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October 15, 2004
 

M E M O R A N D U M
 

TO:

CSU Presidents

FROM:

Charles B. Reed
Chancellor
 

SUBJECT:

Policy Governing Non-General Fund Receipts — Executive Order No. 919
 

Attached is a copy of Executive Order 919 relating to Non-General Fund Receipts. The purpose of this executive order is to provide guidance to campuses on the administration of their non-General Fund receipts that are subject to local campus control, to ensure that the funds are held in proper accounts and are administered in accordance with applicable laws and regulations.

In accordance with policy of the California State University, the campus president has the responsibility for implementing executive orders where applicable and for maintaining the campus repository and index for all executive orders.

If you have questions regarding this executive order, please call Systemwide Financial Operations at (562) 951-4540.

CBR:gs

Attachment

Distribution:

 

Vice Presidents for Administration and Finance
Financial Officers Association
Auxiliary Organization Association
Executive Staff, Office of the Chancellor


Executive Order 919
 

THE CALIFORNIA STATE UNIVERSITY
Office of the Chancellor
401 Golden Shore
Long Beach, California 90802-4210
(562) 951-4747

 

Executive Order:

919
 

Title:

Policy Governing Non-General Fund Receipts

Effective Date:

October 15, 2004
 

Supersedes:

No Previous Executive Order
 

This executive order is issued pursuant to authority granted in Section II (h) of the Standing Orders of the Board of Trustees.

Section 1: Introduction

Though the significant majority of funding for the California State University system comes from the State General Fund, campuses are increasingly reliant upon alternative funding sources to be able to provide the educational services needed by students. Those alternative sources include donations, fees for services/facilities and income from self-supporting activities such as parking operations and continuing education programs.

The purpose of this executive order is to provide guidance to campuses on the administration of their non-General Fund receipts that are subject to local campus control, to ensure that the funds are held in proper accounts and are administered in accordance with applicable laws and regulations.

Campuses must continue to comply with Executive Order 753 Allocation of Costs to Auxiliary Enterprises as they implement this executive order.

Section 2: Activities that Generate Supplemental Revenue

Campuses and auxiliaries conduct a variety of activities that generate supplemental revenue. This section discusses the primary activities that are conducted and issues that determine where the receipts should be deposited. This is not an all-inclusive list. Section 4 of this document is a table that relates how the receipts generated from the following activities should be handled. At the end of each of the following paragraphs describing each activity is a sentence referencing how that activity can be found on the table (Section 4).

Fund Raising:
Donations received from alumni, businesses, and other benefactors are primarily in the form of cash. However, in-kind donations (equipment, books, software) are also received. Donors may impose restrictions on their contributions. For example, they may specify how long the donated asset must be used by the organization before it can be sold or otherwise disposed of. Such restrictions should be recorded, reviewed and followed.

With respect to cash donations, one issue that may arise relates to the payee on a donor’s check. If an auxiliary conducts a solicitation and receives a check made payable to the campus, and there is evidence that the donor intended the funds to go to the auxiliary, the campus may consider endorsing the funds to the auxiliary.

Cash assets received from fund raising activities are referred to as Gifts in Section 4.

Furnishing Goods & Services of a Research or Public Service Nature:
CSU campuses conduct research on behalf of federal and state agencies, and also for private (non-governmental) entities. Research topics can range from educational-related projects (e.g., the education of poor, urban or minority students) to environmental plant physiology projects (e.g., reintroducing the willow tree species into urban environments). Funds received for this activity are generally in the form of service contracts or research grants, and are referred to as Grants and Contracts in Section 4.

Use of Facilities:
Authority to require payment for granting rights to access campus facilities is generally governed by Education Code 89700(a), which states that the trustees may, by rule, require all persons to pay fees, rents, deposits, and charges for services, facilities or materials provided by the trustees to such persons.

Rights to facilities would typically be granted through a lease or a license agreement. A lease confers an exclusive possessory interest in a campus facility, whereas a license would grant a nonexclusive permission to use. A lease has been conveyed if the possessory rights granted are against all others, including the campus.

