The UNC Policy Manual

Custody and Management of Institutional Trust Funds and Special Funds of individual Institutions

 

 The UNC Policy Manual
600.2.4
Adopted 02/08/91
Amended 08/10/12
Amended 10/11/12

Custody and Management of Institutional Trust Funds and Special Funds of Individual Institutions

 

WHEREAS the 1977 General Assembly (2nd Session, 1978) by enactment of N.C.G.S. § 116-36.1 charged the Board of Governors of the University of North Carolina with the custody and management of the institutional trust funds of the University of North Carolina and of each constituent institution, and instructed the board to adopt uniform policies and procedures applicable to the administration of these funds; and

 

WHEREAS the 1977 General Assembly (2nd Session, 1978) by enactment of N.C.G.S. § 116-36.2 charged the chancellor of each constituent institution of the University of North Carolina with the custody and management of special funds of that institution and instructed the Board of Governors to adopt uniform policies and procedures for the administration of these funds; and

 

WHEREAS the 1977 General Assembly (2nd Session, 1978) by enactment of N.C.G.S. § 116-36.3 charged the chancellor of each constituent institution of the University of North Carolina with the custody and management of institutional student auxiliary enterprise funds of that institution, subject to uniform policies and procedures adopted by the Board of Governors; and

 

WHEREAS, after due consideration, the board concluded that moneys received by an institution in respect to fees and other payments rendered by medical, dental or other health care professionals under organized practice plans or under contractual agreements between the institution and a hospital or other health care provider should be deposited in the institution's official depository rather than with the State Treasurer;

 

WHEREAS the 1990 Reconvened Session of the 1989 General Assembly enacted legislation, Chapter 936 of the 1989 Session Laws, which provides management incentives and budgetary flexibility for  constituent  institutions  of  the  University of North Carolina and an expanded  definition of "institutional trust funds" to include institutional student auxiliary enterprise funds an d funds received from the operation and maintenance of institutional forest and forest farmlands, thereby necessitating revision of the Board  of  Governors resolution dated January  12,  1979,  concerning custody and management of institutional trust funds and special funds of individual institutions;

 

WHEREAS, the 2011 General Assembly enacted legislation, Session Law 2011-145 section 9.6E which provides that the Board of Governors adopt uniform policies applicable to the deposit, investment, and administration of institutional trust funds and that through the President, the Board of Governors may delegate authority to the chancellors.

 

NOW, THEREFORE, BE IT RESOLVED:  That the following policies and procedures are hereby established for the administration of: institutional trust funds, as now defined in N.C.G.S. § 116 -36.1 and special funds of individual institutions, as defined in N.C.G.S. § 116-36.2.

 

I.                    General Provisions

A.            Funds not to substitute for state appropriations.  Neither the funds covered by these policies  and  procedures  nor  the  investment  income therefrom  shall take the place of state appropriations or any part thereof, but any portion of  these funds available  or general institutional purposes shall  be used to supplement state appropriations to the end that the institution may improve and increase its functions, may enlarge its areas of service, and may become more useful to a greater number of people.

 

B.            Presumption that receipts belong to the General Fund unless shown otherwise. Except as otherwise provided by or pursuant to law, all moneys received by or accruing to an institution shall be deemed institutional receipts within the meaning of the Executive Budget Act and shall be deposited with the State Treasurer to the credit of the General Fund unless the chancellor can show that the moneys fall within one or more of the following general categories: (1) institutional trust funds, as defined in N.C.G.S. § 116-36.1. (2) special funds of the institution, as defined in N.C.G.S. § 116-36.2. (3) endowment funds, as defined in N.C.G.S. § 116-36. (4) funds subject to debt instruments containing special provisions with respect to the deposit of receipts pledged to secure such debt.

                   

C.            Accounting.  The chancellor of each institution, with the approval of the State Controller, shall establish and maintain an accounting system for the funds covered by these policies and procedures in conformity with generally accepted principles of institutional accounting and in accordance with these policies and procedures.

 

D.           Internal  controlThe  chancellor of each institution shall institute internal control procedures with respect to the handling of funds covered by these policies and procedures that are necessary or desirable to prevent misappropriation or mishandling of the funds.

