Appropriate Use of University Funds

University Policy 601.8, Appropriate Use of University Funds

Executive Summary: 

This Policy identifies permissible and impermissible uses of various types of University funds.

I. Introduction

The University of North Carolina at Charlotte receives funds from a variety of sources, including state appropriations, fees, receipts, and gifts.  Most of the funds received are for specific, limited purposes or are subject to restrictions by a governing body.  The University uses all funds, regardless of type, in a manner consistent with applicable federal and state laws and regulations, University policies, and other restrictions or designations governing their use. 

II. Fund Definitions

Appropriated Funds

Appropriated Funds, also referred to as “general funds” or “state funds”, include all moneys appropriated 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 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 general fees that do not qualify as Institutional Trust Funds (e.g., Education and Technology Fee, Application Fee), and utility service reimbursements from auxiliaries.

Foundation Funds

Foundation Funds are non-Appropriated Funds held in the accounts of The Foundation of the University of North Carolina at Charlotte, Inc. and The Athletic Foundation of the University of North Carolina at Charlotte, each separate 501(c)(3) organizations.  These funds are generally not on deposit in a University fund.  Both organizations support the University by accepting donor gifts to assist with the educational objectives of the University.  The use of these funds must be consistent with the purpose required by the donors.
 
The operating budget for the Foundation and Athletic Foundation are approved by their respective Board of Directors.  Both Foundation budgets include discretionary support for the University for programmatic activities and development and are requested annually by the Chancellor and the Athletic Director.
 
Institutional Trust Funds are non-Appropriated Funds on deposit with the North Carolina Department of State Treasurer outside of the general and capital funds, including:

Discretionary Funds

Discretionary Funds are funds that are not government appropriated, do not carry restrictions as to usage or purpose, and are not designated by the University for a particular use.  Discretionary Funds can be used for any legal purpose that will advance the mission of the University. Expenditures of Discretionary Funds must be for a valid business purpose.  Discretionary Funds are created when unrestricted, undesignated donations or interest from certain institutional funds are deposited into a separate institutional account approved by the Chancellor, Provost, Athletic Director, a vice chancellor, or a dean. 
 
Expenditures of Discretionary Funds, whether for meals; travel; lodging; business entertainment; official  functions; sponsorship of tables or events; gifts and awards; or memberships, must comply with all University policies that apply to the type of expenditure and must be accompanied by appropriate documentation including receipt(s), business purpose, date, location, and names of persons involved.  The flexibility associated with Discretionary Funds means that judgment is required in determining the propriety of some expenditures.  In these cases, the prudent person test applies, which means the employee determining the appropriateness of the expenditure must be comfortable with the prospect that this expenditure decision could come under the scrutiny of individuals outside the University. 
 
Auxiliary and Student Fee Funds are generated by those fees and activities that support student attendance at the University.  Examples of these funds include revenues from housing, dining, bookstore, and parking.
 
Millennial Campus Trust Funds are non-Appropriated Funds generated through activities described in the Millennial Campuses Financing Act.
 
Overhead Receipts (or F&A) are non-Appropriated Funds generated through charging a predetermined percentage, known as the Facilities and Administrative Rate, to externally sponsored projects.  The use of these funds is limited to scholarly development of faculty, staff and students to sustain academic programs, to support campus infrastructure, and to encourage and expand research. 
 
Restricted Trust Funds are gift funds for which the use and/or purpose have been restricted by the donor. 
 
Specifically Designated Unrestricted Trust Funds are non-appropriated Institutional Trust Funds that have been designated by a University action to be used for a specific purpose or identified in the fund establishment process as funds for a particular purpose, such as relocation costs.  The name of the fund provides guidance on its purpose.  Within these funds, there are certain undesignated funds that are specifically held for reserves and contingencies.
 
Unrestricted Trust Funds are Institutional Trust Funds that are not restricted by a donor, but are generally designated by the University in support of a particular unit or activity.  Sources of these funds may include but are not limited to unrestricted gifts, non-academic fees, accumulated balances from recharge operations, revenues generated from rental and non-appropriated equipment and facilities, investment income, fixed fee contracts, and event receipts.  For the purpose of this Policy, auxiliaries, overhead receipts and Discretionary Funds are not considered unrestricted trust funds.
 
