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Office of General Counsel Policies & Guidelines

Policy Number: 
4:01:02:30
Policy/Guideline Area: 
Business and Finance Policies
Applicable Divisions: 
TCATs, Community Colleges, System Office
Purpose: 

The following policy is adopted by the Tennessee Board of Regents relative to the planning and design of facilities on the campuses of institutions governed by the Board.

Policy/Guideline: 
  1. Facilities Planning and Design
    1. Prior to proceeding with preplanning or design of any project for which an architect or engineer is engaged, the institution president shall, in coordination with the Tennessee Board of Regents staff, develop a comprehensive program statement for the project.
    2. This program statement shall fully set forth the scope of the proposed project and the functional requirements to be satisfied.
    3. When approved by the Board of Regents staff, the program statement shall be the basis for the preplanning and design of the project.
    4. The Chancellor shall ensure that the preplanning, design, and final plans of each project are carried out in conformance with the approved program statement.
Sources: 

Authority

T.C.A. § 49-8-203

History

TBR Meetings, October 12, 1973; September 30, 1983; December 8, 2006

Policy Number: 
4:01:01:20
Policy/Guideline Area: 
Business and Finance Policies
Applicable Divisions: 
TCATs, Community Colleges, Universities, System Office, Board Members
Purpose: 

Debt management policies provide written guidance about the amount and type of debt issued by governments, the issuance process for such debt, and the management of the debt portfolio. A debt management policy tailored to the needs of the Board:

  • Identifies policy goals and demonstrates a commitment to long-term financial planning.
  • Improves the quality of decisions concerning debt issuance; and
  • Provides justification for the structure of debt issuance.

Adherence to its debt management policy signals to rating agencies and the capital markets that the Board is well-managed and should meet its obligations in a timely manner.

Debt levels and their related annual costs are important financial considerations that impact the use of current resources. An effective debt management policy provides guidelines for the Board to manage its debt programs in line with those resources.

