401Finance Committee Operations

  1. Introduction

    The Bylaws of 91原创 (herein called Board), at Article IV, Section 3, provide for a standing committee designated as the Finance Committee (herein called Committee). The Committee's role is primarily advisory to the Chancellor and the Board, unless otherwise provided by the Board. It is expected that the Committee will meet periodically at regular meetings of the Board, and on other occasions as deemed necessary by the Chancellor or the Board.

  2. Objectives

    The purpose of these operating guidelines is to provide a mechanism through the Office of the Chancellor to assist the Board in its policymaking role and in those business and financial matters requiring Board action on matters in which the Board has expressed a desire to be kept fully informed. The Chancellor shall review information and make recommendations to the Committee in the following areas:

    1. Establishment and implementation of financial policies and objectives of the University;
    2. Levying of student tuition and fees;
    3. Review and approval of legislative requests for appropriations; both Operating & Maintenance as well as Capital, annual budgets, and midyear budget changes;
    4. Approval of all loans, borrowing and the issuance of bonds;
    5. Review and advise regarding long-range fundraising development plans;
    6. Review of long-range financial plans;
    7. Review of the financial aspects of new or modified policies at both the campus and System levels;
    8. Approval of depositories, custodial arrangements, contractual arrangements and legal commitments of all kinds;
    9. Review and approval of technology contracts or projects that exceed $750,000.

    In each of the areas set forth above, the Chancellor, through the Vice Chancellor for Finance and Administration, the principal staff officer in these matters, shall cause the issuance of detailed plans for accomplishing the work of the Chancellor and the Board. Such detailed plans will be approved by the Chancellor and communicated to the Presidents and to the members of the Committee.

    Before issuing any such detailed plans, the Chancellor or Vice Chancellor shall consult with and seek the advice and recommendations of the chief financial officers of each of the campuses.

    To fulfill the above purposes, the Committee will work with the assistance of the Vice Chancellor for Finance and Administration, as designated herein. The Chancellor wishes to review and present to the Board relevant financial functions indicated under this Section II.

Operation of the Committee

        1. All financial issues of the Board are presented to the Committee.
        2. Chancellor's staff prepares agenda for distribution to the Committee members prior to each meeting.
        3. The Committee takes the official action for items requiring action by a Board Committee.
        4. The Vice Chancellor for Finance and Administration , or her/his designee, schedules working sessions, as needed, to permit time for full discussion of each item on the agenda.
        5. In order for an item to appear on the agenda of the Committee, it should have been reviewed by the Chancellor, the Chair of the Committee or the President pro tempore.

(Adopted August 24, 1977 as Committee Guidelines; amended January 21, 1981, September 16, 1981, and April 21, 1995; amended and adopted as Board Rule December 5, 1977; amended November 19, 1999; November 14, 2008,June 7, 2019, and September 16, 2022).

402Financial Accounting and Reporting

  1. General

    Financial accounting and reporting shall be prepared in a manner generally consistent with the principles and guidelines set forth by the National Association of College and University Business Officers (NACUBO). Specifically, NACUBO publications define the two standard-setting boards which control college and university accounting and financial reporting practices as the Financial Accounting Standards Board (FASB) and the Governmental Accounting Standards Board (GASB).

    The 91原创 System adheres to the standards set by the GASB. The GASB was created by the Financial Accounting Foundation (FAF) in 1984 to establish generally accepted accounting principles for state and local governments and their component units, including government-controlled, not-for-profit organizations such as colleges, universities, and hospitals.

    The GASB has developed guidance on accounting issues related to recognition, measurement, and changes in net position, classification of assets, liabilities, revenues, expenses, gains and losses included in the external general-purpose financial statements of public colleges and universities that report as special-purpose governments engaged in only business-type activities. Based on the guidance provided in GASB 34, the campuses and hospital of The 91原创 System prepare annual financial statements as special-purpose governments engaged in only business-type activities.

    The financial reports of The 91原创 System entities shall be prepared in compliance with the most recent applicable GASB guidance as deemed appropriate by the Chancellor in consultation with the Audit, Risk, and Compliance Committee of the Board. Management on each campus shall be responsible for a continuous risk assessment of key financial processes and for maintaining adequate control structure and procedures for financial reporting and other financial disclosures. The Audit, Risk, and Compliance Committee will approve the annual audited financial statements of the System and the campuses.

  2. Campus Annual Financial Reports

    Campus annual financial reports to the Board shall include basic financial statements, notes to financial statements, and other supplementary information required by generally accepted accounting principles. The independent auditor's opinion letter shall be included with these reports.These statements, notes, and schedules should generally adhere to the principles and guidelines set forth in the references cited in Section I. Variations intended to accomplish more complete disclosure shall be published as needed by the Finance and Administration Department of the System Office.

  3. Other Financial Reports

    Other financial reports shall be prepared as required by the Board and the Chancellor.

(Originally adopted November 30, 1977 as Rule 411; completely revised April 9, 1980; amended April 21, 1995; renumbered December 5, 1997; amended November 9, 2007, and June 7, 2019.)

403Funding of and Accounting for Expenses of The 91原创 System Office

It is the policy of the Board that expenditures for the work of The 91原创 System Office in support of the Board's responsibilities are an integral part and an extension of campus expenditures and, consequently, should be reflected appropriately in the financial accounting of each campus. The budgeted assessments for the System Office anticipated expenditures for each fiscal year will be provided by the Chancellor or his designee, acting on behalf of the Board, in sufficient time for the campus operating budgets to reflect anticipated needs. Allocation of expenses shall be made to each campus on the basis determined by the Chancellor to be the most equitable, agreed to by the President pro tempore of the Board, and discussed in advance with the campus Presidents.

(Adopted February 1, 1978 as Rule 412; amended May 13, 1978, and April 21, 1995; amended and renumbered December 5, 1997, and June 7, 2019.)

404Investment Policy and Guidelines

  1. Statement of Purpose

    The purpose of this investment policy statement is to assist 91原创 ("Board of Trustees") in effectively supervising and monitoring the investment activities of The 91原创 System ("System") and to provide guidance to investment advisors employed to manage assets on its behalf. This statement represents the current investment philosophy consensus of the Board of Trustees and shall be reviewed from time-to-time to ensure that it continues to reflect the appropriate expectations, goals, and objectives for the different funds managed on behalf of the Board of Trustees.

  2. Definition of Responsibilities

    The Board of Trustees has delegated to the Investment Committee responsibility for recommending investment objectives, broad asset allocation changes, policies, and practices.  The Investment Committee is  responsible for overseeing investment activities and performance; for ensuring the proper control and safekeeping of the investment funds; for making changes within the broad asset allocation guidelines; and for the selection and approval of managers and custodians, and such advisors/consultants as are necessary to properly manage these funds.

  3. Reporting

    The System Office reports on the investments and performance of the investment pools monthly to the Investment Committee of the Board of Trustees, the Chancellor, University Presidents, and University Vice Presidents for Finance and Advancement.  The investment pools consist of the Pooled Endowment Fund (鈥淧EF鈥�) and the Liquidity and Capital Reserve Pool (鈥淟CRP鈥�).  The PEF is comprised of all participating endowed funds and strategic long-term reserve funds.  The LCRP is comprised of operating reserves.

    Periodically, the advisor/consultant will make a presentation to the Investment Committee and show performance relative to benchmarks and peer institutions.  The advisor/consultant will also provide other reporting as deemed necessary by the Committee.

A. Investment Policy for Pooled Endowment Fund

  1. Investment Objectives

    The purpose of the PEF is to support the System universities, hospital, related foundations, and their missions over the long-term. Accordingly, the primary investment objectives of the PEF are to:

    1. Preserve the real purchasing power of the principal; and
    2. Provide a stable source of perpetual financial support to the Endowment's beneficiaries.

    To preserve the real purchasing power of the principal and provide a stable source of income to the beneficiaries of the PEF, the long-term annualized total rate of return objective for the PEF will be targeted at inflation as defined by the Consumer Price Index (CPI) plus the PEF spending rate plus all fees and expenses. To satisfy its long-term rate of return objective, the PEF relies on a total return strategy in which investment returns are achieved through both capital appreciation (realized and unrealized) and from natural income (interest, dividends, royalties, and rents). Asset allocation guidelines and the investment manager structure should be established to meet the target return while providing adequate diversification to minimize the volatility of investment returns.

    The PEF assets are intended to support the System in perpetuity.  For investment purposes, the PEF Portfolio has a long-term investment horizon, and performance will be reviewed over full market cycles.

  2. Pooled Endowment Fund Spending Policy

    The Board of Trustees shall attempt to balance the long-term objective of maintaining the purchasing power of the PEF with the goal of providing a reasonable, predictable, stable, and sustainable level of income to support current objectives. The Board has established a Spending Rate for the PEF of 4.5% of the 60-month moving average of unit market values. The Investment Committee will review the spending rate periodically.

    In determining whether it is appropriate to make distributions, the System Office will comply with Section 4 of the Uniform Prudent Management of Institutional Funds Act (UPMIFA), as adopted by the State of 91原创 and codified at Code of 91原创, 19-3C-1, et seq., or any successor statute or statutes governing such distributions.  UPMIFA requires, if relevant, consideration of seven factors when determining when spending is prudent: 鈥�(1) the duration and preservation of the endowment fund; (2) the purposes of the institution and the endowment fund; (3) general economic conditions; (4) the possible effect of inflation or deflation; (5) the expected total return from income and the appreciation of investments; (6) other resources of the institution; (7) and the investment policy of the institution.鈥�2

    At the institutional level, university financial and advancement officers shall establish internal policies that temporarily prohibit distributions from an endowment fund that has a current market value less than its historical dollar value based on the UPMIFA guidelines.  Historical value or corpus is defined as the original donor contribution plus any additional contributions, and any additions to historic dollar value as prescribed by the donor鈥檚 gift instrument.  In all instances, the donor鈥檚 intent must be met. 

    To prevent spending before earnings have accumulated, effective October 1, 2017, any new endowment fund shall be invested in the PEF for a consecutive period of 12 months prior to the distribution of a spending allocation of realized gains.

    Strategic long-term reserve funds may not be redeemed for a minimum of ten years, and all spending distributions for strategic long-term reserve funds are required to be reinvested in the PEF, unless prior approval has been received from the Senior Vice Chancellor for Finance and Administration and Chair of the Investment Committee. For any System Office strategic long-term reserve funds, the Chancellor and Chair of the Investment Committee must approve redemptions or spending distributions.

  3. Pooled Endowment Fund Asset Allocation

    To achieve its investment objectives, the PEF shall be allocated among a number of asset classes. The primary asset classes may include:  global equity, global fixed income and cash, real assets, and diversifying strategies. The purpose of allocating among asset classes is to ensure the proper level of diversification within the PEF.  Further descriptions of the asset classes are below:

    Global Equity 鈥� The allocation will consist of public equity, private equity, and equity-oriented hedge funds. Global Equity is expected to be the highest risk, highest return asset category of the four. The allocation will be diversified by factors including security, sector, geography, market capitalization, and manager style

    Global Fixed Income and Cash 鈥� The allocation will consist of two broad categories: high quality/rate sensitive and global/private credit/distressed.

