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22.1 Self-Supporting Funds Overview

Policy Statement

Units must ensure that self-supporting funds (SSFs) are properly accounted for within Banner.

Reason for the Policy

To ensure accurate reporting for the University of Illinois System’s audited financial statements.

Applicability of the Policy

All units who manage SSFs.

Procedure

1. Understand the purpose of SSFs.
   1. SSFs (which primarily reside in fund types 3E, 3J, 3M, and 3Q) are funds that account for financial resources generated primarily from the sale of goods and/or services. SSF activities are typically managed as a business-like operation and sell to a variety of customer bases (such as system units, grant funds, students, faculty, staff, the public, and external entities).
   2. Common examples of self-supporting activities include (but are not limited to): sale of meals or tangible goods; registration fees received for a conference owned and operated by the system; advertising revenue; professional services, such as consulting, technical testing, or event coordination; certain types of student fee assessments, such as course fees, study abroad fees, service fees, or general fees; auxiliary revenue such as housing, parking, or recreational gym fees; and rental income, such as space or equipment rentals.
   3. Most SSFs operate on a break-even basis. However, certain types of SSFs may be able to accumulate excess earnings that exceed their operating costs. For further details on how these scenarios are handled, refer to 22.2 Self-Supporting Excess Funds.
   4. While it is generally not recommended to operate a SSF activity at a loss, there are times when this may occur. If a SSF is in deficit due to an operating loss, the unit who is managing the SSF activity will need to analyze expenses and revenues to see where costs can be reduced and to see where revenues can be increased. For further details on how to address self-supporting fund deficits, refer to 22.3 Self-Supporting Fund Deficits.
2. Be able to identify SSFs in Banner.
   1. SSFs can be identified by examining the fund code segment of the Banner C-FOP. These SSF codes reside in the 300000–399999 numerical range in Banner.
3. Understand how fund types and entities are used to segregate different types of SSF activities in Banner.
   1. SSFs are assigned a fund type of 3E, 3J, 3M, or 3Q. The fund type assigned to a specific SSF can be found in Banner page FZMFUND or FTVFUND. See below for a summary of the self-supporting activity each fund type was designed to account for:
      1. 3E, Service and Storeroom Activities: Goods and/or services sold primarily to other university units and grant funds.
      2. 3J, Auxiliary Enterprises Not Under Indenture: Goods and/or services sold primarily to students, faculty, and/or staff of the University of Illinois System. This fund type would not include self-supporting activities that involve bond financing (see 3M).
      3. 3M, Auxiliary Enterprises Under Indenture: Goods and/or services sold primarily to students, faculty, and staff of the University of Illinois System when bond financing is involved in the self-supporting activities (such as housing operations, university bookstores, parking services, campus recreation, and student unions).
      4. 3Q, Departmental Activities: Goods and/or services sold primarily to members of the general public and/or external entities.
   2. Finally, within each fund type, there are different entity codes assigned to each SSF. Categorizing these self-supporting activities into fund types and entities allows the system to properly classify these self-supporting activities for financial reporting purposes.
   3. These four-digit entity codes (which can typically be found in the Predecessor Fund field of Banner page FZMFUND or within Level 3 of Banner page FGQFNDH) further classify the SSF into categories that best fit the nature and purpose of the SSF. See below for a brief description of each self-supporting entity code:
      1. 3100, Communication & Computing Services: This entity code is only used with SSFs assigned with a 3E fund type. It is used for activities that provide system- or university-wide services (primarily to university departments) for data processing, telecommunication, and computing services.
      2. 3110, Plant & Service Operations: This entity code is only used with SSFs assigned with a 3E fund type. It is used for activities that provide services to internal operations on a system- or university-wide basis, including storeroom services, physical plant services, mail services, insurance services, printing services, copying services, and activities used for the collection and redistribution of costs.
      3. 3200, Student & Staff Programs: This entity code is only used with SSFs assigned with a 3J fund type. It is used for administration and operation of programs and services for students, faculty, and/or staff, including counseling, testing, student government activities, and international study abroad programs that are credit-bearing (excluding the related tuition revenue, which is recorded in the tuition fund).
      4. 3420, Unique Programs: This entity code is only used with SSFs assigned with a 3J fund type. It is used for unique student and staff programs such as non-credit bearing field trips (either domestic or abroad) or domestic field trips that are credit-bearing (excluding the related tuition revenue, which is recorded in the tuition fund).