Policy/Guideline: 
  1. Introduction
    1. The Board of Regents of the State University and Community College System (“Board”) adopts the following policies concerning debt management.
    2. Pursuant to T.C.A. § 49-3-1205(11), whenever the Board takes action under chapters 4, 7-9, and 12 of Title 49 to borrow money for any purpose, the Board must first seek the approval of the Tennessee State School Bond Authority (the “Authority”), created in 1965 under the Tennessee State School Bond Authority Act, T.C.A. § 49-3-1201 et seq. The Authority is a corporate governmental agency and instrumentality of the State of Tennessee whose purpose is to finance revenue generating capital projects for public institutions of higher education located in Tennessee by issuing its bonds and notes. The Board has entered into a Second Program Financing Agreement as of November 1, 1997 with the Authority for the financing of projects for institutions under the jurisdiction of the Board.
    3. At this time, the Board chooses to borrow only through the Authority; however, with the approval of the Authority, the Board reserves the right to utilize other borrowing methods should special circumstances arise.
    4. The Authority has financed for the Board a variety revenue generating of higher education projects including, but not limited to, dormitories, athletic facilities, parking facilities, student activities/recreation centers, research laboratories, and major equipment purchases. These projects stand in contrast to non-revenue generating capital projects for basic academic needs such as classrooms and libraries that are funded from the proceeds of the State’s general obligation bonds issued by the State Funding Board and for which the Board is not obligated to pay the debt service.
  2. Goals and Objectives
    1. The Board is establishing this debt policy as a tool to ensure that financial resources are adequate to meet the Board’s long-term debt program and financial planning.
    2. In addition, this Debt Management Policy (the “Policy”) helps to ensure that financing undertaken by the Board satisfy certain clear objective standards designed to protect the Board’s financial resources and to meet its long-term capital needs.
    3. This Policy coordinates with other policies and guidelines of the Board.
      1. The goals of this Policy are:
        1. To document responsibility for the oversight and management of debt related transactions;
        2. To define the criteria for the issuance of debt;
        3. To define the types of debt approved for use within the constraints established by the General Assembly;
        4. To define the appropriate uses of debt; and
        5. To minimize the cost of issuing and servicing debt.
      2. The objectives of this Policy are:
        1. To establish clear criteria and promote prudent financial management for the issuance of all debt obligations;
        2. To identify legal and administrative limitations on the issuance of debt;
        3. To ensure the legal use of the Board’s direct debt issuance authority;
        4. To maintain appropriate resources and funding capacity for present and future capital needs;
        5. To evaluate debt issuance options;
        6. To promote cooperation and coordination with other stakeholders in the financing and delivery of services;
        7. To manage interest rate exposure and other risks; and
        8. To comply with Federal Regulations and generally accepted accounting principles (“GAAP”).
  3. Debt Management
    1. Purpose and Use of Debt Issuance
      1. Debt may be used to finance projects identified by institutions comprising the State University and Community College System.  Ordinarily, projects are identified and included within the System’s approved capital plan that is submitted annually to the Tennessee Higher Education Commission.  After consideration by the Commission, these projects are incorporated into the State of Tennessee annual budget (as “disclosed projects”).  From time to time, mission critical projects not considered as part of the annual process will be brought to the Commission by the Board for intra-year financing.
      2. Debt may be used to finance project costs which include all direct capital costs and indirect capital costs of projects, including but not limited to costs of construction and acquisition, costs of issuance of debt, funded interest on debt, and amounts to fund or replenish reserves, if and to the extent approved by the Authority.  In compliance with Article II, Section 24 of the Tennessee Constitution, no budgeted operational expenditures (including internal employee labor) shall be reimbursed with debt proceeds unless such debt is retired/repaid within the fiscal year of issuance.
      3. Prior to the issuance of bonds, bond anticipation notes may be issued for the payment of costs as authorized by the Authority.
      4. Bonds may be issued to refinance outstanding debt.
    2. Debt Capacity Assessment
      1. The debt capacity of the Board is partially reliant on the debt capacity of each institution under its jurisdiction.  Due to this reliance, this Policy requires the assessment of the debt capacity on a project by project basis as each project is considered.  Debt capacity of each project is based on debt service coverage, which measures the actual margin of protection for annual debt service payments from the annual pledged revenue.  The pledged revenue plus the pledge of legislative appropriations must meet a two times coverage test for a project to be approved for debt funding.
      2. Bond anticipation notes are limited to the amount stated in the related Resolution and/or Credit Agreement.
    3. Federal Tax Status
      1. Tax-Exempt Debt
        1. The Board will use its best efforts to have projects eligible for financing with tax-exempt debt based on the assumptions that tax-exempt interest rates are lower than taxable rates and that the interest savings outweigh the administrative costs, restrictions on use of financed projects, and investment constraints.
      2. Taxable Debt
        1. The Board will agree to financing of projects with taxable debt when projects are not eligible to be financed with tax-exempt debt or when the administrative costs, restrictions on use of financed projects, and investment constraints outweigh the benefit of tax-exempt rates.
    4. Legal Limitations on the Use of Debt
      1. Pursuant to T.C.A. § 49-3-1207(d)(4), limitations on the purpose to which the proceeds of sale of bonds or notes may be applied are contained in the resolution or resolutions authorizing the bonds or notes.
      2. No debt may be issued for a period longer than the useful life of the capital project it is funding. 