    1. High quality/rate sensitive investments are defined as managers where the majority of the portfolio is rated investment grade by S&P and Moody鈥檚 (Baa3/BBB- and above). These bonds provide equity risk mitigation, deflation protection, and liquidity to the portfolio.
    2. Global/private credit/distressed allocation will include high yield bonds, bank loans, emerging market debt, structured or asset backed bonds, debt oriented hedge funds, and private partnerships investing in debt (mezzanine loans, distressed debt, etc.). This allocation provides investment opportunities to generate a substantial real return but is more correlated with equity markets than high quality fixed income.

    Real Assets 鈥� The allocation will consist primarily of real estate, natural resources, and infrastructure assets. Investments will include public securities, hedge funds, and private partnership structures. These investments are expected to provide inflation protection as well as generate positive real rates of return.

    Diversifying Strategies 鈥� The allocation will consist of investments whose primary source of risk and return is not a constant allocation to one of the three asset classes listed above. This includes, but is not limited to, hedge funds and private partnerships whose approach can be described as 鈥渁bsolute return,鈥� multi-strategy, event driven, relative value, or global macro.

    Direct Co-Investments 鈥� The allocation will consist of direct investments sourced from existing investment managers within the private capital portfolio where skill and alignment have been identified. Co-investments benefit the PEF by 1)investing at a lower cost, and 2) providing additional transparency to the sponsor General Partner鈥檚 (鈥淕P鈥�) underwriting process. Co-investment opportunities must be executed in a short timeframe. As such, authorization for co-investment budgets will be pre-approved by the Investment Committee at the same time as approval for commitments to the respective GP鈥檚 fund. The GP will be authorized to invest up to the approved amount of co-investment capacity over the course of that fund鈥檚 investment period, at the GPs discretion.

    The target for the portfolio level of co-investments is 2% of the PEF. Coinvestments will not exceed 50% of the GP鈥檚 fund commitment at cost. Direct co-investment opportunities outside of pre-approved authorized amounts must be approved by the Investment Committee.

    The Investment Committee shall periodically review asset allocation targets, ranges, investment objectives, policies, and make changes in investment managers to reflect changes in market conditions, as well as changes in asset class valuations or investment manager performance.

  4.  

    2Code of 91原创 Section 19-3C-4(a)

  5. Liquidity for Pooled Endowment Fund

    Liquidity is necessary not only to meet the spending policy payout requirements but also to satisfy demands in case of an extraordinary event. In many instances, investment opportunities come with liquidity constraints. The tradeoff between opportunity and liquidity will be considered throughout the portfolio construction process. Sufficient liquidity should be maintained to fulfill the spending and operating objectives. Portfolio liquidity will be monitored using a three-tier system:

    • Liquid: available within 90 days
    • Semi-liquid: available in 90 days or more but less than 2 years
    • Illiquid: available only in 2 years or more

    New commitments will be made to illiquid/private capital investments with the intent to progress to a 43% allocation to private capital. A minimum of 30% of the portfolio will be held in liquid securities.

  6. In-Kind Gift Policy

    1. As a general rule, securities received as gifts will be sold on receipt and the proceeds added to the pooled fund, unless the endowment documents require separate management, in which case the proceeds will be allocated to the investment managers. In those cases where the Investment Committee decides not to sell securities received as a gift, those securities will not be commingled with the rest of the endowment and will be accounted for separately until sold.
    2. Gifts of real estate will be held at the individual universities as separately managed assets until liquidated. Unless the real estate has strategic long term importance to the universities or can be managed with existing land, timber, and mineral holdings for investment purposes, it should be liquidated as quickly as practical. Once the real estate is liquidated, the funds will be invested in the appropriate investment pool.
    3. Annually, universities are to provide to the System Office a report on all university managed investments.
    4. Annually, each university will report on non-campus land and natural resources held for investment.

  7. Life Income and Annuity Funds Investments

    The Board of Trustees assigns to university presidents the responsibility for direct investment and administration of life income and annuity funds. Investments are to be made in accordance with payout agreements determined at the time of initiation, subject to investment criteria for endowment funds, as described above. With the approval of The Board of Trustees, external investment advisors may be retained to manage certain life income and annuity funds. Upon the death of the respective beneficiaries, the principal becomes available to the respective university for the purposes described in each individual trust conveyance; investment of such funds will then be determined by the applicable funds investment policy.

B. Investment Policy for Liquidity and Capital Reserve Pool

  1. Investment Objectives

    The System Office, with the guidance and advice of the universities and hospital financial officers, is charged with developing and implementing an investment strategy that is consistent with matching the duration of the universities鈥� working capital with their projected needs. Because the reserves also serve as collateral for each institution's debt, care is taken to make sure that investment risk levels and liquidity are appropriate for the financial condition of each individual university. It is the responsibility of the System Office to ensure that cash is available to meet the liquidity needs of the universities and the hospital. As all cash needs cannot be anticipated, the portfolio shall consist largely of securities with active secondary or resale markets.

    System reserves are to be managed in one pooled fund, the Liquidity and Capital Reserve Pool, except for monies that are ineligible for inclusion in this pool, such as endowment assets and life and annuity trusts, and cash held for operations at banks. The goals of the pool are to preserve and grow capital, maximize returns without undue exposure to risk, and maintain sufficient liquidity for credit ratings.

  2. Liquidity and Capital Reserve Pool Asset Allocation

    The Liquidity and Capital Reserve Pool shall be allocated among a number of asset classes as described in the PEF Asset Allocation, excluding private equity, private debt, and private real assets. The pool does not distribute a spending rate and reinvests all income, but universities are able to withdraw reserves as needed for operations with sufficient notice to the System Investment Office, described in III. Liquidity for Liquidity and Capital Reserve Pool.

  3. Liquidity for Liquidity and Capital Reserve Pool

    In many instances, investment opportunities come with liquidity constraints. The tradeoff between opportunity and liquidity will be considered throughout the portfolio construction process. Sufficient liquidity should be maintained to fulfill operating objectives with consideration to time horizons for the need of the reserves established between the universities, hospital, and the System Office.

    Universities should provide the System Office with one business day notice for withdrawal requests up to $10 million. For requests greater than $10 million, requests should be made at a minimum of five business days in advance of receipt of funds.

    Universities may also request internal loans rather than liquidate invested assets. Universities must submit an internal loan request at least five business days in advance of the requested date of receipt of funds. The System Office will analyze the pool鈥檚 liquidity, asset allocation and any available credit facilities when considering internal loan requests. Internal loans for working capital purposes will not exceed twelve months. Internal loans for capital purposes may also be considered.

    Liquidity Policy guidelines for the Liquidity and Capital Reserve Pool are:

    Classification of Asset

    Liquidity

    Liquid (within 30 days)

    no less than 60%

    Semi-liquid (31 days to 1 year)

    no more than 40%

    Illiquid (greater than 1 year)

    no more than 15%

(Adopted as Rule 420, Investment Policy and Procedures on May 12, 1979; amended December 14, 1979; amended November 19, 1980; revised to Rule 420, Investment Funds Policy on September 16, 1981; amended February 3, 1983; amended January 12, 1984; revised to Rule 420, Asset Management Policy on September 20, 1984; amended December 8, 1989; revised to Rule 420, Investment Management Policy on April 30, 1993; amended October 29, 1993; amended April 21, 1995; amended and renumbered as Rule 404 on December 5, 1997; amended November 19, 1999.

Adopted as Rule 416, Investment Committee Operations on November 19, 1999; amended and merged with Rule 404, Investment Management Policy on June 17, 2005 as Rule 404, Investment Policy and Guidelines; amended April 7, 2006; amended February 2, 2007; amended November 14, 2008; amended February 6, 2009; amended June 15, 2012; amended September 19, 2014; amended June 16, 2017; amended September 21, 2018; amended June 7, 2019; amended April 9, 2020; amended February 4, 2022; amended April 14, 2023.)

Appendix 1

POOLED ENDOWMENT FUND (PEF) ASSET ALLOCATION

 

Long Term Target

Ranges

Equities

62%

45-70%

Fixed Income and Cash

12%

5-25%

Real Assets

13%

5-25%

Diversifying Strategies

13%

5-25%

Total = 100%

LIQUIDITY AND CAPITAL RESERVE POOL (LCRP) ASSET ALLOCATION

 

Long Term Target

Ranges

Equities

40%

30-50%

Fixed Income and Cash

42.5%

30-50%

Real Assets

7.5%

0-15%

Diversifying Strategies

10%

5-20%

Total = 100%

The advisor working with the System Office has the responsibility of rebalancing assets periodically to stay within the current asset allocation targets.

Manager Diversification

To ensure sufficient diversification for the PEF and the LCRP, there will not be an allocation of more than 10% to any active manager, and 15% to a passive manager at the time of investment.

405Deposit of 91原创 System Entity Funds

  1. Authority to Effect Transactions with Banks or Other Depositaries

    Board Rule 405 establishes appropriate processes involved in the deposit of The 91原创 System funds. In addition, the Board must designate by Resolution those university officials who are authorized to effect transactions involving those accounts, i.e., those with the authority to sign checks, initiate wire and automatic funds transfers, or otherwise withdraw funds from any authorized depository on behalf of the Board or any division of The 91原创 System. These Resolutions should specify that only those persons named in the most current Resolution for each campus can effect a transaction involving University funds of their respective division of The 91原创 System. Such authority may not be delegated by the persons so authorized to other persons within the institution.

  2. Board Approvals of Banks or Other Depositaries

    All 91原创 System Entity (University) funds available for deposit, as determined under the policies, objectives, and requirements of Board Rule 404 - Investment Policy and Guidelines - (except for imprest funds permitted upon the condition set out below) shall be deposited in a bank or other depositary upon compliance with the following conditions:

    1. The Board shall approve, by resolution, in the format set forth in Attachment A, the bank or other depositary as a depository for University funds. Such approval may be withdrawn by the Board at any time and for any reason, and, if it does so, any funds remaining on deposit with that depositary shall be paid immediately to the University. As long as the approval of the Board continues, subsequent or additional approval shall not be necessary upon the opening of any additional accounts in the same depositary by any campus or other division of the University as long as the specific account is approved or authorized by the Board as provided in Section III below.
    2. Prior to the Board approval as set out in Section above, the proposed depositary shall provide evidence of its designation by the 91原创 State Treasurer as a qualified public depository under the Security for 91原创 Funds Enhancement Act (SAFE). Because such designation shall apply to all accounts and funds of the University, regardless of source, held by the depositary, only one such offer of evidence shall be required even though subsequent and additional accounts are opened (upon the approval of the Board as required in Section III below); except that, from time to time, as requested by the Board, the depositary may be required to provide evidence of its continuing designation as a qualified public depository.

