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Business and Financial Policies and Procedures

Address a Self-Supporting Fund Deficit

Before You Begin

The State Finance Act (30 ILCS 105/6d) mandates that self-supporting income not necessary for the support, maintenance, or development of that activity must be credited to the University Income Fund. Therefore, to avoid transfers of excess revenues to the Income Fund, units must ensure their self-supporting activities break even over time.

Funds that operate at a deficit are in effect borrowing from the University's pool of funds to help finance their operation. In addition, the Fiscal Control and Internal Auditing Act (30ILCS 10/) mandates standards of fiscal accountability. To ensure compliance, the University requires that unless explicitly exempted, self-supporting fund balance deficits of less than $10,000 as of June 30 must be eliminated by the following fiscal year-end. It also requires that non-exempt funds with deficits of more than $10,000 must submit a business plan for recovering the deficit to their college or administrative unit office.

Determine if you have a deficit fund balance in your self-supporting activity by following the procedures in Monitor a Self-Supporting Fund. For information on how to find your fund balance, consult Guide to Finding Your Accounting String Balance (Portrait).

Begin

To address a self-supporting fund deficit:

  1. Determine the cause of the deficit by asking the following questions:
  • Have you recorded expenses unrelated to this activity in this fund?
  • Have you recorded expenses in the wrong fiscal year?
  • Have revenues intended for this fund been recorded elsewhere?
  • Have you recorded revenue earned but not collected?
  • Does the current deficit represent a low point in the normal annual business cycle?
  • Did the fund incur significant, one-time costs, such as major equipment purchases or start-up costs that will be recovered over multiple years?
  • Is there a multi-year trend that indicates the deficit is diminishing over time?
  1. If the deficit cannot be explained by any of the circumstances in Step 1, modify the rate to generate more revenue. If the rate cannot be modified because of competition or customer commitments, your unit must subsidize the operation by regularly transferring costs to a different fund source so that revenue generated from the operation will fully fund the remaining costs charged to the self-supporting fund.

Expenditures may not be made from or transferred to other self-supporting funds unrelated to the activity, nor may auxiliary activity expenditures (Fund Types 3J and 3M) be made from or transferred to state funds. If you are unsure what funds may be used to subsidize your activity, contact University Accounting and Financial Reporting (UAFR).

  1. If the deficit is more than $10,000, you must submit a business plan to recover the deficit to your college or administrative unit office.
  2. If the deficit is such that it will not be recovered within two or three years of normal operation, or cannot be otherwise subsidized, contact your campus OBFS Budget Office for assistance.

Related Policies and Procedures

Monitor a Self-Supporting Fund
Establish and Monitor Rates for Goods and Services Sold to Customers
Address a Self-Supporting Fund Surplus
Section 1 - Introduction to Business and Financial Functions at the University of Illinois

Additional Resources

Self-Supporting Funds FAQs
Guide to Finding Your Accounting String Balance (Portrait)
Fiscal Control and Internal Auditing Act
State Finance Act (30 ILCS 105/6d)
Fiscal Control and Internal Auditing Act (30ILCS 10/)

Last Updated: January 20, 2016 | Approved: Senior Associate Vice President for Business and Finance | Effective: January 2013

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