  4. Types of Debt
    1. Pursuant to T.C.A. § 49-3-1207, the Authority is authorized from time to time to issue its negotiable bonds and notes. These include:
      1. Bonds
        1. The Authority may issue bonds, where repayment of the debt service obligations of the bonds will be made through revenues generated from specifically designated sources. The bonds will be special obligations of the Authority. These bonds may include, but not limited to:
          1. Fixed Interest Rate Bonds - Bonds that have an interest rate that remains constant throughout the life of the bond.
            1. Serial Bonds
            2. Term Bonds
          2. Variable Interest Rate Bonds - Bonds which bear a variable interest rate but do not include any bond which, during the remainder of the term thereof to maturity, bears interest at a fixed rate. Provision as to the calculation or change of variable interest rates shall be included in the corresponding Supplemental Resolution.
          3. Capital Appreciation Bonds - Bonds as to which interest is payable only at maturity or prior redemption of such Bonds or which bear a stated interest rate of zero. The corresponding Supplemental Resolution for the bonds will define the manner in which the period during which principal and interest shall be deemed to accrue, and the valuation dates for the bonds and the accreted value on the valuation date.
          4. Refunding Bonds - Bonds refunding the whole or a part of a Series of Bonds delivered on original issuance.
      2.  Short-term Debt
        1. The Authority may issue short-term debt, from time to time as needed to fund projects for the Higher Educational Institutions during their construction phase. Such debt shall be authorized by resolution of the Authority. Short-term debt may be used for the following reasons:
          1. To fund projects with an average useful life of ten years or less; and
          2. To fund projects during their construction phase.
        2. These notes may be structured as Bond Anticipation Notes (“BANs”) or short-term obligations that will be repaid by proceeds of a subsequent long-term bond issue or fees and charges from the borrowers. Typically these notes are issued during the construction period to take advantage of lower short-term interest rates. These notes may include:
          1. Commercial Paper (“CP”) – CP is a form of bond anticipation note that has a maturity up to 270 days, may be rolled to a subsequent maturity date and is commonly used to finance a capital project during construction. It can be issued incrementally as funds are needed.
          2. Fixed Rate Notes – Notes issued for a period of time less than three years at a fixed interest rate.
          3. Variable Rate Notes – Notes issued for a period of time less than three years which bear variable interest rates until redeemed. Provision as to the calculation or change of variable interest rates shall be included in the authorizing resolution.
          4. Revolving Credit Facility – A form of bond anticipation note involving the extension of a line of credit from a bank. The bank agrees that the revolving credit facility can be drawn upon incrementally as funds are needed. The draws upon the line of credit may bear variable interest rates until redeemed. Provision as to the calculation or change of variable interest rates shall be included in the authorizing credit agreement. 
  5. Debt Management Structure
    1. The Board, when requesting financing for a project, shall request the Authority to structure the funding:
      1. Term
        1. All capital projects financed through the issuance of debt will be financed for a period not to exceed the useful life of the projects, but in no event will the term exceed thirty (30) years.
      2. Financed (Capitalized) Interest
        1. From time to time certain projects may require the use of capitalized interest from the issuance date until the Board has beneficial use or occupancy of the financed project.
        2. Interest may be financed (capitalized) through a period permitted by federal law and the Authority’s Second Program General Bond Resolution if it is determined that doing so is beneficial.
      3. Debt Service
        1. Debt issuance shall be planned to achieve relatively net level debt service.  The Board shall not use bullet or balloon maturities, absent sinking fund requirements, except in those instances where these maturities serve to make existing overall debt service level or to match a specific income stream.
        2. No request shall be made to the Authority for debt to be structured with deferred repayment of principal unless such structure is specifically approved by affirmative vote of the members of the Board.
      4. Call Provisions
        1. In general, the Authority’s securities will include a call feature no later than ten (10) years from the date of delivery of the bonds. Call Features should be structured to provide the maximum flexibility relative to cost. The Authority will avoid the sale of long-term non-callable bonds absent careful evaluation by the Authority with respect to the value of the call option.
      5. Original Issuance Discount/Premium
        1. Bonds sold with original issuance discount/premium will be permitted with the approval of the Authority.
  6. Refunding Outstanding Debt
    1. At least semiannually, Authority staff with assistance from the Authority’s Financial Advisor analyzes outstanding bond issues for refunding opportunities, whether for economic, tax-status, or project reasons.
    2. Consideration is to be given to anticipated costs and administrative implementation and management.
    3. The Board shall report to the Authority a need for refunding when:
      1. The refunding of the debt is necessary due to a change in the use of a project that would require a change to the tax status of the debt.
      2. The project is to be sold or no longer in service while still in its amortization period.
      3. Restrictive Covenants prevent the issuance of other debt or create other restrictions on the financial management of the project and revenue producing activities.
    4. The Board will request the refunding term to be no longer than the term of the originally issued debt. 
  7. Reserve Funds
    1. Debt Service Reserve Fund
      1. The Authority’s Second Program General Bond Resolution provides that a Debt Service Reserve Fund shall be established up for each bond that is issued.
      2. If future Authority bond resolutions do not require such a reserve fund, this provision is not required.
    2. Liquidity Facility
