Budget Structure Design

Introduction and Approach

Budget Structures are used in Florida PALM to support business processes that require control, monitoring and tracking of transactions and balances. These business processes:

• Manage the tracking and reporting of Appropriations, Releases, Reserves, and Allotments (collectively referred to as appropriations budgets), including the exchange of information between LAS/PBS and Florida PALM
• Manage the tracking and reporting of revenue
• Manage the tracking and reporting for transactions disbursing or receiving cash
• Manage the tracking and reporting for investment and disinvestment transactions
• Manage tracking and reporting for FCO projects
• Manage budget, cash, and invested balance exceptions
• Support the close-out of appropriations (Carry Forward, Certified Forward, Non-Operating, and Continuing Appropriations)

Budget Structures are established once the ChartField structure has been defined and the detail values have been configured. The Florida PALM Budget Structures, described in greater detail in the Budget Structure Details section below, are:

• Appropriations
• Releases
• Reserves
• Allotments
• Projects
• Cash Control
• Investments
• Revenue

Budget Checking

The budget checking process in Florida PALM refers to the act of checking transactions against ChartField values and designated ledger balances to determine if sufficient balance exists for the transaction to proceed and to update the ledger balance for the amount of the transaction. Budget Checking is applicable for all transactions processed in Florida PALM which includes Appropriations, Allotments, Cash, projects, investments, and revenue.  Budget checking is a step in the transaction lifecycle before an accounting entry is posted in the source module. The Commitment Control module is tightly integrated with the General Ledger and other source modules (i.e., Accounts Payable, Purchasing, InterUnit, Project Costing, and Accounts Receivable), which enables the expenditure accounting entries to be tracked and controlled against Appropriations and Allotments Budget Structures, cash transactions against the Cash Control Budget Structure, revenue transactions against the Revenue Budget Structure, and investment/disinvestment transactions against the Investment Budget Structure.

Within the Commitment Control module, the budget structures design includes:

• System configuration setup – defines the framework to support the budget structures
• Budget definition rules– applied to the system configuration setup framework, governs edits and processing rules for:
  1. How the system behaves when appropriations budgets, allotments, projects, cash, invested balances, or revenue budgets are established; and
  2. How accounting entries behave when the process is initiated during transaction processing.

Budget Structure Use and Features

The establishment of the budget framework, along with budget checking outcomes, are directly controlled in the Commitment Control module utilizing the system configuration setup and budget definition rules features. Budget checking configuration and outcomes are as follows:

• Appropriations Budget Structures – Budget checking on expenditure transactions is configured to strictly control on appropriations, release and reserve structures which stops the transaction from proceeding. Budget checking on the allotments budget structure can be configured to stop the transaction or produce a warning if the transaction exceeds the allotment. Allotment transactions will subsequently be checked against the appropriations, release, and reserve structures.
• Project Budget Structure – The configuration for the Project budget structure is set to track without budget which allows transactions to proceed. 
• Cash Control Budget Structure – Budget checking on expenditure transactions is configured to strictly control. The Cash Control budget structure maintains a spendable cash balance which represents the remaining available Fund cash balance. The spendable cash balance is impacted by verified and approved deposits which increases the balance and payments/outflows which decrease the balance.
• Revenue Budget Structure - The configuration for the revenue budget structure will allow revenue transactions to proceed when designated account ChartField values are used.
• Investments Budget Structure - The configuration for the investments budget structure is set to strictly control disinvestment transactions which stops the transaction from proceeding. Investments increase the balance while disinvestments decrease the balance.

These system configuration setup and budget definition rules make up the Florida PALM Budget Structures. The following sections detail the individual components of the system configuration setup, the budget definition rules, and the Budget Structure security.

System Configuration Setup

The system configuration setup defines the framework to support the appropriations,Releases,Reserves, allotments, cash, investments, and revenue using Detail Ledgers and Ledger Groups configuration features.

Detail Ledgers

Commitment Control Detail Ledgers are configured to establish appropriations, and revenue budgets for estimates, spendable cash and investment balances, and to record accounting entries as General Ledger and source module transactions are budget checked. The accounting entries are made up of the individual ChartFields as described in the ChartField Structure section above. This relationship enables the tight integration with the General Ledger and the source modules to calculate the remaining spending authority for appropriations budgets, also known as the budget balance; the remaining cash balance also known as the spendable cash balance; and the investment, or revenue balances.

The Commitment Control Detail Ledgers define the type of budget (e.g., expenditure or revenue) and the type of transaction (e.g., budgets, encumbrances, expenditures, cash, investments, revenues) that is recorded on the ledgers. Figures 2 and 3 below identify the Detail Ledgers associated with each Ledger Group. The following are the Detail Ledgers for Florida PALM:

• Budget Detail Ledger – records budget activity by ChartField combination
• Encumbrance Detail Ledger – tracks encumbrance activity
• Expenditure Detail Ledger – tracks expenditure activity
• Revenue Detail Ledger (Estimates) – tracks revenue activity when revenue is estimated via the recording of revenue estimates
• Revenue Detail Ledger (Recognized) – tracks revenue activity when revenue is recognized via the recording of accounts receivables  
• Revenue Detail Ledger (Collected) – tracks revenue activity when revenue is collected via the recording of deposits or InterUnit transfers.  
• Spendable Cash Detail Ledger – tracks cash activity by Fund when cash is received (verified and approved), transferred, and disbursed. Cash received increases the balance while outflows decrease the balance. InterUnit transfers can increase or decrease the balance.
• Investments Detail Ledger – tracks investments activity. Investments increase the balance in the ledger while disinvestments decrease the balance.