      5. 3300, Housing & Food Service: This entity code is only used with SSFs assigned with a 3M fund type. It is used for activities that provide housing and food services to students, faculty, and/or staff when those activities are provided from a unit that is part of the Auxiliary Facilities System (AFS). The AFS is comprised of system-owned housing units, student unions, and other similar auxiliary service units, such as parking, recreation, and athletic facilities. AFS units must abide by the provisions, terms, covenants, and conditions outlined in the AFS revenue bond covenants.
      6. 3310, Student Activity Facilities: This entity code is only used with SSFs assigned with a 3M fund type. It is used for activities provided to students, faculty, and/or staff within student activity facilities that are a part of the Auxiliary Facilities System (AFS). The AFS is comprised of system-owned housing units, student unions, and other similar auxiliary service units, such as parking, recreation, and athletic facilities. AFS units must abide by the provisions, terms, covenants, and conditions outlined in the AFS revenue bond covenants.
      7. 3320, Parking: This entity code is only used with SSFs assigned with a 3M fund type. It is used for activities that provide parking services to students, faculty, and/or staff when those activities are provided from a unit that is part of the Auxiliary Facilities System (AFS). The AFS is comprised of system-owned housing units, student unions, and other similar auxiliary service units, such as parking, recreation, and athletic facilities. AFS units must abide by the provisions, terms, covenants, and conditions outlined in the AFS revenue bond covenants.
      8. 3400, Instructional Course Activities: This entity code is only used with SSFs assigned with a 3Q fund type. It is used for credit-bearing instructional activities provided primarily as a public service to private businesses, community organizations, and governmental units.
      9. 3410, Professional Development Activities: This entity code is only used with SSFs assigned with a 3Q fund type. It is used for non-credit bearing instructional activities provided primarily as a public service to individuals, private businesses, community organizations, and governmental units such as conferences, workshops, seminars, and continuing education. These services are usually provided as a part of the system’s instructional and public service mission.
      10. 3430, Agricultural Operations: This entity code is only used with SSFs assigned with a 3Q fund type. It is used for agricultural activities that provide direct support of the instructional, research, and public service missions of the system as administered by the University of Illinois Urbana-Champaign College of Agricultural, Consumer, and Environmental Sciences (ACES). Activities that pertain to academic and theoretical research are recorded in other entities as appropriate.
      11. 3440, Public Service, Academic Support, Healthcare, and Economic Development Activities: This entity code is only used with SSFs assigned with a 3Q fund type. It is used for activities that provide direct support of the primary academic, public service, healthcare, and economic development missions of the system. Examples include (but are not limited to) activities such as technical testing services, consulting services, laboratory and testing services, publication and design services, technology incubation and economic development services, and facilities that are in direct support of the instructional, research, public service and economic development functions of the system.
      12. 3450, Intercollegiate Athletics: This entity code is only used with SSFs assigned with a 3Q fund type. It is used for the administration and operation of intercollegiate athletic activities and programs. Examples include (but are not limited to) summer camps, golf courses, tennis centers, and various athletic programs.
      13. 3460, Instructional Facilities Deferred Maintenance: This entity is only used with SSFs assigned with a 3Q fund type. The activity predominately accounts for the Academic Facilities Maintenance Fund Assessment (AFMFA), which is a student assessment. Accounting for the assessment in this accounting entity is required per the Legislative Audit Commission University Guidelines since it is used to partially address deferred maintenance for academic facilities.
      14. 3500, Hospitals and Clinics: This entity code is only used with SSFs assigned with a 3Q fund type. It is used for the administration and operation of patient care facilities, primarily the University of Illinois Hospital and Clinics, which are in direct support of the instructional, research, and public service missions of the University of Illinois System.
      15. 3600, Commercial Operations Not Under Indenture: This entity code is only used with SSFs funds assigned with a 3Q fund type. It is used for activities that provide services from facilities that are not under indenture, and that have a significant emphasis on users outside the university community. Examples include services from steam plan operations, the technical research park, and airport operations.

