Spectrum - Volume 17 Issue 36 July 13, 1995 - Decentralized business procedures benefit university

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Decentralized business procedures benefit university

Spectrum Volume 17 Issue 36 - July 13, 1995

Plans to decentralize accounting, payroll, and purchasing at Virginia Tech moved ahead with the implementation July 1 of local processing of non-payroll disbursements. Vice President Minnis Ridenour, credited with planting the seeds for decentralization at Virginia Tech, received one of the first checks processed, a travel reimbursement.

"For the past 10 years or more, Virginia Tech and other schools, including UVa, have taken the lead to achieve decentralization," Ridenour said. "Now we are beginning to realize some of the benefits. Decentralization results in FTE (full-time equivalent) savings, and it is central to the university meeting its budget-reduction goals."

In 1991, the decentralization of public records eliminated the requirement to send documentation supporting disbursements to the Department of Accounts. An electronic interface was created to update the state's accounting system.

A 1992-94 Appropriation Act required the secretaries of administration and finance, in coordination with the director of the State Council of Higher Education, to conduct a study of the delegation of administrative responsibility and authority to public colleges and universities. The 1994 Appropriation Act provided for a pilot decentralization program at Virginia Tech, UVa, and William and Mary. On June 23, 1994, Virginia Tech submitted a proposal to participate in a pilot decentralization program in accounting, personnel, and purchasing.

The pilot schools implemented decentralized payroll processing on July 1, 1994, with each school cutting its own payroll checks and handling its own electronic deposits.

On July 1 of this year, Virginia Tech and the other two pilot schools began processing their own non-payroll disbursements. On that same date, the three schools were given permission to partially implement decentralized purchasing procedures.

According to Lenwood McCoy, controller, accounting decentralization benefits the university in a number of ways. It allows the university to fully use its automated payroll and accounts-payable systems and to process payroll checks, electronic deposits, and non-payroll disbursements locally. It also provides more timely data to departments.

Under decentralized accounting, the time required to process payments to vendors and employees is reduced by about seven to 10 days. The university can make electronic payments to vendors, further streamlining the disbursement process.

The new accounting process allows the university to streamline the accounting interface with the state. Under the new system, summary transactions are sent each day and then distributed at the end of the month. This eliminates duplicate review of transactions in the state's central offices, and the requirement to send paper documents to Richmond, and has resulted in the elimination of two positions in the Controller's Office that were devoted to reconciling university records to state records.

Purchasing decentralization has been partially implemented. The new system eliminates the requirement for the Governor's Office to approve sole-source procurements and for documentation for sole-source procurements of less than $5,000. It also provides buyers with some flexibility in bid procedures for small items.

Personnel decentralization has also made some headway recently, according to Ridenour. Details on procedures in this area will be published this fall in Spectrum.