  3. The Board shall approve, by resolution in the format set forth in Attachment A, the specific account, including as a minimum the following:

    1. Approval of the opening, designation, purpose, and nature of the account.
    2. Designation of and authorization to the individuals who shall have the authority and responsibility for the opening and closing of the account, for making deposits in and withdrawals from the account, and for otherwise supervising and managing the account.
    3. Approval of any mechanical or facsimile system for authentication or execution of checks, drafts, or other documents.
    4. Approval of any other particular or unique terms or features of the account.

    No proposed account shall be approved by the Board unless it has previously approved (or contemporaneously approves) the proposed depositary as a depository under the provisions of Section I of this Rule and unless the proposed depositary has provided (or contemporaneously provides) the documentation required under Section II. B. of this Rule.

    The Chancellor and the Presidents are authorized to establish imprest funds in an amount not to exceed $15,000 per fund, as they shall deem to be necessary or advisable in the operation of their respective organizations. These imprest funds shall be subject to any other restrictions imposed by the Board or state law, provided that such funds shall be exempt from the requirements of this Rule.

The Chancellor and Presidents or their chief financial officers shall be responsible for the enforcement of this Rule for their respective operations.

(Adopted December 1, 1979 as Rule 421; amended April 21, 1995; renumbered December 5, 1997 as Board Rule 405; amended February 15, 2001; September 14, 2012, and June 7, 2019.)

Attachment A to Board Rule 405

APPROVAL OF DEPOSITARY AND AUTHORIZATION TO OPEN AN ACCOUNT 鈥� RESOLUTION

WHEREAS, the (insert the name of the component of the University System, such as "System Office") desires to create, maintain, and establish an account of the nature hereinafter described with (insert the name of the proposed depositary such as the "Citizen's Exchange Commercial Bank of the Southeast") for the deposit of certain funds under its control, as hereinafter described; and,

WHEREAS, the proposed depositary has provided evidence of its designation by the 91原创 State Treasurer as a qualified public depository under the Security for 91原创 Funds Enhancement Act, as required by Board Rule 405; has agreed to provide evidence of its continued designation as a qualified public depository under the Security for 91原创 Funds Enhancement Act, upon the request of the Chancellor, or his or her designee; has agreed to serve as a depository for University funds; and has further agreed to the establishment and maintenance of the hereinafter described account for the purposes and upon the terms and conditions hereinafter set out; and,

(If the depositary has previously been approved by the Board or the Executive Committee as a depository for University funds, whether for that component or any other component, then in lieu of the immediately above paragraph, insert the following:) .

WHEREAS, the depositary has previously been approved as a depository for University funds by resolution of (insert "91原创" or "the Executive Committee of 91原创" as appropriate) and, as such approved depositary, agrees to and accepts the creation, maintenance, and administration of the hereinafter described account upon the terms and conditions hereinafter specified.

NOW, THEREFORE, BE IT RESOLVED by (insert either "91原创" hereinafter referred to as the Board or the "Executive Committee of 91原创" as appropriate) that the (insert the name of the depositary) is hereby approved as a depository for the funds of the University in such accounts or account as shall be approved by the Board from time to time by resolution. This approval of the depositary may be withdrawn by the Board at any time and for any reason, and if it does so, any funds remaining on deposit with the depositary shall be paid immediately to the University. Provided however, that as long as the approval of the Board continues, subsequent or additional approval of the depositary shall not be necessary upon the opening of additional accounts by any component of the University as long as the specific account is approved or authorized by the Board by resolution.

(If the depositary has previously been approved by the Board or the Executive Committee as a depository for University funds, then the above paragraph shall be omitted.)

BE IT (FURTHER) RESOLVED that the (insert "The Board of Trustees" or "Executive Committee" as appropriate) does hereby authorize the opening, establishment, maintenance, and administration of the following designated account with the approved depositary for the following purpose and upon the following terms and conditions:

  1. (Insert the name or designation of the account and the reason for opening the account and its purpose or nature, if not explained by its purpose.)
  2. (Designate the names of those individuals who shall have the authority and responsibility for the account and specifically charge and direct the named individuals with the authority and responsibility for the opening and closing of the account, for making deposits in and withdrawals from the account, and for otherwise supervising and managing the account, to the extent that those authorizations and responsibilities shall be appropriate to the particular kind or nature of account opened.)
  3. (Insert authorization for the manner by which checks, drafts, or any other document necessary for the operation and maintenance of the account shall be executed, authenticated, or endorsed, including authorization for any mechanical or facsimile system for accomplishing the same.)
  4. (Insert all other terms and conditions by which the account shall be operated and governed, including any particular or unique terms or features of the account established by the component and the approved depositary. If a separate depositary agreement governing the account has been submitted by the approved depositary or the component, it should be attached as an exhibit and its execution authorized by this resolution at this point.)

BE IT FURTHER RESOLVED that the authorization for this account may be withdrawn by the Board at any time and for any reason. Provided, however, that until the approved depositary receives written or oral notice of the termination by the Board of this authorization from any of its members, its Secretary, Chancellor, President of the appropriate campus, or any of the individuals designated above as having the authority and responsibility for the maintenance of said account, then the provisions of this resolution shall remain in full force and effect. However, upon receipt of such notice, any funds remaining on deposit shall be immediately paid to the University.

406Contracts on Behalf of the Board

  1. Authority to Contract and Revisions of Authority

    1. The Board must designate by Resolution those persons who are authorized to enter into a contract on behalf of the Board. These Resolutions should specify that only those persons named in the most current resolution for each division of the 91原创 System can execute a contract on behalf of the Board.
    2. The applicable Resolution for each division of The 91原创 System should be revised in its entirety when any change is made, so that the most current resolution listing those persons who have been authorized to enter into contracts on behalf of the Board can be readily verified by the Secretary to the Board.

    For purposes of this Rule, the term 鈥渃ontract鈥� includes any agreement involving the receipt of funds or the expenditure of System, campus, or Hospital funds, whether termed an agreement, purchase order, or otherwise.

  2. Contracts Benefiting Senior Administrators

    Contracts originated by senior administrators, and that may be perceived to benefit that senior administrator1, shall be subject to an internal counter-signature process. The second signature should be from someone of sufficient authority, typically of equal or greater authority. For contracts originated by the President, the counter- signature shall come from the Chancellor. For contracts originated by the Chancellor, the counter-signature shall come from the President Pro Tem of the Board.

  3. Conflicts of Interest

    1. All authorized signatories of the Board shall participate in the electronic disclosure process required by Board Rule 106.
    2. Regardless of whether an individual is specifically required to participate in the Board鈥檚 electronic disclosure process, all persons authorized to sign contracts on behalf of the Board, campuses, Health System, Hospital, or any other related organization must disclose any conflicts of interest in any contract subject to their approval or signature in accordance with Board Rule 106 and 106.2, and have said contract approved by a senior administrator of equal or greater authority before the same is binding.

    1Senior administrators are defined by Board Rule 106 as follows: 鈥淪enior administrators, for purposes of this Rule, are defined to be the Chancellor, other Board officers and Vice Chancellors of The 91原创 System, the Presidents and Vice Presidents of each campus and any others so designated in writing by the Chancellor.鈥�

  4. Vendor Disclosure Form

    Contracts with the Board shall include a 鈥淰endor Disclosure Form鈥� approved by the Office of Counsel. Such forms shall require disclosure by the proposed vendor of any known conflicts of interest on the part of any University officials involved in the contract or benefitting from the contract. Exceptions to this requirement shall be approved by the Office of Counsel.

  5. Contracts Requiring Board Approval

    1. Except as otherwise exempted below, the following contracts must be approved by the Board before the same are binding and effective:
      1. All contracts for goods or services, or both, involving an expenditure of $1,000,000 or more for the term of the contract (including all option, renewal or extension periods) that were not procured through a competitive process;
      2. All consulting or professional services contracts involving an expenditure of $250,000 or more for the term of the contract (including all option, renewal or extension periods), regardless of whether the contracts were procured through a competitive process;
      3. All contracts involving the receipt of $1,000,000 or more for the term of the contract (including all option, renewal, or extension periods);
      4. All information technology contracts or projects2 involving an expenditure of $750,000 or more for the term of the contract or project (including any extensions, renewals, upgrades or expansions to existing technology contracts or projects), regardless of the source of funds; and
      5. All loans, whether the UA System entity is the lender or borrower. This provision does not supersede any affiliation agreements that specify a dollar threshold for Board approval of loans.
    2. The following contracts are exempt from this requirement:
      1. Contracts that are otherwise required to be approved by the Board, such as construction contracts;
      2. Contracts that are otherwise approved by the UAB Health System Authority Board;
      3. Contracts subject to and approved pursuant to the Heightened Review Process described below;
      4. Contracts with publicly regulated utilities;
      5. Sponsored research grants and contracts, including associated subcontracts;
      6. Contracts with related organizations that have an existing affiliation or joint operating agreement with the Board, or are otherwise incorporated as a university healthcare authority authorized by the Board.
      7. Contracts with federal, state, or local governments or their agencies;
      8. Gift agreements or memorandums of understanding with donors to a UA System entity; and
      9. Contracts related to the provision of legal services executed by the General Counsel.

      2 A technology project includes multiple related contracts for hardware, software, training, contractual services, etc. For example, a single technology project could include a $200,000 contract for a hardware, a $300,000 contract for software, and a $300,000 contract for training. Even though each individual contract does not exceed $750,000, the cost of the entire project does exceed $750,000. Therefore, the entire technology project should be approved.

  6. Heightened Review of Certain Contracts

    The Heightened Review Process provides for the System-level review and approval of certain contracts in lieu of Board approval.  Contracts subject to and approved by this process must be approved by the Chancellor, or his or her designee, before the same are binding and effective.  Contracts described in paragraph V.A. above, and not otherwise exempted pursuant to paragraph V.B., are eligible for review and approval through the Heightened Review Process if they also involve:

            1. Circumstances of unusual and compelling urgency (as determined by the Chancellor and Sr. Vice Chancellor for Finance and Administration, after consultation with the President pro tempore, Chair of the Finance Committee,  Chair of the Legal Affairs Committee, as well as the Chair(s) of any Committee(s) to which the subject contract relates);
            2. Goods or services, or both, in support of or relating to the UAB Health System Authority;
            3. Direct provision of liability or property insurance, or compensation and welfare benefits to employees of the System office or employees or students of the campuses of the UA System, including contracts for the provision of life, disability, health (including student health plans), dental or vision insurance, or retirement, deferred compensation or other arrangement for supplemental benefits or pay not otherwise covered by Board Rule 302; or
            4. Intercollegiate athletic competitions
            5. Goods or services, or both, in support of or relating to affiliate entities of the Board or its operating divisions that have agreed to comply with this Rule in the applicable affiliation agreement.

