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CHAPTER III

6. FINANCIAL AFFAIRS

6.1 Insurance Coverage.

The Texas State University System is authorized to purchase policies of insurance for the System and its Components as provided by this Subparagraph or for other purposes that may be specifically authorized by statute.

6.11   Blanket Fidelity Bonds. Blanket fidelity bonds shall be required to cover all employees of the Components under the governance of the Board. The System's Vice Chancellor and Chief Financial Officer is responsible for coordinating acquisition of the blanket fidelity bonds.

6.12   Director’s and Officer’s Liability Insurance. Director’s and officer’s liability insurance shall be required to cover all regents, directors and officers of the System and its Components. The System's Vice Chancellor Chancellor and Chief Financial Officer is responsible for coordinating acquisition of the Director’s and Officer’s coverage.

6.13   Intercollegiate Athletic Activities. The Components are authorized to purchase policies of insurance providing for the medical care, treatment, and services for injuries sustained by students while participating in or during supervised practices for intercollegiate athletic activities and to pay the premiums for such insurance out of the Component’s auxiliary funds.

6.14   Automobile Liability and Physical Damage.The Components are authorized to purchase liability insurance to insure their administrative officers and other employees from liability arising from the use, operation, and maintenance of automobiles, trucks, tractors, power equipment, aircraft and motor boats or watercraft that are or may be used in the operation of the Component. The System’s Vice Chancellor Chancellor and Chief Financial Officer is responsible for coordinating acquisition of this coverage.

6.15   Property, Equipment Breakdown and Terrorism Insurance. The Components are authorized to purchase insurance for equipment, buildings, and facilities, as allowed by statute. The System’s Vice Chancellor Chancellor and Chief Financial Officer is responsible for coordinating acquisition of this coverage.

6.2 Debt Issuance Services

6.21   Bond Counsel. The Board shall employ bond counsel to advise and represent it in all matters pertaining to the issuance or proposed issuance of bonds of any type, the pledge of institutional credit, the assumption of deferred fiscal obligations, or the encumbrance of facilities of any Component under the governance of the Board. Bond counsel shall be employed by the Board upon such terms and conditions and under such fee arrangement as the appointing order of the Board shall designate.

6.22   Financial Advisor. The Board shall employ a financial advisor to provide financial advice and represent the Board in concert with bond counsel in all matters pertaining to the issuance or proposed issuance of bonds of any type, the pledge of institutional credit, the assumption of deferred fiscal obligations, and the encumbrance of facilities of any Components under the governance of the Board. The financial advisor shall be employed by the Board upon such terms and conditions and under such fee arrangement as the appointing order of the Board shall designate.

6.3 Institutional Funds.

All institutional funds not required to be deposited in the State Treasury must by law be deposited in official depository banks for safekeeping or invested in accordance with the current Depository Funds Policy as adopted by the Board of Regents. Depository agreements with official depository banks shall be negotiated, as necessary, with those banks approved by the Board and in accordance with the then current policies of the Board. Such depository agreements shall be executed by the Chairman of the Board.

6.31   Depository banks selected shall furnish adequate securities to assure safety of these funds. Institutional funds shall be deposited in the depository banks as soon as possible, but in no event later than seven days from the date of collection. Demand deposits and time deposits will be maintained in accordance with the current policies of the Board.

6.32   The Board and the Component Presidents may not, by law, borrow money from any person, firm, or corporation to be repaid from institutional funds except as specifically authorized by the Legislature.

6.33   As permitted by statute, interest received from depository banks for funds on time deposit shall be credited to the appropriate accounts in either general funds or trust funds, in relationship to the sources of balances on time deposit, provided that deposition of such earning was not specified by the grantor.

6.4 State Appropriated Funds -

Including Local Funds in State Treasury. The Board delegates authority to the Chancellor for the System Administration and the Presidents for their respective Components to sign state vouchers. The Chancellor and Presidents are permitted to delegate this signature authority to other personnel by letter and signature card to the Texas State Comptroller’s Office. Local Funds in the State Treasury are to be accounted for and utilized for the Component's operation in accordance with Education Code, Section 51.008.

