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Local Funds Policy, effective July 1, 2018

Summary

...to provide guidance to individuals seeking to use university local funds to execute purchases when conducting the university’s business.

Full Description

Administrative Policy - FIN

Title:  Allowable Use of University Local Funds

Effective Date:  July 1, 2017

Revision Date:  July 1, 2018

I.  Scope

This policy is intended for all employees of William & Mary, including the Virginia Institute of Marine Science (hereafter referred to as “the university”), with budget authority to spend from university local funds. Expenditures of state funds must be made in accordance with the Commonwealth Accounting Policies and Procedures (CAPP) manual set out by the Virginia Department of Accounts (DOA) and are not impacted by this policy. 

II.  Purpose

The purpose of this policy is to provide guidance to individuals seeking to use university local funds to execute purchases when conducting the university’s business.  Although university local funds are not deposited in the Treasury of the Commonwealth of Virginia, they are public funds by virtue of the university being a public institution of higher education, and it must follow university procurement regulations, regardless of fund type.  Similarly, all funds, both state and local, are reported on the university’s financial statements and are subject to audit by the Virginia Auditor of Public Accounts and the Virginia Freedom of Information Act. The purpose of this policy is to ensure that university local funds are being spent in accordance with university priorities and are being used to the best possible extent to support the university’s mission.

III. Definitions

State Funds -  Funds appropriated by the Commonwealth of Virginia, such as state general fund (taxpayer) dollars; tuition and fee revenue; state auxiliary enterprises, including revenues derived from student housing, dining, and athletics; student financial assistance, and financial assistance for educational and general services, including direct and indirect revenue received for sponsored programs.

University Local Funds – Funds not appropriated by the Commonwealth that are deposited into a local bank account held by the university that is not under the control of the Virginia Department of the Treasury.  Expenditures of local funds must follow university procurement regulations.  Pursuant to CAPP Manual Topic 20205, these funds are “not subject to the Comptroller’s policies governing the disbursement of State funds.  However, non-State fund accounting practices are subject to audit by the Auditor of Public Accounts (APA) and authorized accounting firms.

Examples of local funds include, but are not limited to:

  • Unrestricted or restricted gifts or donations to the universityGift funds or related income earned on those funds that are controlled by and expensed directly from the university, not an affiliated university. These funds are commonly referred to as “BOV private funds” and designated with a “1Z” or “2Z” fund and index. 
  • Other unrestricted or restricted funds that support standard university business operations - Funds that have been established to allow for expenditures through the university, but are supported by gifts maintained in one of the university’s affiliated foundations. Expenses to these funds are covered by a transfer of revenue from one of the affiliated foundations.  (Note:  for funds supported by the transfer of revenues from the William & Mary Foundation, the university establishes funds designated with a “1W”, if unrestricted, or “2W”, if restricted.  For additional information, contact University Data Control: https://www.wm.edu/offices/financialoperations/data/index.php  https://www.wm.edu/offices/financialoperations/data/contact/index.php
  • Revenue from sales and services – Revenue from ticket sales, departmental conferences or events, or other local university activities where a fee for service is charged to end users, often designated as a “1Y” fund and index.
  • Special rate program revenue not related to the educational activities – Fees generated by market-based academic programs, including executive graduate programs, on-line educational programs, and study abroad programs as approved by the Board of Visitors.
  • Local auxiliary enterprises – Those auxiliary programs for which no state appropriation of non-general funds is provided in the Commonwealth’s biennial Appropriation Act. Examples include Highland, the Plumeri House, Tennis Center, and university bookstore.  For a complete listing, check with the Data Control Department within university Financial Operations:  https://www.wm.edu/offices/financialoperations/data/index.php

Allowable Expenditures – Items for which university local funds can be used to cover the cost with appropriate procurement protocol and documentation as set out by University Accounting Procedures within the Office of Finance.

Unallowable Expenditures – Items that may not be expensed through the university. 

Non-Cash Gift – Tangible personal property (a physical item) that does not include cash, cash equivalents, gift cards, gift coupons, or gift certificates (other than arrangements conferring only the right to select and receive tangible personal property from a limited assortment of items preselected or preapproved by the employer).  Also excluded are vacations, meals, lodging, tickets to theater or sporting events, stocks, bonds, other securities, and other similar items.

University Business – Routine business expenses such as personnel costs, office materials and supplies, equipment, business travel, meals and incidentals that support routine operations of the university. 