    The System Office shall maintain a form for such submissions and approvals and will provide the Board quarterly reports of contracts approved through the Heightened Review Process.

  7. Competitively Awarded Goods or Services Contracts

    1. All campus or University Hospital contracts for goods or services, or both, procured through a competitive process and involving an expenditure of funds of $1,000,000 or more for the term of the contract (including all option, renewal or extension periods) shall be reported quarterly to the Finance Committee in a format with sufficient detail for effective review. Contracts that are subject to approval or have been previously approved by the Board may be excluded from the report.
    2. In connection with any procurement subject to Article 5 of Chapter 4 of Title 41, Code of 91原创, an expenditure of $75,000 or more must be awarded by competitive sealed bid unless otherwise authorized by law.

  8. Annual Information Technology Plans

    1. Annual information technology plans shall be reviewed and approved by the Board. Annual plans shall contain all known information technology contracts or projects requiring Board approval under Sections V(A)(ii) or V(A)(iv) of this Rule. Contracts or projects specifically included in the approved plans will not require separate Board approval unless the terms of the contract change after the annual plan is approved by the Board. Any renewals or extensions of existing contracts or upgrades or expansion of existing projects must be included in these annual plans.
    2. The Chancellor and the Sr. Vice Chancellor for Finance and Administration shall review information technology plans and associated contracts and projects and may make recommendations to the Finance Committee regarding such plans and associated contracts and projects.

    (Adopted April 21, 1995 as Rule 422; amended September 15, 1995; amended and renumbered December 5, 1997; amended April 6, 2018; amended June 7, 2019; amended April 9, 2020; amended June 10, 2022; September 16, 2022; April 12, 2024, November 8, 2024).

407Audit, Risk and Compliance Committee Operations

  1. Introduction

    This Rule establishes Board expectations of its Audit, Risk, and Compliance Committee.

  2. Committee Composition

    The Committee will consist of at least three members of the Board of Trustees, all of whom are independent of management. At least one member will have financial expertise, and at least one member will have expertise regarding the law and/or regulatory compliance. The required expertise may be gained through education or experience.

  3. Committee Meetings

    The Committee will meet at least three times per year, and on other occasions on the call of the Board, Chancellor, or Chair. Attendance, agenda, and minutes will be as provided for in Board Bylaws. The Committee may invite senior administrators, officers, auditors, counsel, and other professionals or employees, to attend and provide information. The Committee may hold executive sessions as allowed by Board policy and law.

  4. Committee Authority and Responsibilities

    The Committee has authority to engage in the following advisory activities related to audit, risk, and compliance functions of the System, its institutions, the Health System, and affiliated entities.

    1. Oversight - Assist the Board with substantial oversight of these functions, in light of existing and changing legal and other expectations
    2. Escalation - Forward matters as appropriate to the full Board
    3. Recommendation of Officers - Recommend to the Board the appointment and removal of the chief audit executive and such other officers to be responsible for these functions, and monitor the effectiveness of those individuals
    4. Retention of Independent Professionals - Retain independent professionals for advice or assistance, and monitor the effectiveness of such firms or individuals
    5. Risk Identification and Assessment - Assist and advise senior administrators with the identification and assessment of risks, such as risks related to noncompliance with financial, regulatory, and other laws and standards, or other risks that may impact System operations, finances, reputation, or assets, including, by example, risks related to physical safety and security, and the safety and security of information and data
    6. Mitigation - Assist and advise senior administrators with the development of plans related to the mitigation of such risks, including effective communication with and training of employees, and effective insurance and risk finance programs
    7. Monitoring and Enforcement - Monitor and assist senior administrators with monitoring the efficacy of activities designed to reduce risk to System assets, including the consistent enforcement of standards and incentives, especially in response to any actual or perceived failures
    8. Periodic Review of Standards and Staffing - Periodically review and recommend necessary changes to policies, practices, staffing, and organizational structure
    9. Reports - Request, receive, review, and respond as appropriate to, reports and findings, including internal reports and reports of independent regulators and auditors, such as the State Examiners of Public Accounts; including review and acceptance of annual audited financial statements
    10. Investigation - Conduct or authorize special or other investigations
    11. Communication - Periodically meet with, promote communication among, and resolve any disagreements among, senior administrators, officers, auditors, counsel, or other employees
    12. Coordination - Promote coordination among System institutions and entities
    13. Tone at the Top 鈥� Promote an effective environment for these functions and undertake such other activities as may be necessary to accomplish the Board鈥檚 objectives.

  5. Further Duties Related to External Auditors

    The Committee shall be responsible for the following additional duties related to the hiring of independent external auditors:

    1. Retention - Recommend to the Board the appointment, compensation, and discharge of external financial and other required auditors:
      1. Approve in advance all audit and all new/non-recurring non-audit services provided by the external auditor
      2. Review the independent, external auditors鈥� proposed audit scope, approach, compensation, and performance
      3. Receive and execute the external audit engagement letter
    2. Independence - Review and confirm the independence of the external auditors by obtaining statements from the auditors on relationships between the auditors and the System, including non-audit services and compensation practices, and discussing the relationships with the auditors
      1. The external audit firm is authorized to perform audit and audit- related services. Audit related is deemed to be federal audit support, internal control reviews and investigations, review of income and other tax matters, internal financial reviews other transactions and audits of affiliated entities or special purpose audits, and other attestation engagements.
      2. The external audit firm should not provide the following services: bookkeeping, financial information systems design and implementation, appraisal or valuation services, actuarial services, internal audits, management and human resource services, broker/dealer and investment banking services, and legal services.
      3. The lead engagement partner for each campus or entity must rotate no less than every seven years, with a two-year timeout.
    3. Review and Respond - Review the results with senior administrators and external auditors and ensure that appropriate actions are taken in response thereto, in accordance with generally accepted accounting principles

  6. Periodic Review of Committee Activities and Role

    The Committee shall periodically assess its activities and role with respect to the responsibilities outlined in this Rule, and with respect to the changing expectations and responsibilities of Universities. The Committee shall take action in response to this assessment, including proposing any necessary changes to the Rule.

(Adopted August 23, 1978 as Committee Guidelines; amended April 10, 1992. Adopted March 11, 1978 as Rule 430. Amended and renumbered December 5, 1997. Amended November 9, 2001, June 20, 2003, November 9, 2007, June 17, 2011, June 15, 2012, November 4 2016 and June 7, 2019.)

408Internal Audit Policies and Standards

  1. Introduction

    This Rule contains the policies and standards by which the Internal Audit functions of The 91原创 System (System) will be governed.

  2. Mission, Scope, and Nature of Work

    1. The mission of Internal Audit is to provide independent, objective assurance and consulting services designed to add value and improve the System鈥檚 operations. Internal Audit helps the System accomplish its objectives by bringing a systematic, disciplined approach to evaluate and improve the effectiveness of risk management, control, and governance processes.
    2. The scope and nature of work of the Internal Audit department is to determine whether the System鈥檚 risk management, control, and governance processes, as designed and represented by management, are adequate and functioning in a manner to ensure:
      1. Risks are appropriately identified and managed,
      2. Significant financial, managerial, and operating information are accurate, reliable, and timely,
      3. Employee actions are in compliance with policies, standards, procedures, and applicable laws and regulations,
      4. Resources are acquired economically, used efficiently, and adequately protected,
      5. Programs, plans, and objectives are achieved,
      6. Quality and continuous improvement are fostered in the control process,
      7. Significant legislative or regulatory issues impacting the System are recognized and addressed properly.

  3. Authority

    The chief audit executive and staff of the Internal Audit department are authorized to:

    1. Have unrestricted access to all functions, records, property, and personnel,
    2. Have full and free access to the Audit, Risk, and Compliance Committee
    3. Allocate resources, set frequencies, select subjects, determine scopes of work, and apply the techniques required to accomplish audit objectives
    4. Obtain the necessary assistance of personnel in units where they perform audits, as well as other specialized services from within or outside the System.

    The chief audit executive and staff of the Internal Audit department are not authorized to:

    1. Perform any operational duties for the System or its campuses,
    2. Initiate or approve accounting transactions external to the Internal Audit department
    3. Direct the activities of any System or campus employee not employed by the Internal Audit department, except to the extent such employees have been appropriately assigned to auditing teams or to otherwise assist the Internal Auditors.

  4. Accountability

    The chief audit executive shall report administratively to the Chancellor and functionally to the Audit, Risk, and Compliance Committee. In the discharge of his/her duties, the chief audit executive shall:

    1. Report significant issues related to the processes for controlling the activities of the System, including potential improvements to those processes
    2. Provide information periodically on the status and results of the annual audit plan and the sufficiency of department resources.

  5. Chief Audit Executive Responsibilities

    The chief audit executive, or his/her designee, will carry out the following responsibilities:

    1. Develop a flexible annual audit plan using appropriate risk-based methodology (including consideration of risk and compliance control concerns identified by management) and submit the plan to the Chancellor and the Audit, Risk, and Compliance Committee for review,
    2. Implement the annual audit plan as approved, including, and as appropriate, any special tasks or projects requested by management and the Audit, Risk, and Compliance Committee,
    3. Maintain a professional audit staff with sufficient knowledge, skills, experience, and professional certifications (may use outside sources, as necessary),
    4. Establish a quality assurance and continuous improvement program,
    5. Create a culture of support and accessibility to campus management; and assist management in meeting objectives by performing consulting services in addition to assurance services,
    6. Issue periodic reports to the Audit, Risk, and Compliance Committee and management summarizing results of audit activities
    7. Serve as liaison between the System and the external auditor
    8. Assist in the investigation of significant suspected fraudulent activities within the System
    9. Consider the scope of work of external auditors and regulators, as appropriate, for the purpose of providing optimal audit coverage to the System
    10. Coordinate with other control and monitoring functions (risk management, compliance, security, legal, ethics, environmental, external audit), as appropriate.

  6. Campus Management Responsibilities

    The President of each campus, or his or her designee, will carry out the following responsibilities:

    1. Participate with Internal Audit to formulate the campus audit plan
    2. Meet routinely with Internal Audit to review the status of audit work
    3. Communicate to Internal Audit unanticipated audit needs as they arise
    4. Review with Internal Audit all audit reports and ensure all recommendations are implemented
    5. Provide requested information and assistance to external audit firm and keep chief audit executive informed about status of audit requests and issues,
    6. Participate with the chief audit executive in presenting the audit results to the Audit, Risk, and Compliance Committee, when necessary
    7. Issue an audit charter reinforcing Internal Audit access to personnel, records and other property or information necessary to conduct audits.

  7. Campus Management Acceptance of Risks

    When a difference of opinion exists between Internal Audit and management, the chief audit executive will exercise the following process until the difference is resolved.