6.5 Purchase Vouchers.

Each Component President is authorized to delegate signature authority for purchase vouchers to one or more fiscal officers. At the time of approval, purchase vouchers shall have attached all relevant documentation to support the disbursement.

6.6 Local Bank Accounts.

The Board delegates authority to the Chancellor for the System Administration and the Presidents for their respective Components to establish local bank accounts as deemed necessary. All local checks must be signed by at least one Component fiscal officer. A check signer with authorized facsimile signatures may be used on checks for less than $35,000. All checks in the amount of $35,000 and over shall have the original signature of two fiscal officers. Payments in the amount of $35,000 and over made by Automated Clearing House (“ACH”) shall have the original signature of two fiscal officers on the voucher documentation supporting the payment.

6.61   Banks with an Automated Payment Fraud Prevention Process. If the Component’s local bank provides an automated payment fraud prevention process (e.g., positive payee) for payments, the Component may use the electronic signature of one of its fiscal officers for processing checks. Before the payment is finalized by  the bank, the Component shall utilize a fraud prevention process to review and approve electronically both check and Automated Clearing House (“ACH”) individual payments exceeding $50,000.

6.7 Financial Reports.

All Component books, records, ledgers, and accounts shall be kept and maintained in conformity with recommendations of the State Auditor and the State Comptroller of Public Accounts, subject to approval of the Board. All proposed operating budgets and all biennial appropriation requests shall be examined, considered, and approved by the Board in open meetings.

6.71   Annual Operating Budget and Budget Summary. The President of each Component shall prepare and submit annually to the Board at its May or August meeting, as specified each year by the Board, a proposed budget for the operation of the Component for the next fiscal period. Copies of all proposed operating budgets shall be available to all members of the Board and the Chancellor at least eight calendar days in advance of such Board meeting. A budget summary is to be prepared and submitted in writing at least eight calendar days in advance of such Board meeting. The proposed operating budget and budget summary shall be in the form and detail recommended by the Chancellor with the approval of the Board, with all income estimated and itemized by fund, project, or department. A true and correct copy of the adopted operating budget of each Component shall be filed with the System Administration as a public document and a conformed copy delivered to the Chancellor and to all appropriate agencies by the President of the Component. Upon adoption of the operating budgets by the Board, all subsequent expenditures shall conform therewith. Changes in a current operating budget and all transfers of funds between appropriated items shall be subject to Board approval.

6.72   Annual Financial Report. The Annual Financial Report shall be prepared in accordance with the provisions of the statutes, the General Appropriations Act (Article III-Special Provisions and Article IX-General Provisions), as may be amended or superseded, and with the requirements established by the Comptroller of Public Accounts. The reports shall be approved by the chief fiscal officer and submitted to the System Administration for inclusion in the Consolidated System-wide Report. This submission should allow sufficient time for consolidation and subsequent submissions to the required State agencies within the time requirements as specified by State law.

6.73   Monthly Operating Report. The chief fiscal officer of each Component under the governance of the Board shall submit one copy of the Monthly Operating Report to the System's Vice Chancellor and Chief Financial Officer on or before the end of the following month. When possible, the report may be submitted electronically. The Monthly Operating Report shall show, as of the last day of the preceding month, a summary statement of budget position, general ledger trial balance by fund groups, statement of realization of estimated income, and statement of departmental and other balances (including appropriations and credits, expenditures and debits, unexpended balances, encumbrances, and unencumbered balances).