 

E.            Preaudit of disbursements.  No bill or claim against an institution to be charged to an account established here under may be paid unless it has been approved  by  the  officer or employee authorized to initiate disbursements from that account. No bill or claim may be paid in any form other than a check or draft on an official depository of the institution or a warrant on the State Treasurer.

 

F.            Facsimile  signaturesThe chancellor may authorize the use of facsimile  signature machines or signature stamps in signing checks, drafts, and warrants.

 

II.           Institutional Trust Funds

A.                  Applicability. This Section II applies to moneys within the following categories:

1.             moneys, or the proceeds of other forms of property, received by the institution as gifts, devises, or bequests that are neither presumed nor designated to be gifts, devises, or bequests to the endowment funds of the institution.

2.            moneys received by the institution pursuant to grants from, or contracts with, the United States government or any agency or instrumentality thereof.

3.            moneys received by the institution pursuant to grants from, or contracts with, any state agencies, any political subdivisions of the state, any other states or nations or political subdivisions thereof, or any private entities whereby the institution undertakes, subject to terms and conditions specified by the entity providing the moneys, to conduct research, training or public service programs.

4.            moneys  collected by the institution to support extracurricular activities of students of the institution.

5.            moneys received from or for the operation by the institution of activities established for the benefit of scholarship funds or student activity programs.

6.            moneys received from or for the operation by the institution of any of its self-supporting auxiliary enterprises, including institutional student auxiliary enterprise funds for the operation of housing, food, health, and laundry services.

7.            moneys received by an institution in respect to fees and other payments for services rendered by medical, dental or other healthcare professionals under an organized practice plan approved by the institution or under a contractual agreement between the institution and a hospital or other health care provider.

8.            moneys received from the disposition effected pursuant to Chapter 146, Article 7, of any interest in real property owned by or under the supervision and control of an institution if  the interest in real property had first  been acquired by gift, devise, or bequest or through expenditure of moneys defined in Section II.A. as 'trust funds', except the net proceeds from disposition of an interest in real property first acquired by the institution through  expenditure of  moneys  received  as  a  grant  from  a  state  agency. (Chapter 529 of the 1981 Session Laws)

9.            moneys received from operation and maintenance of institutional forests and forest farmlands, provided that such moneys shall be used, when used, by the institution for support of forest-related research, teaching, and public service programs.

10.          moneys received from an activity authorized by G.S. 66-58(b)(8)m., n., and o;

11.          moneys deposited to the State Education Assistance Authority Fund pursuant to G.S. 116-209.3, and

12.             any other moneys collected by an institution as student fees previously approved by the Board of Governors. 

    

 

B.            Delegation of authority.  The chancellor of each institution, under the supervision of the President, is charged with the custody and management of all moneys within the categories described in Section II.A. now held by or hereafter accruing to that institution in accordance with applicable laws of the State of North Carolina and these policies and procedures.

 

C.            Agency Fund Authorities.  The President is authorized to approve and transmit to the State  Treasurer  an  agency  fund  authority  for  each  institution  receiving any of the moneys identified in Section II.A. This document shall contain the following information:

                1.             The name of the institution.

                2.            The categories of moneys as described in Section II.D. to be deposited in the fund.

                3.            The position or individual authorized to approve disbursements from the fund.

                                The fund authority shall constitute authorization for the State Treasurer to establish and administer such a fund in the name of the institution.

 

D.           Institutional trust fund authorities.  The President is authorized to approve for each institution for  which  an  Agency  Fund  is  establishepursuant  to  Section  II.C.  one  or  more Institutional Trust Fund Authorities for each of the following categories as may be appropriate to that institution's operations:

1.             Gifts, devises and bequests.  This category comprises all receipts described in Section II.A.(1), including income derived from the investment of institutional trust fund balances and gifts  and grants for student loans (including federal and state contributions).

2.            Federal contracts, grants and agreements.  This category comprises receipts described in Section II.A.(2), including receipts derived from the sale of surplus federal property originally purchased through a federal institutional trust fund.

3.            Non-federal contracts and grants.  This category comprises receipts described in Section II.A.(3) not properly includable in another category.

4.            Student extracurricular activities.  This category comprises receipts described in Section II.A.(4), including receipts from student activities fees established by the Board of Governors for the support of student organizations, student athletic and recreational activities (other than intercollegiate athletics), student entertainment, student publications and similar activities.