4. Ensure that SSF activities use an accrual basis of accounting for year-end close.
   1. While most SSFs operate on a cash basis throughout the fiscal year, the activities within these SSFs must be accounted for on an accrual basis at the end of the fiscal year to ensure compliance with financial reporting requirements.
   2. This means that any accounts receivable, inventory for resale, prepaid expenses, accounts payable, and/or unearned revenue must be properly accounted for within Banner at fiscal year-end.
   3. The most efficient and effective way of making these accrual adjustments at year-end is to use the Year-End Fact Sheet to report these adjustments, accruals, and deferrals to UAFR during July of the fiscal year-end close each year. See Year-End Fact Sheet for further details on this important process.
   4. In addition, regarding accounts receivable, keep in mind that policy requires the use of the Banner AR system for managing the accounts receivable activity, unless an approved exemption is granted. For further details on this process, refer to 5 Receivables.

5. Understand how to locate the available fund balance for SSFs in Banner.
   1. To find the fund balance for a SSF, units will need to examine the general ledger. To do this, go to Banner page FGITBSR and enter the applicable chart and fund code, then click the Go button in the upper right-hand corner of the page.
   2. The available fund balance will then appear in the lower right-hand corner of the page, on the Current Fund Balance row of the Current Balance column, while the available cash balance will appear in the Claim on Cash row.
   3. For further details, see Finding Your C-FOP Balance.

6. Ensure SSFs are used for appropriate types of transactions.
   1. Any expenses posting to SSFs must be related to supporting the revenue generation within the SSF. In other words, there must be a way to explain how each expense within the SSF is tied to supporting the fund’s revenue generation.
      1. For example, if a SSF was established to account for an upcoming conference, then all expenses posting to that fund should have some relation to the planning and operations of the conference itself (such as catering expenses, personnel expenses for employees working at the conference, printing expenses for conference materials, etc.)
   2. Also, it is important to ensure that the revenue-generating activity is actually allowable to record within a SSF. There are many intricacies to consider when determining what type of fund to use to account for revenue-generating activities, and sometimes the revenue should be recorded in a different type of fund. For example, revenue generated from Medical Service Plan activities should be recorded in a medical service plan fund (not a SSF). Also, there are times when conference revenue or sponsorship revenue may need to be recorded in a custodial or gift fund, respectively, instead of a SSF. It is important to consider the details of each scenario before recording the activities within a SSF.
      1. For further details and examples, see 11.13 Accounting for Qualified Sponsorships and 13.6 Revenue-Generating Events.

7. Ensure that the SSF is reconciled on a regular basis and that any discrepancies are corrected on a timely basis once they are identified. In addition, keep in mind that a final reconciliation for June 30 period 12 business is required at the end of the fiscal year, to ensure that any errors are corrected by the close of the fiscal year. This will ensure accuracy for the system’s audited financial statements.
   1. For further details and tips on good business practices surrounding financial reconciliations, see 13.4 Reconciliation of Financial Activities along with UAFR’s Reconciliation of Financial Activities resource page.

8. Understand how unspent funds within a SSF carry forward to the following fiscal year and understand the difference between a SSF’s cash balance and fund balance.
   1. Unspent funds within a Banner SSF carry forward to the following fiscal year. The unspent balance from the prior fiscal year can be found within the Claim on Cash balance within Banner page FGITBSR.
   2. A SSF’s cash balance differs from its fund balance. While the Claim on Cash balance represents the cash on hand, the SSF’s computed fund balance represents the difference between a SSF’s total assets and total liabilities (i.e., what the SSF owns vs. what the SSF owes).
   3. While cash is one type of asset that contributes toward the SSF’s computed fund balance, there are other assets and liabilities on the SSF’s general ledger that contribute toward the SSF’s computed fund balance as well. Common examples include assets such as accounts receivable, inventory for resale, and prepaid expenses as well as liabilities such as accounts payable and deferred revenue.
   4. If the computed fund balance is a credit balance, then that means the SSF’s assets are greater than its liabilities. This is commonly referred to as a “normal” or positive fund balance. However, if the computed fund balance is a debit balance, then that means the SSF’s assets are less than its liabilities. This is commonly referred to as a “non-normal” or negative fund balance.

9. Finally, if the activity within a SSF ever comes to an end (e.g., a unit decides to no longer sell the goods and/or services that were being sold from the SSF), then the unit will need to:
   1. Perform a final reconciliation of the SSF activity on any organization and/or program codes used with that SSF to ensure all transactions are appropriate and to correct any errors that are found. The reconciliation should include a review of both the general ledger and operating ledger balances.
   2. Ensure that any payroll appointments, jobs, detail codes, encumbrances, or PCards/TCards that are assigned to the SSF are removed prior to submitting the termination request. See Terminations for further details.
   3. Once all issues are rectified and cleared, submit a termination request to UAFR (uas@uillinois.edu) requesting that the SSF (and any program used specifically with that SSF) be terminated.