    1. The chief audit executive and Campus President will meet to discuss the matter,
    2. The chief audit executive and Campus President will meet with the Chancellor to discuss the matter, or
    3. When the chief audit executive believes that management has accepted a level of risk that may be unacceptable to the System, the chief audit executive will discuss the matter with the Audit, Risk, and Compliance Committee.

  8. Standards of Audit Practice

    Internal Audit will operate under standards that the Board has approved. Current standards are the International Standards for the Professional Practice of Internal Auditing of The Institute of Internal Auditors. Areas of noncompliance will be disclosed to the Audit Committee. On occasion, other standards such as the Government Auditing Standards will apply.

    Internal auditors will uphold the principles of integrity, objectivity, confidentiality, and competency as defined in The Institute of Internal Auditors Code of Ethics.

(Adopted May 12, 1979 as Rule 431; completely revised April 10, 1992; amended April 21, 1995; amended and renumbered December 5, 1997; amended June 17, 2011,June 15, 2012, and June 7, 2019.)

409Legislative Appropriations Requests

The responsibilities of the Chancellor for legislative appropriations requests include both Operations and Maintenance (O&M) as well as for Capital Appropriations funds shall include, but not be limited to, the following:

  • Recommending to the Board plans and policies which provide for the effective development, coordination, and justification of the University's legislative appropriations requests.
  • Establishing and supervising an orderly legislative appropriations request process that is integrated with such other activities as academic planning and capital planning.
  • Publishing guidelines, schedules, and formats which facilitate the implementation of the legislative appropriations request process.
  • Coordinating and assisting the campuses with the development of their legislative appropriations requests and the submission of recommended legislative appropriations requests to the Board.
  • Monitoring the legislative appropriations request process and informing the Board of the status of the requests.

Details related to the foregoing responsibilities are set forth in the following paragraphs.

  1. Schedule for the Preparation, Submission, and Approval of Legislative Appropriations Requests

    The Chancellor shall issue annually a schedule for the preparation, submission, and approval of legislative appropriations requests. The schedule shall be prepared in coordination with the campuses, shall be consistent with the schedules of the 91原创 Commission on Higher Education (ACHE) and the State Budget Office, and shall reflect prevailing circumstances. The schedule shall be guided by and include those items set forth in Attachment A.

  2. Guidelines and Formats

    The Chancellor shall annually publish guidelines and formats which enable the campuses to concisely and meaningfully present for approval their legislative appropriations requests. These guidelines and formats shall include the following:

    1. Guidelines. Guidelines which include, but are not limited to, the following:
      1. An inflationary increment for all non-salary items excluding utilities and debt service.
      2. Average salary adjustments, as well as the method for establishing same.
      3. Submission of fixed cost increases.
    2. Formats. Formats for the submission of significant financial data which reflect the principles, guidelines, and classifications set forth in Board Rule 402 (Financial Accounting and Reporting). These formats, which shall be termed presentation formats, shall include a requirement for narrative as well as financial summary forms. The design of the presentation formats shall be coordinated with the staff of each campus and with appropriate officials at ACHE and in the State Budget Office.

      Generally, formats and documentation criteria shall be issued for the following categories:
      1. Increases to sustain existing programs and O&M
      2. Increases for program enhancements
      3. Increases for new programs and new line items
      4. Capital outlay request
      5. Total legislative request
    3. Highlights and Justification
    4. Other. Additional information as necessary to carry out the Board鈥檚 and Chancellor's financial responsibilities.

  3. Submission of Legislative Appropriations Requests

    The campuses shall submit their respective legislative appropriations requests to the Chancellor for review, appropriate revision, and submission to the Board. After approval by the Board, each campus shall submit its legislative requests to appropriate State agencies.

  4. Governmental Relationships

    The Board intends to maintain maximum flexibility for each campus, consistent with efficient coordination of the total System legislative effort by the Chancellor. In accordance with Board Bylaws, the Chancellor shall establish procedures for the development and maintenance of external governmental relationships.

(Originally adopted August 23, 1978 as Rule 435; completely revised April 9, 1980; amended April 21, 1995; amended and renumbered December 5, 1997; amended November 9, 2007, and June 7, 2019.)

Attachment A to Board Rule 409

Annual Cycle for the Preparation, Submission, and Approval of Legislative Appropriations

  • Distribution by the Chancellor to the campuses of the calendar for the preparation, submission, and approval of requests.
  • Submission from the campuses to the Chancellor of data for the development of salary guidelines.
  • Discussions by Chancellor鈥檚 Advisory Council, consisting of the campus Presidents, regarding guidelines to govern requests.
  • Distribution by the Chancellor to the campuses of the guidelines (including salary guidelines) and the formats to be used in the development of the requests.
  • Submission to the Chancellor of all requests including requests for existing programs and O&M new programs, new line items, enhancements to existing programs, and capital outlays.
  • Review and approval by the Chancellor of requests, including meetings and discussions with appropriate campus officials.
  • Review of major issues by the Finance and Academic Affairs and Planning Committees of the Board prior to submission of the Chancellor's recommendations to the Board.
  • Submission of total requests to Chancellor by campuses and review by Chancellor and staff, including meetings and discussions with appropriate campus officials.
  • Submission of Chancellor's recommended campus total requests to the Board.
  • Formal presentation of legislative requests to the Board.
  • Submission by campuses of legislative requests approved by the Board to ACHE and the State Budget Offices.

410Annual Operating Budgets

The budgetary responsibilities of the Chancellor shall include, but not be limited to, the following:

  • Recommending to the Board plans and policies which provide for the effective and efficient use of University, Hospital, and System resources.
  • Establishing and supervising an orderly budgetary process that is integrated with the campus and the hospital, a fund of the 91原创 at Birmingham (hospital) strategic plans and such other activities as academic planning, capital planning, and the legislative appropriations request process.
  • Publishing guidelines, schedules, and formats which facilitate the implementation of the established budgetary process.
  • Coordinating and assisting the campuses with the development of their proposed operating budgets, including recommendations for tuition and fee increases and salary increase guidelines, and the submission of recommended campus, hospital, and system office operating budgets to the Board.
  • Monitoring the implementation of campus operating budgets, recommending budget changes as necessary, and informing the Board of the status of those budgets.

Details related to the foregoing responsibilities are set forth in the following paragraphs.

  1. Schedule, Guidelines and Formats

    1. Schedule. The Chancellor shall issue annually an operating budget schedule, which shall be prepared in coordination with the campuses and which shall reflect prevailing circumstances.
    2. Guidelines and Formats. The Chancellor shall publish guidelines and formats which enable the campuses to concisely and meaningfully present for approval their annual operating budgets. These guidelines and formats shall include the following:

      The format for the submission of significant financial data shall reflect the principles, guidelines, and classifications set forth in Board Rule 402 (Financial Accounting and Reporting).

      The guidelines shall address tuition and fee and salary increase recommendations and reflect the information to be included in the presentation materials for the Board.

      The guidelines shall also delineate additional information to be provided as necessary to carry out The Board of Trustees鈥� and Chancellor鈥檚 financial responsibilities.

  2. Submission and Approval of Annual Operating Budgets

    Campus, hospital, and system office annual operating budget proposals for the next fiscal year shall be submitted to the Chancellor who shall in turn submit recommendations to the Board. These proposals shall be submitted in the format and at the times directed by the Chancellor but no later than the start of the new fiscal year. Operating budget proposals for the next fiscal year shall include comparisons with the approved operating budget for the current year. The Chancellor shall review, summarize, and recommend to the Board the campuses' annual operating budgets.

    The campuses, hospital, and system office shall prepare such periodic status reports as deemed appropriate by the Chancellor.

(Originally adopted August 23, 1978; completely revised April 9, 1980; amended April 21, 1995, amended February 18, 1999; amended November 9, 2007, and June 7, 2019.)

411Minimum Standards, Acceptance, and Reporting of Gifts and Use of Gift Revenue

  1. Purpose and Application of Rule

    This Rule sets forth expectations of the Board of Trustees related to gifts. The Rule shall apply to all gifts, regardless of source, including gifts given during a donor's life or through a bequest, charitable remainder trust, or other means.

  2. Adherence to Ethical and Professional Standards

    Campus development offices and development professionals are expected to comply with applicable ethics laws and standards, including the Council for Advancement and Support of Education guidelines, the Model Standards of Practice for the Charitable Gift Planner, which are promulgated by the Partnership for Philanthropic Planning and the American Council on Gift Annuities, and the Code of Ethical Principles and Standards of Professional Practice and Donor Bill of Rights, which are promulgated by the Association of Fundraising Professionals, as each may, from time to time, be revised.

    Reporting of the sources and purposes of gifts and fundraising results, as well as the preparation of campaign plans, shall be in accordance with the common and best practices of the professional field of fundraising.

  3. General Gift Policy

    All gifts directed to or intended for 91原创, a public corporation and constitutional instrumentality of the State of 91原创, or any of its campuses, programs, or divisions, however named or identified (for purposes of this Rule, the 鈥淯niversity鈥�) are the property of the University, subject to control and management by the Board, within the limits of and subject to any binding and enforceable restrictions or directions of the donor of the gift accepted and agreed to by the Board, in accordance with this Rule and to the extent permitted by law. If any provision of an existing gift agreement or instrument of the University is ever found to conflict with or violate any federal or state law or regulation, then that provision will be deemed amended to bring the agreement into compliance with applicable law or regulation

    To the extent that a donor or grantor does not otherwise specifically direct, or that a contrary intent of the donor does not otherwise readily appear, income and other revenues from gifts or grants to the University shall be used on behalf of the campus to which the gift was directed or for the campus whose efforts or relationship with the donor generated or promoted the gift.

    Each campus, in its annual budget development and presentations to the Chancellor, shall identify the manner in which revenue generated from these funding sources, not otherwise restricted, shall be used. It is the policy of the Board that, to the extent possible, these gifts be used in a manner which will maintain the University's regional and national reputation.

