Handbook of Business Procedures

2.2. TYPES OF FUNDS

Funds are categorized according to their funding sources and how they typically operate. This section is an overview of those categories; more detailed information can be found in the section linked to each heading.

Education and General Funds (14- and 20-accounts) are used to support the university’s general educational operations. State appropriations fund 14-accounts. Available University Funds fund 20-accounts, which are income from investments in the Permanent University Fund. Expenditures from 14- and 20-accounts must abide by the guidelines stipulated by the university and the State of Texas Comptroller’s Office.

Service Center Funds (18-accounts) provide goods and services essential in supporting the university’s teaching and research functions, as well as central university operations. Income is primarily derived from charging other university departments at approved rates. Service centers operate on a break-even basis, are an ongoing activity, and are not used for one-time distribution of expenses. Expenditures must be directly related to the operation of the service center.

Designated Funds (19-accounts) are used for special purposes as designated by university officers and are funded by external revenue (from sales and/or services), indirect cost return, or tuition and fees. Expenditure restrictions depend upon the source of funds.

Contracts and Grants (26-accounts) are funded by federal, state, local, and private grants; 26-accounts typically include a statement of work with identified deliverables and require contracts and specific financial reporting requirements. Expenditures must follow individual contract and grant guidelines.

Auxiliary Enterprise Funds (29-accounts) are used for self-supporting operations that exist predominantly to furnish goods and services to students, faculty, or staff. The general public may be served incidentally by auxiliary enterprises. Funding comes from fees charged for the goods and services provided, which may include mandatory and optional student fees. Expenditures are directly related to the operation of the auxiliary enterprise.

Gift Funds (30-accounts) are funded by gifts received from a donor. The funds are restricted for use by a particular college or department, and/or restricted for a specific purpose or program. Endowed gifts, which are also 30-accounts, are linked to 57-accounts. The principal of endowed gifts is not expendable; only the income earned from the investment is expendable.

Loan Funds (32-accounts) are used to account for resources that may be loaned to students. As the principal is repaid, along with interest on the loan and any late charges, the principal will be returned to the loan fund account to be made available for additional loans.

Unexpended Plant Funds (36-accounts) are used for major new construction projects, as well as remodeling and renovations to existing buildings and grounds.

Investment in Plant (39-accounts) are fixed assets including land, buildings (new, under-construction, or additions to existing in progress), improvements other than buildings, equipment, library books, and museum and art collections and the related debt.

Agency Funds (41-accounts) are funds temporarily held by the university as a custodian or fiscal agent for nonuniversity entities, which support or enhance the mission of the university. There should be a mutual benefit in having the university act as fiscal agent for the funds.

Endowment Funds (57-accounts) are gifts for which donors have stipulated, under terms of the gift instrument creating the fund, that the principal of the fund is not expendable. The principal is to remain untouched in perpetuity and is to be invested for the purpose of producing present and future income. The income from the investment is periodically transferred into the endowment’s linked 30-account so that the funds may be expended or added to the principal. The University of Texas Investment Management Company (UTIMCO) manages Endowment Funds, and The University of Texas System performs accounting functions for them.

Annuity and Life Income Funds (58-accounts) are gifts for which donors have stipulated, under terms of the gift instrument creating the fund, that the principal of the fund is not expendable. In exchange for a gift of cash, stocks, or bonds, the fund will pay the donor beneficiaries a fixed sum every year for the lifetime of the beneficiaries. The principal is to remain untouched in perpetuity and is to be invested for the purpose of producing present and future income. The income from the investment is periodically transferred into the endowment’s linked 30-account so that the funds may be expended or added to the principal. The University of Texas Investment Management Company (UTIMCO) manages Annuity and Life Income Funds, and the UT System performs accounting functions for them.

Part 2. Fund Accounting - Table of Contents