approval.

 

In most institutions of higher learning the president presents

27.

the completed budget, ascording to the time table, to a governing board
for review and approval. Due to the length and detail of most institu-
tional budgets, the president will present with the budget a letter of
ransnittal which will outline the important matters for board considerao
tion.

In some institutions, the internal officers approve of all
local budgets which would include a residence hall budget. In other in»
stances the above procedures for institutional budgets are followed.

The governing bound, in considering the budget, has two major
reaponsibilities. First, to judge the general policies that are involved
in the preposed financial plan, and second, to make certain that the pro-
posed expenditures are safely within the limits of probable income. Once
the considerations are approved, the budget may be looked upon as an in-

terpretation of policy for administrators to follow.

Budget revision.

 

Revision of flue budget may be made necessary by the fact that
forecasts of expenditure and income set up prior to the fiscal period
cannot be exact in every detail. To meet changing conditions, the budget
should be modified as necessary during the course of the year.

The revision of the budget is carried on in a manner similar to
that used in its original preparation and by the same persons. All changes
affecting the balance between income and expenditure should be formally
adopted by he approving body.

"It is a good principle to require that a change in any detail

B)
CD
0

after being recommended by the officer aiministoring the unit concerned,
should not be effective until aggroved by the officer or agency to which
he is responsible."31
"Budget revision is occasioned moot frequently by the necessity
of increasing the apprOpriation for certain purposes during the year. An
increase to an itom daring the year nay legitimately'bo met in one of
four wayS: (a) transfer from unayprOpriated income, such amounts being
available because income during the year has exceeded the budget esti-
mates; (b) transfers from a contingency fund originally included in the
budget to take care of unforeseen emergencies; (0) transfer from one budget
account to another, which is p0381ole in case some organizational unit will
not need all the approgriation designnted for it in the original budget;
and (d) transfer from funded reserves, which is pass ble only in case the
institution has in previous years set up reserve funds from unexpended

income."32

1.
2.

3.
h.

S.
6.
7.

9.
10.
ll.
12.

13.

1h.
15.
16.
17.
18.
19.

29.

FOOT N I"? '3

Russell, John Dale, The Finance of Hifiher Education, (Revised Edition,
Chicago: University of Chicago rresl, lQSu), p. 66.

 

Tanner, Irving, Municipal and Governmental Accounting, (New York:
Prentice—Hall Inc., 1955}, p. 21.

Hun ate Thad L. Finance in Educational Mnnafement of Colleqes and
I 0 L. L
Universities, (new York: Bureau of Publications, Teaoners Col-
lege, Colombia University, l95h), p. 60.

 

 

The National Committee on Standard Reports for Institutions of Higher
Education, Financial Regorts for Colleges and Universities, (Fourth
Impression, Chicag : University of Chicago Press, 19b3), p. 11.

Russell, op. cit., pp. 66.67.

Ibid., p. 68..

Peirce, Janes L., "The Budget Comes of Age," Readings in Cost Account-
ing, nudgeting, and Control, ed. William E. Tnomas, (Cincinnati:

South-western rublishing Company, 1955), p. lh2.

Ibid., p. 1h2,

 

 

Russell, 0p. cit., p. 72.
3233,. pp. 73-86.

Hungate, op. cit., pp.66-67.
Russell, op. cit., pp. 7h-7S.

iorey Lloyd, University and College Accounting, (New York: John'Hiley
and Sons, Inc., 1930), p. 3.

Russell, 0p. cit., p. 81.
Peirce, op. cit., PP. lBl-lBh.
Hungate, 0p. cit., p. 92.
3232,, p. 68.

Russell, op. cit., p. 73.

Ibido, p. 7b.

{O

r o
9
,4 c
U
Q
‘ U
. e
o C
'
.. Q
1 a

20.

27.
28.
29.

30.

523$}. p. 7b.

Hungate, op. cit., p. 66.
Tenner, op. cit., p. 23.
Morey, Op. Cit.. P. 1h.
Hungate, op. cit., p. 78.
Morey, op. cit., p. 1h.
Hungate, op. cit., p. 79.
Morey, 0p cit., pp. lh-lS
(2212., p. lb.

Hungate, op. cit., p. 79.
Morey, op. cit., p. 15.
Russell, op. cit., p. 83.

Ibid., p. 83.

30.

Chapter III

Inkoltsa3 D ”OquI.o M J OhéuCTIVnS Foe LmJIJs“CB HHLL

BUIJGEZTISI AT FERIJS If. zTI "UTul

This discussion of Ferris budgetary procedure is based on the
fundamental principle that the residence hall budget is an inn trument of
administration. The steady increase in numbers of colley students has
forced Ferris Institute, as well as most institutions of hifher learning,
to provide housing and feeoing facilities on itsc campus. In many in-
stances, as at Ferris, this program has become a major business function
which heretofore had not been so considered.l Thus, has come the need
for consideration of budgetary control. Larger universities have for
many years recognized the need and established regular budgets by which
they Operate their r~sidence hall proeruns. Smaller colleges and simi-
lar institutions entering into the field of housing and feeding students
should also rec0gnize the importance of budgets for the control of exist-

ing Operation as well as for future expansion.
r)olicy and the Ferris Budget

Need and purpose.

 

d nee hall

’3
L“)
p.
O

Budgetary'controls will provide the Ferris r

32.

administration with a means for predicting with reasonable accuracy the
financial future of the existing program, which will in turn not only be
an aid in determining the feasibility of constructing new facilities but
also in determining the financing plan. A budget is further necessary
to provide feeding and housing with a method of comparison Of Operating
results and to provide a guide for evaluating the performance of manage-
ment personnel.

”he fact that Ferris Institute is in a state of growth which
demands increased housing and feedins facilities, far beyond the usual,
accounts for the need of even greater control in order to stablish a

sound financial system.

Institutional_policy.

 

The {resident and hoard of Control establish measures that will
affect residence hall tudnet and Operation at Ferris Institute. home
Specific policies as established are:

l. The rate which can he charred for room na board.

2. Amount from roan and board fee to be allocated to
room sales and the amount for food service.

m- 1 i ,. ~ .'g '1 .- s A . .o .
b fa. .. 9x A. w . I n I x ‘ , ‘- r.
1.18 edit-1.: _=J -‘pcflrleuics 101' (314.13,. n33 .

to
O

on -.
l

. u ‘ '0 1" ~‘~-—. ~ , . ~. v‘r" -, 'r :‘- " ‘\ ‘~ -’
11-. Lu'. ANT!) 0 L Cng‘xtsi ,J. i.’ J I. ~_.I‘;:.\J;'l'.‘.t.r.n. 1.x) no (3} 331‘:le to

the housinr division.

Toe number of o-ger:tin.-~ days for roons and feed-
ing services.

r“ - ‘- ‘ 'r ‘ \ 5 -~ .- « in v‘ s
o. she establiawcd confcx»ice 1” es.

7. Uhich students will he TEQUiFGd 30 11V3 in 03“?“3
housing unitS.

33.

Budget assumptions:

 

It is recommended that the Ferris budget contain a section de-
voted to budget assu.ptions, such as those listed on panes 15 and 16. In
order to construct a budget, many such assumptions must be made before an
actual policy can be established. In all likelihood, the assumptions will
be largely based upon past established policy and will be of definite aid

to the approving officers when the budget is presented for review.

Procedure in Preparation of the Budrct

Preyaration.

 

The first factor in estnblishing U10 Ferris budget will be that
of establishing a time table for preparation which is illustrated in Uhap-
ter IV. The second consideration will be that of asuicning the re3ponsi-
bility of preparation for the residence hall budget to the director of
residences who in turn will assirn the food service director to prepare
estimates for that department. The Operations manager'will be responsi-
ble for the residence halls' estimates. :olicy a"fecting the budget should
be established by the president and com troller, who in turn, would be re-

syonsible to the Board 0’ Control.

Ad on ti< m o
m

When.the Perri: budpet has a] umed its final form, it should be

31;.

presented to the president and Board of Control for approval. “ccommenda-
tions made by the president should meet with the approval of the governing

body.

.ution and control.

:1
N
O
I

 

The author, in the following, made full use of passages from
Readings in Cost Accou.ting,_fiudgeting, and Control, as the quote exactly
expresses his thought:

"Control might be nuickly and simply defined as a disciplined
effort to fellow a plan or eXplain deviations from it. The effort re-
ferred to takes the form of self-discipline-dvoluntary, unified, and coop-
erative. The deviations ‘ul plan are deliberate, foreknown, and author-
ized. If they are apparently beyond anyono's ability to prevent-one for
instance a failure to reach budgeted sales volume-cat least than are spot-
lighted as early as possible, and management has the chance to take what-
ever action is indicated. Control is simply the modern form of the old
formula, 'msnagement by excoption.‘

“It is, of CO‘rse, at the point of deviation from the budget
that most of the human problens are born. This is, by design, the cen-
tral point in the entire system-—the.moment which demands explanation,
instruction, decision, argument, or even discipline, as the case warn
rsnt3-the flash point for manasemcnt in action.