5.            Institutional auxiliary enterprises and activities supporting scholarship funds and student activity programs.  This category comprises receipts described in Section II.A.(5) and Section II.A.(6) from the operation of self-supporting service enterprises which exist primarily to furnish goods or services to students, faculty, or staffs and institutional programs and for which charges or fees are related to the cost of the goods or services. By way of illustration but not limitation, these enterprises include the operation of housing, food,  health,  and  laundry  services,  central  stores,  printing  and  duplicating  services, student stores, student centers, athletic facilities, rental property, utilities systems, and similar operations, specifically including all operations whose profits are dedicated to scholarship support or specific student activity programs.

6.            Fees for services of health care professionals.  This category comprises receipts described in Section II.A.(7).

7.            Dispositions of real  property.  This category includes receipts described in Section  II.A.(8)  of net proceeds from the disposal of any interest in real property belonging to an institution and acquired as described in Section II.A.(8).

8.            Institutional forests and forest farmlands.  This category includes receipts described in Section II.A.(9) of moneys received from operation and maintenance of institutional forests and forest farmlands and used, when used, in support of forest- related research, teaching, and public service programs.

9.            Moneys received from an activity authorized by G.S. 66-58(b)(8)m., n., and o. This category includes receipts described in Section II.A.(10) of moneys derived from certain activities authorized by the referenced subsections of the Umstead Act.

10.          Moneys deposited to the State Education Assistance Authority Fund pursuant to G.S. 166-209.3. This category includes receipts described in Section II.A.(11) of moneys from the operation of certain programs of the State Education Assistance Authority; and

11.             any other moneys collected by an institution as student fees previously approved by the Board of Governors.

Each Institutional Trust Fund Authority shall contain the following information:

1.                   The name of the institution.

2.                   The source(s) of the moneys to be credited thereunto.

3.                   The purpose(s) for which the moneys credited thereunto may be used.

4.                   The position or individual authorized to receive moneys to be credited thereto and to disburse them.

 

Upon the  approval of the President, the Institutional Trust Fund Authority shall be transmitted to the chancellor of the institution and a copy shall be filed among the permanent records of the President's office.  When established as provided therein, the Institutional Trust Fund Authority shall  constitute authorization for  the  institution to receive and  disburse the moneys described therein in accordance with the purposes stated, subject to the provisions of G.S. 143-18.1 with respect to capital improvements projects.

 

E.            Subsidiary Account Authorities.  For each subsidiary account within one of the categories described in Section II.D., the chancellor is authorized to approve an account authority containing the following information:

                1.             The Institutional Trust Fund Authority within which the account is established.

                2.             The name of the account and its accounting designation.

                3.            The source of the moneys to be credited thereto.

                4.            The purpose of the account, including any specific restrictions, terms or conditions on the use of the moneys credited thereto.

                5.            The position or individual authorized to accept receipts and initiate disbursements from the account.  Each account authority for institutional trust funds authorized by the chancellor shall be filed among the permanent records of his office and it shall constitute authorization for establishment and operation of the account in accordance with the purposes stated therein.

 

F.            Deposit to and disbursement from institutional trust fund accounts.  Except as provided in Section II.I.,  all moneys within the categories described in Section II.A. that are received by an institution shall be deposited with the State Treasurer in that institution's Agency Fund and credited to the appropriate Institutional Trust Fund and subsidiary account on the institution's books.  Disbursement of such moneys shall be accomplished by warrant on the State Treasurer issued by the person designated in the Agency Fund Authority upon voucher or requisition of the person designated in the Institutional Trust Fund Authority or the subsidiary account authority as appropriate.  No disbursement shall be made for a purpose not specified in the appropriate fund or account authority or contrary to any specific restrictions, terms or conditions on the use of the funds.

 

G.            Allocation of investment income.  Subject to any restrictions thereon, investment income credited to an institution's Agency Fund by the State Treasurer as provided in Section II.D. or earned through institutional investment and management may be used for institutional support purposes in such manner as the President, or chancellor, as applicable, shall approve.

 

H.           Financial reports. If an institution has delegated authority pursuant to Policy 600.2.4.1, the institution shall report only as provided in Section II.K.

 

I.             Institutional Trust Funds under delegated authority. Any of the foregoing provisions of this Section to the contrary notwithstanding, funds identified in Policy 600.2.4.1 shall be deposited in an official depository of the institution.