6.74   Sinking Fund Reports. The chief fiscal officer of each Component shall incorporate in the Annual Financial Report the true condition as of the thirty-first day of August of all bonds, interest, and pledged revenue sinking funds maintained under all bond or warrant obligations of the Component. Each Sinking Fund Report shall identify the bond contract and facility to which it pertains, the sinking fund maintained thereunder (including date established and date of scheduled retirement), the depository and account in which the sinking fund is maintained, and the cash balance on hand in the sinking fund and withdrawals therefrom (if any) during the preceding calendar year. Sinking funds shall be maintained by each Component in accordance with the contractual provisions creating them. Withdrawals from sinking funds, other than required bond and interest payments, shall not be authorized by the Board, except in the manner and to the extent provided in the bond or warrant contract establishing it and upon recommendation of the Local Committee.

6.75   Investment Report. A quarterly investment report will be prepared by each Component as prescribed by The Texas State University System Investment Policy for Operating Funds and Endowment Funds.

6.8 Purchase of Food, Refreshments, and Awards with Institutional Funds that are not otherwise restricted.

The Board of Regents has determined that the expenditure of institutional funds that are not otherwise restricted for the purchase of food, refreshments, and achievement awards assists the Components in the System in carrying out their educational functions, promotes education in the State of Texas, and provides an important public purpose. Accordingly, the Board authorizes each Component to use such funds for the purchase of food, refreshments, and achievement awards in accordance with the following guidelines. The President of each Component is delegated the authority to determine if specific expenditures for the purchase of food, refreshments, and achievement awards, using institutional funds, fall within the following objective guidelines established by the Board, and the Component President is authorized to implement this policy through appropriate directives and delegation.

6.81   Direct Purpose. Expenditures of Component funds that are not otherwise restricted for food, refreshments, and achievement awards must have one or more of the following guidelines as a direct purpose:

6.811   The recognition or promotion of academic achievement, athletic achievement, scholarship, and/or service to the Component or State. 

6.812   The promotion of the communication of intellectual ideas among students, faculty and staff, administrators, and/or representatives of the public.

6.813   The support of student events and activities which are sponsored by the Component.

6.814   The recruitment of highly qualified students, faculty, and staff.

6.815   The promotion of the exchange of ideas with community leaders regarding the Component role in the community.

6.816   The assistance of the Regents, accrediting agencies, officials from other Components, and/or public officials in inspecting and/or reviewing facilities and programs.

6.817   The support of the Component's program of continuing education.

6.82   Specific Limitations. Specific guidelines and limitations on the expenditures for food, refreshments, and achievement awards from certain types of auxiliary funds are as follows:

6.821   Funds expended for continuing education conferences, seminars, and short courses must have been included in the continuing education registration fees assessed.

6.822   Funds expended which were received from Component concessions, student services fees, student organizations, and other auxiliary funds must have been previously budgeted.

6.823   Other locally generated income and auxiliary funds (not restricted to administrative, education and general, research, plant expansion, loan, endowment, or scholarship programs) may be used to the extent that they have previously been budgeted.

6.824   No funds under the control of intercollegiate athletics may be used to purchase alcoholic beverages.

6.9 Facsimile Documents.

Facsimiles (fax copies) of various authorizations, requests, invoices, and so forth are acceptable as documentation for financial transactions. Original documentation must be retained by the originating party and remain available for inspection/audit.

6.(10)   Acceptance of Small Gifts. The Board welcomes contributions, both large and small, in aid of the various missions of the Component (see Chapter III, Subparagraph 1.(12)).

6.(11)   Establishment of Permanent Endowments. The Board encourages creation of permanent endowments at System Components and authorizes each President to set the monetary levels required to establish such endowments.

6.(12)   Travel Guidelines.

6.(12)1   In-State Travel. The Component Presidents, or their respective designees, are authorized to approve the in-state travel for personnel within their Components.

6.(12)2   Out-of-State Travel. The Component Presidents, or their respective designees, are authorized to approve out-of-state travel for personnel within their Components, provided the travel request is sought and approved by the President or the President's designee in advance of the travel.