Lease revenue for facilities is governed by Education Code 89046 which states that any rental received by the trustees under this or other leasing sections shall be deposited in the State Treasury and credited to the support appropriation of the California State University current during the period of occupancy.

If the rights granted allow continuing possession by the campus and permits contemporaneous use by the licensee (as well as possibly others), the arrangement should be treated as a license. License revenue for facilities is governed by Education Code 89721(g) which states that the chief fiscal officer of each campus of the California State University shall deposit into and maintain in local trust accounts moneys received in connection with fees and charges for services, materials, and facilities authorized by Section 89700 where these fees or charges are required of those persons who, at their option, use the services or facilities, or are provided the materials, for which the fees or charges are made. Fees and charges so received and deposited shall be used solely to meet the costs of providing these services, materials, and facilities.

Monies received from licenses and leases are referred to as Rental Receipts in Section 4.

Offering Continuing Education Programs:
CSU campuses offer a variety of programs, courses, seminars and conferences to serve the educational needs of businesses, industry, hospitals and governmental agencies. The programs award academic credits or Continuing Education Units (CEU’s) and must be self-supporting. Examples include external degree programs and special session courses which are offered on a for-credit basis. Other examples include summer writing programs, intensive English instruction for international students, and professional development programs for working professionals, which can be offered on either a for-credit or non-credit basis.

Auxiliary organizations also offer self-supporting instructional programs. The courses are non-credit and cannot use the California State University name or representation in any manner other than where California State University is part of the auxiliary’s title. Examples include offering lifelong learning courses to individuals age 50 and older, and providing Scholastic Aptitude Test (SAT) preparation for high school students.

Program/course fees are the predominant revenue source, though other fees are also charged (application fees, processing fees, exam fees).

Monies received from Continuing Education Programs are referred to as Continuing Education Fees in Section 4.

Selling Goods and Services from Educationally Related Activities:
Formal instruction is not always sufficient to provide students a quality educational experience. Additional activities and laboratory experiences are needed to supplement the instructional offerings. Examples of educationally related activities offered by campuses include publishing newspapers and magazines; and operating dairy and agricultural farms.

Conducting those activities may incidentally create goods and services that may be sold to students, staff and the general public. Examples of incidental revenues include sales of scientific and literary publications; and sales of products of dairy creameries, food technology divisions or poultry farms. These revenues are referred to as Goods and Services from Educational Activities in Section 4. These activities can be provided by either the university or an auxiliary.

Selling Commercial Goods and Services:
Campuses and auxiliaries also offer products or services that enhance, but are not central to, the educational mission. Examples of these ancillary activities include providing food services, college stores, and selling student health insurance policies. “Pouring rights,” the long-term granting of the right to exclusively sell certain beverages at events, also fall into this category. Monies received from these activities are referred to as Commercial Sales of Goods and Services in Section 4.

Campus Events:
CSU campuses host a wide range of activities to complement the university experience not only for students, but also for faculty, alumni and surrounding communities.

Examples include offering laser light concerts at a campus’ planetarium; hosting track and field championships; sponsoring children’s musical performances; sponsoring speakers of national repute; offering backpacking trips; offering film screenings; hosting Family Fun Days for alumni; and sponsoring basketball camps for youth in the community. These activities can be provided by either the university or an auxiliary.

Monies collected from these activities (from ticket sales, registrations fees, etc.,) are referred to as Campus Events in Section 4.

Student Fees and Other General Fees:
In addition to the above activities – fund raising, leasing and licensing, selling goods and services, hosting events - campuses and auxiliaries furnish yet other services, facilities and materials that are complementary to instruction. Examples include providing healthcare, parking and housing to CSU students. To cover the costs of providing these services, campuses are authorized to charge fees to students, faculty, staff and visitors.

The establishment, revision and rescission of student fees are governed by Executive Order 740, The California State University Student Fee Policy. As set forth in EO 740, student fees are classified in four categories that are discussed below.

Category I – These are fees that must be paid to apply to, enroll in, or attend the university. Examples include Instructionally Related Activities Fee, Health Services Fee, Student Body Association Fee, Health Facilities Fee and Student Body Center Fee.

