E&G Infrastructure Revolving Loan Program
On May 22, 2000, the Administrative Council approved the creation of a revolving loan account up to $500,000 a year to facilitate funding for departmental initiatives. This program was devised in response to increased requests from the campus to access the State Master Lease Program for funding of multi-year initiatives.
The source of funds for the program is the management of institutional E&G cash flow. Institutionally we have very few resources that are not committed to a variety of activities. However, on any given day we have substantial unutilized cash on deposit. (For example, funds are encumbered at the time an order is placed, but cash is not used until the invoice is paid.) Thus, much like a bank that has many small depositors that cumulatively provide a stable resource for making loans, the University has many small accounts that cumulatively provide us with a relatively stable, but untapped resource that we will start using to our advantage.
This program is designed to function similar to the State Master Lease program with a nominal interest charge indexed to the prevailing five-year Treasury note at loan origination. All of the interest will be retained in the fund to provide long-term stability and optimally provide future increased loan resources.
The procedures for the E&G Infrastructure Revolving Loan Program are as follows:
- Loan requests will be accepted from E&G departments after September 1 each year. Requests to borrow funds must be fully justified and routed through the appropriate Vice President for approval and guarantee of repayment with final approval by the Administrative Council.
- After approval by the Administrative Council, the requesting department and their respective Vice President will execute a loan agreement, which will be provided by Fiscal Affairs, to document the loan. The University Budget Office will then increase the budget/spending authority of the E&G department in CUBS and copy Fiscal Affairs, who will make a journal entry to record the transaction in CUBS, i.e., 1260-15-5599-000-130-1500000 and 2412-15-xxxx-000-130-1500000. If the budget/spending authority is increased late in the fiscal year, the borrowing E&G department will be authorized to carry forward any unspent balance to the next fiscal year.
- Beginning six (6) calendar months after the budget/spending authority is increased and semiannually thereafter, Fiscal Affairs will make a journal entry, i.e., 2412-15-xxxx-000-130-1500000 and 1260-15-5599-000-130-1500000 reducing the borrowing E&G department's liability and increasing the central University revolving account that will be established by the University Budget Office. A portion of each semiannual payment will represent payment of interest and principal as set forth on an amortization schedule, which will be provided by Fiscal Affairs to the University Budget Office and borrowing E&G department at loan origination.
- The internal loan characteristics will be:
- The interest rate will be 83% of the prevailing five-year Treasury note at loan origination.
- Maximum maturity - 5 years.
- Loan: $50,000 (minimum) to $500,000 (maximum).
- Equal semiannual repayments.