Cash and Debt Management
[ Debt Management ]
The mission for Debt Management is to provide competitive real returns for the University's working capital pool while maintaining sufficient liquidity to meet University cash requirements.
Internal Finance manages internal capital project certifications and internal loans. We provide services for certifying funding for approved Capital Projects, including Internal Capital Project Loans (intra-University lending); see Capital Project Accounting Procedures for more information. We also administer the Equipment Purchase Loan Program (EPLP) to finance equipment purchases for schools and centers.
The following is a list of some of the information maintained by our office, should you find you need information.
- Property Records
- Dormitory Agreements
- Internal loan documents, both Capital and Equipment
Capital Project Funding and Financing
"Capital projects" are renovations and new construction with estimated total costs of $100,000 or more. (See Financial Policy 1106, Plant Assets.) Renovations and other projects with estimated total costs of less than $100,000 are normally not capitalized. These projects are budgeted and charged directly to the school/center's operating budget using object code 5407. (See http://www.finance.upenn.edu/comptroller/accounting/cppd/non-cap for more information on non-capitalized projects.)
The expenses, funding, and financing of all capital projects are recorded in the "capital account". This is a 26-digit FinMIS account composed of:
- CNAC and org of the school/center responsible for the project
- Budgetary control of "0"
- Fund "000010"
- Program value unique to the capital project
- Center Reference "0000"
The Office of the Treasurer "certifies" all capital project funding. The Internal Finance department prepares the certification upon receiving a request to do so and after confirming that the funding is available, approved, and appropriate. Once the funds are certified, General Accounting transfers the funding into the capital account.
The Office of the Treasurer also certifies capital project financing. An amortization schedule with the expected interest rate, principal and term is distributed to the school/center with the certification of this internal capital project loan. At project closure, a copy of the final amortization schedule with the final interest rate and principal is sent to the school/center and to General Accounting, which will begin taking principal and interest payments at the beginning of the following fiscal year.
The Internal Finance department manages a database of all anticipated internal capital project loans and periodically distributes spreadsheets to each school/center reflecting their scheduled debt service for the next five fiscal years, to facilitate the budgeting process of each school/center.
At the end of every month, the dollar difference between the amount of funding and the total expenses in each capital project generates either an internal capital project loan or a surplus in the capital account. This loan/surplus incurs/earns an interim interest amount that is charged to/credited to the school/center at the beginning of the following fiscal year. This interest amount is calculated in FinMIS in the INTF object code (with "STAT" as the currency instead of USD) at the then current interest rate. The Internal Finance department strives to prepare funding certifications promptly to minimize the unanticipated interim interest expense a school/center incurs when an unanticipated loan is generated.
Equipment Purchase Loan Program
The University has committed resources for an internal financing program called EPLP (Equipment Purchase Loan Program) administered by the Office of the Treasurer as a means for paying for equipment over time at the prevailing prime interest rate at the time of the loan. All loan requests must be approved by the School/Center’s Senior Business Administrator or Dean and the VP of Finance.
Debt Service on loans is record annually. Loans administered under this program are based on the following three-tier repayment system:
$25,000 - $49,999 three-year amortization
$50,000 - $99,999 four-year amortization
$100,000 and greater five-year amortization
Note: The minimum loan request is $25,000.
Because internal interest is not typically recoverable under indirect cost recovery guidelines for grants, EPLP's should generally not be used for grant related activity. To inquire about an EPLP, please contact the Treasurer’s office.