'. . . the effect of control on people is commensurate with
their training and conditioniné for it. If they understand thoroughly

the meaning and uses of control, they'will View it in the lieht of common

35.

sense. They will neither resent it nor be awed by it. They will turn
it to the constructive use for which it is intended, and it will become.
an aid rather than an obstacle.“1

"Three major functions are involved in the executiontnd control
of the budget: (1) control of experditures so t‘r'ley do not exceed the
limits of the specified apprOpriations for each particular purpose; (2)
revisions of the budget during the year to care for unforeseen conditions;
and (3) the closing-out of the budget at the end of the fiscal year."2

The duty of controlling eXpenuitures so that the budget estimates
will not be exceeded should be assigned to the director of housing and
food services. The president and comptroller act under specific instruc-
tions of the Board of bontrol which takes precedence over any orders that
may be given by any other administrative officer or agency on any matter
connected with finance. The bookkeeping: procedures of the housing office
should be established with budget accounts for each item of expense.

Thus, either the total income or the total expense for a unit may be
easily and quickly reviewed. Whenever the budgeted amount has been ex-
pended, all persons involved should be immediately notified and remedial
steps taken to revise this account to fit the needs of the department
being charged.

Monthly financial reports prepared by the business office are
essential to the successful application of a housing and feeding program.
The basic purpose of any report is to give information. A number of of-
ficers of the Ferris Institute and the bonding agency providing funds for

self-liquidating housing and feeding projects will have need for the

financial information, and a well-planned system of reports will be essen-
tial if their needs are to be adequately met.

The most urgent need for adequate reports arises within the in-
ternal administrative organization of the housing and food service Opera-
tion. The maintenance of sound control over the affairs of the department
would be difficult, if not impossible, unless full information regarding
all financial matters were available to the executive officers. The ur-
goncy of this demand for financial reports would be'directly related to
the size of the operation. In any event, a report will be needed if only
for the sake of the record.

The Board of Control at Ferris Institute bears the final respon-
sibility for the conduct of the college. If anything goes wrong in any
phase of the institution's activities, the members are held finally ac-
countable. To adequately'discharge this important responsibility, the
board members must be furnished with complete information, presented in
a form.flhich will reveal the precise financial situation of the institu-
tion. Fiscal affairs require financial reports.

It is extremely important also that a financial report be pre-
sented periodically'to the bonding or loaning agency which provides the
funds fer self-liquidating projects. Ferris Institute is required to
present a monthly financial report to the agency from which money'has
been borrowed for*the present construction of dormitory and food service
units.

Ferris Institute provides a balance sheet, an operating state-

ment, and a statement of revenue and expenditure for each individual unit

37..

of operation. This must be done to facilitate the comparison of the pro-
posed unit budget with the actual Operation.

In a previous paragraph it was stated that an important phase
in control of expense is the establishing of budget accounts in the book-
kleping system. Another cont ol measure recommended for use at Ferris
Institute is that of comparing the monthly financial report with the budg-
et. To accomplish this it will be necessary to break dorm the manual
budget into calemlar months. This breakdown is shmm in detail in Appom-
dix A. under the title, distribution of Annual Budget by Calendar Months.
Fur-mentors, in the budget distribution by calemar months , a policy and
method of arriving at salary and wages expense must be approved by both
the business office and the budget planner.

There are certain generalities concerning the Distribution of
the Annual Budget by Calendar Months which should be explained. It should
be understood that the number of students, the various rates, and other
figures used are ficticious. They are placed in the report merely to give
the reader a better illustration of how income and eXpense should be com—
puted by the day and by the month.

The accounting or business office personnel in charge of making
the financial report must be in.complete accord with the budget planner
as to the accounts established in the master budget and what is applied
to each account. For example, should the payroll be entered in the finan-
cial report for the pa}r period only? If the pay period is like that of
Ferris Institute (every two weeks), an accurate monthly salary and wages
expense item would be impossible without estimating the remaining two or

three days of a month. Another factor to be taken into consideration would

33.

be that of accounts payable. The financial report must be complete and
final if it is to be used as a comparison with a budget. incomplete, the

report would be of no value.

Clos inLthe budget .

 

NMch depends upon the agreement made with the financing firm.
In the case of Ferris Institute, all net income beyond the necessary re-
quirements is placed against the total bond issue. When a certain depart-
ment of either housing or food service does not expend all its income, the
balance cannot be used to build up a reserve to be carried over from one
year to the next. Unexpended balances may occur even under the most care-
ful budgetary procedure; for the most part they'will be small in amount

in the individual accounts, but the total may reach a significant sum.

Budget Remonsibility

Ultimate reopensibility for the approval of the residence hall
budget at Ferris Institute will rest with the Board of Control. Within
the institution the president will bear final reopensibility while the
comptroller and director of residences are to be reopensible for estima-
ting income. For estimating expenditures, die director of residences
should request this information from the heads of the various departments
associated with the budget. The food service director, assisted by the

unit managers,'will develop all estimates for that department. In the

residence halls the housing counselor will be responsible for the expendi—

39.

tures incurred by emd for the halls' counseling staff. The Operations
manager will estimate the buildings' maintenance needs. Thus, the actual
formulation of the budget should involve the whole residence hall and

food service supervisory staff.

Use of the budget.

 

The budget as planned for use of Ferris Institute's residence
hall program would be devised primarily to aid management in producing
a maximum prOgram for the housing and feeding of students within the fi—
nancial climate necessary to pay for the building and Operating program.

The use of a budget in formulating plans for future expansion
of the Ferris housing program can be of utmost importance. It will lend
support toldepartmental planning for Operating more efficiently and act

as a guide for departmental managers,

1. Peirce, Jones L., ”The Budget Comrs of Age," Readings in Cost Account-

ng, Budgeting, and Control, ed. willinm E. Thomas, (Qincinnuti:
south-Western Hubliehinx Lonpany, 1955), pp. l3h-135.

 

 

(Chicago: University of Chicago Press, 195Ej; p. 81.

2. Lugsell, John dale, The Finance of Hirher Education, Revised Edition,

Chapter IV

Buss-3r Poms Ass mop sum; TO BE swoon AT "any sternum

In view of the necessity and important position of a residence
hall Operational budget in the affairs of Ferris Institute, the accounts
and records incident to the Operation are described herein, together with
the prOposed necessary controls and use of the budget. Since one of the
main services rendered by a budget is to allow management a firm control
over Operational procedures of the business, discussion and illustrations
of budgets by department are included in detail.

The kind of budget preposed for the Ferris housing and food ser-
vice is an Operating budget. The fact that Ferris Institute uses the
multi-type housing and food service necessitates three types of budgets.
The first, a unit budget, is for the individual housing or feeding unit.
The second is the administrative budget. The third, the master budget,

is a consolidation of each unit budget and the administrative budget.

Unit budget.

 

The residence hall budget for“ is based on the income and ex-
pense of a single hall. The food center of a multi-unit Operation may
base its income on the numbers of students fed from two or more halls

with his income being used for Operating expenses. The_residencs halls

hl.

n
"3
LL". 0

and food service unit budget might be corepareu to a d.epsr‘tmen.el budget
of a large retail business or manm‘f'ecturing conpsrnr. The income and ex-
pense accounts of each uiio, when totaled, :1? as up the master budget.

(Appendix B, pages 911-99.)

{administra tive__‘nu.1£et.

 

This budget is formulated to prOperly allot naministrative ex-
pense to the various units. It lists the titles and positions Of the
administrative staff. “he total expense will be allocated to each budget

in preportion to the number Of students in the unit. (Appendix B, p. 100).

Master budget.

 

The master ‘tuigct is a combination of the unit budgets. All
of the estimated transactions for the condng year are found in the master
budget. ‘w'hen these transactions are accounted for, the estimated finan-
cial position at the eat of the caning: year, together with the estimated

financial progress during the year, will be available. (Appendix B, p. 92.)

A Calendar for Budget rrcparetion

Ferris I. stitute's fiscal year begins July 1 and ends June 30.
Thus it would seem most practical to begin budget prenaration soon after
the calerxiar year begins. The main outline of the budget should be ap-

parent by aimnt .‘bnr l, at which time it may be possible to proceed with

L3.

some preliminary arrangements. A model calendar budget for Ferris In-

stitute may be found on pave Lb, Figure III.

E ster Budget Accounts

Collection and verification of in.cne.

