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Executive Policy 2.212 Executive Policy 2.212



Title

Management of University Bond System (UBS)

Header

Executive Policy Chapter 2, Administration
Executive Policy Section:  EP 2.212, Management of University Bond System (UBS)
Effective Date:  October 2014
Prior Dates Amended:  August 2005
Responsible Office:  Office of the Vice President for Budget and Finance/Chief Financial Officer
Governing Board of Regents Policy:  RP 8.204. University Projects
Review Date:  August  2018

I. Purpose

A.    To delegate management of the University Bond System (UBS) to the Vice President for Budget and Finance/Chief Financial Officer or designee.

B.    To define the roles and responsibilities of the UBS System Office and UBS Projects.

C.    To establish operational and financial reporting requirements.

D.    To provide guidelines for financial and fiscal management.

II. Definitions

A.    UBS System Office – The functional unit within the Financial Management Office responsible for facilitating and managing accounting, audits, bond debt service payments, cash flow projections, financial statement preparation, investment of bond proceeds, and post issuance compliance for the University Bond System. 

B.    University Bond System (UBS) – Formally known as the University System.  The portion of the Network, consisting of University Projects, established by the Board of Regents’ Resolution in November 2001 and as amended and supplemented.

C.    UBS Project – Formally known as University Project.  Any project, whether or not capable of producing revenue, designated and approved to be included in the University System by the Board of Regents.

III. Executive Policy

A. The University Bond System (UBS) shall be managed as a "System" and not as independent or "stand alone" projects.

B. The UBS System Office shall:
    1.    Provide managerial oversight to ensure compliance with federal and state requirements;
    2.    Coordinate bond principal and interest payments, annual audits, and financial management reporting;
    3.    Coordinate and implement the reallocation of resources between UBS Projects, as approved by the University President or designee;
    4.    Manage cash flows; 
    5.    Coordinate and facilitate communication among UBS Projects;
    6.    Coordinate post issuance compliance efforts;
    7.    Monitor reserve levels.

C. At least once every three years, the UBS System Office shall conduct an in-depth review to assess the adequacy of the reserves and the UBS reserve policies.  Adjustments and changes to reserve account levels to accommodate for changing conditions shall be considered and implemented in consultation with Project Managers, subject to approval of the University President or designee.

D. UBS Projects shall generate revenues sufficient to make the UBS Project self-sustaining.  Rates, rents, fees, and charges shall be reviewed and revised periodically so that the UBS shall be and always remain self-sustaining.

E. Capital financing to include capital leases, loans, and tax-exempt debt issuances shall be coordinated through the UBS System Office. 

F. To the extent possible, management costs of the UBS shall be funded from interest earnings from monies on deposit in the System Debt Service Reserve account.  Management costs shall include but not be limited to those items necessary and reasonable to assure overall healthy financial condition, compliance with bond covenants and applicable laws, fulfilling of reporting requirements, and contribution to strategic initiatives.  If interest earnings are insufficient to cover management costs, an assessment may be imposed on each project for System management costs.

    An annual UBS administrative operating budget will be prepared by the Financial Management Office by the third quarter of the fiscal year.  The budget will cover UBS administrative operations for the succeeding fiscal year and should be used by Project directors/managers for planning purposes.  Any assessment shall be subject to the approval of the University President or his/her designee.

G. Campus and Project Responsibilities
    1. Campus Chancellors or their designee shall be responsible for oversight of the operations, fiscal affairs, financial reporting and compliance of UBS Projects under their jurisdiction. Chancellors shall ensure that each UBS Project is properly managed, facilities are in good repair, and rates, rents, fees, and charges are sufficient to meet the Project's operating and long-term capital replacement requirements.

    2.    UBS Projects shall provide long-range budgets and goals and objectives to their respective campus Chancellor to ensure the program is financially self-sustaining and meeting the long-range objectives, and is in compliance with applicable laws and university policies. 

    3.    Project managers shall submit an annual business plan approved by the campus Chancellor or their designee to the Vice President for Budget & Finance I Chief Financial Officer by August 1st annually.

    The Business Plan shall include  a schedule of annual revenues and expenditures, available fund balances and update the schedule of major repairs and replacement of assets and related reserve fund balances. 

    4.    Each UBS Project shall maintain current financial reports necessary to effectively monitor revenues, expenditures and project performance.  The Financial Management Office shall maintain such reports for the UBS as a whole.

H. Reserve Guidelines

    1. Debt Service Reserve -The University is legally obligated to pay debt service on all bonds issued for the UBS when due. Although a debt service reserve is not required for University issued revenue bonds, a debt service reserve sufficient to pay the maximum annual debt service due in the succeeding 3-year period is recommended for all outstanding bonds that do not require a debt service reserve.

    2. Repair and Replacement Reserve -  In addition to the $1 million, Mandatory Major Repair and Replacement Reserve mandated by the resolution adopted by the Board of Regents' on November 16, 2001, UBS Projects shall incorporate an annual contribution to the voluntary Repair and Replacement account equal to 50% of its depreciation expense for the preceding fiscal year.

IV. Delegation of Authority

Delegation of authority to the Vice President for Budget and Finance/Chief Financial Officer or designee for the management of the University Bond System.

V. Contact Information

Subject Matter Experts
 James Yoneda
 jyoneda@hawaii.edu
 956-7351
 
Office of the Vice President for Budget and Finance/Chief Financial Officer at 956-8903 or htodo@hawaii.edu.

VI. References

    A. Board of Regents Policy RP 8.204. University Projects - http://www.hawaii.edu/offices/bor/policy/borpch8.pdf

    B. November 16, 2001 Board of Regents Meeting minutes http://www.hawaii.edu/offices/bor/regular/minute/20011116.regular.html

    C. September 21-22, 2006 Board of Regents Meeting minutes
http://www.hawaii.edu/offices/bor/regular/minute/20060921.regular.pdf

    D. February 20, 2009 Board of Regents Meeting minutes
http://www.hawaii.edu/offices/bor/regular/minute/20090220.regular.pdf

    E. February 18, 2010 Board of Regents Meeting minutes
http://www.hawaii.edu/offices/bor/regular/minute/20100218.regular.pdf

    F. August 30, 2010 Board of Regents Meeting minutes
http://www.hawaii.edu/offices/bor/regular/minute/20100830.regular.pdf

    G. Link to superseded Executive Policies in old format https://www.hawaii.edu/policy/archives/ep/

VII. Exhibits and Appendices

No Exhibits and Appendices found

Approved

    Signed    
    David Lassner    
    October 31, 2014    
    Date    
    President

Topics

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