 

J.            Investment of cash balances. Available cash balances shall be invested in interest bearing deposits and investments so that the rate of return equals that realized from the investment of state funds generally and shall otherwise be managed in the manner provided for in Section III.D, E, F, G, and H. Income earned on investment of funds shall be used, subject to any restrictions thereon, in such manner as may be prescribed further in the Institutional Trust Fund Authority.

 

K.            Reports. If an institution has delegated authority pursuant to Policy 600.2.4.1, the chancellor shall report annually by September 30 to the President as of June 30 of each year, (i) the total balance of institutional trust and special funds invested outside of the Office of the State Treasurer; (ii) the balance broken down into sub-total by investment asset classes; and (iii) names of commercial cash management bank, investment custodian, and all investment managers including dollars under management and the type of investment asset classes handled by the manager. Beginning with the third annual report submitted to the President, the constituent institution shall include a rolling three-year average annual rate of return on institutional trust and special funds invested outside of the Office of the State Treasurer. Beginning the fifth annual report, the constituent institutional shall also include a rolling five-year average annual rate of return on the same funds, in addition to continuing to provide the rolling three-year average annual rate of return.

 

III.               Special Funds of Individual Institutions

 

A.                  Applicability. This Section III applies to moneys within the following categories:

1.                   moneys received from or for the operation by the institution of its program of intercollegiate athletics.

2.                   moneys held by the institution as fiscal agent for individual students, faculty, staff members, and organizations.

 

B.                  Account Authority.  Effective January 15, 1979,  a  chancellor shall  not  authorize the creation or continuation of an account for special funds falling within any of the categories described in Section III.A., until he has established an account authority for that account.  Upon approving an account authority for special funds, the chancellor shall file it among the permanent records of his office and it shall constitute authorization for establishment and operation of the account in accordance with the purposes stated therein.

 

C.            Allocation of investment income.  Income earned on investment of funds covered by this Section III shall be used, subject to any restrictions thereon, in such manner as may be prescribed in the account authority.

 

D.           Fidelity bonding. Each officer, employee, or agent of an institution who handles or has in his custody any of the funds described in Section III.A., or who has access to physical inventories constituting  assets of accounts established under this Section III, shall be covered by an individual or blanket fidelity bond with sufficient sureties payable to the institution.

 

E.            Investment of idle funds.

1.             An institution may deposit at interest or invest all or part of the cash balance of any account established under this Section III.

2.            Moneys may be deposited at interest in any bank or trust company in this state in the form of certificates of deposit, savings accounts, or similar interest-bearing time deposits. Such deposits shall be secured as provided in Section III.G., provided, however; that deposits of an institution with delegated authority pursuant to Policy 600.2.4.1 shall not be required to be secured.

 3.           Moneys may be invested in any form of investment allowed by law to the State Treasurer any of the securities authorized by A RESOLUTION CONCERNING THE INVESTMENT  OF  UNIVERSITY  FUNDS  NOT  REQUIRED  FOR  CURRENT  USE adopted by the Executive Committee of the Board of Trustees of the University of North Carolina on March 14, 1969; or as proposed by the institution pursuant to Policy 600.2.4.1.

4.            The institution may employ one or more fiscal agents for the purposes of this section.

 

F.            Selection of depositories.  The chancellor of each institution shall designate as the official depository of the institution one or more banks or trust companies in this state. No funds subject to this Section III shall be deposited in any place, bank or trust company other than an official depository, except as otherwise required by the terms of any debt instrument containing special provisions with respect to deposits.

 

G.            Deposits to be secured. The amount of money on deposit in an official depository or deposited at interest pursuant to Section III.E. shall be fully secured by deposit insurance, surety bonds, or investment securities of such nature, in such amounts, and in such manner as is prescribed by the State Treasurer for the security of state funds generally, provided, however; that deposits of an institution with delegated authority pursuant to Policy 600.2.4.1 shall not be required to be secured.

 

H.           Daily deposits. All receipts subject to this Section III shall be deposited daily.  If the chancellor gives his approval, deposits shall be required only when the moneys on hand amount to as much as two hundred and fifty dollars ($250.00), but in any event a deposit shall be made on the last business day of the week.