Category II – These fees pay the full cost of instruction, which is required of certain students. Example: tuition paid by out-of-state students.

Category III – These are fees paid to receive materials, services or use of facilities provided by the university. Examples include Housing Fee, Parking Fee, Special Session Fee, Course Fee, and Graduation Fee.

Category IV – Penalties/Late Fees/Deposits – The majority of fees in this category are penalties, as opposed to deposits. Examples include Check Return Fee, Replacement of Lost Parking Permit Fee, Identification Card Replacement Fee. They are meant to cover the additional costs that result when checks do not clear, when cards are lost, or when property is damaged.

Monies collected from these sources are referred to as Student Fees and Other General Fees in Section 4.

Trust Fund to Trust Fund Services:
In addition to the above activities where an operating unit provides goods or services to a student or the community, there are instances where a unit will provide services to another unit. If both units have trust resources, regardless of whether they also have General Fund resources, it may be considered a “Trust Fund to Trust Fund” service. In cases where the entity providing the service is funded from trust funds, that entity can charge for the service and deposit the receipts into its trust fund. An example of this would be a Continuing Education unit that purchases housing services from the Student Housing unit, for its international students taking an English as Second Language course over the summer. Another example is the Financial Services Accounting (FSA) Department within the Chancellor’s Office. It receives its funding from various trust funds and the General Fund. Within the FSA department there are units that provide financial services to other trust funds as well as auxiliaries. FSA charges those funds and auxiliaries for the services rendered, and deposits the receipts into the FSA trust fund.

Receipts for such services are referred to as Trust Fund to Trust Fund Services in Section 4.

Receipts Relating to Reimbursed Activities:
Executive Order 753 requires that auxiliary enterprises (which includes both enterprise funds such as parking and housing, as well as auxiliary corporations) be charged with allowable direct and indirect costs associated with facilities, goods and services provided by the university funded by the General Fund. Receipts for such activities are referred to as Reimbursements in Section 4.

Section 3: Factors That Determine Where Revenues Must Be Held

As funds are received, the campus must confirm that it may accept the monies. The campus must clearly understand the source of the funds; i.e., what event or activity generated the funds. Finally, the campus must determine which entity (the university or an auxiliary) is responsible for any losses that might arise from the event; i.e., has expenditure and operational control over the event/activity.

If authority to deposit a receipt of state money into a special fund in the State Treasury or a local trust account does not exist, the asset should be deposited into the General Fund, to avoid any risk of misdirecting General Funds into a non-General Fund account.

Several factors determine where a non-General Fund receipt will be deposited: which entity provided (or will provide) the underlying activity through its operating agreement? If the university provided the activity, is there related university debt? And finally, does the university have a policy, consistent with state law and CSU policy, for holding its monies inside or outside of the State Treasury system? These factors are discussed in the following paragraphs.

Factor 1: Who Provided the Underlying Activity?
This factor may not be as straightforward as it sounds. Normally, whoever provided (or will provide) the service should deposit the receipt. However, there is a critical issue here that pertains to when an auxiliary provides the activity. The auxiliary can only deposit the receipt if certain conditions are met.

If a campus has contracted with an auxiliary organization to provide specific services, receipts resulting from providing those services may be accepted by the auxiliary and deposited into the auxiliary’s bank account. Such monies would be considered Auxiliary Funds, not State Funds. The funds would be subject to laws and regulations specifically applicable to CSU auxiliaries. While an operating agreement between the campus and the auxiliary that specifically mentions the service being provided is required, it is not the sole requirement for fees to be accepted by an auxiliary. The auxiliary must also be responsible for any losses that might arise from the event or activity that generated the receipts; i.e., has expenditure and operational control over the event/activity. Auxiliaries may only accept monies under these conditions. As a matter of CSU policy, auxiliaries may not accept state funds with the intent of administering them as an agent of the university. Payment for services is the only instance where state funds may be accepted into an auxiliary organization’s account.

