Chapter 7 - General Finance Provisions
for Board Policy 7.3
Part 1. Authority. Minnesota Statutes §§136F.90-136F.98 establish the Revenue Fund as an independent enterprise fund under the control of the Board of Trustees, subject to legislatively established bond authority. Minnesota Statutes §136F.90 authorizes the Board to acquire, construct, remodel, operate and manage residence halls, dormitories, dining halls, student unions, parking facilities and any other similar revenue-producing facilities the Board finds necessary for the benefit of the state colleges and universities. The Board may acquire property, operate buildings, charge for their use, enter into contracts, borrow money, and issue bonds. The Board has entered into a Master Indenture of Trust applicable to the management of revenue bonds.
Part 2. Purpose. This procedure's purpose is to describe the governance of the Revenue Fund and to ensure the financial integrity of revenue fund programs at each participating college and university and system-wide.
Part 3. Definitions.
Bond Authority. "Bond Authority" means the maximum aggregate principal amount of revenue bonds that the Board is permitted to have outstanding at any time in accordance with state law.
Bond Debt Capacity. "Bond Debt Capacity" means the financial measurement of the amount of debt the Revenue Fund can afford.
Cost of Issuance. "Cost of Issuance" means the costs incurred when selling revenue fund bonds, and includes, but are not limited to costs for bond counsel, financial advising in preparation for the sale, underwriting in preparation for marketing the bonds, trustee fees, printing of official statements to satisfy securities requirements, rating agencies' fees to rate the bonds, and miscellaneous fees that may be applicable to a particular sale.
Subpart D. Debt Service Reserve. "Debt Service Reserve" means the amount collected at the time of the bond sale closing equal to one year's worth of a series debt service payment. The Debt Service Reserve may be used for the last scheduled debt service payment.
Subpart E. Facility. "Facility" means the physically identifiable portion of any land, dormitory, residence hall, food service, student union and other revenue-producing building(s), which was built, improved, or acquired and financed in whole or in part by the issuance of revenue fund bonds, and all other buildings, improvements, structures and lands, the revenues of which are pledged and appropriated to the revenue fund by resolution of the Board.
Fees and Charges. "Fees and Charges" means the amounts the Board is obligated to charge in support of the financing, use and operation of any buildings or structures sufficient at all times to pay the necessary expenses of their operation and maintenance, the principal of and interest on the bonds, and suitable reserves. Fees and charges may include any fees and charges that may be levied for a particular action or service required, such as room change fees, early occupancy, damage fees, and other fees or charges to recover costs.
Financial Advisor. "Financial Advisor" means an independent financial services firm used to consult on Revenue Fund projects and coordinate the orderly issuance of revenue bonds for the fund.
Master Indenture of Trust. The "Master Indenture of Trust," means the current legal document, as amended from time to time, between the Board and a financial trustee that governs the issuance, use, organization, management, delivery and redemption of revenue fund bonds and proceeds.
Other Bond Costs. "Other Bond Costs" means any other costs payable at the time of the revenue bond sale, such as the collection of one year's worth of debt service to be placed in reserve and an underwriter discount fee.
Program. "Program" means an eligible use or activity housed in a revenue fund facility. For example, an eligible use or activity may include student living quarters, food service, space for student activities and locations for student groups to meet, exercise programs or other use or activities offered in support of students and student life.
Project. "Project" means a revenue-generating facility, facility renovation or land that is or will be financed by the issuance of revenue fund bonds or through the use of other revenue fund assets.
Property. "Property" means real property acquired or underlying a revenue fund financed facility.
Rating Agency. "Rating Agency" means Moody's Investor Service, Inc., Standard & Poor's Ratings, Fitch's, Inc., or such other nationally recognized credit rating agency, which has been selected to issue a rating on Bonds, and their successor organizations.
Revenue Fund or the Fund. The "Revenue Fund" means the statutorily-established, restricted enterprise fund for use in issuing bonds, managing bond financing and governing operations of certain revenue-generating facilities at system colleges and universities.
Series Resolution. "Series Resolution" means the resolution adopted by the Board authorizing a specific Revenue Bond sale and governing the obligations of the bond sale in coordination with the Master Indenture of Trust.