  4. Minimum Standards for Named Gifts

    1. Minimum standards for named gifts are established by the Board. An individual campus, through its President, may adopt higher minimums (but not lower minimums) to be used on that campus for each category of named gift. Each campus shall develop naming and gift acceptance guidelines for their respective fundraising programs while adhering to these Board minimums:
      1. Minimum Standards for Endowments
        1. Deanship $2,500,000
        2. Chair $1,000,000
        3. Distinguished Presidential Scholarship $1,000,000
        4. Professorship $500,000
        5. Distinguished Graduate Fellowship $500,000
        6. Visiting Professorship or Distinguished Lectureship $250,000
        7. Research Fund or Eminent Faculty Scholar Fund $100,000
        8. Lectureship $75,000
        9. Fellowship or Eminent Scholarship $50,000
        10. Student Loan Fund $50,000
        11. Scholarship or Support Fund $25,000
        12. Award Fund or Library Fund $10,000
      2. Minimum Standards for Naming a Facility or Part of Facility. The matter of naming a facility or part of a facility for a donor, or donor鈥檚 honoree, will be decided in all cases by the Board, upon recommendation of the Chancellor and the campus President. Donors will normally be required to provide a gift, or series of gifts, with a total present cash value of no less than thirty-three percent (33%) and usually no less than fifty percent (50%) of the expected construction cost or replacement value of the facility, or portion thereof, not including land, equipment, landscaping, architectural or design fees, utility and infrastructure work, or furnishings. The term facility includes buildings, additions to buildings, space within a building, outdoor space (such as a plaza or court), and other tangible and relatively permanent features located on University property. The specific amount of a gift required to name a facility or space will be recommended to the Board by the appropriate campus official, giving due consideration to the size, location, prominence, purpose, and level of use of the facility being named. The cost of naming opportunities for some limited time period less than the anticipated life of the space may be lower than naming opportunities that are associated with the life of the space being named, as recommended to the Board on a case-by-case basis by the appropriate campus official.
      3. Minimum Standards for Naming a Program or Unit. The matter of naming a college, school, department, or other program or unit will be decided in all cases by the Board, upon recommendation of the Chancellor and the campus President. Campus programs or organizational units may be named with a gift that is determined to be of transformational and sustaining value to the program or unit being named. A substantial portion of the gift should be designated as a permanent endowment with the income providing a perpetual stream of support for the program or unit. Minimum gift levels follow, and the specific amount required to name a program or unit will be recommended to the Board by the appropriate campus official, giving due consideration to the size, scope, national recognition, annual operating budget, student enrollment or patient volume, if applicable, and number and accomplishment of the faculty of the program or unit being named. The cost of naming opportunities limited in term may be lower than naming opportunities that are associated with the life of the program or unit being named, and such pricing will be recommended to the Board on a case-by-case basis by the appropriate campus official.
        1. College $10,000,000
        2. School/Department $5,000,000
        3. University Institute/Program/Center $3,000,000
        4. College or School Institute/Program/Center $1,000,000
    2. Periodically, the Board will review minimum standards for gifts to consider whether adjustments are needed in order to assure adequate income for designated uses.
    3. When a facility, part of a facility, college, school, department, program, or unit is to be named in consideration of a financial contribution, the gift shall be received by the University, or its future receipt shall be assured, pursuant to a naming agreement, as follows:
      1. While the Board retains its power to accept gifts and to recognize donors in its complete discretion on a case-by-case basis, the standard practice shall be that, before the naming is made, at least forty (40) percent of the pledged gift amount for the naming must be received, and the remainder of the pledged gift amount must be received within four (4) years thereafter, unless cash flow requirements for construction or renovation require an abbreviated payment schedule. If it is anticipated or desired that an exception to this standard practice should be made, then the request for an exception should be reviewed with the Chair of the Honorary Degrees and Recognition Committee as early as possible prior to the execution of a naming agreement. This standard requirement may be waived by the Board in its discretion.
      2. If the pledged donation is to name new construction, renovation, or other projects with cash-flow considerations, the timing of the pledge payments must satisfy cash-flow demands.
      3. No facility, part of a facility, college, school, department, program, or unit will be named in recognition of revocable planned gifts.
      4. Gifts made through an irrevocable planned gift are subject to the following additional rules:
        1. Minimum amounts for naming can be set higher for a particular gift based upon the present value of the gift or if the actual amount to be received by the University could be significantly delayed or reduced by the time the entire gift is actually received by the University.
        2. Determination of the naming value of such gifts must be agreed to by the campus President and the Vice President for Advancement, and the Chair of the Honorary Degrees and Recognition Committee in advance of acceptance of the gift.
    4. Naming opportunities secured through future payments will be revoked if the donor fails to meet his/her financial obligation. The University also reserves the right to dispose of any named property or facility as deemed necessary via sale, demolition, etc. The University reserves the right to close, merge, or dispose of any college, school, department, program or unit, and said decision may affect the name thereof, when warranted by academic decision-making. Named properties may be amended, removed, or disposed of only upon recommendation by the campus President and approval by the Board with notification to be provided to the donor or donor鈥檚 representative. Should a named building be demolished or replaced, the University will consider appropriate recognition including, but not limited to, placing a plaque in or near a new building to indicate it occupies the site of a building formerly known by another name; however, the University is not obligated to transfer recognition to another facility. If the name of a donor changes, the University may change the name of the facility or entity at the donor鈥檚 request and expense.
    5. While the Board retains its power to accept gifts and to recognize donors in its complete discretion on a case-by-case basis, the Board generally disfavors the naming of buildings, significant landmarks, significant exterior spaces, or colleges, schools or departments in the name of businesses, corporations, or other for-profit commercial enterprises. Any naming approved in the name of a business, corporation, or other for-profit commercial enterprise, should normally include a term limit for the naming, which should generally be a term in the range of five (5) to ten (10) years. If it is anticipated or desired that an exception to this policy should be made, then the request for an exception should be reviewed with the Chair of the Honorary Degrees and Recognition Committee as early as possible prior to the execution of a naming agreement.
    6. Naming-related signage should be consistent with established campus design standards and conform to the aesthetics of the campus as a whole.
    7. Subject to this Section IV of the Rule, in cases in which it is impractical or undesirable for a donor to make endowment gifts, the Board will allow, upon recommendation of the campus President and Vice President for Advancement, named gifts supported by pledges of annual or periodic contributions to be expended annually for a designated purpose, separate and distinct from gifts to name a facility or program as described in Section IV.A., Items 2 and 3. The naming shall exist for as long as the gifts are received and for the useful life of the fund, and the amount of the annual contribution must be greater than or approximate to the amount that would be annually distributed if the total gifts were endowed. If donations become inadequate to support the designated purpose, the designation will be discontinued.
    8. Unless specifically approved by the Board in its discretion, when considering gifts in which a physical facility, part of a facility, college, school, department, program, or unit will be named, no credit or consideration will be given to past gifts or contributions unless the past gifts or contributions relate directly to the naming opportunity.

  5. Acceptance of Gifts

    1. In order to protect the donor and the University, gifts must be accepted either by the Board or by its duly authorized personnel.
    2. The following categories of gifts must be recommended by the Chancellor and President, and approved by formal resolution of the Board.
      1. Gifts to establish new endowments. Gifts to create endowments must comply with the minimum standards set forth herein, and investment of endowment funds must comply with Board Rule 404.
      2. All named gifts, including gifts conditioned on the naming of a facility, part of a facility, college, school, department, program or unit.
      3. Gifts restricted as to investments.
      4. Gifts of real property or an interest therein.
      5. Gifts of undivided interests.
      6. Gift-sales or gifts subject to any encumbrance.
      7. Gifts of non-publicly traded stock or otherwise of ownership, membership, or partnership interests for which there is not a ready market, regardless of whether such interests are passive.
      8. Gifts which, because of their unusual nature, either present a potential detriment, financial or otherwise, or a serious question as to whether they are within the role and scope of the campuses.

      The gifts described in B.1. through B.8. shall be forwarded to the Chancellor for recommendation to the Board or the Executive Committee. If prospective gifts requiring acceptance by the Board appear to contain difficult, unusual, or unique aspects so that ultimate Board acceptance is in question, development officers are encouraged to counsel with the campus Vice President for Advancement to assure that the objectives of both the prospective donor and the Board will be met.
    3. The Executive Committee of the Board may act upon gift recommendations so long as the request for Board approval is submitted by the appropriate recommending body of the institution (which should generally include the President, Chief Development Officer, Chief Financial Officer, Legal Counsel, and other appropriate party/department associated with the gift, i.e. Dean or Athletic Director), and is accompanied by a statement of a 鈥榗ompelling reason鈥� for consideration prior to the next Board meeting. After receipt of a properly submitted request for action prior to the next Board meeting, the submittal will be reviewed within five (5) business days, after which, in the discretion of the Pro tem, The Board Executive Committee may convene a meeting to consider the gift recommendation, or the gift recommendation may be considered and approved through the Board Rule鈥檚 signature process.
    4. The Chancellor or the Presidents, or their designated representatives, shall have full authority to accept all gifts not described in paragraph B above, including charitable remainder or lead trusts. Charitable lead trusts, unitrusts, and annuity trusts will be administered in a manner consistent with Internal Revenue Service regulations and the laws of the State of 91原创.

  6. Fundraising Campaigns

    1. Significant, multi-year comprehensive fundraising campaigns or initiatives proposed by the campuses must first be submitted to the Chancellor and the Board for information and approval. A significant, multi-year comprehensive fundraising campaign or initiative is defined as follows:

      A major institutional fundraising effort conducted over two or more years which is designed to meet multiple campus needs or priorities and which has a goal of at least $100 million.
    2. Other fundraising campaigns or initiatives conducted by the campuses which have a goal of at least $10 million but less than $100 million will be presented to the Board for informational purposes.
    3. Significant, multi-year comprehensive fundraising campaign plans shall be prepared in accordance with the common and best practices of the professional field of fundraising, and the campuses are encouraged to share these plans with the other campuses for informational purposes at the same time they are submitted to the Chancellor鈥檚 Office for review and approval by the Board.
    4. In the event that one of the System institutions wishes to undertake any plan of fundraising in which a specific building or definable portions of a specific building would be proposed for naming opportunities, the Board may approve such plan in its entirety in advance.
      1. By such approval the Board does not intend to preapprove any particular naming. Rather, in such instances, all proposed namings resulting from the fundraising efforts shall be conditioned on Board approval, and shall be submitted to the Chancellor and the Board for approval in compliance with this Rule 411.
      2. Such plans of fundraising shall include (1) each space or definable portion of a building to be named; (2) The proposed value of the naming opportunity; and (3) The documentation and calculations necessary to demonstrate that the naming opportunity is in compliance with this Rule 411.
      3. If a space or definable portion of a building has a change in cost or size that is justified after the Board has approved the project, then the naming will still be allowed as long as the original amount gifted complied with Board Rule 411 at the time of the naming.
      4. Board-approved lists of naming opportunities shall become void and of no effect after three (3) years of original Board approval unless it has been re-submitted and reviewed by the Honorary Degrees and Recognition Committee.

      Each foundation which provides financial support to the campuses, divisions, and/or programs of The 91原创 System is requested to provide, to the campus through which it is affiliated, the information necessary for the report.

      In addition to the presentation of the reports listed in subsection A of this Rule, the Chancellor may, if he or she deems advisable, consolidate the reports into an annual report for presentation to the Board.

  7. Quasi-Endowments

    Unlike pure endowments, which are created with third-party funds and must be invested in perpetuity, quasi-endowments are endowments created with institutional funds and may be unwound at the Board鈥檚 discretion. The Board generally disfavors the creation of quasi-endowments but recognizes there are unique circumstances for doing so, such as when a donor has requested a matching gift.1 Additionally, accumulated unspent earnings from a pure endowment may be used to create a related quasi-endowment, the annual earnings from which could be used together with the annual earnings from the pure endowment to enhance the amount of funds used annually for a particular purpose. In no event, however, should a quasi-endowment be created that is unrelated to an existing pure endowment.

