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FSS/PPS 03.03 - Inter-fund Loans

Inter-fund Loans

FSS/PPS No. 03.03 (03.01.05)
Issue No. 3
Effective Date: 9/01/2012
Next Review Date: 1/01/2016 (E4Y)
Sr. Reviewer: Associate Vice President for Financial Services

  1. POLICY STATEMENTS

    1. The purpose of this PPS is to establish policies and procedures for approving and reporting the status of inter-fund loans.

    2. The administration of Texas State University-San Marcos utilizes inter-fund loans to provide bridge financing for operations or capital improvement projects. All accounts should rely on their own regular sources of income, appropriations or regular allocations from specific capital funds as their primary and permanent source of financing.

    3. Inter-fund loans are permissible in certain circumstances in order to advance the strategic plan of the University and require:

      1. An authorized Inter-fund Loan Note, and

      2. Approval of the Vice President for Finance and Support Services, with notification to the Associate Vice President for Finance and Support Services Planning, Associate Vice President for Financial Services, Treasurer, Assistant Vice President for Budgeting, Financial Planning and Analysis, and Director of Accounting.

    4. Inter-fund loans of state-appropriated monies from the Educational & General (E&G) fund group are prohibited.

    5. Inter-fund loans between bond funds (different bond series) are generally prohibited.

  2. DEFINITIONS

    1. Inter-fund loan: The movement of cash between two accounts with differing sources of funding with a definite plan to repay the loan, including any applicable interest charges, within a specified, short-term period of time.

    2. Educational & General (E&G) fund group: General Revenue (Fund 001) appropriated by the Legislature of the State of Texas

  3. PROCEDURES FOR APPROVING INTER-FUND LOANS

    1. A written agreement detailing the terms of the loan is required. That agreement will include the account that is borrowing and will repay the inter-fund loan.

      All inter-fund loans require the approval of the director of the department receiving the loan, the Cabinet Officer of the division receiving the loan, and the Vice President for Finance and Support Services. Notification will be given to the Associate Vice President for Finance and Support Services Planning, Associate Vice President for Financial Services, Treasurer, Assistant Vice President for Budgeting, Financial Planning and Analysis, and Director of Accounting.

      When deemed appropriate by the Vice President for Finance and Support Services, the signature of the Cabinet Officer for the requesting division will be required.

    2. Inter-fund loans may bear interest, set at a prevailing market rate, as determined by the Vice President for Finance and Support Services at the onset of the loan. In certain strategic circumstances, the Vice President for Finance and Support Services may choose to waive interest. If applicable, interest will be recorded on a monthly basis.

    3. In the event that an inter-fund loan cannot be repaid by the end of the period specified in the loan agreement, a new loan agreement must be executed to extend the loan. Terms of the loan agreement may be evaluated and adjusted as appropriate.

  4. PROCEDURE FOR REVIEW AND DISCLOSURE AT FISCAL YEAR-END

    1. Prior to closing the fiscal year, the Director of Accounting shall report the status of any inter-fund loans. The status report will include the principal and interest, if any, repaid during the fiscal year and the principal balance outstanding for each inter-fund loan. The status of all inter-fund loans will be disclosed in an internal report to the Vice President for Finance and Support Services quarterly. The status report will include the principal and interest, if any, repaid during the fiscal year, and the principal balance outstanding for each inter-fund loan.
  5. REVIEWERS OF THIS PPS

    1. Reviewers of this PPS include the following:

      Position Date
      Associate Vice President for Financial Services January 1 E4Y
      Assistant Vice President for Budgeting, Financial Planning and Analysis January 1 E4Y
      Director of Accounting January 1 E4Y
  6. CERTIFICATION STATEMENT

    This PPS has been approved by the following individuals in their official capacities and represents Texas State Finance and Support Services policy and procedure from the date of this document until superseded.

    Associate Vice President for Financial Services; senior reviewer of this PPS

    Vice President for Finance and Support Services