At Iowa State we have been operating as an "auxiliary enterprise" since 1986. The designation as an auxiliary enterprise has allowed us to sell "utility revenue bonds" to finance needed utility projects. As an Auxiliary we are a rate based utility - our customers only pay for what they use. Because we sell commodities, we are allowed to carry-forward our fund balance which gives us an option for funding large capital projects and major equipment overhauls without having to go through a capital funding request with the state. As such debt service and depreciation are included in our rates. Because we have bondholders to respond to the utility enterprise is audited annually by an outside firm.By and large this has been a very successful approach which has stabilized our funding and allowed us to plan for and fund utility capital improvements. I report to the Associate VP for Facilities but when it comes budget time, I am primarily busy setting rates - the university's budget is based upon a projection of utility consumption and on our annual rates (which are set for one year with no seasonal variation or demand charges).
Dave Miller djm@iastate.EDU