Conversion of certain gift and endowment accounts

1. Conversion of certain gift and endowment accounts From restricted tounrestricted

2. Reasons for change • Response to changes in accounting standards • Greater consistency across all schools

3. What changes were implemented ? • Income for “10” funds (endowments for budget support) will be booked as unrestricted • previously booked as restricted, then allocated to unrestricted budget

4. What changes were implemented ? • Income for “15” (unrestricted gifts) funds will be booked as unrestricted • previously booked as restricted, then allocated to unrestricted budget

5. What changes were implemented ? • Approximately 10 endowments were reclassified from unrestricted (“10” funds) to restricted (“26” funds) • many were set up in the 19th century to “support” professorships, but had been used for general budget support. • Will be used for professorships now.

6. What changes were implemented ? • Approximately 7 endowments were reclassified from restricted to unrestricted • because purpose of fund was generally considered to be budget support within a department or program. • will be continue to be used for same purposes. • over head will be taken off income (quarterly) rather than on spending

7. Old overhead method Example: old fund 26000 Income $12,000; overhead rate = 20% budget would be set up with $10,000 in directly spendable, $2,000 (20% of direct) as overhead; if all $10,000 spent, overhead would be credited $200 to dept (lc11, bu 79) AND $1,800 to central (Dean’s) account.

8. Old overhead method So, Dean’s share was 15% ($1,800  $12,000 = 15%)

9. New overhead method Now, it’s converted to a ‘10’ fund. In general, ‘10’ funds don’t have overhead, because they are to pay for a School’s general operating expenses. Since these are for departmental support, we have designed a new method of receiving our overhead from them

10. New overhead method • New fund number 10000 Income $12,000; new overhead rate = 15% budget would be set up with $10,200 in directly spendable, $1,800 (15% of total) as bu 9185; every quarter. As income is booked, 15% is credited to to central (Dean’s) account.

11. What about Gift Funds Several gift funds were also changed from restricted (ledger 2, fund number 3XXXX) to unrestricted (ledger 1, fund 9099X) for similar reasons. • Response to changes in accounting standards • Greater consistency across all schools Likewise, a similar overhead calculation will have to be performed for these funds

12. New overhead method (gifts) Without repeating all the explanation from before, we are charging the same 15% overhead on gift income, but the calculation is done monthly rather than quarterly.

13. Other issues Q: What happens to balances in my 9099x gift account at the end of the fiscal year? A: Any positive free balance will be credited to your departmental reserve during the closing process.

14. Other issues Q: What about unspent amounts in our new “10 fund” endowments? A: the DEFAULT will be for this money to close into the general reserve of A&S. However, we are working to set up a method to transfer these free balances to either a specific reserve or to a 94 fund within the specific affected departments.

15. Conclusion • So, we have tried to work with accounting so that these changes will have the smallest possible impact on the day-to-day operations of your departments.