Capital Project Funding

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Capital Projects

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.  

The expenses, funding, and financing of all capital projects are recorded in the capital account. This is a 26-digit FinMIS account composed of: 

  1. CNAC and org of the school/center responsible for the project 
  2. Budgetary control of “0” 
  3. Fund “000010” 
  4. Object Codes “19xx” Expenses, “4812” Gifts, “4821” all other funding, “278x” Financing   
  5. Program value unique to the capital project 
  6. Center Reference “0000” 

The Office of the Treasurer will verify and certify capital project funding for certain schools/centers. 

The Office of the Treasurer also certifies capital project financing. An amortization schedule with the anticipated interest rate, principal, and term is distributed to the school/center.  At the project closure, a copy of the final amortization schedule with the final interest rate and principal is sent to the school/center showing their debt scheduled payments during the life of the loan. 

Debt Management oversees all anticipated Internal Capital Project Loans and periodically distributes a five-year forecast to each school/center reflecting their anticipated debt service and/or project loan status. 

Interim Interest

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. The Internal Finance department strives to prepare funding certifications promptly to minimize the interim interest expense a school/center incurs when an unanticipated loan is generated. 

For more information on the capital process, please visit https://www.facilities.upenn.edu/capital-process. 

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