Business Travel – Overnight travel, as defined by the IRS, by an employee for a bona fide business purpose. Note:  Same day travel is not considered business travel for purposes of claiming meal reimbursements, although mileage may be reimbursed for day trips involving a personal vehicle.

Standard Lodging Rates Rates established by the federal government based on location and month of travel.  For additional information: (https://www.wm.edu/offices/financialoperations/travel/meals/index.php

Meal Per DiemsRates established by the federal government based by location.  For additional information, see:  https://www.wm.edu/offices/financialoperations/travel/meals/index.php#mie2

IV.  Policy

All university employees are expected to follow university policies, guidelines and procedures for procuring and expensing travel, business meals, and other goods and services, regardless of the source of funds that are used to pay for those activities.  This policy addresses the use of university local funds.  Related policies govern the use of state funds appropriated to the university.

Expenses for routine university business should be handled through the university and not invoiced directly through one of its affiliated foundations.  Examples include:  faculty and staff business travel, reimbursements for business meals, purchase of office supplies and materials, procurement of specialized services, software, or the use of independent contractor, and any expense directly related to carrying out the business of the university.

In limited instances, university events, donor-designated activities, or special occasions may warrant direct expenditure through the foundation(s) in accordance with its expenditure policies.  Those instances should be limited with a clear justification as to why expenses should not be handled through the university. 

Further, expenses related directly to foundation activities, including meals and travel for foundation board members, the use of specialized, contracted services (e.g., foundation auditors), or other expenses directly related to the management of the foundation are not subject to this policy.

Note:  All expenses must have appropriate documentation, including itemized receipts if applicable.  Please consult financial operations procedures for details:  https://www.wm.edu/offices/financialoperations/index.php

A. Employee compensation – University employees may have all or a portion of their salary, wages, and related benefits supported by local funds with approval from the Budget Office and Human Resources. Please contact askHR@wm.edu for additional information.  Note:  University employees should receive no compensation directly from an affiliated foundation or other business entity.

B.  Goods and Services – Non-personnel purchases/expenses, commonly referred to as Maintenance and Operations or “M&O”, typically fall into one of 11 major categories, as defined below. In addition to purchases that are allowed on state funds, the university may use local funds for these activities as described below.  Where indicated, purchases are capped at a maximum -- not to exceed -- allowable level as shown. 

  1. Employee Business Travel – Travel that has been pre-approved by an employee’s supervisor (or designee) and designated budget approver that directly supports the mission of the university, professional development, or job-related activity.
    a) Car Rental GPS and Fuel Service Plans – allowable on local funds with a bona fide business purpose

    b) Car Rental Insurance – allowable only in extreme circumstances with justification as to why traveler could not use mandatory car rental contract: https://www.wm.edu/offices/procurement/procurement_processes/required_preferred_purchases/enterpriserentalcars/index.php

    c) Taxi Tips
    – Allowed up to 20% of total charge

    d) Business Class Upgrades for flights lasting less than 8 hours with appropriate justification. Note:  First class flights are strictly prohibited

    e) Baggage Fees, Parking, Tolls, Resort Fees – allowed with qualified business purpose

    f) Conference Lodging in excess of 200% of the Nightly Rate - Allowed with pre-approval by the Vice President for Finance and Chief Financial Officer (VP/CFO) with appropriate documentation

    g) Non-Conference Lodging - Allowed with approval by the responsible Dean or Vice President; additional approval from the VP/CFO if cost exceeds 200% of nightly rate.

    h) Per Diem for Meals – Use of local funds for per diem meals is consistent with state guidelines given limitations set forth by the IRS. Per Diem rates, regardless of fund source, are capped at U.S. General Services Administration Guidelines, consistent with state and federal IRS guidelines. Travel days are capped at 75% of per diem per state and federal regulations. In addition, to the extent meals are provided by the host or included as part of registration or other fees already paid for by the university, those meals should not be included in the per diem amounts. (Note:  Departments may choose to reimburse at the lesser of actual receipts or per diem, but are responsible for tracking and reconciling receipts prior to submission to the university travel office.  Departments may not reimburse above per diem rates, since those reimbursements are considered taxable income to the employee.)
  2. Non-employee Business Travel – With a valid business purpose, the university may cover the cost of travel for certain non-employees including, but not limited to, individuals who are candidates for a position with the university, guest lecturers, outside consultants, potential donors or other professionals who have been engaged by the university.  Allowable expenses and expense limits for non-employee business travel shall be consistent with the items outline in Item B1 above.   Note:  Travel for related family members is not reimbursable unless the family member is also traveling for a specific university-related purpose.
  3. Business meals, including catered events, not related to travel – Food and non-alcoholic beverages served at business meals that do not occur when an employee is in travel status (see B1 above) can fall into 5 categories:

    a) Business Meals Involving External Parties - Allowed up to 200% of the standard meal rate with approval by the appropriate Dean or Vice President. Examples include meals with job candidates, potential donors, guest speakers or other invited guests of the university, including guests’ spouses, if appropriate. (Note: Travel expenses for spouses are unallowable as stipulated under Item B2 above.

