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1. CBT T he raining T P ost An Educational Computer Based Training Program

2. ENDOWMENT COMPLIANCE The University of Texas at Tyler General Compliance Training

3. U.T. Tyler Compliance Program The objective of this course is to assist you in gaining an understanding of: • the policies governing endowment compliance • the documents that each department should have related to their endowments • the tracking of the use of endowment distributions • the monitoring of the use of endowments • the location of additional available resources

4. Policies Governing Endowment Compliance and Use • Endowments are established with a minimum amount of $10,000 with the Office of University Advancement. The donor gift and a signed endowment agreement forwarded to UT System and approved by the Board of Regents.

5. Policies Governing Endowment Compliance and Use (cont.) • The distributions (interest earned) from endowments are used to fund scholarships, academic positions, and other educational programs and activities.

6. Policies Governing Endowment Compliance and Use (cont.) • Once the endowment agreement is approved by the Board of Regents, the criteria or terms of the agreement may not be changed by the donor at will. • Restrictions may be reduced, but additional requirements may not be imposed. • Amendments may be submitted through the Office of University of Advancement at UT Tyler and are then presented to the Office of Development and Gift Planning Services at UT System.

7. Policies Governing Endowment Compliance and Use (cont.) • Distributions from endowments for academic positions may be used for salary supplementation and professional support of the holder, including assistance in the holder’s research. • Endowment funds are invested at the UTIMCO (University of Texas Investment Management Company). Distributions from endowments supporting academic positions may be used to fund costs related to recruitment activities for the sole purpose of filling the vacant positions. • A new Endowment for an academic position must be approved by the Board of Regents or its designee(s) before being announced. • No initial appointment will be made to an endowed or named academic position without prior approval as a Request for Budget Change by the president of an institution after review and approval by the appropriate Executive Vice Chancellor. Subsequent new or continuing appointments to the endowed or named academic positions may be approved as a part of the annual operating budget.

8. Polices Governing Endowment Compliance and Use (cont.) • Interest income or distributions from endowments are received from UTIMCO and deposited into local U.T. Tyler accounts (DEFINE) on a quarterly basis. Those few held by external organizations may have one annual distribution. • REQUIREMENT: The Budget Authorities shall insure that the projected payout is included in the annual budget and that the balance in DEFINE at the end of each fiscal year is less than two times the annual distribution from the endowment. The Office of University Advancement requires an annual Report of Use for monitoring purposes and for excessive accumulation a Report of Planned Use by the Budget Authority is to be submitted stating the plan to correct the excessive accumulation and the projected payout for the following budget year. • REQUIREMENT For each Endowed academic position that remains unfilled for a period of three consecutive years, the institution shall provide a report to the donor disclosing the vacant status of the chair. • REQUIREMENT Endowed academic positions: U. T. Tyler must also report to the Legislative Budget Board the average length of time in months endowed chairs have remained unfilled and the percent of endowed chairs unfilled within the fiscal year being reported. • REQUIREMENT Scholarships: Failure to award an endowed scholarship during its first five years is reported to the donor and the Higher Education Coordinating Board by the Office of University Advancement and results in notice of that failure being published in the Texas Register.

9. Polices Governing Endowment Compliance and Use (cont.) • If the aggregate amount of an unawarded endowed scholarship reaches $250,000, the University shall also notify the Legislative Budget Board. • Diminishing an endowed program’s financial support from institutional local funds within five years of the program’s creation or endowment (i.e., U. T. Tyler has to continue the same level of support as in the past), requires notification of the donor, the Higher Education Coordinating Board and the Legislative Budget Board as well as publication in the Texas Register. • If any of the above occurs, upon application by the donor, the University shall return the donation or endowment to the donor.