At Ferris Institute, the Director of ResidenceS'would provide
the budget estimates for income; however, this estimate should be subject
to review e3 the Comptroller. Past financial records will be available
for use, and by using the enrollment predictions made by the Registrar,

reasonable estimntes can be made.

Classification of income.

 

The first account in a residence hall and food service master
budget is that of income. At Ferris Institute, as in most similar in-
stitutions, the sources of incom. are: student fees for room and board,
conferences, guest sales, fO‘feited deposit fees, employees meals, and
miscellaneous. In the paragraphs below it is exelained how income esti-

mates should be determined from the probable sources just listed.
Income from student room and board fees.

Room and board fees, which are the main source of income in a

residence hall and flood serviCe budget, are established by basing the

11h.

FIGLEL‘J III. 3354'th ILMTITcTL; LLJUMT UALanAfl

date

Prior to February 1

”PATCH 1 o o o o 0

April 1 to i-‘iay .

Pia-372000.00

May 2 to Ray 15 .

May 16 to June 1 .

For

Linc-get Year tagginninr: Julg,r l, 1959

Steps in iii-udfiet srocexiure

. . . . . . . Budget officer prepares estimate
forum and instructions.

. . . . . . . mcigtet oi‘f‘icer distributes estirraate
forms and instructions among depart-

V ,\ L "
'Jli =11 DD 0

. . . . . . . Jepsrtmcmts pr pere- c tinntes.
budget officer prepares estimates of
1‘ fixed c"'1.:—11"{:(1=3 and other nornepart-
mental items.

0 o . o o . . Filled-in departmental estimate forms
are rotunied to the budgrrc-zt office by
de;,ua.rtaents.

. . . . . . . Budget officer consolidates estimates.

h

, . . . . . . Ii’ud;‘;et oflicer conducts departmental
he-:,rin;'s. 'uir'et officer confers with
Comptroller and {resident and the lat-
ter dotezmin s amounts to be fizmlly
recozuzsnded to the board of Uontrol.
hudg‘ct officer prepares fir‘aal budget
docwuz-nt for subglission to board of
C <‘ )‘z"; {1‘01 .

1:5.

I S 0

estimate of budgeted operating eXpense against probable income. For tnis
tne rates diargw by n~c4by institutions Operating like facilities are of-
ten used as a "y' 3ticr" or guide. In addition to the Operating extenses
it will be necesscry to earn enough to handle the debt service requirements
of t% .e bord issue.

From the weekly rate established for room and board, college of-
ficials have decided it would be best to yresent room and board rates to
the student in "package" form or be he term. All terms at Ferris average
very close to twelve week perimds. tpon recomme nds1ion, fer accounting
pu; poses, the wee.w:ly'r te has been broken down to a fixed amount for room
and the remainder for board. At t is p01 nt the income from the above
source would be Computed by multiglying the room rate for one year by the
number of students living in the unrmitnries. This gives the gross in-
come frons etudent room seles. The same metnod can be used to derive feed
eel as income.

One important factor in attaining net income from room and board
is the allowance for vacancy loss. Holicy, as established by the insti-
tution, determines either a high rate of occupancy or a high vacancy loss.
Ferris Institute requires a 1 single women students a d all male fresnman
and sophomore students to live in dermitcrieszrsliunges space is avail-
able. by adhering closely to this policy, the cornitoriee have been abha

to maintain small loses uue to vacancy.

Conference income.

 

The calendar analysis, in A pendix 3., s.ww3 by nontb the days

the dormitories are used by the students and the days hey are vacant.
From this it will be assumed that there are many periods during which the
rooms and food service can be made available for conferences. This source
of income is welcomed by any residence hall and food service in the "off-
periode." Past records and clone COQpcrntion with college conference co-

ordinators will afford the most reasonable measures for estimatinr this
ts

particular income.

Incove from forfeited deuosit fees.

 

Estimating forfeiturcs must be done by using past records, and
it is recommended that estimates be conservative in nature as the pattern
of sudh income is Quite flexible.

F

00d service income.

 

T“e nmmber of students times the rate and the number of weeks
served equals the amount of gross income that can be expected from food
service. Guest meals will not be a great source of income but should be
considered. The revenue derived from conference guests can well aid in
defraying coats, eSpecially during the summer or other "off-periods." A
director can estimate total conference sales for both housing and food
service by keeping in close associction.witn all dcpar-mogts on the cam-
pus and by discussing with department heads the prob-bilities of antici-

1.
i

pated conferences. gsny of the yrdcps attending meetings at Ferris

La 1' .

Institute return regularly because of the excellence of the pa:-icular

facilities offered.

E1nlovees' mem 3.

 

All Mid igan colleges re3cire food service personnel to pur-
chase their meals from the unit in which the y‘work. In turn, many of the
colleses reimburse the employees for those meals. Thus, employees' meals
must be taken into consideration as both irzconle and expense. At Ferris
Institute this income amounts to several thousand dollars yearly. Even
though the entry'msy be purely a bookkeeping entry, it aids the bunget
uirector in establis} mir a hi.ner rat efor 1e Hi ement pension purposes.
1he above procedure is required by tk- Federal Dr lreau of Internal Revenue
for income tax purposes.

0

Miscellaneous inc o“e.

 

This item mi;- ht include several sources anii in resold to content
should be careful}? analyzed bv res Hid3nm hall officials. Coinpoperated
machines such as toil telephones would be a source of mic ellaneous in»
come. However, when amounts of income from any source reach a preportion

of conseoucnce which is of a steady nature, it is recn)nmended the t a sepa-

rate account he established for this item.

14v.

Total income.

 

The ', total income in the master budget shole be complete in
every detail. The author believes that accuracy in estinating income is
of prime importance and that there Should and can be a closer estimate
made of the total income than of the total expense. Unforeseon vacancies

would be the major hindrance to an accurate esLimate.

 

Collection andfycfification of expense cr‘timstes.

The assembly of budget expense estimates would be the chief re-
aponaibility of the director of residence halls who in turn would dole-
gate the unit reafaousibility to the various heads of departments. M1: .“
compilation the director would sub-:.L.t the completed budget to the comp-
troller for review. Supporting data for each item of eXpense would be

imperative, as the author explains in detail under "Expense Accounts.”

Classification of (gamma estimates.

 

 

In establishing the expense accounts for the Ferris master budg-
et, four categories were used: Administration, Operations, Other, Re-
serves. In the foil-trying pages each ezqncnse account, as entercd in the

Ferris residence hall master budget, will be explained in detail.

Administrative.

Administrative expen e as it appears in the master budget is
the total of all salaries and wages of the over-all administration of
the residence hall and food services Operations. “t Ferris, this ex-
pense will include the salaries of the director of residences, a sacre-
tary, and four clerk accountants. The administration of a residence
hall and feedinp procram requires the budget planner to provide a sepa-
rate budget sheet, as shown in Appendix B. On the following pare will
be found the food service administration budget and the halls' administra-
tion budget.

To distribute administrative expense prOperly to each hall and
food service unit, a formula for proportioning the expense was made by

directing half of the expense to housinp and the other half to food serv-
ice. The fact that Ferris has many hon 113 units and two feeding units
means that a further breakdown has to be made in order to fulfill the
unit budget requirements.

For the hall unit budget, the total 'dmlnistrative exncnse
amount allocated.will be divided in proportion to the number of students
in a hall; in the case of a food unit, the expense should be allocated
in accordance to Hie nunber of persons fed in a unit. See Table II.

Experience in this Iicld shows that food service administrative
expense should be separate from veneral administrative in order that it
may be directed wholly to the food service department. At Ferris, this

expense is composed of the salaries of the food director and secretary.

Residence halls' administration in:ludes the manager of hall

50.

TABLE II. GENERAL ADMINISTRATION EXPFNSE DISTRIBUTION BY UNIT

Note: The following figures assume that 1200 students are housed in all
halls. Housing Operations assume one half of the total administration
expense and the food units the other half. Total administrative expense

is 315,000.

Hall "A" - £7500 x 200/1200 . 01250.00
Hall "B" - s7500 x 150/1200 - s 937.50
Hall "on - 37500 x 350/1200 = t2187.50

Food Unit 1

@7500 x 700/1200 - $h375.00

Hall "0" - $7500 x 2&0/1200 = e1500.00
Hall "E" - $7500 x 260/1200 s 91625.00

Food Unit 2 - @7500 x 500/1200 - $3125.00

51.

and his office staff as pertaining to the operations. To preportion the
expense, the same formula for division is employed as was used for general
administrative (as eXplained in a preceding paragraph).

All other items of expense listed under administrative are self-
explanatory and the amounts are'eitersd in the ma=ter budget or income and
expense summary sheet in total. In aduition, it should be noted that in
place of the items listed, there may be other expense items to list that

are peculiar to specific organizations.
gperations.