      1. In the event the Authority shall utilize CP, the Authority may set up a liquidity facility to provide liquidity to securities that have been tendered. The liquidity facility may be in the form of a letter of credit, advance agreement or other arrangement that may provide liquidity.
    3. Interest Rate Reserve Fund
      1. The Authority establishes an interest reserve fund for the bond anticipation notes issued for each project. The interest reserve fund provides security for interest due on the bond anticipation notes as such interest matures between billings.
      2. The Board will pay on a monthly basis based on the amount borrowed.
      3. When the short-term debt for a project is either repaid or converted to bonds, the amount invested in the reserve fund will be credited back to the Board.
  8. Risk Assessment
    1. The Executive Director of Facilities Development, subject to approval of the Vice Chancellor of Business and Finance, will evaluate each transaction to assess the types and amounts of risk associated with that transaction, considering all available means to mitigate those risks.
    2. The Executive Director of Facilities Development, subject to approval of the Vice Chancellor of Business and Finance, will evaluate all proposed transactions for consistency with the objectives and constraints defined in this Policy.
    3. The following risks should be assessed before issuing debt:
      1. Change in Public/Private Use
        1. The change in the public/private use of a project that is funded by tax-exempt funds could potentially cause a bond issue to become taxable.
      2. Default Risk
        1. The risk that revenues for debt service payments are not all received by the due date.
      3. Liquidity Risk
        1. For variable rate debt, the risk of having to pay a higher rate to the Authority for the liquidity provider in the event of a failed re-marketing.
      4. Interest Rate Risk
        1. For variable rate debt, the risk that interest rates will rise, on a sustained basis, above levels that would have been set if the issue had been fixed.
      5. Rollover Risk
        1. For variable rate debt, the risk of the inability to obtain a suitable liquidity facility at an acceptable price to replace a facility upon termination or expiration of the contract period.
  9. Transparency
    1. As a public body, the Board shall comply with the Tennessee Open Meetings Act.
    2. Additionally, the Board will assist the Authority in complying with U.S. Securities and Exchange Commission Rule 15c2-12, by providing certain financial information and operating data by specified dates, and to provide notice of certain enumerated events with respect to the bonds, if material. Such material events include:
      1. Issuer’s Counsel - The Authority will enter into an engagement letter agreement with each lawyer or law firm representing the Authority in a debt transaction. No engagement letter is required for any lawyer who is an employee of the Office of Attorney General and Reporter for the State of Tennessee which serves as counsel to the Authority.
      2. Bond Counsel - Bond Counsel shall be engaged through the Office of State and Local Finance and serves and assists the Authority on all its debt issues under a written agreement.
      3. Financial Advisor - The financial advisor shall be engaged through the Office of State and Local Finance and serves and assists the Authority on financial matters under a written agreement. However, the financial advisor shall not be permitted to bid on or underwrite an issue for which it is or has been providing advisory services. 
  10. Professional Services
    1. From time to time the Board uses its General Counsel for advice on aspects of a debt transaction; no engagement letter is required since General Counsel is an employee of the Board.
    2. Additionally, the Board relies upon advice from the Office of Attorney General and Reporter, with which no engagement letter is required.
  11. Potential Conflicts of Interest
    1. If the Board were to hire professionals to assist the Board in a debt transaction, the professionals shall be required to disclose to the Board existing client and business relationships between and among the professionals to a transaction (including but not limited to financial advisor), as well as the Authority.
    2. This disclosure shall include such information that is reasonably sufficient to allow the Board to appreciate the significance of the relationships. 
  12. Debt Administration
    1. Planning for Sale
      1. The Board (through the Executive Director of Facilities Development and Vice Chancellor of Business and Finance) will provide all requisite information to the Authority to facilitate the compilation of data necessary for the Official Statement related to the bond issuance and bond underwriting.
    2. Post-Sale
      1. The Board will ascertain that fees and charges are established at levels sufficient to meet the two times debt service coverage when combined with legislative appropriations.
      2. The Board will (through the Executive Director of Facilities Development and Vice Chancellor of Business and Finance) provide for timely transmission of requisite debt service payments as billed by the Authority.
    3. Continuing Administration
      1. The Board (through institutional administration) will ascertain that facilities financed with tax exempt debt will be used in a manner such as to not jeopardize the exempt status of the issued debt.
      2. The Board (through institutional administration) will maintain the financed facilities in a prudent manner establishing maintenance reserves when necessary to preserve the viability of facilities.
  13. Federal Regulatory Compliance and Continuing Disclosure
    1. Arbitrage
      1. The Board (through the Executive Director of Facilities Development and Vice Chancellor of Business and Finance) will work with the Office of State and Local Finance to comply with arbitrage requirements on invested tax-exempt bond funds consistent with representations made in the relevant Tax Certificate.
      2. The Board will also retain all records relating to debt transactions for as long as the debt is outstanding, plus three years after the final redemption date of the transaction.
    2. Generally Accepted Accounting Principles (GAAP)
      1. The Board will comply with the standard accounting practices adopted by the Governmental Accounting Standards Board when applicable.
  14. Review of the Policy
    1. The debt policy guidelines outlined herein are intended to provide direction regarding the future use and execution of debt. The Board maintains the right to modify these guidelines in a manner similar to the original adoption of the Policy.
Sources: 

