Overview of Local Funds Expenditure Policy Revised as of July 1, 2018

1. Overview of Local Funds Expenditure PolicyRevised as of July 1, 2018

2. Background • The Commonwealth of Virginia stipulates the use of state funds, identifying permissible expenses and thresholds for those expenses. • Under restructuring, W&M and other Tier 3 institutions, have additional authority to spend state funds in certain circumstances, with approval by the Virginia Department of Accounts (DOA). • DOA also recognizes that institutions of higher education have locally controlled, university funds that may be guided by separate university policy. • Historically, W&M has opted to handle all expenditures in accordance with state expenditure requirements. • University policy, currently under development, will allow for additional expenses to be covered by local university funds within policy limits.

3. The Business Case for aPolicy • Business Needs – Academic and administrative units often have bona fide business needs that are not covered fully by state expenditure policy. • Administrative Efficiencies – Current limitations often require business units to process payments through multiple entities, splitting payments across the university and an affiliated foundation. • Excessive Use of Reimbursements – Expenses not allowed under current policy often require employees to “front the money” and get reimbursed by an affiliated foundation. • Consolidation and Better Management of University Expenditures – Current practice makes it difficult to identify common expenses, vendors, and opportunities for more strategic contracting and sourcing.

4. What the Policy Does NOT Change? • Procurement requirements • All items purchased for use by the University, regardless of fund source,must comply with the University’s Governing Rules for Procurement. • SPCC requirements • The small purchase charge card (SPCC) is a method of payment. Regardless of whether something is paid through the Accounts Payable Office or through an SPCC transaction, the expense must be allowable under state or local expenditure policies, as appropriate. • Donor restrictions • If the funds have a donor restriction associated with them, the funds must still be used in accordance with the donor’s wishes, consistent with university procurement policy.

5. What funds will be considered “local university funds”? • Unrestricted or restricted gifts or donationsto the university – Gift funds or related income earned on those funds that are controlled by and expensed directly from the university, not an affiliated university. These funds are commonly referred to as “BOV private funds” and designated with a “1Z” or “2Z” fund and index. • Other unrestricted or restricted funds that support standard university business operations - Funds that have been established to allow for expenditures through the university, but are supported by gifts maintained in one of the university’s affiliated foundations. Expenses to these funds are covered by a transfer of revenue from one of the affiliated foundations. (Note: for funds supported by the transfer of revenues from the William & Mary Foundation, the university establishes funds designated with a “1W”, if unrestricted, or “2W”, if restricted. For additional information, contact University Data Control: https://www.wm.edu/offices/financialoperations/data/index.php https://www.wm.edu/offices/financialoperations/data/contact/index.php

6. Revenue from sales and services – Revenue from ticket sales, departmental conferences or events, or other local university activities where a fee for service is charged to end users, often designated as a “1Y” fund and index. • Special rate program revenue not related to the educational activities – Fees generated by market-based academic programs, including executive graduate programs, on-line educational programs, and study abroad programs as approved by the Board of Visitors. • Local auxiliary enterprises – Those auxiliary programs for which no state appropriation of non-general funds is provided in the Commonwealth’s biennial Appropriation Act. Examples include Highland, the Plumeri House, Tennis Center, and university bookstore. For a complete listing, check with the Data Control Department within university Financial Operations: https://www.wm.edu/offices/financialoperations/data/index.php

7. What about foundation funds? • The local university funds policy applies only to funds managed by the University (Chart W). • However, for units with funds at any of the university’s affiliated foundations, a local fund can be established (if one doesn’t already exist) to handle allowable expenses. Funds can be transferred from the foundation(s) to the local fund as a revenue source to offset the expense.

8. What about agency funds? Agency funds (81xxxx) are NOT intended to be used for university business. University activities not funded by state appropriated funds should be charged to local university accounts with offsetting revenue deposited into those accounts as needed.

9. Policy All university employees are expected to follow university policies, guidelines and procedures for procuring and expensing travel, business meals, and other goods and services, regardless of the source of funds that are used to pay for those activities. This policy addresses the use of university local funds. Related policies govern the use of state funds appropriated to the university. Note: All expenses must have appropriate documentation, including itemized receipts if applicable. Please consult financial operations procedures for details: https://www.wm.edu/offices/financialoperations/index.php

10. Employee Business Travel

13. Employee Business Meals

15. Other Expenses

17. Other Goods and Services – For other goods and services, additional information can be found at: https://www.wm.edu/offices/procurement/buying/index.php.

18. Exceptions • For expenses supported by Special Program Revenue, as defined above. • Expenses from funds specifically designated by the Senior Vice President for Finance and Administration for strategic purposes that are supported solely by gifts, income from gifts, or other local revenues to the university. • In all cases, expenses from the designated funds under this provision will be managed consistent with the annual budget approved by the responsible Vice President, the Provost, and the Senior Vice President for Finance and Administration.