Salaries and*wages are near the top of the list under Operating
exPense and in amount of dollars Spent are second only to raw food costs.
Here again, the policy of the SleOl and the makeup of the housing or-
ganization.may be the deciding factor as to which account expense is Charged.
Ferris Institute policy states that the resident adviser of a hall, the
receptionist, and other desk personnel are reSponsiLle to the manager of
residence halls for certain Operating “unctions. Re idcnce hall's coun-
selors are also a part of the Operating salaries and wages expense. In
addition, ianitors', and housekeepers' wages are Charged to the Operating
staff.

The food service budget for salaries and wages should include
the unit manager and other supervisory staff as well as all other per-
sonnel in this department. It would be well to note that each individual
position is listed by classification for both the housing and food service

personnel in the unit tudget. Although nst shown in unis paper, it is

sometimes requested.that an attached sheet listing names and classifica-
tion be presented with the budget for the college officials' approval.

In planning Ferris Instituie's first housing and food service
budget, it was necessary to take into consideration the fact that the
summer enrollment is shall. Thus, most of the housing and food service
staff are on a tennmonth work schedule. Only key administrative, manage-
ment, custodial, and a small number of food service personnel are em-
ployed during the summer months.

Student salaries and wages, though not separated in the master
budget, should be listed by position and numbers in the unit budget.

From experience and investigation at other sdhools, it has been found
that the budget planner must treat this erpense with as much thorough-
ness as he would when budgeting for regular employees. Otherwise he will

find the situation out of hand.

Subsistence.

 

The resident adviser received an apartment in the hall as a
part of her compensation, as well as all meals in the food service unit
while sdhool is in session. While this is not a formidable entry, it is
still an eXpense and should be treated as such. It is also necessary to
carry this as an expense and to credit the person's salary with the dollar

amount involved for tax and pension purposes.

 

(II "It? I‘

53.

Raw food cost.

 

The largest single cost in the housing and feeding of students
is that of food. There are many factors which govern this expense and
all must be considered carefully when determining the budget needs.

The actual food cost allotment at Ferris Institute is ninety-
two cents a day per student or approximately fifty per cent of.the gross
income per day per student. At this writing, however, the food cost for
the present year is but thirtyathree per cent. According to records es.
tablished by the food service department this differential is due largely
to absenteeism on the week ends and during breakfast periods. By main-
taining accurate records of meals served, it will be possible to forecast
the number of students to be {Ed on a particular day and meal. See Table
III, page 5h.

Factors such as purchasing and other food control measures aid
in determining raw food costs. All food items are bought after consider-
ing quality, quantity, and price. The control of food portions served
is also an important consideration. E'ch menu is precosted to meet the
requirements as established by the administration. A physical inventory
of the food stores is taken at the end of each month; requisitions are
used, and a full-time storeroom man is employed to issue and receive. In
the kitchen, accurate production records are also maintained.

The first Ferris food budget figures were based on a statedwide
college norm. Today, the author frequently compares the food costs with
those of other schools throughout the state. Certain food control meas-

ures are necessary to attain a proper net income. They are also meant to

TABLE III. MaAL COUNT - APRIL, 1958

 

 

 

 

date hreakfsst Lunch Dinner Total
Tuesday, April 1 37b 1050 1063 eta?
Wednesday, April 2 336 1005 1025 2366
Thursday, April 3 350 91h .. 25h

Thursday, h/3 through Monday lunch - Easter recess
Monday, April 7 - - 130 130
Tuesday, April 8 LBS 1055 1060 25h0
Wednesday, April 9 h95 1018 1125 2038
Thursday, April 10 h98 103 1003 2596
Friday, April 11 26h 1015 660 1939
Saturday, April 12 175 SL7 051 1203
Sunday, April 13 162 - 555 717
Monday, April 1b 360 1021 1059 2h70
Tuesday, April 15 32h 1005 1125 25h?
Wednesday, April 16 255 1071 1063 2309
Thursday, April 17 L00 1085 1057 25h2
Friday, April 18 256 1033 50h 1870
Saturday, April 19 2h§ 050 L70 1365
Sunday, April 20 173 - hSé 629
Monday, April 21 370 1078 1091 25k?
Tuesday, April 22 325 10t6 1006 2&3?
Wednesday, April 23 550 1070 thO 2668
Thursday, April 2t hSS 1032 112h 2611
Friday, April 25 528 1020 5&8 2096
Saturday, April 26 90 h79 390 959
Sunday, April 27 183 - L65 6&8
Monday, April 23 has 1010 1013 2h91
Tuesday, April 29 L90 10h9 loot 2603
Wednesday, April 30 h18 919 1015 2352
Total 53,112

Occupancy:
April 1h - 1127
April 21 - 1117
April 28 c- 1117

55.

indicate to the management the quality of food Served and if the portions

\

served are fair.

Laundsy Expense.

The food service department at Ferris Institute is the largest
user of linens. Students must furnishiimdr own bedding which.means that
the only laundry expense in the halls is for guests who pay a small fee
for the privilege of staying overnight.

Laundry expense for the feed services was determined by the num-
ber of employees requiring uniforms and the number of chanyes allowed per
week. Towels and other supplies were estimated by comparing with other
institutions serving like numbers of students in a unit.

At present, by referring to past records, near-accurate esti-
mates can be made. As the unit grows, additions to the amount can be
made. National percentage figures are available from various sources
such as bulletins from the Association of College Housing Officers. Past
records show Ferris Institute's laundry espouse in feeding units runs ap-

proximately one and one-half per cent of the gross income for a year.

Telephone.

Each residence hall has telephone expense which is based on the
rental of the switchboard and its extensions. This is a fixed fen pertain-

ing to incoming cells only. Outgoing long distance calls are prehibited. c

66.

In the various administrative offices, an estimated dollar amount for long

distance calls should be allowed for each department.
Utilities.

In the explanation of eXpense items, many institutions do not
have metered devices by which to measure heat, light, and power. Thus,
the only utility'which can be budreted with exact fifures is that of gas
consumed. This is metered by the utility company at the source of use.

An individual dormitory budrrct estimate for heating by steam
from a central heating plant can be arrived at by the use of the formula
on page 57, Table IV. Because of the cost involved, it was necessary to
deveIOp this formula to cost per student.

The term "degree day" in Table IV may be defined as follows:
"This is a unit, based upon temperature difference and time, used in
estimating fuel consumption and Specifying nominal heating load of a
building in winter. For any one day, when the mean temperature is less
that 65?, there exists as many degree days as there are Fahrenheit de-
grees difference in temperature between the mean temperature for the day
and weal

The total degree days, 7051, was based on experience covering
eight years of records. This emphasizes the importance of records in de-
termining degree days for a particular heating situation.

Budget estimates for steam-operated kitchen equipment now so-

tually in use were dev010ped from a formula located in the Heating, Ven-

 

‘tilating, and air Conditioninnguide for 1956. See Table V, page 58.

 

57.

TABIE. IV. TEJUEY HEATH-IE} COST FOR I‘LE'SSIDLEWE HALL "A"

The yearly heating cost for-Residence Hall "A" can only'be es-
timated by'using the total degree days for 1956, which is assumed to be
a normal year with a total of 7051 degree days.

The consumption factor by past exyerionce was found to be 3.0
cubic feet per degree day per'million cubic feet volume.

The following figores, using this informatiohl estimate the

heat cost on a thirty-six week basis:

h7o,ooo cu. ft. Space

2Lh students

3.0 consumption factor

.77 per M.C.F. (gas charge)

7051 degree days

7051 99L2
3 .77
m 5 5)! 3.}4'

h70 6959b

lfi807l0 p” 35.) yearly cost of heat
8h612

§,§HI,9I§ cu. ft. gas

 

The total cost per student per week would be $ .87.

TABLE V. BUDGET ESTIHATBS FOR STEAM-OPBRLTZD KITCHEN EQUIPHENT

3 Vegetable Kett1e3._6o Cal.
20 lbs. per 5 gal size

 

II

720 lbs. per hr.
for 8 hrs. 5,660 lbs. per 2h hrs.

1 Pastry'Ketth‘_3O Gal.
20 lbs. per 5 gal size

I!

120 lbs. per hr.

 

 

for 2 hrs. 2&0 lbs. per 2h hrs.
1 a 3 Tier bteamer .
ho lbs.mber hr. for 2% hrs. = 100 lbs. per 2h hrs.
1 Uishwgsher
60 lbs per hr. per tray ='b20 lbs. per hr.
(7 trays) for 8 hrs. 2‘360 lbs. per 2h hrs.

 

Total 9,360 lbs. Steam
per 2h hrs.