6.(12)3   Out-of-Country Travel and Reimbursements. All out-of-country, official System or Component travel and reimbursements (excluding trips to Mexico, Canada, and U.S. territories) require advance approval by the Component President, or his or her designee. Component Presidents’ out-of-country-travel and reimbursements require pre-approval by the Chancellor; and the Chancellor’s out-of-country travel and reimbursements require pre-approval by the Board chair. Travel by and reimbursements for regents and system office employees require advance approval by the Chancellor or his or her designee.

6.(12)4   Official Business. The allocation of funds for individuals to attend out-of-state meetings shall be restricted to expenditures for official business, and the available funds shall be allocated so as to encourage maximum participation by the faculty and staff.

6.(12)5   Exceptions. Any exceptions to the above guidelines shall require prior approval of the Board of Regents.

6.(13)   Disposal of Property and Equipment. Each Component President may dispose of property or equipment considered surplus because it is obsolete or useless for the Component’s needs or purposes. Prior to external disposal in accordance with System and Component regulations, such items may be made available to other system Components.

6.(13)1   In accordance with Texas Government Code, Section 2175.304(c), in disposing of such property, preference shall be given to transferring the property directly to a public school or school district or to an assistance organization designated by the school district before disposing of the property in another manner. If more than one public school or school district or assistance organization seeks to acquire the same property on substantially the same terms, the Component shall give preference to a public school that is considered low-performing by the commissioner of education or to a school district that has a taxable wealth per student that entitles the district to an allotment of state funds under Education Code, Chapter 42, Subchapter F, or to the assistance organization designated by such a school district.

6.(13)2   Materials or equipment that can be used for instructional purposes may be transferred directly to a public school or school district, or an assistance organization designated by the school district, at a price or for other consideration to which the Component and the public school or school district or the assistance organization agree or for no consideration as the Component determines appropriate. Surplus instructional property and equipment must first be advertised through the Texas Higher Education Coordinating Board prior to disposition.

6.(13)3   If the Component is unable to dispose of the property as required by Paragraph 6.(13)1, the President shall have the authority to dispose of property or equipment with a book value of less than the capitalization value determined by the Comptroller’s Office by means of sale on the basis of arm’s length negotiation or competitive bid, or by transfer to another state agency or governmental sub-division at a mutually agreed value, or by donation (subject to written approval of the President) to an assistance organization certified by the Texas Facilities Commission.

6.(13)4   Sales of property or equipment with a book value equal to or more than the Comptroller’s capitalization amount shall be made on a basis of competitive bids.

6.(13)5   Sales of property or equipment less than five years old and with a book value of $10,000 or more shall be approved in advance by the Chairman of the Finance and Audit Committee.

6.(13)6   Surplus computer equipment must be offered to the Texas Department of Corrections prior to disposition under Subparagraphs 3, 4, or 5 above.

6.(13)7   Exchange and Disposal of Surplus Library Materials. To facilitate sharing of information resources and reduction of costs, Component libraries may exchange surplus library materials by:

(1) Offering such materials to local public school or other governmental libraries with preference given to low performing schools per Texas Government Code, §2175.304; and/or,

(2) Bartering with or exchanging materials with other system libraries; and/or,

(3) Making such materials available for exchange through TexShare or appropriate national library materials exchange lists, provided no other system library desires the materials; and/or,

(4) After thirty (30) days on TexShare or appropriate national library materials exchange lists, notifying “out-of-print” book dealers and negotiating sale or exchange of materials.

6.(14)   Premiums from Vendors. Any monetary rebate or rebate in the form of a product or products extended by a vendor by virtue of the Component, its departments, employees, or students having directly or indirectly made purchases from the vendor or committing to make future purchases from the vendor is, if not accounted for as a reduction of expense, a gift to the Component and must be acknowledged as such by the Component's development office. Such monetary gifts shall be placed into a general Component development/enrichment fund to be used in the same manner as other gifts to the Component. Arrangements for the acceptance of product rebates or other forms of consideration must be approved by the appropriate Component Vice President or the President. Excluded from these procedures are the traditional complimentary books or materials used to evaluate textbook adoption decisions, and calendars, pens, coffee cups or other materials bearing the name or logo of the vendor which are intended as advertising.

