UAMS ADMINISTRATIVE GUIDE

NUMBER: 8.5.03
DATE: 10/15/96
REVISION: 3/25/98

SECTION: FINANCE DEPARTMENT
AREA: FINANCIAL REPORTING
SUBJECT: DESIGNATED FUND PROCEDURES

PURPOSE

The Designated Fund (Fund 175) is to be used to account for Current Unrestricted Funds which have been designated for a specific purpose. These funds will carry forward from one fiscal year to another at an individual center level. Unrestricted gifts will continue to be accounted for in the Other Unrestricted Fund (119). No expenditures will be permitted in Invest in Life and Special Funds. Interest allocations will be recorded as revenue. Fund Balance Transfers will be used to move funds in and out of the fund as needed. The Designated Fund is not an exempt fund. The Designated Fund may be used for three different purposes.

PROCEDURE

  1. Invest in Life - MCPG has agreed to match donations received from College of Medicine Clinical faculty up to 1% of gross professional fee collections. An Interdepartmental Transfer will be processed to transfer the appropriate matching funds from Center 115-3882000 to individual centers in the Designated Fund which have been set up to account for those funds by project. The Invest in Life funds will receive interest allocations at the short-term rate less fifty (50) basis points (one-half of one percent) and will have no penalty for withdrawal. The Organization Code for Invest in Life is "O".
  2. Special Funds - Departments may request transfers of funds from their departmental accounts to reserve accounts in the Designated Fund. A request should be made using the form on Page 3 of this policy. Requests should be submitted to the Director of Financial Analysis and Reporting at Slot 545. The purpose of the transfer must be to accumulate funds in order to meet a specified long-term objective such as the establishment of a departmental chair or quasi-endowment. The minimum initial transfer of funds required to establish a center for this purpose is $100,000 and a minimum of $100,000 must remain in the Designated Fund for at least five (5) years. The source center from which the transfer is made to establish a Special Fund center must be a center that carries forward fund balance and earns interest.
    • The minimum amount for additions to a Special Fund center will be $25,000. No more than one addition to or deduction from a Special Fund center will be allowed within one fiscal year. Any transfer out will require thirty (30) days' notice because of restrictions on withdrawals from externally invested funds.
    • The source center or centers for the initial transfer for a Special Fund account may not become deficit within a period of twelve (12) months following the transfer. If the source center or centers should become deficit during that period, the department will have thirty (30) days to cover the deficit.
    • The interest income for Special Funds will be allocated quarterly based on the long-term rate less fifty (50) basis points.
    • Interest income allocated to the Special Funds must be accumulated in the account until the specified objective has been met. After the objective has been met, departments may request authorization to use interest income for funding the objective. The request should be submitted to the Director of Financial Analysis and Reporting at Slot 545 on the form on Page 5 of this policy.
    • If unforeseen circumstances force departments to request transfers out of the Designated Fund back into their departmental accounts, they may request that the transfer be made. Requests for transfer out will be made on the form on Page 4 of this policy. The request should be submitted to the Director of Financial Analysis and Reporting at Slot 545. If the request is granted and the funds have not been in the Designated Fund for at least five years, the interest rate for the period the funds were in the Designated Fund will be reduced to the average of the short-term rate for the period the money was in the fund.
  3. Other Designated Funds - Other Designated Funds are those funds which would be transferred from the General Operating Fund (111) or Hospital Fund (113) in order to carry forward the balances at year end. These are funds which are effectively contingency reserves and should properly be classified as Current Unrestricted. Funds may be transferred from Plant Funds if they are no longer needed for capital expenditures. Also, discretionary funds from completed Clinical Trials may be transferred to an Other Designated Fund. No transfers in would be made from funds other than General Operating, Hospital, Plant, Clinical Trial and Designated Funds. Expenditures are allowed in Other Designated Funds. There will be no interest allocation to Other Designated Funds.

    A request to establish an Other Designated Fund center should be submitted on the form on Page 6 of this policy. The request should be submitted to the Director of Financial Analysis and Reporting at Slot 545.
  4. The scheme for numbering of centers in the Designated Fund would be as follows:
  1. Invest in Life Funds would be numbered using 175 as the first three digits, 388 (MCPG's Capital Campaign Fund department number) for the next three digits and a "project number" for the last four digits. An example of a center number for Invest in Life Funds would be 175-3880362. This indicates that the center is for Invest in Life and that it corresponds to the foundation's Account Number of 362. The Foundation numbering system has three digit numbers for nonendowed and unrestricted accounts and four digit numbers for endowed accounts. These would be used as the four-digit "project number". The three-digit project numbers would begin with a zero (0).
  2. All Special funds would be numbered using 175 as the Fund, the three digits of the department number as the second three digits and a "project number" as the final four digits. An example is the Nettleship Chair Reserve Center which is 175-3151000. The center number indicates that it is a Pathology center and is the first project for Pathology. The next numbers could be 175-3151001, 175-3151002, etc.
  3. All Other Designated Funds would be numbered using 175 as the Fund, the department number as the second group of three digits and a "project number" for the final four digits. The project number would start with a "5". Project numbers beginning with "5" would not be used in Invest in Life or Special Funds. Other Designated Funds would be identifiable by the "5" at the beginning of the project number. An example of a center number for Other Designated Funds would be 175-3155001.