Budget Primer

How do we use our money?

Berkeley spends about $1.8 billion per year in support of our teaching, research, and public-service mission. The pie chart above shows total campus operating expenditures by the basic educational functions. This classification of expenses is used throughout higher education and provides a convenient means for comparison across institutions. On the Berkeley campus, we also monitor and manage our funds by several additional mechanisms. The most typical way of reviewing our resource picture is by organization, and we often classify expenditures by the control unit or major cost center that manages the resource. We also review funds by the type of expenditure being made, such as faculty salaries, staff salaries, benefits, etc. For a long time higher education has also classified its expenses by major mission-based function, such as instruction, research, and public service. At Berkeley we recently expanded on this model to allow for more robust activity-based budget management and analysis.

One of the most challenging aspects of university budgeting is the need to control expenditures so that every dollar is spent in a manner consistent with any constraints put on the fund by the source. Funds that are given to us with a specific purpose — such as research funds awarded by the federal government, or student-aid funds given to us by a donor — are considered restricted in nature, and mechanisms must be put in place to ensure the funds are spent properly. Funds that lack restrictions are called "unrestricted funds." Though unrestricted funds may be spent for any mission-related purpose, all funds, including unrestricted funds, must be spent in ways consistent with regular University accounting and purchasing policies.