Section: 300-2
Effective: 07/01/2025
Supersedes: 01/01/2021
Next Review Date: 07/01/2028
Issuance Date: 10/03/2025
Issuing Office:  Campus Budget Office
Financial Deficit Policy

 

SCOPE

 

Thisdocument establishes UC San Diego&s Financial Deficit policy and applies toAdministrative Officials, defined herein, with responsibility over financialresources. This Policy does not apply to employees of UC San Diego MedicalCenter.

POLICY SUMMARY

 

Thispolicy defines management responsibilities for the monitoring, reporting, andtimely resolution of Financial Deficits across UC San Diego excluding theMedical Center.

 

DEFINITIONS

 

AdministrativeOfficial- For this policy, the term Administrative Official refers to any UC San Diegoemployee who holds a position with delegated financial, administrative, ormanagement responsibility as detailed in AdministrativeResponsibilities Handbook.

 

FinancialDeficit- The situation thatexists when a Financial Unit spends more than is authorized or available in aparticular Fund source.  Financial Deficits may be measured by testing balancesat any level within the accounting hierarchy; the appropriate level depends onthe nature of the Funds and is typically identified by funding sourcelimitations. Themeasurement of a Financial Deficit largely depends on the financial activitywithin a particular fund. Financial Deficits should first be identifiedby Financial Unit and Fund. However, to effectively and consistently identifyand remediate Financial Deficits, balances must in some cases be measured by the Project segment of the Chart of Accounts, which captures business categories such as Sponsored Research Project Awards, Capital ConstructionProjects and General Projects (including operating Recharge Activities,Auxiliaries, Service Agreements, Faculty start-up and portfolio, among others).

 

CarryforwardBalance - Thecumulative Net Position at the close of the prior fiscal year, and representedas the beginning balance as of July 1 of the current fiscal year. Thisbalance is found in account 300000 and is referred to as the beginningbalance. In Oracle, this balance is determined at the Entity - Fund -Financial Unit - Project level (where Project exists).

 

NetPosition - Alsoreferred to as ending balance, it is a measure of available expendablefinancial resources and represents the accumulation of total resources andrevenues minus total expenses since inception.  It is calculated as the July 1beginning balance plus the YTD Net Surplus/(Loss). 

 

FinancialUnit -Represents a business unit with an ongoing business mission, with a responsibleindividual with fiscal authority over budget, resources and expenses, anidentifiable group of employees, and generally physical space.

 

Fund - The Fund is thehigh-level classification of the source of funds for a transaction and tracksrestrictions and designations.

Project- Asegment of the Chart of Accounts chart string used inOracle which tracks a body of financial activity& with a start date, and insome cases an end date, spanning multiple fiscal years. Examples includeSponsored Awards, Capital Projects and other activities. In some cases, thissegment captures index from old chart of accounts in IFIS.

 

ProjectPortfolio Management Module - The Project Portfolio Managementmodule is a sub-ledger in the Oracle Financial Cloud (OFC) system which managesProjects that are designated as either: Sponsored Research, Capital Construction,or General Projects.  Each Project in the Project Portfolio Management moduleis auto-assigned a unique number by the system, and each Project has a distinctset of characteristics identified at the point of setup (including unique FinancialUnit association and Project Manager such as Principal Investigator orAdministrative Official). This number becomes part of the accounting chartstring in the General Ledger.

 

POLICY STATEMENT

 

UCSan Diego receives financial support from a number of external stakeholders andhas a stewardship responsibility to its students, patients, and donors, as wellas federal, state and private funding agencies, and the public.  Thatstewardship includes prudent financial management of resources entrusted to theUniversity and the Administrative Officials in each Financial Unit.

 

AllFinancial Units are expected to meet their financial needs within their overallavailable funding. This may be accomplished by (1) regularly monitoringfinancial activities, (2) avoiding cost over-runs relative to approvedresources, (3) avoiding unallowable or unreasonable costs against various Fundsources, (4) avoiding unauthorized cost-transfers or expenditures, (5)immediately resolving improper charges and any deficit by properly movingexpenses or redistributing resources, or (6) a proactive and timely pursuit ofadditional funding. Financial Deficits should not occur and must be remediedimmediately when they do occur. The appropriate resolution will differ by Fundand circumstance.

 

Unitswill not be permitted to carry over Financial Deficits exceeding $100,000without a deficit resolution plan that is approved by the DepartmentChair/Designee and Dean/Vice Chancellor.

 

FinancialDeficits should first be identified by Financial Unit and Fund. However, insome cases, balances must be measured by including the Project segment thatcaptures business categories. Deficits for Sponsored Research Project Awards,Capital Construction Projects and General Projects (including operatingRecharge Activities, Auxiliaries, Service Agreements, Faculty start-up andportfolio, among others) will be measured at the Project segment.

 

RESPONSIBILITIES

 

A.   Principal Investigator (PI) or Fund Manager

 

a.    For Sponsored Projects, the person(s) named as the PI, manager, or director in an award of a contract or grant accepted by UC San Diego, has primary responsibility for adherence to the conditions of the award and for ensuring that expenditures made are appropriate, allowable, and within the budgetary limitations of the award.

 

b.    Ensure that sponsored Projects& expenses do not exceed the cumulative amount of the award, allocation or budget. If Financial Deficits do occur, ensure that corrective action is taken. For sponsored Project&s that have ended, ensure that available, unrestricted PI and/or department resources are applied to clear the deficit before fiscal year end.

 

c.   For all other Projects, the Fund Manager is responsible for avoiding Financial Deficits, promptly resolving when they occur, or developing and implementing written action plans to eliminate.