Ledger Groups

Ledger Groups enable grouping of Detail Ledgers which allows multiple ledgers to be controlled by a single Budget Structure. Ledger Groups also enable the interaction of Detail Ledgers with one another to calculate remaining spending authority for expenditure budgets, remaining balances for cash and investment budgets, and variances for revenue estimates. This is accomplished by using a specific configuration setup to either include or exclude a particular Detail Ledger in the calculation.

Ledger Groups are configured for income statement Accounts (i.e., expenditures, revenues) and not for balance sheet Accounts (i.e., assets, liabilities, and equities). The Ledger Groups are visually represented in the figure below for the Income Statement Accounts. They are the Expenditure Ledger Group and the Revenue Ledger Group, where each consists of three Detail Ledgers.

Ledger Group Structure (Income Statement Accounts)

Cash Control and Investment Ledgers are controlled by asset Account ChartField values. These ledgers are reflected below. 

Detail Ledgers (Balance Sheet Accounts)

Ledger Balance Calculations

The table below shows the remaining spending authority calculation and revenue criteria for the Detail Ledgers. Encumbrance and expenditure amounts can never exceed appropriations and expenditure amounts can never exceed releases, but encumbrances may exceed releases. The Reserve Budget Structure only includes Budget details because this budget amount does not allow expending or encumbering. Encumbrance and expenditure amounts can exceed allotments if the control option is Track with Budget or Track without Budget but cannot exceed allotment amounts if at control. If encumbrance and expenditure amounts exceed allotments, they must meet the criteria for appropriations and/or releases. Cash amounts can never exceed the spendable cash balance while disinvestment amounts can never exceed the invested balance. Remaining spending authority that is not sufficient to cover transactions can be overridden with appropriate Commitment Control security rights as described below in the Budget Structure Security section. This level of override is only available to DFS users.

Remaining Spending Authority Calculation Criteria

*Encumbrance and Expenditures can exceed Allotments under control options of Track with Budget and Track without Budget, however, cannot exceed a control option of Control. 

Budget Definitions

The budget definitions establish the processing rules and parameters which are applied to Detail Ledger and Ledger Groups that dictate how transactions behave upon budget checking before posting to the ledger. The following budget definition rules are considered to define Budget Structures:

• The Control ChartField determines the budget structure to which a given transaction line is subject to budget checking. Transaction lines with a value in the Control ChartField are subject to that structure’s budget check.
• The Ruleset uses the key ChartFields and key ChartField translations to require what ChartFields must be on a transaction to pass budget checking. Multiple rulesets can be configured with a different set of key ChartFields, key ChartField translations, and budget period calendars.
• The Key ChartFields define which ChartFields are required and optional for all budget journals and all transactions for a given Budget Structure. This configuration allows the selection of the ChartFields that are subject to budget checking.
• Key ChartField Translations use ChartField budget Trees to hierarchically arrange ChartField values so that detail values can be related to the summary levels. This functionality provides a convenient way to budget at a summary level while using detail-level ChartFields in transactions to reduce the workload of budget management.
• The Control Option defines the level of budgetary control and determines how the Budget Structure responds to transactions that are subject to budget checking. The Control Options are:
  • Control – Strict; transaction fails when the actual amount exceeds the budget
  • Track with Budget – Less strict; transaction passes when the actual amount exceeds the budget
  • Track without Budget – Flexible; transaction passes when a budget has not been created
• The Account Type budget definition rule determines which Budget Structure applies to a transaction based on the Account Type. Transactions with expenditure and revenue Account Types are subject to the appropriate expenditure or revenue Budget Structure. Transactions with asset Account Types are subject to the appropriate cash or investments Budget Structure.
• The Budget Calendar  configures the Florida PALM budget period that defines the time segment to which the budgets apply for Budget Structures (i.e., for how long the budget is available). In Florida PALM, the budget calendar is annual for Appropriations and Revenue Budget Structures. For Cash, Investment, and Projects Budget Structures, there is no budget period applicable
• Through the configuration of a Parent Control Budget, a hierarchical parent-child relationship can be established between Budget Structures such that a parent budget has one or more child budgets. The budget amounts for each child budget together represent the amount in the parent budget but divided into smaller budgets. This parent-child relationship prevents child budget amounts from exceeding parent budget amounts.

The table below provides a summary of the Budget Structures and the related budget definition rules for key parameters.

Budget Structures and Definitions

Budget Structure Security

In addition to the system configurations that control expenditures against established budgets, there is the Commitment Control security feature that is applied to Budget Structures. This enables only those users that are granted appropriate security rights to manage or post to select Budget Structures. That is, Commitment Control security can define which users can modify budgets or override exceptions on ChartField combinations used in accounting entries.

Various budget functions are classified as Commitment Control security events on which the Solution enforces security. Commitment Control security will be accomplished by defining rules that identify the security events a user has access to, by permission list. The following event types are configured for which security is enabled separately:

• Budget Entry or Adjustment – enable to restrict budget journal (budget amount) entry to a limited set of users
• Budget Transfer – enable to restrict or add constraints to the ability of the user to transfer funds from one budget period and/or ChartField string to another
• Budget/Cash Checking Override – enable to restrict or add constraints to the ability of the user to override budget/cash checking. Budget/Cash checking override enables users to override exceptions for a new transaction or to pass a transaction that has failed budget checking. This feature in Florida PALM is only available to DFS for appropriations, cash and investment structures. Agencies have this feature for the Allotments ledger set with a control option of Control.
• Budget Date Override – enable to limit or allow users who can override the system-defined budget date on a source transaction
• Budget Inquire – enable to allow users to view control budgets

The table below shows the security settings for each Budget Structure and indicates who has the ability to perform those.

Budget Structures Security by Security Event Type

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