6.(15)   Indirect Cost Recovery. All grant proceeds shall be used to support and encourage research and grants (sponsored programs). Eligible uses include:

(a) conducting pre-grant feasibility studies;

(b) preparing competitive proposals for sponsored programs;

(c) providing carry-over funding for research efforts to provide continuity between externally-funded projects;

(d) supporting new researchers, pending external funding;

(e) purchasing capital equipment directly related to expanding the research capability of the institution;

(f) research or sponsored program administrative costs; and

(g) engaging in research programs of critical interest to the general welfare of the citizens of the state of Texas.

6.(16)   Tax Identification Numbers. Student and other organizations are prohibited from utilizing the Component’s federal employer or other tax identification numbers. The only organizations that may utilize such number(s) are those that derive their existence and their funding solely from the Component. Examples include, but are not limited to, residence hall associations and student governments. To quality for use of the tax number(s), the expenditures must be made from Component accounts and must have a business purpose related to the mission of the Component.

6.(17)   Electronic Transactions. The Components of The Texas State University System are authorized to process business transactions through various electronic means. This includes, but is not limited to, direct deposit of wage and salary payments, in-coming and out-going wire transfers, ACH, credit/debit cards, and in-house processing. All electronic transactions must incorporate adequate security precautions and written approvals so as to protect the financial integrity of each Component. Signatory authority and documentation is to be consistent with that required for nonelectronic transactions.

6.(18)   Investment Policy. The Components of The Texas State University System may invest their funds in accordance with the Board approved Investment Policy, which is hereby incorporated into these Rules and Regulations.

(1) The authority to sign Corporate Resolutions on behalf of The Texas State University System and its Components, confirming the person or persons authorized to buy, sell, assign and endorse for transfer certificates representing stocks, bonds or other securities now registered or hereafter registered in the name of the Component is delegated to the Vice Chancellor and Chief Financial Officer. Requests for such authorization shall be accompanied by a letter from the Component’s President in which the names of all persons being authorized to conduct such business are specified.

6.(19)   Wireless Communication Services and Equipment. Each Component shall establish policies regulating employee availability, acquisition, and use of wireless communication services and equipment for official business. A Component:

(1) May not enter into any such agreement for the sole and personal benefit of any employee;

(2) May support an employee’s wireless communications service costs for conducting official business by providing a monthly payroll allowance or reimbursing the employee’s business-related costs.

(3) Must discontinue support if: a) the employee discontinues his or her service plan; b) support exceeds the employee’s costs for the plan; or, c) the employee’s job duties no longer require wireless communication services; and,

(4) Shall inform each affected employee that he or she is solely responsible for any personal federal tax liability incurred as a result of his or her receipt of this benefit.

6.(20)   Identity Theft Prevention Program (“Red Flags Rule”). Considering the size and complexity of its operations and accounting systems, as well as the nature and scope of its activities, each President shall assure that his or her Component develops an Identity Theft Prevention Program (“Program”) that includes reasonable policies and procedures to detect, identify, mitigate, and prevent identity theft.

6.(20)1   Program Administrator. Each Component shall name a Program Administrator to be the primary administrator empowered to manage and execute all aspects of the Program, including the engagement of other institutional departments and personnel as necessary to detect, identify, mitigate, and prevent identity theft.

6.(20)2   Scope of Regulation. Each Component program shall minimally address the following areas, to the extent applicable to Component operations:

(1) Issuance of student identification cards that are part of a national debt card (such as Visa or MasterCard);

(2) Use of consumer reports or background checks;

(3) Handling of consumer accounts that involve multiple payments, including but not necessarily limited to the following:

(a) The federal Perkins Loan Program;

(b) The federal Family Education Loan Program;

(c) Institutional loan programs for students, faculty, or staff;

or,

(d) Institutional tuition (or fee) installment payment plans (Education Code, section 54.007).