Factor 2: Does the University have Related Debt?
This second factor applies to receipts resulting from university-provided services. If a university has a specific project that was funded by debt (the sale of bonds), fees collected from the operation of that project typically are pledged to repay the bonds. The pledged fees must be deposited into the California State University Dormitory Revenue Fund, number 0580. Thus, if a Health Center had been built with bond funds, health center facility fees would be required to be deposited into this fund to cover the debt service on the bonds. Similarly, if a student union had been built, student union fees would have to be deposited into this fund. Reference: Ed Code 90074.

Factors 3 & 4: Source of Funds and Campus Policy.
If a university does not have outstanding debt applicable to the funds received, its non-General Fund receipts must be deposited into one of several funds, depending on the source of the receipt and the campus’ policy. Several of the funds are discussed below.

Fees collected for providing continuing education courses may be deposited into either the California State University Continuing Education Revenue Fund (CERF) 0573, a special fund in the centralized State Treasury or in local trust accessed through an initial deposit into Trust Fund 0948. The campus has the choice. Reference: Ed Code 89704, 89721(i), and Executive Order 794. A benefit of depositing the funds in Trust 0948 for deposit into local trust is the ability to hold the monies outside of the State Treasury system.

Monies received for research, workshops, conferences, institutes and special projects may be deposited into either the California State University Special Projects Fund 0947, a special fund in the centralized State Treasury, or in local trust accessed through an initial deposit into Trust Fund 0948. The campus has the choice. Reference: Ed Code 89725 and 89721(k). A benefit of depositing the funds in Trust 0948 for deposit into local trust is the ability to hold the monies outside of the State Treasury.

Monies received for parking may be deposited into either the State University Parking Revenue Fund 0583, a special fund in the centralized State Treasury, or in local trust accessed through an initial deposit into Trust Fund 0948. Reference: Ed Code 89701 and 89721(i). Monies received for student health center facility fees may be deposited into the State University Facilities Revenue Fund 0581, a special fund in the centralized State Treasury, or in local trust accessed through an initial deposit into Trust Fund 0948. Reference: Ed Code 89702 and 89721(i).

Most other non-General Fund receipts will be initially deposited and held in Trust Fund 0948. Trust Fund 0948 in the CSU receives and holds monies for deposit into either the centralized State Treasury (which has a special fund called the California State University Trust Fund 0948, a fund different from CSU’s holding Trust Fund 0948) or for deposit into a local trust account.

The other non-General Fund receipts include gifts made to the state, student financial aid monies, federal grants and contract monies where the state is the grantee or contractor, international programs expenses, cafeteria replacement funds, miscellaneous deposits, optional fees and charges for CSU services, materials, facilities, instructionally related activity fees, lottery revenues and mandatory student body organization fees.

Within CSU’s holding Trust Fund 0948, there is one last option for a campus: to have the monies held in the centralized State Treasury or to hold the monies in local agency trust accounts outside of the State Treasury System. If the campus chooses the State Treasury, the receipts are invested in the Surplus Money Investment Fund (SMIF). If the campus chooses to hold the funds in local agency trust accounts, the funds must nonetheless be invested in accordance with CSU investment policy. One benefit of using a local agency trust account is that the campus has more control over disbursements. Regardless of the choice, these funds are state funds and are subject to state laws and regulations.

Separate Accountability
As monies are deposited, it is important to maintain separate accountability for receipts with different purposes or restrictions. For example, if an activity is supposed to be self-supporting, its receipts and disbursements must be tracked in a separate account. This will allow campuses to more easily track that the fees being charged are indeed adequate to cover the costs of providing the activity. Separate record keeping also improves a campus’ ability to prepare revenue predictions using extrapolations of current results.

Section 4: Where to Deposit Non-General Fund Receipts

The following table lists the most common sources of non-General Fund receipts, and indicates where the receipts should be deposited. Certain General Fund receipts are also listed; this was done to contrast receipts that, although similar to something that may be deposited into Trust, must be deposited into the General Fund.