B. Department Chair and Department Business Officer (or Equivalent Officer)

 

a.    Identify, avoid and resolve Financial Deficits during the fiscal year

 

 

b.    Ensure that PI or Fund Managers develop a written plan under which Financial Deficits larger than $100,000 will be eliminated. The deficit resolution plan must be approved by the appropriate Vice Chancellor and/or Dean (see Procedures below).

C.   Vice Chancellors and Deans

 

For the Financial Units under their purview, the Deans or Vice Chancellors are responsible for ensuring that:

 

a.      Financial Deficits are routinely monitored at the level of the Department Chairs and Business Officers;

 

b.      Written plans to resolve deficits are prepared and submitted to the Department Chair/Designee and Dean/Vice Chancellor for review and approval when deficit balances are larger than $100,000;

 

c.      Actions specified in approved deficit resolution plans are effective and acted on for timely resolution of Financial Deficits before end of current fiscal year; and

 

d.     In cases where the Financial Deficit cannot be resolved by fiscal year-end, ensure that written deficit resolution plans focus on corrective actions being taken and timeline for resolution. Written plans must be provided to the VC for Finance & Administration and/or CBO upon request.

D.   Campus Budget Office (CBO)

 

The Campus Budget Office is responsible for ensuring that prompt and final resolution of deficits is effectively achieved. Responsibilities include:

 

a.     Developing system reports that provide timely information for monitoring and remedying deficits.

 

b.     Partnering with the appropriate Administrative Official(s) to ensure that they have written resolution plans and that corrective actions are progressing for deficits that remain unresolved.

 

c.     Reviewing written deficit resolution plans for feasibility and making recommendations to the VC for Finance & Administration and/or the Chancellor as part of the annual budget process reviews for the upcoming budget year.

 

 

PROCEDURES

 

A.    Deficit Monitoring and Reporting

 

Whenworking to resolve a Financial Unit - Fund - Project chart string in FinancialDeficit, first consult existing policies and procedures applicable to selecttype of activity provided below:

 

Recharge Operations

Recharge activities are operated on a no-gain/no-loss basis. Any surplus or deficit occurring in any one year shall be corrected by timely management of expenses or adjustment of rates in the succeeding year to achieve a break-even balance at the succeeding year end.

See SSA link in Related Information section.

Gift Funding

Per Advancement&s UC San Diego Gift Acceptance and Processing Online Handbook: Gift funds should never be in deficit. The STAR online dashboard provides access to view gift information, including available expendable balances held at UCSD Foundation.

See Gifts link in Related Information section.

Sponsored Projects

Departments should follow Sponsored Projects Finance (SPF) guidance.

See Sponsored Research link in Related Information section.

 

Oracle-basedFinancial Deficit reports are available to help Administrative Officials meettheir Fund management responsibilities. They provide a view of current deficitsby Vice Chancellor area with drill-down capabilities to the various levels ofthe Financial Unit, Fund and Project hierarchies (where applicable). They serveas effective reports for monitoring current deficits. As such, AdministrativeOfficials, Fund Managers, and Principal Investigators will be required to makeappropriate use of it.

 

B.    Timely Resolution andRoll Overs

 

FinancialDeficits must be resolved within the fiscal year, i.e., before June 30th.However,
Financial Deficits may be carried over to the next fiscal year when (1) awritten deficit resolution plan is in place that focuses on corrective actionsbeing taken and includes reasonable timeline for resolution and (2) the FinancialUnit is in compliance with the plan and with campus policies.

 

a.     All approved deficitresolution plans must be in place before the end of the third quarter and mustbe provided to the VC for Finance & Administration and/or CBO upon request toensure discussion can occur during the annual budget meetings each Spring, ifneeded. Generally, Financial Deficits in excess of $250,000 will be thepriority for discussion purposes.

 

b.     Any Financial Deficits accumulatingin the last quarter of the fiscal year that have not already been addressed inan approved deficit resolution plan must have a plan documented as soon aspossible after the discovery of the Financial Deficit.  

 

c.     If Financial Deficitsare not successfully resolved per the timeline presented in the deficitresolution plan, by direction of the VC for Finance & Administration or theChancellor, a Vice Chancellor Office may transfer Funds and/or expenses fromunrestricted Fund sources within the department/unit or cognizant ViceChancellor area and/or the Campus Budget Office may withhold future fundingallocations until successful resolution.

 

FORMS

 

None

 

RELATED INFORMATION

 

A.     University of California - Policy BFBBUS-10 Principles of Accountability with Respect to Financial Transactions

 

B.     UCOP Contract and GrantManual 6-400 Responsibility for Financial Management and Control of ProjectFunds

 

C.    Academic PersonnelManual

 

D.    UC San DiegoAdministrative Responsibilities Handbook

 

E.     Overview of Sales andService Activities

 

F.     UC San Diego GiftAcceptance and Processing Online Handbook

 

G.    SPF Sponsored ResearchDeficit Procedures

 

H.    UC San Diego Chart ofAccounts User Guide

 

I.      UC San Diego ProjectPortfolio Management User Guide

 

FREQUENTLY ASKEDQUESTIONS (FAQs)

 

Additionalimplementation guidance, report access, and Frequently Asked Questions (FAQs)will be updated periodically at https://blink.ucsd.edu/finance/budget/deficit-policy-and-monitoring.html

 

REVISION HISTORY

 

2025-07-01       Thirdrevision to update dollar threshold for deficitresolution plans and update/clarify roles and responsibilities.

 

2021-01-01       Secondrevision with Issuing office and policy renaming changes, new and updatedbusiness processes and definitions due to transition to Oracle Financial Cloudand shift in responsibility from Business and Financial Services (BFS) toCampus Budget Office (CBO).

 

2017-09-19       Firstrevision regarding administrative actions and accountability for overdraftresolution.

 

2017-02-23       NewPolicy published.