1 cu. ft. of {as = .8 of 1 lb. of steam

9360 lba.of steam 2 10,530 cu. ft. of gag
x .77 per M.C.F. (gas charge)

$7.70 per day

$1,9b0.h0 per 36'weeks

3 .09 per week per student

o o» .. p
a . .
o v o ‘
1 .
. n ‘
0 V .
x
.
o
O I o . .
. ,
a» O
. . o
. 7
_
. 2 ..
o o o
I n I
c
a O
C
O
,
. . _
O
. . .
l I
I . -
.
u 0 v _
v o v .
U Q
r L
O
.
. .
u u . o o
n
.
e o u u o

Hot water consumption.

The hot water consumption for all Ferris dormitories and food
service units was based on information taken from the 1956 edition of the
American.HeatingLVentilatingj and Air Conditioning Guide, and compared
with the Institute's daily records. A peak load was assumed from h p.m.
to midnight. The two methods are very close for estimating purposes.

The example in Table VI was based on the number of students for 1957-58.
Electricit .

The budget estimates for electricity to be used in dormitories
and food service units was developed by: computing the number of watts
to be used in a building, dividing the total number of watts by one thou-
sand (1000 watts equals 1 kilowatt or KW), multiplying the KW by the hump
ber of hours used per day. This equals the kilowatt hours consumed: mul-
tiply the HM hours by the cost per KW hour, which is established by the
utility company. This gives the cost per day. Following is a formula to
compute the cost per day used in dormitories and food service units:

Lighting - The square foot times two divided by one thousand times the
average hours in use times the prevailing rate.

Example: A room 20 feet square equals LOO square feet.
h00 square feet times two (watts) divided by 1000 equals .8 EN
The use of two watts is a predetermined amount of wattage used
per square foot as establishrd by lighting engineers.

Time - - - Twelve hours per day for one year

.8 KW times 12 hours equals 9.6 Kw hours

9.6 Kw hours times 3 .03 per KW hr. equals & .238 or Q .29 per day

60.

T:'U$LE VI. HOT '.‘!!‘.TEH COWSUIIPTIQEI IN "JOE-Zil‘I'OI-xIES

Helen Ferris 279
Masselink Commons (boys) lhb
‘Tasselink Sermons ({r’irls) 202

Venue-re 001: Hall 266
Carlisle Hall 9th

m7 Etudents
b0 Gal. per person per 2h hrs.
Efiufio Gal. per 2h hrs.
1.0L; Consumption factor — cubic ft.
tiQZx of gas to heat 1 gal. of water
MGHRO
El’digti’eofio Clio mo [33-3

 

L7,2g9 ; 1000 - h7

t?

.Y? per 3.3. . (pas charge)
53.9
329

$30.19 per 2h hrs. per 1137 students
305 days per year
N; r\,'\9
- J,LV.0

The weekly breakdown on hot water used in dormitory rooms, fig-
uring thirtybsix weeks (three 12aweek semesters) would be 3 .32 per stu-

dent per week.

(31.

To determine the electricity used in Operating motors for re-
frigeration, air comiitioning, etc., the follondng formula was used:

a . .
1. Total horsa‘rpmver of all motors diVidend by 7h6
equals number of'watts

2. ‘u'fatts divided by 1000 equals Kr!
3. KJ multiplied by the time used equals KN hours
11. RN hours times the rate equals total cost per day

as. , .
note: One horsepower equals 7110 watts.

Supplies (controlled and operating).

 

This exoense is best e;:ti<n..';ted by referring to past experience
and records. If the budget planner is for the first time preparing a
budget, it would be best to compare with other institutions having Simi-
lar facilities or to maize as z'ae-.-.r accurate asszssptions as possible. Fer-
ris Institute now maintains accurate records of all supplies and each
item must be requisitioned from a central storero m where it is charged

to the hall or food service unit in motion it will be used.

Debt service, as established in the loan agreement, must be
shown as an expense it<-:m. This is a predetermined amount and no estima-
ting is needed here.

Insurance expense is rated on the annmt of coveraz-re desired.
Buildings and furnishings are covered, but personal property is not usually

carried by a state institution.

62.

Miscellaneous general expense is many times a matter of admins
istrative policy. However, within the author's experience, it has been
found best to maintain a low estimate in this account as it may be mis-

used to cover costs which should be charged to other accounts.

Uncollectnhle accounts.

 

Ferris Institute has been fortunate to date in controlling the
amount of accounts not collected. This has been accomplished by maintain-
ing strict adherence to the payment policies as established by the Board
of Control. The contract, in part, states: "Penalty for late payment of
the above charges will be imposed as follows: (a) A cl per day accumu-
lative late penalty fee will be charge for each day or partial day hat
school is in session after the final day of each payment. In exceptional
cases, if arrangements are made with the lirector of Residences prior to
the final due date, the late penalty fee may be waived. (b) If delin-
quent room and board charges are not ynid within seven school days after
the final due date for each payment, the resident will have to vacate his
room in the residence hall and discontinue eating in the food unit.-"2
Allowances are estimated on.tie hesis of one quarter of one per cent of

the total gross income from housing and food service.
Grounds maintenance.

Two fu11-time grounds mnintennnce personxcl are provided. This

budget item will grow as the housing department ~rows and the needs tecome

\
'w
I

apparent. Using past experience again as a criteria, funds have been
designated and provision made er additional plants and shrubs. Street
and parking maintenance funds are based on a percentage of the total cost

to the college.
Reserves
Equipment maintenance.

A fixed percentage for equipment maintenance would be established
in the Ferris budget. The amount should be based on previOLs records, mak-
ing allowances for the age of the equipment.

Bail di n; rm‘i. nt cnanc e .
An allowance of .02 per cubic foot has be€m lide in estimating

building maintenance e» L3. This cost is broken down prOportionately

between food service and housing.

a»

nnanxs

l. fincrican chiety of Heating, Ventilatingj_and Air Conditioninnguide,
" 4"" -' ‘ ' .2- "x. -.T '. . - m .. , . " ‘7' '
1996, MAIN, (deitmum, cuirylanaz HJVC‘IlJ ArtiS.)’ 1815b), p. 5.

 

2. Housing {agregpnt Tiegulr-r {excel YearA 21.539743J (iiig Rapids, Michigan:
rrtating arts deferment, Ferris I‘.‘.:3‘z.;.-.‘-L..; c, 1957 ), p. 1.

 

Chapter V

C713 CLUS- IOL‘iS 1‘33 «) KLCC‘: 11133 Lh‘xTIi’}; i :3

The specific steps to be taken to initiate or inprove budget
practice depend on the needs of the organization. A searching self-
examination in the light of knswn principles of budgeting should be the
first step. Having identified the practices which most clearly abuse
those principles, management can take appropriate steps. Courage and
patience are needed to follow them. The author believes the following
recommendations should be considered by management wishing to establish
its budget practice on a sound basis.

Policies established for the Ferris Residence Hall Budget were
designed to fit the needs of the program of that institution. Other in-
stitutions may find it desirable to establish policies other than those
enumerated in Chapter III. However, the author recommends these policies
be used in the budget planning. He believes they have a definite part in
the over-all planning for future construction, the feasibility of Operating
a residence hall and food service proyram, and a means of evaluating man-
agement personnel. To implement the budget the planner must COn ult with
the administration of the institution for approval and establishment of
such policies as are deemed necessary to fit the needs of the particular
situation.‘

The forms and procedures outlined for use at Ferris Institute

in Chapter IV were established as those which would give the most information

65.

66.

to the administration of the residence hall pregram. The author further
recommends the use of these forms and procedures because their'detailed
information allows management a firm.control over the entire operation.

The objectives of a budget are: a means for setting standards
of performance, for measuring actual results and for guiding management
to satisfactory achievsncnt. It means regecting the use of budgets pri-
marily as a pressure device to goad peeple into greater efforts. This
is the most important step in attaining maximum benefit from a budget
program.

A residence hall budget must be a definite part of the school's
over-all planning. "The budget is not the plan; it is merely the state-

1 The thinking of the or-

ment of the plan in the language of figures."
ganization must turn to basic planning, then the people involved prepare
budgets to effectuate their plans.

The budget should be used as a permit for management to control
its Operation . First, the means of contrOl must be established and then
put into practice. In particular, this requires the manager of a depart-
ment to establish his budget based on a couplets understanding of the job.
The administration may not be able to a prove the amounts requested, but
may reach agreement with the manager.

The budget planner should arrange for common sense accounting,
which involves complete, simple, and prompt explanations. Extreme care
should be devoted to seeing that no supervisor has in his budget any item
over which he does not have control.

The budget system presented here was designed to successfully

meet and solve the v ried problems, large and small, which have confronted

67.

the people guiding the expansion of housing and food a 9.;ee facilities

at Ferris Institute. It is not assumed that this system of budgeting for'
residence halls and food service is superior, in detail or as a whole, to
the systems of other universities and colleges, but the author does pre-
sent it as a good, working system worthy of consideration by others striv-

ing to initiate or improve budgets for similar institutions.

