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 and 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 for 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
control. The 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
signatures. The 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. 55-58(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
established pursuant 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, indentified 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 annual 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 with the fifth annual report, the
constituent institution 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.