The University has a variety of sources of funds including but not limited to state appropriations, tuition, fees and other receipts, gifts, and capital funds. Each of the fund sources are integral to carrying out the University’s mission. This Policy defines the hierarchical authoritative level of guidance on the management and use of all operating funds. In addition, this Policy defines the overarching principles for expending University operating funds.
First, the University will manage and use the variety of fund sources in accordance with North Carolina General Statutes and Session Laws.
Second, the University will comply with the Office of State Budget and Management Budget Manual for applicability on various types of funds (as noted below).
Third, the University will comply with all UNC General Administration policies regarding the management and use of all funds.
For all potential expenditures from any source of operating funds, no set of guidelines can be written that addresses every possible expenditure decision that may arise. The overarching principles for expenditures are (1) the expenditure must have a University business purpose, (2) the expenditure must be proper and must appear to be proper by external constituents (“appearance test”), and (3) the expenditure must be reasonable (“reasonableness test”). For all expenditures from any source of funds, there must be a verifiable business purpose. In addition, the “appearance test” requires review and judgment regarding how the purchase would look to external constituents if placed on the front page of the paper. The reasonableness test requires a verifiable affirmative response to the question: “Is this expenditure amount reasonable for the goods and/or services provided?”
In addition, expenditures must also adhere to any spending restrictions specific to individual funds (e.g., donor or grantor restrictions) that are more restrictive than what is set forth in these policies and standards.
Purpose and Scope
The purpose of this policy is to establish standards for the use and management of University operating funds. All sources of operating funds are included in this Policy and are defined as follows:
I. The General Fund
The General Fund includes all appropriations allocated by the General Assembly of North Carolina and all moneys collected by the University that cannot be deposited as Institutional Trust Funds or Special Funds as defined in North Carolina General Statutes and The University of North Carolina Policy Manual. Moneys collected by the University that must be deposited into the General Fund include, but are not limited to, regular term tuition, distance education tuition, summer tuition, extension instruction fees, student charges that do not qualify as Institutional Trust Funds (e.g., miscellaneous service charges), revenues generated with General Fund resources, and utility service reimbursements from auxiliaries. With the exception of a small percentage of appropriation that is statutorily allowed to be “carried forward” to the subsequent fiscal year, General Fund budgets must be expended by the end of the fiscal year. The General Fund is subject to the State Budget Act.
II. Institutional Trust Funds
Institutional Trust Funds are on deposit with the North Carolina Department of State Treasurer, and although outside of the General Fund and Special Funds, are another type of State funds. They are not subject to the budget process of the State Budget Act, but are subject to other applicable Statutes and Session Laws such as Capital projects, travel, and personnel. Categories of Institutional Trust Funds are as follows:
III. Special Funds
Special Funds are on deposit with the North Carolina Department of State Treasurer, and although outside of the General Fund and Institutional Trust Funds, are another type of State funds. They are not subject to the budget process of the State Budget Act, but are subject to other applicable Statutes and Session Laws such as Capital projects, travel, and personnel. Categories of Special Funds are as follows:
IV. Discretionary Funds
“Discretionary” is an internal designation for a category of funds that consist of (1) unrestricted, undesignated donations initially made to a University Foundation; (2) donor-restricted gifts initially made to a University foundation or endowment earnings allowing discretionary spending; and (3) interest earned on certain non-General Fund sources.
Discretionary funds must be used for a valid business purpose that directly benefits the program or objective for which they are received and require prudent and reasonable judgments by those responsible for the funds. With these guiding principles, the use of discretionary funds is flexible in nature but must comply with University policies, standards, and documentation requirements.
Roles and Responsibilities / Compliance
The Associate Vice Chancellor for Finance will issue standards, guidelines and procedures to assist departments in implementing this and other related policies. This Policy is the governing foundation for future standards, guidelines and procedures related to the management and use of operating funds.
The responsible party assigned to each fund must ensure the use of funds complies with the overarching principles, UNC General Administrative policies and the State Budget Manual, where applicable, and are supported by original, verifiable documentation.
Responsible Office: Business Affairs