Higher Education Assistance Funds
(HEAF) UPPS No. 03.02.05
Issue No. 3
Effective Date: 02/01/2013
Review: April 1 E5Y
01. POLICY
STATEMENT
01.01 This UPPS
establishes guidelines covering the allocation, management, budgeting,
expenditures, and related restrictions of Higher Education Assistance Funds
(HEAF) appropriated to Texas State University-San Marcos. These guidelines
apply to the use of HEAF funds by all departments and units of the university.
02. DEFINITIONS
02.01 Higher
Education Assistance Fund is a permanent capital funding provided under
Article VII, Section 17 of the Texas Constitution for Texas Higher Education
Institutions that are not participants in the Permanent University Fund (PUF)
beginning September 1, 1985. These funds are General Revenue funds that must
reside in and must be expended from the State Treasury.
02.02 HEAF Treasury
Funds are those HEAF funds expended by the university, subject to state
expenditure procedures and restrictions, and reimbursed from the State.
02.03 HEAF Bond
Funds are those funds secured by HEAF treasury funds that are obtained
through bonds issued in accordance with Article VII, Section 17 of the Texas
Constitution.
02.04 Operating
Expenses are costs incurred for services or items with a useful life of
less than one year.
02.05 Consumable
Supplies is a category of operating expenses for items that likely will be
consumed within one year. These are expensed, rather than being capitalized as
assets. Some items may have an expected useful life of more than one year, but
are of nominal value and are expensed. This would include paper products,
toner, paper clips, pens, pencils, and other similar items.
02.06 Capital Equipment
is fixed or moveable tangible assets to be used for operations, the benefits of
which extend over more than one fiscal year. Reference Section 04.04 a. for
specific guidelines related to HEAF.
03. PROCEDURES
FOR THE USE OF HEAF FUNDS
03.01 In accordance
with Article VII, Section 17(a) of the Texas Constitution, HEAF funds are
appropriated for the following purposes:
a. Acquisition of
land, either with or without permanent improvements;
b. Construction and
equipment of buildings or other permanent improvements;
c. Major repair or
rehabilitation of buildings or other permanent improvements;
d. Acquisition of
capital equipment, library books, and library materials; and
e. Payment of
principal and interest on bonds issued under this authority. Reference
Section 04. for additional information.
03.02 HEAF funds are
to be used only for Educational and General (E&G) purposes. HEAF may not be
used for:
a. Student housing
b. Intercollegiate
athletics
c. Auxiliary enterprises
However, in the case of renovation of a building used in
part for auxiliary enterprises, HEAF may be used proportionally for the
Education and General portion of the building.
03.03 Article VII also
provides that governing boards may issue bonds or notes and pledge HEAF funds
for up to fifty percent of money allocated to secure payment of the principal
and interest on the bonds or notes.
04. ACCEPTABLE
HEAF EXPENDITURES AND RESTRICTIONS
04.01 Acquisition
of land with or without permanent improvements: For the purposes of HEAF
expenditures, the following definitions and guidelines apply:
a. Land: The
surface or crust of the earth which can be used to support structure and which
may be used to grow crops, grass, shrubs, and trees.
b. Cost of land may
include:
1) Purchase price
2) Commissions
3) Fees for
examining and recording titles
4) Surveying
5) Drainage costs
6) Land clearing
7) Demolition of
existing improvements (less salvage)
8) Landfilling
9) Grading
10) Interest on mortgages
accrued at date of purchase
11) Other costs
incurred in acquiring the land
c. Unless approved in
advance by the legislature, an institution cannot use these funds to acquire
land for a branch campus or educational center that is not a separate
degree-granting institution created by general law.
04.02 Construction
and equipment of buildings or other permanent improvements, for the
purposes of these guidelines, are defined as follows:
a. Constructing
and equipping: The process of erecting buildings and providing equipment
that will assure that the buildings can be used for the purposes intended, and
the constructing and equipping of other permanent improvements. This category
includes additions to and equipping of existing buildings. It does not include
consumable supplies.
b. Buildings:
Roofed structures (conventional or underground) housing operations. This
category includes storage structures and additions to buildings meeting this
definition.
c. Other permanent
improvements: Assets that enhance the quality of land or buildings or
facilitate the use of land or buildings and that have finite but extended
lives. Permanency is relative and should be interpreted in terms of the periods
of usefulness. Only land can be considered permanent in any absolute sense.
Examples of other permanent improvements: Paving; lighting; fences; sewers; electrical distribution
systems; water systems; sewer systems; landscaping; air conditioning;
elevators; vent hoods; energy management systems; mechanical, plumbing, and
electrical systems; voice-and-data systems; computing systems; and the like.