    b) Internal Training and Related Business FunctionsUp to one event per quarter is allowed with costs reimbursed up to 200% of standard meal rate if the event includes formal training or a business agenda and lasts more than two hours and is approved by the appropriate Dean or Vice President

    c) Events with Students - Allowable up to 200% of the standard meal rate for academic as well as non-academic events and is approved by the appropriate Dean or Vice President

    d) Employee Appreciation EventsAllowed up 200% of the standard meal rate. Note: Appreciation events should be limited to no more than once per quarter

    e) Meals, Food or Beverages for One University EmployeeAllowed up to standard per diem rates if the employee is meeting with a non-employee who is covering his or her own expenses. The expense must be approved by the responsible Dean or Vice President and must be handled on a reimbursement basis. These items are prohibited on the university small purchase charge card (SPCC).
  1. Alcohol provided at business meals including catered events. Alcoholic beverages may be purchased with local university funds as long as the cost per person, inclusive of tax and tip, does not exceed $30 per person and served in conjunction with food. 
  2. Non-cash Gifts and Recognition – A non-cash gift or award of up to $100 on an annual basis may be provided to students, employees, volunteers and other non-employees in recognition of their contributions to the university.

    Food may also be provided as recognition or in appreciation for employees, volunteers, or other non-W&M employee with a bona fide business purpose as outlined in Item 3d above.
  1. Flowers/plants – Local funds may be used for flowers under the following conditions:

    a) for public events consistent with the mission of the institution (e.g., Commencement or Charter Day ceremonies, public performances, or other public events

    b) to decorate public common areas in university buildings, to recognize volunteers, donors or other non-employees, or

    c) in sympathy for the death of an employee’s immediate family member. Funeral or sympathy arrangements are capped at $100, including tax, tip and delivery.

    Flowers may also be provided as recognition or in appreciation for employees, volunteers, or other non-W&M employee with a bona fide business purpose as outlined in Item 5 above.
  1. Event sponsorship – With pre-approval by the Vice President for Strategic Initiatives and Public Affairs, the university may use local funds to sponsor an event organized by an external third party that are essential to, and support the mission of, the university. Note:  Philanthropic contributions to another non-profit organization are prohibited unless explicitly approved by the Senior Vice President for Finance and Administration or provided in lieu of flowers as provided for under Item #6.
  2. Public Art – With approval by the responsible Dean or Vice President and consistent with any policies or procedures set forth by the university’s design review board, local funds may be used to purchase art for public spaces.
  3. Office Beverages – Coffee, tea, water or other beverages available for visitors and guests may be purchased with approval by the responsible Dean or Vice President.
  4. Non-Cash Gifts or Awards for Employee Service or Retirement – Non-cash gifts and awards for years of service or in recognition of an employee’s retirement shall be made in accordance with the university policy on this topic https://www.wm.edu/about/administration/senioradmin/financeadministration/financeoffice/tax/employeeretirementgifts/index.php.
  1. Other Goods and Services – For other goods and services, additional information can be found at: https://www.wm.edu/offices/procurement/buying/index.php.

C.  Exceptions – Limited exceptions may be provided in the following instances:

  • For expenses supported by Special Program Revenue, as defined above.
  • Expenses from funds specifically designated by the Senior Vice President for Finance and Administration for strategic purposes that are supported solely by gifts, income from gifts, or other local revenues to the university.

In all cases, expenses from the designated funds under this provision will be managed consistent with the annual budget approved by the responsible Vice President, the Provost, and the Senior Vice President for Finance and Administration.

V.  Approval and Amendment
  • This policy was created by the Senior Vice President for Finance and Administration (SVPFA) effective July 1, 2017, and may be amended or terminated by the SVPFA.
  • Questions about the implementation of this policy or its interpretation should be directed to the Vice President for Finance and Chief Financial Officer.
VI.  Related Policies or Other Documents