Part 4. Responsibilities. The chancellor delegates the specific responsibility for the operations of the programs and facilities in the Fund to the responsible college and university presidents. The chancellor is responsible for oversight of the financial and legal operations of the Fund, such as management of bond proceeds, debt payment, reporting to the Board of Trustees, the legislature, state government, federal government, rating agencies, and the overall financial community. The presidents have the responsibility to manage the local operations of the Revenue Fund-supported Program(s). In addition to the system's financial operations and legal requirements, Revenue Fund operations must adhere to appropriate Internal Revenue Service (IRS) rules and tax requirements.
Subpart A. Bonding. The Revenue Fund offers revenue bond financing for qualifying capital projects in support of a state college or university. Revenue Bond proceeds must be used for the specific Board-approved Project described in a Revenue Bond sale. Separate Board approval is required for any use of Revenue Bond proceeds outside the scope of original Project approval.
Subpart B. Property and Monies in the Revenue Fund. Facilities are part of the Revenue Fund if either (i) the building, improvement or land is financed in whole or in part by the issuance of Revenue Fund Bonds, or (ii) the Board declares by resolution that a building, improvement or land and its revenues are part of the Revenue Fund. All revenues generated in or by the Facilities, are part of the Fund and pledged to the repayment of Revenue Fund principal, interest, operations, and maintenance. Property remains in the Fund unless moved out by action of the Board or pursuant to the Bond Indenture. Facilities may be jointly funded with other sources, but a clear definition of both property and revenue parameters must be agreed to and documented by all parties and approved by the chancellor or designee.
Subpart C. Master Facilities Planning. Colleges and universities shall identify and incorporate Revenue Fund eligible projects as part of their regular facilities master planning efforts and documents. Colleges and universities are expected to develop other planning documents, such as housing or residential life facilities master plans, parking studies and related evaluations, to supplement and be in concurrence with their overall campus facilities master plans.
Subpart D. Design and Construction. A campus that seeks revenue fund bond financing for a project shall first submit a predesign and financial proforma to the chancellor to determine its feasibility. Design and construction of Revenue Fund projects shall be subject to the same or similar processes as are applicable to all other capital projects in the system.
Part 5. Student Consultation. All Facilities Revenue Fund Projects are subject to the student consultation process and requirements as defined by Board Policy 2.3, Student Involvement in Decision Making.
Part 6. Financial Plans and Fees.
Subpart A. Annual Financial Plan and Fee Approvals. As part of the annual operating budget approval process, colleges and universities with Revenue Fund Facilities shall submit to the system office an annual statement of revenues, expenses and other operating charges, including indirect costs levied against the Revenue Fund. A fee schedule shall be provided to the Board for approval prior to each fiscal year, which describes in sufficient detail the rates and fees students pay for a revenue fund facility. Fees shall be collected to meet ongoing financial obligations, including, but not limited to payment of debt service, ongoing operations, funding for repair and replacement, design work for a future project, and no less than three (3) months worth of reserves.
Subpart B. Facility Usage Fees and Indirect Costs. Adequate fees shall be charged for the use of Revenue Fund Facilities. A college or university may recover indirect costs from revenue fund facilities consistent with System Procedure 7.3.4. Similarly, a college or university should reimburse the Revenue Fund program for indirect costs incurred by the Revenue Fund facilities or programs. All indirect costs shall be reasonable, based on documented principles and procedures, and based on reliable financial and other information.
- Policy 7.3 Financial Administration
- Procedure 7.3.1 Accounting and Payroll
- Procedure 7.3.2 Auxiliary Operations
- Guideline 184.108.40.206 Auxiliary Fund Accrual Financial Statements and Multi-year Financial Planning
- Procedure 7.3.3 Purchasing Cards
- Procedure 7.3.4 Cost Allocation
- Guideline 220.127.116.11 Cost Allocation and Implementation
- Procedure 7.3.6 Capital Assets
- Guideline 18.104.22.168 Capital Leases Involving Tax-Exempt Interest
- Procedure 7.3.7 Impairment of Capital Assets
- Procedure 7.3.12 Scholarships
- Procedure 7.3.13 Surplus Personal Property/Building Disposal
- Procedure 7.3.16 Finance Exception Reporting
- Procedure 7.3.17 Electronic Payments
- Guidelines for 22.214.171.124 Guideline for Payment Card Acceptance, Processing and Security
- Program Codes
Date of Implementation: 6/01/11
Date of Adoption: 5/19/11
Date & Subject of Revisions:
1/25/12 - The Chancellor amends all current system procedures effective February 15, 2012, to change the term "Office of the Chancellor" to "system office" or similar term reflecting the grammatical context of the sentence.
There is no additional HISTORY for 7.03.5 at this time.