25.03 - Operating Deficits – Prior Accumulated Material Deficits
Last updated August 3, 2005
A. General. This procedure establishes guidelines for developing a Prior Accumulated Material Deficit Retirement Plan (the Plan) and identifies procedures and accountability measures used to address the management of material deficits. For further policy information see Executive Council item EC 2003-0011. [Link TBP]
A-1. Effective Period. This procedure shall remain in effect until June 30, 2006, or until such time as all prior deficits are retired, whichever comes last.
B. Procedure. Responsibility Center (RC) Managers are responsible for developing a Prior Accumulated Material Deficit Retirement Plan. This Plan should address the following issues:
B-1. Modification of Fiscal 2003 Deficit Plans. During FY 2003, the Institutional Planning and Budget Office (IPBO) requested RC Managers to submit plans addressing deficits of $25,000 or greater as of June 30, 2002. These plans should be modified and incorporated into the Prior Accumulated Material Deficit Retirement Plan as required by this section.
B-2. FY 2004 Planning. Procedures for preparing FY 2004 Prior Accumulated Material Deficit Retirement Plans are as follows:
i) Purpose. The purpose of the Plan is to provide formal documentation that defines repayment terms and the retirement of material deficits accumulated as of June 30, 2002, for each fund within each RC. At least one annual installment will be required to be made no later than May 31st of each fiscal year.
ii) Plan elements.
- Date certain: A deadline for final payment.
- Revenue sources: Identification of revenue sources for repayment.
- Repayment periods: Established periodic payment dates.
iii) Deadline. All material deficits must be retired no later than June 30, 2006.
iv) Plan Resources. Any unrestricted source of revenue may be identified to retire deficits. Multiple repayment sources may be identified.
v) Plan Submission. Plans and accompanying documentation must be completed by January 31, 2004, and submitted to the IPBO. Plans will be reviewed and then forwarded to the Finance and Business Affairs Committee for their review.
vi) Plan Review. The Finance and Business Affairs Committee shall review all Plans for compliance with applicable criteria and provide feedback to the RCM. Plans may be returned to the RCM if unacceptable or additional information is needed.
vii) Plan Approval. The Finance and Business Affairs Committee shall forward approved plans to the President for their signature.
viii) Plan Format. See attached memorandum of understanding (MOU) sample, Prior Accumulated Material Deficit Retirement Plan.
B-3. Monitoring the Retirement of Prior Accumulated Material Deficits.
i) Assessment: The annual installment for retiring prior deficits will be transferred by each RC Manager no later than May 31st of each year.
ii) Progress Reports. Each RCM shall submit a yearly progress report to IPBO who will review and forward to the Finance and Business Affairs Committee. Plan progress reports shall be due August 15th of each year.
C. Accountability Measure. Each RC Manager’s annual performance evaluation shall include an assessment of financial management performance. One indicator of performance is the progress made on retiring prior accumulated deficits and will be measured by the terms defined in each Plan.
D. Information. For additional information regarding preparation and submission of the Plan, contact IPBO at (111) 111-6718.