,4

08.

Wit W~T/}MT‘\(\
i «OLA "i413

 

fi.

1. Peirce, James L., "The Budf-et tones of pee," E'fieadiig
r -" 4‘.

_ . t ~t)
CO‘mting,fiHudret- rig-1 and "on Lrolj ed. 15:111ij
cimati: bou ' ‘

6?.

BIBLIOGRAPHY

Adams, Bruno "P d a hood Cost Control System," Col‘c, and University
Business. Vol. XXI, (No. 3): )2‘5h. September,II9§6.

American Society'of Heating and Air Conditioninp Engineers, Inc., heatin
Ventilating,kAir Conditioning_0oide. XKYIV Feltimore, Maryland: 'ha-
verly Press, 1957

Brown, L. L., "Phys ical Plant
Vol. XXI, (Lo. 3): 30-31.3

Building_for TomorTOW'trrough oelf-ninu7daiirg P ogocts. Michigan State
card of Muoation. Lanai“ , t (15m. 19; S
Ferris Inxtitute school Bulletin. Vol. 33, (No. 6): Big Rapids
Printing Arts department, Ferris Institute. tantarv 1956.
Financie el Resorts for uoL‘eHDS ant Li‘vor”*t1“7. Compiled by the National
Ckmmuttee on btandaru heports :01 Instioutionu of Higher n'diuca tion,
Fourth Impression, Chicago.

3flad ets, " Col one and University Business.
38:)13» UeT,Tv)6

, Michi gen.

'Fne Un versity of Chica{o Press, 19LS.
Housingyhgroement Reeular School Yes

11 “ - “7-58. Big Rapids, Michigan.
Printing arts department Fer'is Institute. 1957.
Hungate,

Thad L., Finance in reunitioxal haua'onent of Geller
versities. New Yozn:
his Universitv

 

we and U11
lureau of Iuo11oatlon, lbaLIuTB 00L e
, 19521.

they, Frank L. and Hughes, fiavna d 1., ProbLoms of

 

 

 

'ta; ‘ College end Univer-
sity'hdministration. Amos, lofia' Iowa—State 0011 Iege Press, 1952.
Morey, Lloyd, *Niversity and Colin."3 fl *nting. New York: John Yiley
and Sons Inc., 1930.

1"."

4.30.

Fourth Edition, Cincinnati:
npany, FT TnS.
Peirce, James L., "The Indget tones 0’

Budgeting, and Sontrol ed

Noble, HowardQ ~., flc'ou“t1n~ :rincip
Soutll-western Puolisnin;

 

 

 

~56," Ree; Higfs in Co t .xccounting,
. . Willi m w. Thonas, 'i.lcinnati: VSouth-
western Publishi;q_company, 1935.

Hermie-7*, E. J. and ‘utnrm,

l
..‘s
l 'U L'

 

N. T., ”How to Const“='f 3 Labor Control Budget, ”
four, f ; tutInns. Vol. III VIII, (No. 0): lOZ-lob. June, 19Sh.
Render, T. H.,
Business. Vol

“ Mlldlng the Food ».rvice Budget," College and Universitv
. VIII, (No. 3): 53-56. March, 1937.

 

O
Q‘I
" O
o
' I
o
C
v o

I.

 

70.

Hiker, Harold 0., Planninngunctionel College Housing. New York: Bureau
of Publications, Teachers College, bolumtia Lniversity, 1956.

Russell, John Dale,_The Finance of Higher Education. Revised Edition,
Chicago: University of Jhicago frees, l95h.

Tanner, Irving, Municipal and Governmental Accounting. New York: Prentice-
Hall, Inc., 1955.

Webster's New Collegiate Dictionary. 0. & C. Merriam 00., Cambridge, Mass.:
The Riverside Frees, 1956.

Wild, Helen Louise, "A Comparison of Labor Hours and Labor Costs in Two
Women's Residence Halls." Unpublished M.S. thesis. East Lansing, Eich.,
Department of Institution Administration, Michigan,3tate University.
1955.

Williams, Kenneth P., The Mathematical Theory of Finance. New York: The
MacMillan 00., 1935.

71.

APPENDIX A. DISTRIBUTION OF AEII‘IUJLL EU)

"I‘
. I

3".

r1"!!!
USA

Calendar Analysis of Rental

81’ C A LE‘IN DA R MON TI B

a}: 3.13 68

 

 

 

 

Student Available for
Month Occupaney' ___ Conference Use
Ferioa fie. offiDays Period Re. of Days
July 1 - 31 31
Summer
August 1 - 20 20 21 - 31 11
r:‘ieptember 19 - 30 12 1 ~ 18 18
October 1 - 31 31
November 1 - 2h 25 - 27 3
28 - 30 27
December 1 - 1h 13 15 - 31 17
Academic <
Year January 2 - 31 3O 1 1
February 1 - 28 23
March 1 - 23 26 2h - 28 5
April 1 - 3O 30
May 1 - 31 31
June 1 - 17 17 18 - 19 2
Summer I 2’) - 3O 11

Note: These figures were based upon the year 1957-58 at Ferris Institute

and serve to illustrate the use of this form.

...-

o-

it]: I.

Calendar Analysis of Food service Income

 

 

 

Month S trident Income
ferried ' F50. of Days
July 1 - 31 31
Simmer
1113.51th 1 - 20 20
f
Sepbmber 27 - 30 h
tober 1 - 31 31
November 1 - 2h 27
28 - 30
December 1 - 114 11;
Academic <
Year January 6 - 3.1 26
Febmrxy l - 28 28
March 1 - 1‘3 23
,«xprzu h - 3o 27
Hey 1 - 31 31
June 1 - 1'? 17
L
Sumner 23 - 30 8

 

IIIII

r
..l

7“"

Computation of Lhai'ly Income From Students

I. Housing
A. Academic year

Housing rate K per cent of ocsupancy'8 net rate after vacancy loss
fist rate x 350 a total budgeted incume from housing for the academic
year

Total budgeted#income
Days offibouSing in the academic year 3 Income per day
3300 x .95 I 828 O
3285 x 350 0 $99

99 750 I 5&0

“as?

3. Summer session

5.0
.750
SCI-$8 111001718 per day

Housing rate x per cent of occupancy - net rate after vacancy loss
Net rate x 350 I Total budgeted income from housing for the academic
year .

Total budgeted income
aye o casing in suurer session 8 Income per day

$110 x .80 I 388
£88 x 350 a $30,800
$30,800 a $330.71 Income per day

II. Food Service (use same procedure as for housing)

A. Academic year

B. Summer session

Budget Apportionment of Insane from Students by the Calendar I’lonth

Month No. of Income Dan's Day Rate Income

 

Academic Year
Housing

September
October
Hovember

‘ Deceuber
January
February
March
£1er
“£7
June

Total
Food Service

September

October

November

December

J anuary

February

March

April

May

June

. Total

Sumner Session

Hons ing

June
July
August
Total
Food Service

J une
July
August
Total

76.

Guest Sales

 

Apportion by the month using the days of Operation and the average income
per day of Operation as a basis.

Month Day Rate

 

Housing

July
August
September
October
‘ November
December
January
February
March
April
May
June
Total
Food Service

J uly
August
Sep tenber
October
November
December
January
February
March
April
May

June

 

Total

.Q—‘U

0.01.4-

._,

 

c-o-

 

77!!

Employee Heals

Apportion on basis of average daily sales and days of food service Opera-
tion.

Total Ssleel_Academic Year I Day Rate
Days of Fooa Operation - Reademic Year Academic Year

Total 53103, Summer bession I Day Rate
My: oTToomeration - Burner Jession Summer Session

 

Mbnth Days of Operation Day Rate Amount

 

July
August
September
October
November
Dec ember
January
February
March
April
May'
June

...-o

 

78.

Conferences

 

The calendar analysis of rental spaces shows the following periods avail-
able for conference housing.

 

 

Month Period Days Income
August 21 - 31 11
September 16 - 18 3
November 25 - 27 3
December 30 - 31 2
January 1 l
Marsh 2h - 28 5
June 18 ~ 19 '_§ _______
Total 27 3

In the absence of specific conference reservations assume an equal dis-
tribution of income on the basis of the days available for conference
use excepting no income should be scheduled from September 1 - 15 or
December 15 - 29 when it is anticipated that food service lay-offS‘will

OC cur.

-».---. a- “bu-o . .- . o-. 0*-- .r-CW.