Agency Funds are funds held by the University and the University acts as a custodian or agent with a fiduciary relationship for the designated organization, club, etc.  These funds are associated with campus activities.

III. Standards

Expenditures for the following items are routine, operational in nature, and easily documented as University mission-based expenditures:  faculty and staff salaries; classroom, research and support equipment and supplies; and plant operation and maintenance.  However, expenditures such as entertainment, gifts, decorations, artwork, food purchases, meals, purchases for the office to be used for the convenience of employees, certain recruitment and relocation expenses, excess travel costs above the amount allowed under North Carolina law, and awards may require additional supporting documentation and will be reviewed by the Controller’s office.  As a general rule, if categories of funds other than Discretionary Funds are available to address a funding need, and if those funds can be used for the intended purpose consistent with any restriction on their use, then such other funds must be used before Discretionary Funds are applied.  Expenditures that confer a personal benefit are not allowable, and all such nonoperational expenditures must be approved by a supervisor.  Appropriate documentation must accompany all expenditures and should include receipt(s), identification of business purpose, date, location, and names of persons involved and their business relationship to the University.
 
The following standards illustrate some common issues concerning the uses of University funds.  These standards reflect applicable law, regulation, and policy, as well as letter guidance and audit findings directed to constituent institutions of The University of North Carolina and other state agencies.  An abbreviated version of the information below can be found in Appendix A.

1.  Advertising, marketing and promotional Items

Appropriated Funds and Discretionary Funds may be used for advertising, marketing and promotional items.  This includes items such as pens, pencils, erasers, water bottles, coffee mugs, key chains, and t-shirts if the t-shirts are for a security or safety need.  In addition, t-shirt purchases must be approved by the Budget Office. 

2.  Alcohol

Discretionary Funds are the only types of funds that may be used to purchase alcohol.  For official on-campus and off-campus functions where alcohol is served, there must be prior written approval by the Provost, appropriate vice chancellor, or Athletic Director.  Official on-campus functions where alcohol is served must be catered by the University’s food service provider or an organization holding a valid ABC Special Occasion Retail Permit, in accordance with University Policy 706, Alcoholic Beverages.  Official off-campus functions where alcohol is served must be catered by an organization holding a valid ABC Retail Permit.  The only exception to the prior approval requirement is for business meals (see below). 

3.    Amenity

Discretionary Funds are the only types of funds that may be used to purchase amenities.  An amenity is a gift item that helps to build, strengthen and promote relationships with groups and individuals, on and off campus.  These expenditures are appropriate for the Chancellor’s Office, University Advancement, and officially sanctioned for University activities, such as Commencement, Convocation, or official staff recognition activities. 

4.    Awards and gifts

Discretionary Funds and other institutional funds may be used to purchase awards and gifts in accordance with University Policy 101.18, Employee Gifts, Prizes, and Awards.  Appropriated Funds may be used for this purpose as long as the awards and gifts are through a Chancellor-approved program, University-sanctioned program, or under the North Carolina Employee Suggestion System that is described in the North Carolina Office of State Personnel employee handbook.  The Teaching Excellence Award, state service awards, and awards during the staff appreciation celebration are examples of University-sanctioned awards.  Chancellor-approved award programs will identify an appropriate fund source. 

5.    Business meals

Discretionary Funds, Appropriated Funds, and other institutional trust funds may be used for business meals.  A business meal is defined as a meal that includes more than one person and has substantive and bona fide business purpose deemed essential to the University’s mission. Solicitation or cultivation of a donor, recruitment of faculty/staff, purchases of tables at community-sponsored events, or hosting of receptions and booths where participation serves to enhance the University’s relationship with the community are examples of business meals. Appropriated Funds and other institutional funds may not be expended for this purpose unless the person requesting reimbursement is authorized to travel per the North Carolina Budget Manual and at least one person from outside the University is in attendance.  This person from outside the University must have a valid University business purpose.  Furthermore, Appropriated Funds may not be used for meals in conjunction with an employee’s normal day-to-day business activities.  Discretionary Funds may be used for the excess costs over the state subsistence amount, and may also be used if the event has valid University business purpose but does not meet all of the North Carolina Budget Manual requirements.  The cost of the business meal must be reasonable, and the documentation must include receipt(s), business purpose, date, location, and the names of persons involved and their business relationship with the University.      