 

 

 

 

 

 

Description

Deposit into the State Trust Fund (Note 1)

Deposit into an Authorized Auxiliary Organization Fund     (Note 2)

Deposit into the Dormitory Revenue Fund

Deposit to the credit of the General Fund

Gifts:

 

 

 

 

To the University, its units and programs

X

 

 

 

To an auxiliary organization

 

X

 

 

To an approved student club in support of its programs

 

X

 

 

 

 

 

 

 

Grants and Contracts Awarded to:

 

 

 

 

The University

X

 

 

 

An auxiliary organization

 

X

 

 

 

 

 

 

 

Rental Receipts:

 

 

 

 

For exclusive use of University facilities on a lease basis (Ed Code 89046)

 

 

 

X

For use of University facilities usually on a event-related, license  basis (Ed Code 89721 g)

X

 

 

 

For use of auxiliary organization facilities (bookstore; student union)

 

X

 

 

For Student Housing leased to an auxiliary organization under a capital lease, where construction was debt-financed by the Systemwide Revenue Bond program (lease payment)

 

 

X 

 

Continuing Education Fees:

 

 

 

 

    Course provided by the University

 

 

 

 

        If fees are pledged to pay bond debt

 

 

X 

 

        If fees are not pledged to pay bond debt

X

 

 

 

    Non-credit course provided by an auxiliary organization

 

X

 

 

Sales of Goods and Services from Educational Activities:

 

 

 

 

     Provided by the University

X (Note 3)

 

 

X (Note 3)

     Provided by an auxiliary organization

 

X

 

 

Commercial Sales of Goods and Services:

 

 

 

 

Owned by the University

X (Note 3)

 

X (Note 3)

X (Note 3)

Owned by an auxiliary organization

 

X

 

 

 

 

 

 

 

Campus Events:

 

 

 

 

University events, workshops, conferences, institutes, special projects, and program fees

X

 

 

 

Auxiliary organization events, workshops, conferences, institutes, special projects, and program fees

 

X

 

 

 

 

 

 

 

Student Fees and Other General Fees:

 

 

 

 

Category I:

 

 

 

 

    Instructionally Related Activities Fee

X

 

 

 

    Student Body Association Fee

X

 

 

 

    Course Fees (required for enrollment)

 

 

 

X

    Health Services Fee

X

 

 

 

    Health Facilities Fee

 

 

 

 

        If fees are pledged to pay bond debt

 

 

X

 

        If fees are not pledged to pay bond debt

X

 

 

 

    Student Body Center Fee

 

 

 

 

        If fees are pledged to pay bond debt

 

 

X  

 

        If fees are not pledged to pay bond debt

X

 

 

Category II (Non-resident tuition)

 

 

 

X

Category III:

 

 

 

 

    Course Fees  (optional not required for enrollment)

X

 

 

 

    Special Session Fee

X

 

 

 

    Optional Fees, when service/material also avail outside Univ

X

 

 

 

    Parking Fee

 

 

 

 

        If fees are pledged to pay bond debt

 

 

X

 

        If fees are not pledged to pay bond debt

X  

 

 

 

        If owned by an auxiliary organization

 

X

 

 

   Student Housing Fee

 

 

 

 

       If fees are pledged to pay bond debt

 

 

X

 

       If fees are not pledged to pay bond debt

X

 

 

 

       If owned by an auxiliary organization

 

X

 

 

Category IV:

 

 

 

 

     If fee relates to an activity supported by the General Fund

 

 

 

X

     If fee relates to an activity not supported by the General Fund

X

 

 

 

  

 

 

 

 

 

 

 

 

 

Lottery Funds

X

 

 

 

 

 

 

 

 

Trust Fund to Trust Fund Services

X

 

 

 

 

 

 

 

 

Reimbursements:

 

 

 

 

For services and products provided to auxiliary enterprises and organizations, paid from General Fund budget allocation

 

 

 

X

 

 

 

 

 

Note 1: See Section 3.  Monies received for CERF,  Special Projects, Parking, Health Facilities and Lottery may be held in  Fund 0573, 0947, 0583, 0581, and 0839 respectively, or in Trust Fund 0948.

 

 

 

 

Note 2: A valid Operating Agreement is required.

 

 

 

 

Note 3: Depending on the source of the money that created the Goods and Services. The income should reimburse the source.

 

 

 

 

 

 



Charles B. Reed
Chancellor

Dated: October 15, 2004