  8. Acknowledgment of Gifts by Board

    The Board at its discretion may adopt a resolution expressing appreciation to any donor recommended by the Chancellor, the President of a campus, or any member of the Board. All such gifts shall be promptly reported to the Chancellor for inclusion on the agenda of the next Board meeting.

  9. Waiver of Board Rule

    Upon recommendation of the campus President and Chancellor, the Board may approve such exceptions to the minimum standards and conditions of this Rule, as the Board deems appropriate.

  10. Amending, Removing, or Withdrawing any Naming

    Notwithstanding anything herein regarding the naming of any endowment, physical facility, part of a facility, building, college, school, department, program, or unit, or anything whatsoever, 91原创, in its sole discretion, may amend, remove, or withdraw any naming, at any time and for any reason.

(Minimum Standards, Acceptance, and Reporting of Gifts adopted May 13, 1978 as Rule 440; amended September 22, 1979. Minimum Standards, Acceptance, and Reporting of Gifts and Use of Gift Revenue adopted September 20, 1984 as Rule 440; amended March 7, 1985, June 22, 1990, and April 21, 1995. Amended and renumbered December 5, 1997; September 23, 2016; April 6, 2018, June 7, 2019, June 7, 2024 and September 5, 2024.)

1For example, to create an endowed Chair, which can only be created with $1,000,000 or more, a donor could donate $500,000 on the condition that a campus match the $500,000 gift. The donor鈥檚 $500,000 gift is a pure endowment, and the campus matching $500,000 gift is a quasi-endowment. A portion of the earnings 鈥� determined by the applicable spending rate 鈥� from both gifts are used together to fund the endowed Chair.

Download Attachment A to Board Rule 411: University Funds Received From Private Sources Opens in a new window

Download Attachment B to Board Rule 411: Foundation Funds Received from Private Sources Opens in a new window

414Utility Easements

Upon the prior review by the General Counsel and approval by the Chancellor, or his or her designee within The 91原创 System office, any conveyance of rights-of-way or easements in, on, or through any real property of the University for utilities (electricity, electronic services, telephone, gas, water, sewer, or drainage) for ordinary and necessary service to University facilities, programs, or activities may be negotiated, agreed to, made, and executed by the campus officials authorized by the Board to execute contracts. This authorization does not include rights-of-way or easements for roads, streets, sidewalks, or other forms of access to or from or passageway through University property or for utility transmission that does not serve the University.

Any such grant or conveyance shall, if practicable, contain a provision that the interest conveyed or granted shall revert to the University upon its abandonment or non-use.

(Adopted September 23, 1994 as Rule 460; renumbered December 5, 1997; amended April 6, 2007; amended June 19, 2009.)

415Planning and Management of Facilities and Other Capital Assets

    1. The Board is responsible for the overall planning and management of the physical facilities on the campuses of the 91原创 System. The Board is committed to building, preserving, and enhancing campus physical facilities in order to provide an efficient, functional, and pleasant environment for fulfilling established roles and missions. The Board is further committed to developing campuses that reflect: efficient and effective land use; a thoughtful and sensitive integration of buildings, open space, landscaping, and signage; orderly utility and service networks; and safe and accessible vehicular/pedestrian systems. Finally, the Board is committed to accomplishing these activities in a manner which ensures that public funds are expended in the most cost-effective manner and funds received from these transactions are maximized.
      1. Physical Properties Committee Responsibilities. The Committee is responsible for review and recommendations to the Board, actions associated with campus planning, project planning, design and construction and preservation of campus capital assets including, but not limited to:
        1. Review and approval of Campus Master Plans and associated architectural design standards for each campus
        2. Methodologies for selecting consulting architects, engineers, construction managers and program managers
        3. The means and methods of pre-qualifying and selecting general contractors, construction managers, and design-builders to oversee construction on each campus
        4. Project and construction budget controls and monitoring through the Chancellor鈥檚 office
        5. Review of the required ongoing evaluations by campus officials of architects/engineers, construction managers, and general contractors who are awarded contracts on each campus
        6. Review of criteria established by the Chancellor for annual funding commitments to reduce deferred maintenance liabilities on each campus
        7. Management of campus real estate resources
      2. Staff Support. The Vice Chancellor for Finance and Administration and the Assistant Vice Chancellor for Construction Management shall provide staff support in conjunction with the implementation of Board Rule 415.
    2. Purpose. The purpose of this Rule is to set forth policies, practices, and associated responsibilities for the planning and management of the System's capital assets. The Rule specifically provides for:
      1. Campus master planning
      2. Systematic planning for capital projects, purchase/lease of equipment, and real property acquisition/disposition
      3. The establishment of an orderly process for the accomplishment of major capital projects
      4. The selection and appointment of architects, engineers, construction managers, program managers, and other design and construction entities with primary contractual responsibilities for project delivery
      5. The delegation of responsibility for the management of existing capital assets
    3. Capital Asset Planning and Project Development. The primary purpose of facilities planning is to determine and prioritize the resources required to support campus goals and objectives. Effective facilities planning is dependent upon and interacts with academic and financial planning. Within the 91原创 System, the planning for capital assets shall include the following:
      1. Campus Master Plan. A comprehensive Master Plan shall be developed and maintained for each campus. Each Master Plan shall define a system for land acquisition and utilization, building/site densities, architectural design standards, choice of building materials, parking and traffic studies to support pedestrian/vehicular circulation, utility systems, campus services, landscaping, and signage, all consistent with campus long-range goals and project development.
        1. Each campus shall have a duly appointed Campus Master Planning Committee with the responsibility for reviewing and recommending approval to the President of all additions and changes to the respective physical facilities of each campus.
        2. Campus Master Plans shall be reviewed formally at least every five years and updated as needed on schedules established by the Chancellor鈥檚 office, and they shall be submitted to the Board for review and approval.
        3. Amendments to approved Campus Master Plans shall be prepared when significant physical changes are proposed which include new projects, major changes in campus pedestrian and vehicular circulation, proposed changes in architectural design standards, and other changes which will substantially impact the exterior appearance of the campus. These amendments shall be prepared and submitted to the Board for approval.
      2. Five-Year Facilities Development Plan. Consistent with the Campus Master Plan, each campus shall prepare annually for presentation at the September Board meeting a Facilities Development Plan projecting, for a minimum five-year time period, space requirements to support campus academic and administrative programs. Information required in this Plan shall include a description of the project, estimated date(s) for development, estimated cost and source of funds, and the priority for each project based on documented academic or facility needs. The format for this report shall be established by the Chancellor鈥檚 office. Copies of the Facilities Development Plan shall be presented to the Academic Affairs and Planning Committee and the Physical Properties Committee of the Board for review, comment, and information purposes. This program shall serve as a basis for the Annual Capital Development Plan.
      3. Annual Capital Development Plan. A Capital Development Plan shall be prepared by each campus annually and presented to the Board at the September meeting. The Plan shall list all capital projects which meet the criteria established in Section C.5.a. of this Board Rule and which are anticipated to be submitted to the Board for action or information during the fiscal year which begins October 1. These projects should be presented in the context of the campus鈥� annual planning and budgeting process, and each campus should outline how these projects relate to and enhance the University鈥檚 programs. Additional information should include: a brief description of the project鈥檚 scope; preliminary cost estimates for construction/acquisition; projected annual cost for operations and maintenance of the planned space; and anticipated funding sources for the initial capital outlay and the ongoing operating costs, to be reported on forms to be developed by the Vice Chancellor for Finance and Administration and the Assistant Vice Chancellor for Construction Management. The Annual Capital Development Plan will be accompanied by a long-term capital financing report showing current long-term debt and additional liabilities (long-term debt requirements) for proposed new projects. A report showing the current status of deferred maintenance and facilities renewal liabilities on campus shall also be presented.

        The Annual Capital Development Plan shall be subdivided into project categories including, but not limited to, education and general, real estate, auxiliary, infrastructure, equipment and athletics. The format for this report shall be established by the Chancellor鈥檚 office.

        The Annual Capital Development Plan shall be submitted concurrently to the Academic Affairs and Planning Committee, the Physical Properties Committee, and the Finance Committee. The Academic Affairs and Planning Committee will review proposed projects to determine if they are consistent with campus mission statements and long-term academic program planning needs, and whether the proposed projects duplicate existing facilities. The Physical Properties Committee will review proposed projects in terms of: general conformance with the Campus Master Plan; review of project scope, campus priority and impact on reducing deferred maintenance/facility renewal liabilities; the appropriateness of proposed construction costs (per building square foot); and projected annual and five-year operations and maintenance costs for the planned space. The Finance Committee will review the long-term debt structure of each campus in conjunction with the proposed Annual Capital Development Plan and determine if the funding proposed for projects in the Annual Capital Development Plan is consistent with prudent financial planning and within the financial capabilities of each campus.
      4. Annual Capital Request to the Legislature. The Annual Capital Request to the Legislature shall be submitted according to the Guidelines issued by the Chancellor for annual appropriations requests to the Legislature. The request shall be reviewed by the Vice Chancellor for Finance and Administration and the Assistant Vice Chancellor for Construction Management prior to inclusion on the Finance Committee agenda for consideration.
      5. Guidelines for Project Development and Implementation
        1. Each capital project that involves the construction, demolition, or renovation of University facilities which has an estimated Total Project Cost equal to or greater than $1,000,000 shall be planned, designed, and constructed in accordance with Attachment A regardless of the funding source. In addition, for auxiliary projects, a business plan shall be prepared in the format outlined in Attachment G. For those capital projects associated with the Hospital, the review process shall include a Business Plan in the format outlined in Attachment F. All other capital projects shall require business plans.
        2. Generally, capital projects with an estimated Total Project Cost of less than $1,000,000 may be undertaken and associated contracts executed without Board approval. However, all capital projects (regardless of cost) which substantially impact the visual appearance of the campus(es) or that involve historically significant or otherwise notable structures, as determined by the Chancellor or designee, are to be presented to the Board for review and approval.
        3. Purchases or leases of individual items of equipment equal to $750,000 or more shall be submitted to the Board for approval in accordance with Attachment C. Related equipment purchases or leases shall not be subdivided into separate actions or purchase orders of less than $750,000 to avoid required Board consideration.
        4. Equipment purchases or leases included in Capital Construction Projects which have Board approval shall not require separate Board action. Also, purchases or leases of equipment which are funded entirely by grant or contract shall not require Board approval if both of the following criteria are met:
          1. The capital expenditure or value of the leased equipment is less than $1 million; and
          2. At least 75% of the operational cost associated with the equipment will be paid by the grant or contract over the estimated useful life of the asset.
      6. Guidelines for Real Estate Transactions
        1. All proposed real property acquisitions or dispositions shall be submitted to the Board for approval in accordance with Attachment D.
          1. An Annual Timber Management Plan shall be presented to the Board for review at the June meeting subject to approval at the September meeting. The Plan shall provide a proposed harvest schedule for the upcoming year. Sales authorized through the Timber Management Plan shall be conducted in accordance with Attachment D.
          2. All leases of University-owned real property shall be submitted to the Board for approval in accordance with Attachment E. Leases of off-campus property (where the University is the lessee) shall follow the process outlined in Attachment E1.
          3. The Board will approve by resolution for each campus, and for the System Office, an agent who will function as designated in Attachments D, E, and E1.
    4. Facilities Management. The management of campus facilities includes the administration, operation, maintenance, and repair of existing facilities. Responsibility for these activities is delegated to each campus President.

