Higher Education Assistance Funds (HEAF) UPPS No. 03.02.05
Issue No. 2
Effective Date: 03/30/2007
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: 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: Those HEAF funds expended by the University, subject to state
expenditure procedures and restrictions, and reimbursed from the State.
02.03 HEAF bond
funds: 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 which 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, Higher
Education Assistance Funds are appropriated for the following purposes:
a. Acquisition
of land, either with or without permanent improvements;
b. Construction
and equipping 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 equipping 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;
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;
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;
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
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, minimal increase in life expectancy of an existing
building. Qualifying HEAF projects must have a total cost exceeding $5,000, the
State’s established floor for capital 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 is not
an allowable HEAF expenditure.
b. Equipment
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
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 purchase order description must clearly identify the purchase’s HEAF
allowable purchase category, and refer to parent equipment by indicating the
c. 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.
d. 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.
e. Library
materials: Information sources other than books (either owned or accessed),
which provide information essential to the learning process, or which 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
f. 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
04.07 Interdepartmental
charges (IDT’s) against HEAF accounts will not be processed. The State requires
the processing of a purchase order and a voucher through the State
Comptroller's Office.
04.08 Advance
payments are not allowed from HEAF funds.
04.09 HEAF
funds may not be utilized for operating expenses or to purchase consumable
supplies.
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 The
Director of Procurement Services is authorized to determine whether an
expenditure is in accordance with HEAF restrictions and guidelines. Purchases
which 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 will
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
Associate
Vice President for Finance and Support Services Planning; senior reviewer of
this UPPS
Vice
President for Finance and Support Services
President