AO‘ .,J'.-..w‘FI‘Q-rn..—O~H.~‘O-g

79-

Forfeitod Deposits

 

 

 

Assume:
6 at the opening of each quarter during the academic year and
2 at the Opening of the Smmrer oession.
Month Number Amount
September
January
March
June .....—
Total 8

Dean of Students' Budget

Divide the funds transferred for counselor's salaries on the basis of
average daily payment for days of housing in each month.

 

Month

.9

July
August
September
October
November
December
January
February
March

Ap r11
may
June

Days of Housing Day Rate Amount

r -,,.‘ l k_ ,
‘
O
, , A . l, . _ , __L -.. ..- .-.. ,- -'<— ..-..--
, 5. 4 n e l--.-. .- 1 -— -... O '05-.
-.»-. -. v . .o- - — -. Q-
’ 0' I
.
a . .-. - ~ ‘ - . . .r» -., l......-_..

.---

v- c
. .-

..
n o

.-a-‘

 

 

 

'1
mm.

*c
f '1 _-(\ - 1 -I runny/r. (I Tar-n \rnm
' ..A. 4 4.3.. -'.'. J. A) 4.Lv~i"-.,

.llocate 1/12 to each ca endar month.

fldxinittrrtive flffiCfiTO
Allocate 1/12 to each C'lwnuar month.
nonthly charge - Faud service

Monthly Cherie - Housin?

C
4
q
1
-J
..J
l
r I.
7
.H
7.5
“‘3
LL
-..
HI
.\
3

. . ‘
. .I- A-\J

 

Allocate 1/12 to each Crlcnunr month.
Monthly charge - Food dervice

v I- Q q ‘ '. .
5"", n .r. :wc'. H ”1 “"‘ ”l"
.- LLI-‘ZlTJlx-i—uyr C “ ’r£ (3 - ‘ ;‘) V.” "L . it?

.‘I . .
. , . _ x .‘ w _.~
I. 2‘: ‘ :d - , . 4. '.'1\J e

 

 

Allocate on basis of days of food service.

0

Month Joys of Food service Jay Rate Amount

July
August
September
October
N ovenber
decenber
January
February
March
April
May

June

(C
t...)
0

'b' ' n
w rw- *
.l’J-‘laz. {It

Allocate wares for student desk clerks on basis of days of housing.

Allocate s

alaries for full-time help 1/12 to each calendar month.

 

Month

{amount Amount
Days of Housing Day Rate Student Help Permanent Help

Total

 

July
August
Septem3er
October
November
Uecember
January
February
March

A pril
jury

June

Social and hducctional Br get

 

Charge 1/12 of $300 or $25 to each calendar month.

Charge 1/1? of total to each calendar month.

Food service 1/12 of tlQO I Q $.33 Aonthly charge

Housing 1/12 of cujo - $37.50 Hunthly charge

Food Service:

Student Employees - Allocate on day rate basis for number of days in
food service schelule.

 

ionth .Mgs of FuOd Operation Qay Rate Amount

July
August
:3 eptember
October
November
fiecember
January
February
March
April
May
June
Total 3—___-

Full-time food preparation employJCS - Allocate on basis of 11 months
Operation - 1/2 month charres
to September to December

 

Month Amount

July
Aurust
September
October
November
December
‘}£21111211?3f
February
March
April
May
dune

 

Total 6.;-

Food Service (continued):
Custodial Employees - Allocate 1/12 to
Month].v charge
Housing:
Custodial Employees - Allocate 1/12 to

Monthly charge

(canrtirulef)

each month.

 

8h.

Subsistence

 

Allocate on basis of food service days.

 

Month Jays of Food Operation Jay Rate Amount

July
August
September
October
November
December
January
February
March
April
May
June
Total @

()H

09.

firm Food Cost

Allocate on basis of food service days.

A. Student Tenants

 

{10‘ch 39:53 of Food Operation

Sum: we Au {1.331;

riept ember

October

ii 0ch fuer

-Jcc ember

a’ac ada'nic < J snuery
Year 1? eb rusry

March

fiprll

any

aune

\

 

bummer June

B. Student Employees

Jay 1Late

Total

.L‘uno u nt

1?

 

Mo nth days of Food Operation

Jay Rate

Amount

 

a ,,,_... July

Ole... ? . .1 AUI'USt

F-tl{‘3>1;(§nxt‘£31?

Oct-o} .3 er

N (washer

:Jec ember

Academic J anusry
Year < February

f-‘im‘ch

April

may

June

L

Sumner J une

 

u‘xll til

.ItI;J.IV.I‘I’ I4 I

86.

he” F”°d Cost (Continued)

 

C. Guest Sales

(Apportion by the month using the days of food service Operation
and the oversee cost per day of Operation as a Tosis.)

 

Month Jays of Food Operation Day Rate Amount

 

July
August
September
October
November
December
January
February
March
April
May

June

Total o

J. Conference drsls

(Apply cost fi ures to days of Operation.)

 

 

 

Month P eriod Days Amo unt
Ausust 21 - 31 11
September 15 - 18 h
November 25 - 27 3
December 2? - 3
January 1 l
i‘twrch 2h - 2‘ 5
June 18 - 19 _g
Total 29 5

 

 

Allocate 1/12 to each calendar month,

@ Monthl‘r Charge to Food servic

flonthly charge to flousing

Telenhone
m

Allocate 1/12 to each calendar month.

3 Monthly charge to Fooo oervice
Monthly charge to Housins

774 4 T
L’ U .'_..._

t3-

.8. o ‘
L108

 

Gas - Allocate 1/12 to each calendar month

"..L- tionthly Ch:11"f’e
m '
Q Honthly charge to Food service

Monthly charge to Housino

V

8“
Ur

Utilitiesgjcontinuegl¥

Electricity - Allocate annual cost on the basis of the following percent-

 

 

 

ares.

Month Percentage Amount
July’ 5%
August 3%
September 5%
October 12%
November 13%
December ‘ 7%
January 15%
February ' ‘%
March 8%
April Yet
May ' 6%
June , 5% _______

Total 1007-: 3%

¢ Monthly charge to Food b‘ex'vice

Monthly charge to Housing

ea

89.

Utilities (c<ntinue41

 

Steam - Allocate annual cost on the basis of the following percentages.

 

 

 

Month Percentage Amount
July . 2%
August 1%
September . 3%
October ' 8%
November 12%
December 114%
January 18%
February . 17%
March ‘ 12%
April 7%
May hg‘
June 2% ______
Total 100% 3

$ Monthly charge to Food Service

$ Monthly charge to Housing

Water - Allocate annual cost 1/12 to each calendar month.
L Monthly charge
3 Monthly charge to Food Service
5 Monthly charge to Housing

(These costs will normally be broken down on the basis of past records
of consumption with anticipated rates applied.)

90.

Controlled Supplies

 

Allocate 1/12 of annual cost to each calendar month.
3 monthly charge to Food Service

3 Monthly charge to Housing

Qperating §upglies
Allocate 1/12 of awnual cost to each calendar month.
3 Monthly charge to Food Service

$ Monthly charge to Housing

Debt Service

 

Allocate 1/12 of annual cost to each calendar month.

3 Monthly charge to Food Dcrvice

t Menthly charge to Housing

Insurance
Allocate 1/12 of annual cost to each calendar month.
3 Monthly charge to Food Service

o Monthly~charge to Housing

Miscellaneous General on nee

 

Allocate 1/12 of annual cost to each calendar month.
Monthly charge to Food Service

3 Monthly charge to Housing

91.

Uncollectahle Accounts

 

Charge entire amount to Housing in June.

Grounds Maintenance

 

Allocate 1/12 of annual cost to each calendar month.
3 Monthly charge to Food Service

3 Monthly charge to Housing

Eqaiflment Maintenance

 

Allocate 1/12 of annual cost to each calendar month.
3 Monthly charge to Food Service

In

o Monthly charge to Housing

BuildingAMaintenance
Allocate l/12 of annual cost to each calendar month.
n Monthly charge to Food Service

d Monthly charge to Housing

APPENDIX B. BUJGET FORTE

I " ‘t!;‘s~pvl~. 7.?1Z-Vfl“
Tflh L'L‘WkJLLtR DUI)LIL

Residence Halls and Food Service

Food
Total Service Housing

Income
. Cross Rental Income

2. Provision for Vacancy Loss
Net Rental Income

3. Guest Sales

h. Employee Heals

5. Conference housing

6. Forfeited Deposits

7. Miscellaneous Income
Total Income

Ernenses
Administration
8. Administrative
9. Food Qervice Administrative
10. Hails Administrative
11. Social and Educational
12. Office Expense
Total Administrative

Operations

‘13. Salaries and Wages

1h. uubsistence

15. Raw Food Costs

16. Laundry

17. Telephone

18. Utilities

19. Supplies (Controlled)

20. Suoplies (Operating)
Total Operations

 

 

 

93.

