Financial Basics: UNL Funding and Cost Objects (8:40)

Cindy Miesbach Author

07/24/2018 Added

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This video introduces the UNL's main funding sources and explains how funds are identified with the cost object numbering system.

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[00:00:00.000]This video introduces the University of Nebraska - Lincoln’s main funding sources and
[00:00:06.600]explains how funds are identified with the cost object numbering system.
[00:00:12.366]Cost objects are numbers assigned to track and categorize UNL’s financial activity.
[00:00:18.600]Familiarity with funding sources and the cost object numbering system will help you to identify the owner of a cost object
[00:00:26.433]and the source of funding in SAP and on financial reports.
[00:00:32.299]Four main funding sources support UNL.
[00:00:35.500]The first is state-aided funding, which primarily consists of state funds appropriated by the Unicameral; and tuition revenue.
[00:00:43.533]Next are Revolving/Auxiliary funds, which are dollars generated and used by some university entities.
[00:00:51.733]The third funding source is comprised of grants and contracts,
[00:00:55.433]which are awared to the University for specific purposes and include rules for how the funding may be spent.
[00:01:02.633]Finally, there is University of Nebraska Foundation funding which is comprised of financial gifts from donors.
[00:01:10.466]These four major funding sources are broken down into more detail and identified by cost objects.
[00:01:17.966]Cost objects are numbers assigned to track and analyze UNL’s financial activity.
[00:01:24.600]The phrase “cost object” refers to two types of numbers: cost centers and WBS numbers. First, let’s look at the cost center numbering structure.
[00:01:37.400]Cost centers apply to the first two funding sources – state aided and revolving/auxiliary funds.
[00:01:45.033]Cost centers are 10 digits long and each digit provides information about where the funding comes from and who is responsible for it.
[00:01:55.000]The first digit represents the campus -- 2 is for UNL, which most likely will be the funding that is most familiar to you.
[00:02:03.100]Occasionally, you might see cross campus postings – 3 for University of Nebraska Medical Center, 4 for UN-Omaha,
[00:02:12.466]5 for UN-Kearney, and 9 for University of Nebraska’s Central Administration.
[00:02:20.100]The 2nd digit represents the funding source. A “1” indicates state aided, 2s and 3s identify revolving and auxiliary funds respectively.
[00:02:30.833]Both revolving and auxiliary funds are considered “self-supporting” because the revenue is earned
[00:02:37.633]and used by University entities that perform some type of fee-based activity.
[00:02:44.566]Revolving funds are typically earned by an academic department whose primary mission is academic, but which incidentally earns revenue.
[00:02:53.666]Examples of revolving funds include funds earned by providing a good or service to the campus or to external entities,
[00:03:01.333]registration fees charged by a department hosting a conference, funds received from student lab fees,
[00:03:09.100]or the incidental remainder of grant funds after completion of the grant-funded project.
[00:03:15.466]In each instance, the revenue would post to the earning department’s revolving cost center.
[00:03:22.300]Auxiliary Funds (3’s) are earned by non-academic, self-supporting entities whose reason for existing
[00:03:29.000]is to provide their specific service to faculty, staff and students in a personal capacity.
[00:03:37.500]Examples of auxiliary funds are housing and parking fees charged by Housing and Parking Services,
[00:03:44.500]revenue from athletic ticket sales, and revenue earned by Campus Union service providers.
[00:03:51.933]There are also cost centers whose second digit is 9.
[00:03:55.233]These are endowments that are managed by the functional Accounting Office and will not impact departments.
[00:04:02.600]The 3rd and 4th digits identify the subprogram, which equates to the college or administrative area.
[00:04:09.333]For example, by looking at these digits, you would know if the cost object belongs to the College of Arts and Sciences, which is numbered 05,
[00:04:19.033]or Business and Finance, which is 43.
[00:04:23.700]The 5th and 6th digits identify the department and are always looked at in conjunction with the subprogram.
[00:04:31.533]For instance, there are many departments numbered “12” but 0512 specifically identifies the English Department
[00:04:40.000]within the College of Arts & Sciences.
[00:04:42.966]4312 identifies the Budget Office within Business and Finance.
[00:04:48.566]There is a reference sheet for subprograms and departments available online.
[00:04:54.600]The last 4 digits of a cost center are purely to create a unique value after the first 6 digits.
[00:05:01.166]If a department only has one cost object, which is more common in administrative areas, the last four digits of that single cost object are usually 0001.
[00:05:14.033]Departments can request additional cost objects as needed to allow them to manage their funds.
[00:05:20.733]The form to request a new cost center is available online.
[00:05:26.500]Now let’s discuss the other type of cost objects – WBS numbers.
[00:05:32.033]WBS numbers are used to identify Grants & Contracts and Foundation Funds.
[00:05:37.566]WBS numbers are 13 digits long and are also smart numbered. WBS numbers for UNL will start with 2.
[00:05:46.766]The 2nd digit represents the funding source.
[00:05:50.066]4s, 5s and 6s identify grants and contracts. A 4 or 5 indicates a federal grant.
[00:05:57.700]Any grant that is NOT federal, meaning it could be from the State, another university, or a company that is funding UNL research, is identified by a 6.
[00:06:09.033]7’s are typically foundation funds. However, some departments hold their foundation funds in a 26 WBS.
[00:06:18.633]9’s are either loan funds – meaning they are funds reserved for student loan programs --
[00:06:24.833]or plant funds which are used for construction and renovation of University facilities.
[00:06:30.833]9’s are managed by the functional Accounting Office and will not impact departments.
[00:06:36.933]Just like cost centers, the 3rd and 4th digits of a WBS number identify the subprogram and the 5th and 6th identify the department.
[00:06:46.733]The 7th through 10th digits are used to uniquely identify the grant, which SAP calls “a project.”
[00:06:55.200]The last three digits, known as a WBS element, identify sub-parts of the grant.
[00:07:01.900]When you are pulling financial reports in SAP, it is important to understand how the first 10 digits and the last three digits of a WBS number are used.
[00:07:14.166]The first 10 digits of a WBS identify the project as a whole. The last three digits allow the grant manager to track sub-parts of the grant.
[00:07:24.533]For example: if a faculty member receives a grant from the USDA to study grains, all funds related to that grant would have the ten digit project number.
[00:07:35.200]However, assigning specific WBS elements to each sub-part of the project
[00:07:41.566]makes it possible to track funding and spending at a more refined level of detail.
[00:07:47.400]For example, in this instance, a separate WBS element could be assigned to parts of the grant related to corn, milo and wheat.
[00:07:57.733]Sometimes WBS elements are used to track spending for multi-year grants.
[00:08:03.100]For example, if spending on a 3 year grant needs to be tracked by the year, a WBS element can be assigned for each year of the grant.
[00:08:13.000]The additional granularity of data provided by WBS elements can help you to refine your financial reports in SAP.
[00:08:22.666]Thanks for taking time to learn a little about UNL funding sources and about the smart numbering of cost objects.
[00:08:29.800]This information should help you better understand financial information in SAP and in various financial reports.

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Financial Basics: UNL Funding and Cost Objects (8:40)

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