Systems that in normal usage could be moved from building to
building or from room to room are not included as permanent improvements.
d. Cost of
buildings may include:
1) Original contract
price or cost of construction;
2) Expenses for
remodeling, reconditioning, or altering a purchased building to make it
suitable for the purpose for which it was acquired;
3) Payment of unpaid
or accrued taxes on the building to the date of purchase;
4) Cancellation or
buy-out of existing leases; or
5) Other costs
related to placing the asset into operation.
e. Construction
costs of buildings and other permanent improvements can include the costs
of:
1) The completed
project;
2) Excavation,
grading, or filing of land for a specific building;
3) Preparation of
plans, specifications, blueprints, etc.;
4) Building permits;
5) Architects’,
engineers’, or management fees for design and supervision;
6) Legal fees;
7) Temporary
buildings used during construction;
8) Unanticipated
costs such as rock blasting, piling, or relocation of channel of underground
stream;
9) Drainage costs;
10) Land clearing;
11) Demolition of
existing improvements; or
12) Maintenance
agreements purchased as part of the original acquisition (such as those for software
application programs and operation systems or for energy management systems).
f. Equipping
costs can include costs of:
1) Original contract
or invoice of the furnishings or equipment;
2) Freight-in,
import duties, handling, and storage;
3) Specific
in-transit insurance;
4) Sales, use, and
other taxes imposed on the acquisition;
5) Site preparation;
6) Installation;
7) Testing and
preparation for use;
8) Reconditioning
used items when purchased;
9) Maintenance
agreements purchased as part of the original acquisition; or
10) Development of software application programs and
operating systems.
g. Unless approved in
advance by the legislature, institutions cannot use these funds for
constructing and equipping buildings and other improvements for a branch campus
or educational center that is not a separate degree-granting institution
created by general law.
04.03 Major repairs
or rehabilitation of buildings or other improvements can include the
following categories:
·
Repairs
·
Renovations
·
Replacements
·
Improvements
a. These improvements
are normally expected to:
1) Extend the useful
life in excess of one year,
2) Improve operating
efficiency,
3) Eliminate health
and safety hazards,
4) Correct structural
or mechanical defects,
5) Upgrade the
quality of existing facilities, and
6) Convert these
assets to more useful functions.
b. HEAF funds may be
used to purchase hardware and building supplies for use on “major” construction
or renovation projects. This does not include projects for routine
maintenance, repairs, cleaning, painting, replacement of a part or component
with a comparable part, or minimal increase in life expectancy of an existing
building. Qualifying HEAF projects must have a total cost exceeding $100,000,
the State’s established floor for capitalizing construction or renovation of
assets.
04.04 Acquisition
of capital equipment, library books, and library materials, for the
purposes of HEAF expenditures, include the following definitions and guidelines:
a. Capital
equipment: Fixed or moveable tangible assets to be used for operations, the
benefits of which extend over more than one fiscal year. These assets may be
purchased from an outside vendor or constructed or developed by university
employees. Computer software operating systems and application programs are
considered capital equipment under this definition; routine maintenance or
repair is not an allowable HEAF expenditure.
b. Equipment purchased
may include costs of:
1) Original contract
or invoice of the furnishings or equipment;
2) Freight-in,
import duties, handling, and storage;
3) Specific
in-transit insurance;
4) Sales, use, and
other taxes imposed on the acquisition;
5) Site preparation;
6) Installation;
7) Testing and
preparation for use;
8) Reconditioning
used items when purchased;
9) Maintenance
agreements purchased as part of the original acquisition; or
10) Development costs
of computer software.
11) Equipment parts
may be purchased with HEAF funds if the parts materially extend or increase the
useful life of an existing piece of equipment. HEAF may also be used for the
purchase of parts or accessories for incorporation into a newly-purchased piece
of equipment. In these cases, the supporting documentation must clearly
identify the purchase’s HEAF allowable purchase category, identifying the
parent equipment and explaining how the parts materially extend or increase the
useful life of the parent equipment.
c. HEAF appropriated
funds may not be used as partial payment for the acquisition of capital
equipment to be used for both E&G and auxiliary purposes that are
independent of constructing and equipping buildings or other permanent
improvements, major repairs and rehabilitations of buildings or other
improvements.
d. Library:
For the purposes of these guidelines, a collection of books and materials in
locations approved by university administration that are
accessible to the general university community.
e. Library book:
A literary composition bound into a separate volume, generally identifiable as
a separately copyrighted unit. Books should be distinguished from periodicals
and journals.