6.    Conferences, Seminars, Workshops, Committee Meetings, Training Sessions and Retreats

Discretionary Funds, Appropriated Funds, and other institutional funds may be used for professional business activities that are considered external conferences, internal conferences, training sessions, or retreats. Examples include: 
 
  • Committees established to include broad-based campus participation
  • Search committee for Senior Academic and Administrative Officers (SAAOs)
  • Faculty and staff who are working with the Southern Association of Colleges and Schools (SACS) reaccreditation committee
  • Departmental conferences, training programs, receptions, business meetings, seminars, and acknowledgements
  • Management retreats attended by the Chancellor and his or her top assistants and coworkers 
  • Employment-related educational classes or programs for which a fee is generally charged

a.    External conference

Discretionary Funds, Appropriated Funds, and other institutional funds may be used for external conferences.  An external conference is a conference, seminar, workshop, training session or retreat attended by persons other than employees of a single institution or agency.  Payment for meals is allowable if included in the registration fee, but such fee must not consist exclusively of meals or it will not be allowable from Appropriated Funds and other institutional trust funds unless the overnight travel criteria is met per the North Carolina Budget Manual.  Furthermore, Appropriated Funds and other institutional funds may not be used to pay for conference meals if a conference fee was not charged unless certain conditions are met per the North Carolina Budget Manual.  The conference must be planned in detail, in advance, have a formal agenda or curriculum, have a written invitation to participants, and the conference must be attended by more than twenty participants in order to use Appropriated Funds and other institutional trust funds for refreshments.  These refreshment costs are limited per person per day per the North Carolina Budget Manual.  Discretionary Funds may be used for the excess costs over the state subsistence amount, and may also be used if the event has valid University business purpose but does not meet all of the North Carolina Budget Manual requirements.  Subsistence is defined in the North Carolina Budget Manual as an allowance related to lodging and meal costs (including gratuities).  The state subsistence rates are referenced in the North Carolina Budget Manual

b.    Internal conference

Discretionary Funds, Appropriated Funds, and other institutional funds may be used for internal conferences.  An internal conference is one that is attended by employees within a particular institution or agency only.  A routine staff meeting is not an internal conference.  No payment for meals is allowable from Appropriated Funds and other institutional trust funds unless the overnight travel criteria is met per the North Carolina Budget Manual.  The conference must be planned in detail, in advance, have a formal agenda or curriculum, have a written invitation to participants, be held in a state facility, and the conference must be attended by more than twenty participants in order to use Appropriated Funds and other institutional trust funds for refreshments.  These refreshment costs are limited per person per day per the North Carolina Budget Manual.  Discretionary Funds may be used for the excess costs over the state subsistence amount, and may also be used if the event has valid University business purpose but does not meet all of the North Carolina Budget Manual requirements. 

c.    Training sessions

Discretionary Funds, Appropriated Funds, and other institutional funds may be used for training sessions.  Training involves courses that further develop an employee’s knowledge, skill, and ability to perform the duties of his/her present job, such as courses on computer usage or management skills development.  No payment for meals is allowable from Appropriated Funds and other institutional trust funds unless the overnight travel criteria is met per the North Carolina Budget Manual.  The training session must be attended by more than twenty participants in order to use Appropriated Funds and other institutional trust funds for refreshments.  These refreshment costs are limited per person per day per the North Carolina Budget Manual.  Appropriated Funds and other institutional trust funds may be used for training books and materials related to training sessions, provided those books are required to participate in the training sessions.  These books are considered property of the University, not the employee.  Discretionary Funds may be used for the excess costs over the state subsistence amount, and may also be used if the event has valid University business purpose but does not meet all of the North Carolina Budget Manual requirements. 

d.    Retreats

Discretionary Funds, Appropriated Funds, and other institutional funds may be used for a management retreat held by the Chancellor for his or her management team.  Discretionary Funds may be used for other University-related retreats with a valid University business purpose. 