THE MASTLR BUJ-ET (continued)

Food
Total Service

Other
'. debt Service
22. Insuranc
23. Miscellaneous General LXpense
2h. Uncollcctacle Accounts
25. Ground Maintenance
Total Other

Reserves
2o. equipment maintenance
27. Building flaiatenance
Total Reserve

Income over Expense

Housing

9h.

Unit Bud get
Residence Hall A

Academic
Year

Income

Gross Room Rental Income:
Housing
iross Total

Computation of Rental Income:

1. Cross Rental Income
Housing >
Gross Income
2. Vacancy Loss
3. Net Rental Income
(Total gross income
less vacancy loss)
h. Guest Sales
Housing ITICJIHB:
Ho. of sales x number of
nights Q rate per night
5. Conference Income
Assumption based on commit-
ments and past records
Rates: 3 per day
6. Forfeited deposits Income
Assumption based on past
experience
7. Miscellaneous Income

Total Income

Egpense

Administration
8. Administrative
(Taken from an administration
budget listing salaries, office
expense, etc. for administrative
personnel and then establishing
a percentage figure for each unit)

Summer
Sessions

Total

95.

Unit Budget: Residence Hall A (Continued)

Academic Summer
Year Sessions

9. Food Jervice Administrative:
not charged to Housing Unit.
10. Halls Administrative
Resident Advisor
Relief Resident Advisor
Resident Assistants (student)
11. Social and Educational
(Allocated as previously de-
scribed and then est-slishing
a percentage fisure for each
unit.)
12. O“fice Expense
(Allocated as previously de-
scribed and then establishing
a percentage figure for each
unit.)

Total Administration

Operations ~
13. Salaries and Vages
Operation
Custodial

Housekeepers
Student Janitors
Janitors
1h. Subsistence
(Allocated as previously de-
scribed.)
15. Raw Food Costs: Not charged to
Housing Unit.
16. Laundry
(Allocated as previOusly de-
scribed.)
17. Telephone
(Allocated as previOusly de-
scribed.)
18. Utilities
(Allocated as previously de-
scribed.)

Total

C6.

0

Unit Budget: Residence Hall A (continued)

Academic Sumner
Year Sessions

19. Supplies (Controlled)
(Allocated as previously de-
scribed.)

20. Supplies (Operating)
(Allocated as previously de-
scribed.)

Total Operations

Other

21. Debt Service
(Allocated as previously de-
scribed.)

22. Insurance
(Allocated as previously de-
scribed.)

23. Miscellaneous General Espense
(Allocated as previously de-
scribed.)

2b. Uncollectable Accounts
(Charged only once yearly.)

25. Ground Maintenance
(Allocated as previously de-
scribed.)

Total Other
Total Expense
Rooms Net Income

Foods Net Income

Total Net Income Hall A

Total

9?.

Food Service

Central Dining Unit I for Halls A, B, and C

Academic Summer
Year Sessions Total

Income

1. Gross Food Income
(Total number of students of all
residence halls times rate tines
number of weeks.)
2. Provision for Vacancy Loss
Net Rental Income
3. Guest 83163
Food Income
h. Employee Meals
Regular Employees
(Number of employees times the
rate.)
Student Employees
(number of student employees
times student rate.)
5. Conference Income
(Based on commitments and past
records.)
6. Forfeited Deposits: Food Unit not
credited.
7. Miscellaneous Income
(Small items which do not logically
come in any of the above classifica-
tidns.)

Total Income

Expense
M

Administration
8. Administrative
(Allocated as previously described.)

‘0
(1)

Unit Budget: Food Service

Academic Summer
Year Sessions Total

9. Peod Service Administrative
(Total as previously described
and then establishing a per-
centage figure for each Food
Unit.)

10. Halls Administrative: Not charged

to Food Unit.

11. Social and Educational .
(Established policies differ among
institutions. A sum.may'be al-
located to cover costs of seasonal
decorations used in dining rooms.)

12. Office Expense
(Allocated as previously described.)

Operations
13. Salaries and wages
Regular Employees
Food Manager
Assistant Food Manager
Food Supervisor
Cook I
Cook II
Food Service WOrker I
(Four)
Food ficrvice‘worker II
(Five)
Baker I
Baker II
Baker III
Janitor (two)
Total Production Service

Hours Number
Siuuent Employees Per'Week of Weeks Rate Amount

kitchen Workers (Eight)
Line Workers (Six)
Dish Roan (Six)
Pots and Pans (Four)
Runners (Two)

Total Student Employees

Total Salaries

1h.

15.

16.

17.
18.

19.

20.

Other
21.

22.

\ f)
4)

Unit Budget: Food Service

Academic Sumac r
Year Sessions

Subsistence
(Total amount charged to Em-
ployee Meals.)
Raw Food Costs
(Amount per day allowed times
number of’days times number of
persons to be fed.)
Laundry
(Based on past records.)
Telephone
(Based on experience.)
Utilities
Water
steam
Electricity
Gas
Total Utilities
Supplies (Controlled)
(Allocated as previously de-
scribed.)
Supplies (Operating)
(Allocated as previously de
scribed.) ‘

Jebt Dervice
(Allocated as previously de-
scribed.)

Insurance
(Allocated as previously de-
scribed.)

Miscellaneous Ueneral EXpense
(Allocated as previously de-
scribed.)

Uncollectaile Acceunts
(Charged only case yearly.)

Ground Maintenance
(Allocated as previously de-
scribed.)

Total Other Eernses

Income Over Expenses

Total

100.

Administrative Budget
for Residence Halls and Food Service

(Expense to be allocated to all Residence and Food Units)

Administration
Director of Residences and Food oervices
Secretary
Bookkeeper
Bookkeeper
Bookkeeper
Bookkeeper
Total Administration

HHHHHH

Halls Administration
(This expense allocated to Residence Halls only)
1 Manager
1 Secretary

1 Maintenance Foreman
Total Halls Administration

Food Service Administration
(This expense divided among Food Service Units only)
1 Jirector
l secretary
Total Food bervice Administration

1013

Calendar Analysis - Fiscal Year

Summer bession 1957

June 22-23
June 2h
August 20

Academic Year 1957-53

September 20-2h
September 2?
November 25-23
December In

January 3-5
January 6
March 23

March 30 - April 1
April b
June 17

Summer Session 1958

June 21-22

June 23
August 19

Registration - Sumner Session
Classes begin
second Summer Session Closes

Registration - Fell wuarter
Classes begin

Thanksgiving Recess

Fall euarter Closes

Registration - Winter Quarter
Classes begin
iinter euarter Closes

Registration - Spring Quarter
Classes Begin
Spring Quarter Closes

Resistration - Summer Session
Classes begin
First Summer Dession Closes

|

10?.

Operating Schedule

Assumptions

1.

Housing will be supplied from the day preceedina the first day of
resistration through the last day of staminations for each quarter,
excepting Thanksgiving vacation.

The periods between terms are not included in the housing contract

 

No.
No.

No.

No.
No.

of

of

of

of
of

days

 

days

 

days

I !

days
days

 

2.
and housing facilities may be rented to others during this time.
The college will not require students to remove their belongings
from rooms between terms during the academic year.

3. Food will be supplied from the first_day of classes through the
last day of examinations, excepting Thanksgiving vacation.

H)using

1. Fall Quarter From Through

2. Winter Quarter From Through

3. Spring Quarter From ThrOugh

h. Total days of housing, academic year

5. bummer Sessions (1957 From Through

(1958 From ' ""'" Through """""
6. Total days of housing, Summer Sessions
7. Total days of housing, fiscal year

Food Dervice

8.
9.
10.
ll.

12.

13.

11:.

-Fall Quarter From
winter Quarter From

Spring Quarter From

Total days of Food Service, academic year

Summer Dessions (1957 From

(1958 From“ T:- mm”-

Total days of Food Service, Summer session

Through
Through

Through

Through

 

Total days of Food Service, fiscal year

No.
No.

No.

No.

of
of

of

of
of

days
ua's

daas

days
days

 

103.

Rental Income Schedule

Assumptions

1. 1e capacity of the unit is , .

2. The following rates will pply uniformly to all rental spaces:

Academic Year

Room Rate Food Charge Total per Total for
per quarter per quarter quarter Academic Year

Summer session

Room Rate Food Charge Total per > Total for
per session per session session summer session
3. Vacancy loss during the academic year will be per cent

of the gross rental income and vacancy loss for the summer session
will b per cent of the gross rental income.

2:
9:.
SJ

The final computation for each budpet sooount will be rounded off
to the nearest dollar before the figure is placed in the budget
sumnary which appears on page 92.

MICHIGAN STQTE UNIV. LIBRRRIES

 

ILI IIIIWI II II

312930 3890177