FIACCT 12-02_00 Internal Service Funds – Establishing Budget Requests and Compliance

Effective: March 16, 1998
Revised: June 12, 2017
Reviewed: June 12, 2017

Purpose

This outlines policies and procedures for submitting Internal Service Fund (ISF) budget requests and
monitoring ISF compliance with legislative requirements.

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Policy

A. Per Utah Code section 63J-1-410 (3) (a) (i) and (ii), an ISF may not bill another department for services that it provides unless the Legislature has reviewed and approved each ISF’s budget request and rates and included them in an appropriation act. Each ISF shall submit a formal budget request to the Governor’s Office of Management and Budget (GOMB) as part of the annual appropriation process. Each ISF shall submit the formal budget request in accordance with instructions and by established deadlines. ISF budget request forms and instructions are available from the Division of Finance Internal Service Fund Accountant.

B. The ISF budget request must include the following forms for the prior fiscal year, the fiscal year just ended, the fiscal year just begun, and the budget request fiscal year:

1. Form ISF-2 Balance Sheet – This is a balance sheet statement that shows the assets, liabilities, and fund equity/net position of the ISF as of fiscal year end.

2. Form ISF-3 Statement of Revenues, Expenses, & Changes in Retained Earnings – This is a statement of revenues, expenses, and changes in retained earnings that shows the results of operations of the ISF during the fiscal year.

3. Form ISF-8 Cash Flow Statement – This is a cash flow statement that details the total sources of cash and total uses of cash for the ISF. It includes projections for two fiscal years after the budget request fiscal year. See FIACCT 12-03.00 ISF – Fixed Asset Funding and Deficit Working Capital policy for more information.

4. Form ISF-1A Deficit Working Capital Limit – This is a working capital statement that shows the changes in financial position in terms of working capital and compliance with the deficit working capital limit requirement. See FIACCT 12-03.00 ISF – Fixed Asset Funding and Deficit Working Capital policy for more information.

5. Form ISF-4 Operating Revenue By Major Agency – This is a break out of revenue received from major state departments, higher education, and other non-state entities sources.

6. Form ISF-4A Operating Revenue by Major Source – This is a break out of revenue sources by major services and activities of the ISF.

7. Form ISF-5 History and Detail of Rate Changes – This includes a description of the methodology used in calculating rates. It also includes a history of rate changes for the past three fiscal years, any proposed rate changes for the budget request fiscal year and the reasons needed, and the estimated total effect on revenue by these rate changes. See the FIACCT 12-05.00 Internal Service Funds-Rate Setting policy for more on the requirements regarding setting rates.

8. Form ISF-9 Contract & Consultant Summary – This form lists the services provided, the number of contracts or total hours, and comparable full-time equivalent (FTEs) for any contractors and consultants used by the ISF.

9. Form ISF-7 Capital Outlay Authority Status Report – This form includes the total capital acquisition authority authorized, used, unused, requested, and requested to be carried over as non-lapsing for one-time projects. See the FIACCT 12-04.00 Internal Service Funds – Fixed Asset Acquisition policy for more information on this.

10. Form ISF – 7A Capital Asset Request Detail – This form lists capital asset purchases requested, why the assets are needed, and the costs and benefits of these purchases.

11. Form ISF-6 Capital Asset Activity – This form breaks out total capital asset additions and deletions by land and land improvements, infrastructure, construction in progress, building and improvements, machinery and equipment, and software.

12. Form ISF-6A Capital Asset Accumulated Depreciation Activity – This form breaks out total additions and deletions to accumulated depreciation by building and improvements, infrastructure, machinery and equipment, and software.

13. Form ISF-10 Market Analysis Report – This form is for Department of Administrative Services ISFs only and compares the ISF’s rates to the rates and fees of other private or public sector providers where comparable services and rates are reasonably available.

14. Form ISF-1 Summary & Compliance – This form includes a summary of the information contained on all the forms listed above along with the following additional information:

a. A break out of total full-time equivalent (FTE) employee amounts that shows total actual FTE amounts for permanent full-time employees, overtime by permanent full-time employees, and temporary or part-time employees, and compliance with the permanent FTEs amounts authorized by the Legislature. Also included is the total actual FTE contract employee amounts and compliance with the FTE contract employee amounts authorized by the Legislature.

b. A schedule that shows the ISF’s FINET retained earnings balance and the retained earnings amount allowed per federal regulations, the retained earnings balance over or under the federally allowed amount, and any refunds of retained earnings to the federal government that were paid during the fiscal year. This schedule may be broken out by each of the ISF’s services when required by the federal cost allocation negotiator. See the FIACCT 12-06.00 Internal Service Funds – Federal Retained Earnings Requirements policy for more information on federal requirements regarding ISFs.

c. A plan for the financing of requested capital assets purchases with a break out by source of funding for the total capital assets purchased or requested in a fiscal year by appropriations, interfund loans (cash deficit borrowing), trade-in proceeds, or working capital. See the FIACCT 12-03.00 ISF – Fixed Asset Funding and Deficit Working Capital policy for more information.

C. ISFs may not exceed the amounts authorized by the Legislature without legislative approval for capital asset purchases, FTE permanent employee and contract employee levels, or deficit working capital levels. The DAS Division of Finance will monitor the above to ensure compliance.

D. ISFs may adjust legislatively appropriated budget levels for changes in dedicated credits/revenues and
expense levels.

E. ISFs may only change legislative authorized rate levels during the budget year in accordance with the
FIACCT 12-05.00 Internal Service Funds – Rate Setting policy.

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Procedures