10. Endowment Documentation required by Colleges and Budget Authorities • A copy of the Endowment agreement and/or supporting documentation showing use requirements • Monthly account reconciliations of Endowment accounts in DEFINE • Supporting receipts and documentation for those expenditures • Where applicable, forms documenting the eligibility of scholarship recipients • Notification copies of awards to professorships, chairs, and/or departmental endowments • Copies of annual narrative Reports of Endowment Use, detailing enhancement to the students, department, program or academic area (Office of University Advancement will supply template)

11. Tracking the Use of Endowment Distributions • Local endowment account balances and expenditure amounts by category (i.e., salaries, wages, scholarships, etc.) can be accessed through DEFINE by Deans, Faculty and/or staff. • Also, Endowment distribution information can also be accessed through UTIMCO via CRIS (Component Reporting Information System.) • UTIMCO makes Quarterly Endowment Funds Summary reports available on-line. These reports provide endowment account balances, market and book values of the endowments, the most recent quarterly distribution amount, and an estimate of the annual distribution to the account. This report provides investment and payout information only. • UTIMCO generates annual reports, which are sent by the Office of University Advancement to endowment donor/contacts.

12. Monitoring the Use of Endowments • An Annual Compliance Review Report will be distributed to all budget authorities responsible for one or more endowments. • This report will include DEFINE fund balances for two fiscal years and review of adherence to Policies and Procedures. • The responsible persons for the endowments within each unit (usually the Department Chair and Dean in academic units and the Vice President in non-academic units) will review all activity and sign the report. • After signing, the budget authority will forward the report to the Director of University Advancement and copy the Provost. • The Office of University Advancement will review each endowment in detail on a three year cycle.

13. Monitoring the Use of Endowments (cont.) • Endowment funds must also be spent in accordance with the donor’s criteria documented in the endowment agreement and institutional policy. In other words, endowments for scholarships must be spent for scholarships, awarded to eligible applicants; endowments for professorships must be spent only to support the named professor and his/her allowable work-related expenses; and endowments for other endowments must be spent for specified expenses. • On a quarterly basis, the Office of University Advancement reports the results of monitoring activities to executive management through the Compliance Working Group.

14. Failure to Use the Funds or Spend Them CorrectlyFailure to use the funds or spend them correctly could result in any or all of the following: • Legal liability with the donor(s) • Return of the gift to the donor • Jeopardizing future gifts • Adverse public relations

15. Endowment ComplianceHow do I find out more? • General Appropriations Act of the 77th Legislative Sessions, Article III, Sections 44, 47, and 48, on Endowment Reporting Guidelines • Texas Education Code Title 3. SUBCHAPTER H. 51.401 • Texas Government Code, Section 552.1235 • Texas UPMIFA (Uniform Prudent Management of Institutional Funds Act) revised 2007 • UT System Board of Regents Rules and Regulations, • Gift Acceptance Procedures, UT System Admin. Policy #UTS138 • UT System Admin. Policy #UTS117. • Management Responsibilities Handbook, Revised October 2004.

16. U.T. Tyler’s Disciplinary Procedures • Failure to follow compliance guidelines may result in disciplinary action including: departmental counseling, formal disciplinary action, suspension or termination and loss of confidence in donors.

17. Test Your Knowledge Following are several questions to test your knowledge of the information presented. Answer all questions correctly to receive credit for the training.

18. Question #1 The balance in DEFINE is required to be below two times the annual distribution income from the endowment. TRUE FALSE

19. SORRY TRY AGAIN REVIEW

20. Question #2 Endowments may be established to fund scholarships, academic programs, academic positions, and other educational activities. TRUE FALSE

21. SORRY TRY AGAIN REVIEW

22. Question #3 A department can enter into a verbal agreement with a donor as to how the endowment proceeds can be used. TRUE FALSE

23. SORRY TRY AGAIN REVIEW

24. Question #4 Budget Authorities should maintain the following documents related to their endowment accounts: 1. Copy of Endowment agreement and/or supporting documentation of donor criteria 2. Monthly account reconciliations including documentation for their endowment accounts 3. Documentation of student eligibility for endowed scholarship ALL OF THE ABOVE NONE OF THE ABOVE

25. SORRY TRY AGAIN REVIEW

26. Question #5 Endowment funds must be spent in accordance with the endowment agreement. TRUE FALSE

27. SORRY TRY AGAIN REVIEW

28. Question #6 In this endowment training, references were provided on where to find information and who to contact for more information on Endowment Compliance. TRUE FALSE

29. SORRY TRY AGAIN REVIEW

30. Congratulations… you have completed your training on Endowment Compliance! The University of Texas at Tyler General Compliance Training

31. CBT T he E nd The Training Post An Educational Computer Based Training Program