Office of Planning and Budget

Capital Budget Process

Capital expenditures secure tangible property having a value of $50,000 or more and a useful life of two years or more or any expenditure of $50,000 or more for the renovation or remodeling of an existing facility. If in doubt about the actual value of an item that has a useful life of two years or more, include the request in the capital budget rather than the operating budget. The purposes of the capital budgeting process are the following:

1. To identify, assess and plan for the capital needs of the institution for a five-year period.

2. To provide a basis for determining alternative sources of funding for capital needs including choices for donors.

3. To provide a basis for the assessment of the impact of new capital expenditures on the operating budget.

4. To provide a system for accounting for the capital resources of the institution.

The annual capital budget is prepared for a fiscal year but is presented within a context of a five-year capital plan. Once specific capital expenditures are approved in the annual budget, the project or equipment item budgets will be available until they are expended. The timeframe for expenditures can be a few weeks or a matter of several months. The budget is available only for approved capital items and cannot be expended on operational or other capital needs.

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