7.    Convenience items for employees

Discretionary Funds are the only funds that may be used to purchase convenience items for employees.  These are items that are used and reside in the work place for the convenience of the employees.  Examples of such items include televisions, refrigerators, microwaves, and coffeemakers.  All equipment, including convenience items, must be accounted for as described in University Policy 601.15, Control and Management of University Equipment and Other Property.  

8.    Cultivation of donors and development of community and institutional relationships

Discretionary Funds are the only types of funds that may be used for cultivation of donors and potential donors and development of community and institutional relationships, which may include business meals, entertainment, and amenities. 

9.    Entertainment

Discretionary Funds are the only types of funds that may be used for entertainment.  Entertainment includes amusement or social activities and items relating thereto, such as meals, lodging, rentals, transportation, and gratuities.  Appropriated Funds and other institutional funds may not be expended for this purpose. 

10.  Gross up payment

If a payment or reimbursement is not in compliance with the University’s accountable plan or fringe benefit exclusions, then the amount of the payment or reimbursement will be treated as taxable income to the recipient, regardless of the type of funds used for payment.  Payments to an employee’s spouse, guest, and/or children will be treated as having been made to the employee.  In this situation, the department can choose to gross up the payment so that the employee’s tax liability is paid for by the department.  Discretionary Funds are the only types of funds that may be used for this purpose. 

11.  Parking-related expenditures

Discretionary Funds may be used for parking tokens and reserved parking spaces.  No fund type may be used to purchase personal parking permits.  Appropriated Funds and Discretionary Funds may be used to purchase parking permits at an off-campus location for those faculty members who teach at two facilities (e.g. on-campus and at the Uptown facility). 

12.  Recruitment meals

Recruitment meals must include the participation of the candidate being interviewed and may include more than one University employee.  Guests of the candidate and the employee may attend for a valid University business purpose (e.g. attendance improves the chances for a successful recruitment outcome).  Appropriated Funds, Discretionary Funds, and other institutional funds may be used to pay for the candidate; however, only Discretionary Funds may be used to pay for the candidate’s guest, the employee and the employee’s guest.  Appropriated Funds may be used to pay for the employee’s meal if the employee is in travel status per the North Carolina Budget Manual.  The excess costs over the state subsistence amount may be paid from Discretionary Funds. 

13.  Relocation and moving costs

Discretionary Funds may be used for relocation and moving costs for new employees.  Relocation and moving costs are expenses incurred by an employee for relocation of their personal residence due to a work-related event.  Appropriated Funds may not be expended for this purpose unless certain criteria are met by the employee per the North Carolina Budget Manual.

14.  Retirement and faculty receptions

Discretionary Funds are the only types of funds that may be used for retirement and faculty receptions.  A reception is a form of celebration to honor an employee.  Documentation must include a copy of the announcement. 

15.  Student-oriented activities

Discretionary Funds and Auxiliary and Student Fee Funds may be used for student-oriented activities (instructional and non-instructional).  Appropriated Funds may be used for certain instructional student-oriented activities and must be approved by the Budget Office.  Student-oriented activities are academic and student-life related events such as new student receptions, scholarship presentations, and student government activities.  The purchase of food or beverage for students is not allowable from Appropriated Funds unless the student is in travel status per the North Carolina Budget Manual.

IV. Reporting

Financial Services will establish funds as needed for budgeting and reporting purposes. The person responsible for an individual fund is designated in the financial accounting system as the financial manager.  Any delegation of this spending authority must be documented in the department that is responsible for the fund.  The financial manager is required to maintain accurate records and appropriate documentation of expenditures.  Employees may not authorize or approve an expenditure or reimbursement for themselves.  Such expenditures must be approved by the employee’s supervisor. 

V. Responsibility

The Provost and the vice chancellors are responsible for ensuring compliance with the requirements of this Policy within their respective divisions.  Exceptions to this Policy must be approved by the appropriate Provost/vice chancellor.  The Vice Chancellor for Business Affairs will ensure that this Policy is updated; will provide interpretative guidance; and will report to the Chancellor, Provost, and the vice chancellors on the use of University funds as necessary.