      Campuses will present Annual Reports to the Board on deferred maintenance/facilities renewal liabilities and building operations and maintenance (O&M costs). The Chancellor鈥檚 office shall establish thresholds for funding commitments on an annual basis to reduce the level of deferred maintenance/facilities renewal liabilities. These reductions shall be made either through individual project(s) specifically dedicated to the removal of such liabilities, or through inclusion in major renovation projects or in conjunction with proposed building additions.

(Adopted January 21, 1981 as Rule 470; amended February 3, 1983, June 28, 1993, April 21, 1995, June 23, 1995, and September 15, 1995; renumbered December 5, 1997; amended April 20, 2001, November 9, 2001, April 18, 2003, February 4, 2005, April 8, 2011, June 15, 2012, November 8, 2013, April 10, 2015, April 12, 2019, and amended attachment A, April 14, 2023)

Board Rule 415 Attachments

Board Rule 415 Commentary & Notations

417Physical Properties Committee Operations

  1. Introduction

    The Bylaws of 91原创 (herein called Board), at Article IV, Section 2, provide for a standing committee designated as the Physical Properties Committee (herein called Committee). The Committee's role is primarily advisory to the Chancellor and the Board, unless otherwise provided by the Board. It is expected that the Committee will meet at all regular meetings of the Board, and on other occasions as deemed necessary by the Chancellor or the Board.

  2. Objectives

    The purpose of these operating guidelines is to provide a mechanism, through the Office of the Chancellor, to assist the Board in its policymaking role and in those business and physical property matters requiring Board action on matters in which the Board has expressed a desire to be kept fully informed. The Chancellor shall review information and make recommendations to the Committee in the following areas:

    1. Evaluation of campus master plans and annual capital development plans;
    2. Acquisition and disposition of land, facilities and equipment;
    3. Construction-related contract review;
    4. Ground and facility leasing;
    5. Planning and construction of new facilities and renovation of existing facilities;
    6. Off-campus land use;
    7. Other matters that may be referred by the Chancellor or the Board.

    In each of the areas set forth above, the Chancellor, through the Vice Chancellor for Financial Affairs, the principal staff officer in these matters, shall cause the issuance of detailed plans for accomplishing the work of the Chancellor and the Board. Such detailed plans will be approved by the Chancellor and communicated to the Presidents and to the members of the Committee.

    Before issuing any such detailed plans, the Chancellor or Vice Chancellor shall consult with and seek the advice and recommendations of the chief financial officers of each of the campuses.

    To fulfill the above purposes, the Committee will work with the assistance of the Vice Chancellor for Financial Affairs, as designated herein. The Chancellor wishes to review and present to the Board relevant financial functions indicated under this Section II.

  3. Operation of the Committee

    1. Operations
      1. All physical property issues of the Board are presented to the Committee.
      2. Chancellor's staff prepares agenda for distribution to the Committee members prior to each meeting.
      3. The Committee takes the official action for items requiring action by a Board Committee.
      4. The Vice Chancellor for Financial Affairs, or her/his designee, schedules working sessions, as needed, to permit time for full discussion of each item on the agenda.
      5. In order for an item to appear on the agenda of the Committee, the Chancellor, the Chair of the Committee or the President pro tempore, should review it.

(Adopted November 19, 1999.)

419Procedures for Issuing Bonds

At its meeting on September 18, 1998, 91原创 adopted a resolution expressing a preference for the sale of bonds by competitive bid and for an open and competitive process for the selection of any services necessary or desirable in the borrowing of funds through the issuance of bonds. In that resolution, the Board directed that all bonds be sold by open, competitive bid unless it specifically authorizes otherwise and directed the Chancellor, in consultation with the financial officers of the campuses and the University Hospital, to establish a written process to be used in the selection of any services necessary or desirable in the borrowing of funds by the University.

In response to changing conditions in debt management, the Board of Trustees approved a modification of the resolution at their June 2005 meeting. These changes are incorporated in the body of this Board Rule.

To assure that the direction and intent of the Board are met, the following procedures will be followed in the borrowing of funds through the issuance of bonds.

Bond Sales

The competitive sale of bonds normally should produce the lowest total cost to the University for many bond issuances, such as: those focused on a single project; or those that are straightforward and easily understood by investors. At the same time, for certain types of issues, such as those that pledge health care revenues, utilize a mix of bond indentures, or those that bundle different types of projects into a single issue, competitive sales may or may not be utilized depending if they produce the lowest total cost for the University. To make the decision that is most advantageous to the University or the UAB Medicine Financing Authority (the Obligated Group) in the issuance of bonds, the Board, therefore, will review and approve in advance each bond issue and the recommendations of the campus financial Vice Presidents/Health System chief financial officer (CFO) for underwriters and any financial advisor/municipal advisor. Any proposal to issue bonds or indebtedness other than by open and competitive bid must be proposed on the basis that the method recommended is the most advantageous to a campus or the Obligated Group.

Competetive Sale

If a campus or the Obligated Group desires to sell the bonds by competitive sale, it must first present to the Board of Trustees, at a regularly scheduled meeting, the particular details of the bonds that will be competitively bid, including the process for advertising, par value of the bonds to be sold competitively, projected sale date, and the anticipated terms of the successful bid. When possible, University System entities issuing bonds should consider multi-series and structures of bonds to allow for participation from both investment banks and commercial banks. By offering bonds in multiple series and structures, the University System entities may take advantage of increased demand to lower the total cost of capital

Financial/Municipal Advisors

The campus financial Vice Presidents/Health System CFO may hire and retain firms to provide financial advice and assistance in borrowing and the issuance of bonds. For the period of time that a firm or individual is hired or retained to provide financial advice or assistance in the borrowing or issuing of bonds, they shall not be eligible to serve as underwriter or in any other capacity than financial/municipal advisor. Financial/municipal advisors shall be selected via a Request for Proposals (RFP) process as outlined in Attachment A. At the discretion of the campus, financial/municipal advisors may be selected for each issuance or for a period not to exceed three years. Any firm chosen must be an independent registered municipal advisor with the Municipal Securities Rulemaking Board (MSRB) and the Securities and Exchange Commission (SEC).

Underwriters

If the Board has approved a negotiated bond sale, the campus financial Vice Presidents/Health System CFO may hire and retain firms to provide underwriting services for the issuance of bonds. Any firm or individual hired or retained to provide underwriting services or other assistance in the borrowing or issuing of bonds shall not be eligible to serve as financial/municipal advisors or in any other capacity than underwriter for that particular issuance. Any campus or the Obligated Group desiring to issue bonds shall select an underwriter via a Request for Proposals (RFP) process as outlined in Attachment A. From the proposals received, the campus or the Obligated Group shall recommend to the Board the firm (or firms) to provide the underwriting service that best meets the specifications included in the RFP at the lowest cost to the University.

Bond Counsel

Bond Counsel shall be obtained by the General Counsel following current procedures for obtaining legal services.

Other Professional Services

For other services that are customarily competitively bid, per the guidelines in Attachment A, an RFP for each type of service will be issued to any entities or firms who are known to have or indicate an interest in receiving the RFP based on advertisements placed in appropriate media. If an underwriter or financial advisor agrees to provide these services as a part of its fee, then that underwriter or financial advisor shall select the individuals or firms to provide those services by any manner it chooses. If a campus or the Health System is using other professional services, then the underwriter or municipal/financial advisor must provide details in writing of the firms or individuals who are receiving payments. However, if the University is to pay for those services directly, those services will be subject to the provisions of this policy.

Proposal responses will be evaluated based on the specifications included in the RFP based on the particular financing requirements of the bond issue.

Final Report

Within thirty days of completion of the bond sale, the campus or The Obligated Group will complete a New Bond Issuance Summary (Exhibit 1) which will be submitted to the Vice Chancellor for Finance and Administration. The report will be distributed to the Board. On an annual basis, the Vice Chancellor for Finance and Administration will prepare for the Board a summary report for the bonds issued and outstanding during the fiscal year.

Bond Issuance by Affiliate

Unless otherwise specified by agreement, no affiliate of the System may issue bonds without the prior approval of the Board. The Chancellor shall set up procedures to ensure compliance with this provision of Rule 419.

Bond Issuance by UAB Medicine Financing Authority

The UAB Medicine Financing Authority (Obligated Group) is the legal and financial structure used by the Health System to issue debt. All members of the Obligated Group must first obtain approval from their governing bodies prior to obtaining authorization from the UABHS Board. With the exception of the Health Services Foundation, all remaining members of the Obligated Group must be authorized by the Board of Trustees to issue debt after the approval of the UABHS Board.

The Purpose of this Procedure

There is no legal requirement for a campus or the Obligated Group to bid the borrowing of funds, the issuance of any bonds, or any services necessary or desired in connection with those matters. The use of the term "bid process" or "bid" shall not imply or confer any property, procedural, or other rights or interests of any kind in any firm or individual. Nothing in the September 18, 1998, Board Resolution, or any other Board Resolution, or the preference of the Board for competitive bid shall create any property, procedural, or other right or interest of any kind in any prospective or actual bidder or any individual or other entity in connection with the issuance of any debt or bonds by a campus or the Obligated Group. This procedure is adopted for the sole advantage of a campus or the Obligated Group.

No person or firm shall have or acquire any right, interest, claim, or cause of action in or by virtue of any action taken or decision made under any of these procedures or in breach or violation of any of them. The criteria for the invitations to bid, the specifications and alternatives, and the identification and selection of firms and individuals are all at the exclusive discretion of a campus or the Obligated Group. It and its officials and employees shall be the sole judge and decision-maker for all decisions to be made, actions required or desired to be taken under the Board resolution, this Board Rule, and all other aspects of the identification and selection of firms and individuals to perform services for a campus or the Obligated Group in the borrowing of funds or the issuance of bonds or other debt.

(Adopted June 17, 2005; amended April 8, 2011, and June 7, 2019.)

Download Attachment A to Board Rule 419: Guidelines for Obtaining Financial/Municipal Advisor, Underwriter, and Other Related Services Opens in a new window