f. Library
materials: Information sources other than books (either owned or accessed),
that provide information essential to the learning process, or that enhance the
quality of university library programs, including:
1) Journals
2) Periodicals
3) Microforms
4) Audiovisual media
5) Computer-based
information
6) Manuscripts
7) Maps
8) Documents
g. Cost of library
books and library materials can include the costs of:
1) Invoice price of
books or library materials
2) Freight-in,
handling, and insurance
3) Binding
4) Electronic access
5) Reproduction and
like costs
6) Similar costs
required to put these assets in place, excluding library salaries
04.05 Refunding
bonds or notes: The governing board of each institution covered by Article
VII, Section 17 is authorized to issue bonds to refund outstanding bond or
notes. Only bond proceeds issued under this section can be used to refund bonds
issued under prior law.
04.06 Texas State
service departments (such as Facilities, Telecommunication Services and
Technology Resources) will be paid from HEAF accounts via interdepartmental
charges (IDT’s).
04.07 Advance payments
are not allowed from HEAF funds.
04.08 HEAF funds may
not be utilized for operating expenses or to purchase consumable supplies.
04.09 HEAF funds
cannot be used for moves or relocations. The associate vice president for
Finance and Support Services Planning maintains a designated funds moves
account.
04.10 HEAF funds are
on deposit in the State Treasury and must be expended there from. Consequently
procurement cards cannot be issued on HEAF accounts.
04.11 Either the director
of Purchasing or the director of Accounting is authorized to determine whether an expenditure is in accordance with HEAF restrictions and
guidelines. Purchases that do not conform will require another source of
funding.
05. ALLOCATION
PROCEDURES
05.01 Under the Texas
Constitution, an annual appropriation of funds to eligible institutions of
higher education is determined for each 10-year period beginning with 1985 and
subject to review and revision at the end of each five years.
05.02 Annual Texas
State HEAF allotments from this appropriation are then determined through a
state allocation formula that is based upon the institutional space deficit,
the condition of facilities, institutional complexity, and specified set-asides.
The amount of the annual allotment is determined for the 10-year period,
subject to a review at the end of five years.
05.03 On an annual
basis, several months prior to the beginning of the fiscal year, the associate
vice president for Finance and Support Services Planning will recommend a cash
flow statement for specific allocations for construction of new buildings,
demolition, and land acquisition; major repairs and renovations; for research
and teaching equipment; for library books and eligible materials; and for
information technology equipment to the President’s Cabinet. These internal
allocations will be determined in conjunction with discussions with key
academic and administrative officials and groups as well as the incorporation
of the approved construction schedule in the most current Campus Master Plan.
All new requests for HEAF money, not included in the cash flow statement, must
go before the Cabinet for approval.
05.04 When
construction projects exceed available funds, consideration by the Cabinet may be
given to the issuance of HEAF bonds.
05.05 Upon the Cabinet’s
approval, the associate vice president for Finance and Support Services
Planning will prepare the HEAF table for submittal to the Board of Regents at
the August meeting. This table will show HEAF expenditures for the current
fiscal year, HEAF expenditures for the coming fiscal year and the percent
difference.
05.06 After September
1 of each year, the associate vice president for Finance and Support Services
Planning will initiate the creation and funding of HEAF accounts based upon the
purposes for which the funds were allocated and notify the authorized
signatories.
05.07 In December of
each year, the cash flow statement will be reconciled to the Annual Financial
Report by the associate vice president for Finance and Support Services
Planning and shared with the Cabinet for review and possible reallocation.
05.08 HEAF allocations
are provided and budgeted for a specified fiscal year and are generally
encumbered or expended within that fiscal year. Unless approval is granted to
allow for expenditure over a longer finite period of time, the allotment is
subject to reallocation by the Cabinet to other university projects.
05.09 HEAF funds must
be maintained in segregated HEAF accounts and may not be transferred to
non-HEAF accounts. Non-HEAF funds may not be transferred into or intermixed
with HEAF funds.
06. REVIEWERS
OF THIS UPPS
06.01Reviewers of this UPPS include:
Position Date
Associate Vice President for Finance April 1 E5Y
and Support Services Planning
Associate Vice President for April
1 E5Y
Financial Services
07. CERTIFICATION
STATEMENT
This UPPS has been approved by the following individuals in
their official capacities and represents Texas State policy and procedure from
the date of this document until superseded.
Associate Vice President for Finance and Support Services
Planning; senior reviewer of this UPPS
Vice President for Finance and Support Services
President