Authority

T.C.A. § 49-8-203; All Federal and State statutes, codes, rules and regulations referenced in this policy.

History

TBR Board Meeting September 21, 2012; TBR Board Meeting June 23, 2016

Policy Number: 
4:01:01:10
Policy/Guideline Area: 
Business and Finance Policies
Applicable Divisions: 
TCATs, Community Colleges, Universities, System Office
Purpose: 

The following policy on the deposit and investment of funds is adopted by the Board of Regents for the institutions under its jurisdiction, and shall apply to all funds, regardless of source, which are received by any institution.

All depositories which provide deposit or investment services shall agree to comply with the terms of this policy, and with the requirements of Chapter 4 of Title 9 of Tennessee Code Annotated as amended, and the latter provisions shall control in the event of conflict. Words and phrases used in this policy shall have the same definition and meaning as in Chapter 4 of Title 9 Tennessee Code Annotated.

Definitions: 
  • Collateral Security - means securities which may be accepted as collateral for deposits.
  • Compensating balances - means the amount of funds allowed to remain in an account.
  • Default - may include but is not limited to:
    • The failure of any qualified public depository to return any public deposit, including earned interest in accordance with the terms of the deposit contract.
    • The failure of any qualified public depository to pay any properly payable check, draft or warrant drawn by the public depositor.
    • The failure of any qualified public depository to honor any valid request for electronic transfer of funds.
    • The failure of any qualified public depository to account for any check, draft, warrant, order, deposit certificate or money entrusted to it.
    • The issuance of any order of any court or the taking of any formal action by any supervisory authority, which has the effect of restraining a qualified public depository from making payments of deposit liabilities.
    • The appointment of a conservator or receiver for a qualified public depository; or
    • Any other action which the treasurer determines to place public deposits in jeopardy.
    • Failure to provide the required collateral.
  • Deposit Insurance - means the insurance provided by the Federal Deposit Insurance Corporation.
  • Eligible Collateral - shall have the meaning set forth in T.C.A. § 9-4-103. For savings institutions securing local government deposits, eligible collateral shall also include securities described in T.C.A. § 9-1-107(a)(2) under such additional conditions as the treasurer deems appropriate.
  • Loss - includes but is not limited to:
    • The principal amount of the public deposit;
    • All accrued interest through the date of default;
    • Additional interest at the rate the public deposit was earning on the total of the principal amount of the public deposit and all accrued interest through the date of default, through the day of payment by a liquidator or other third party or through the date of sale of eligible collateral by the treasurer or his agent; and
    • Attorney's fees incurred in recovering public deposits.
  • Market Value - means current market price.
  • Depository - means any bank, savings and loan association or savings bank (collectively referred to as savings institutions) located in the state of Tennessee which is under the supervision of the Department of Financial Institutions, the United States Comptroller of the Currency, or the Office of Thrift Supervision, and which has been appropriately designated to hold public deposits by a public depositor.
  • Required Collateral - means eligible collateral, excluding accrued interest, having a market value equal to or in excess of the greater of the average daily balance or average monthly balance of public deposits multiplied by the qualified public depository's collateral-pledging level as required by the Tennessee Board of Regents. (T.C.A. § 9-4-502)
  • Trust Receipts - means a receipt issued by the trustee custodians in lieu of the actual deposit of eligible collateral, it is subject in all respects to the claims and rights of the institution to the same extent as though such collateral had been physically deposited with the institution.
  • Trustee Custodian - means a financial institution designated to hold eligible collateral on behalf of the Tennessee Board of Regents or its institutions and a qualified public depository pursuant to T.C.A. § 9-4-108.
Policy/Guideline: 
  1. Depository Accounts
    1. Each institution shall maintain one general operating account and one payroll account at an authorized depository for the regular operating and payroll functions of the institution. No additional checking accounts may be opened or maintained by any institution unless approved by the Chancellor or his or her designee.
    2. All checks, drafts, or other methods of withdrawing funds from an account must be co-signed by the president and the chief business officer of the institution; provided that facsimile signatures may be used on checks, drafts, or other methods of withdrawals; and provided that any authorization or request for withdrawal form shall bear the original or electronic signature of the president or the chief business officer or designee approved by the president in all cases where expenditures exceed one percent (1%) of the state appropriation to the institution.
    3. The President of each institution is authorized to establish one or more checking accounts for the deposit and disbursement of petty cash funds within the business office. Additional petty cash accounts may be authorized by the presidents for departments external to the business office provided that no account shall exceed one thousand dollars ($1,000.00). If the custodian of the fund has accepted responsibility for the funds in writing, and has agreed to repay any shortages or expended funds not properly accounted for from the account, then the custodian may be designated as the signatory authority for the account, and the custodian or the chief business officer of the institution shall be authorized to withdraw funds from the account.
    4. Institutions will retain written documentation of employees’ authority to perform routine activities related to the depository accounts.
    5. No accounts shall be authorized or established which are complimentary non-interest bearing accounts. When using compensatory balances, the amount of funds allowed to remain in any checking account should be reasonably related to the number of transactions to be processed through the account during any month, and other servicing costs, if any.
  2. Collateral
    1.  All depositories must provide collateral security for deposits and accrued interest in all accounts, including checking, savings, and certificates of deposit. Securities which may be accepted as collateral for deposits shall be limited to those specified in T.C.A. § 9-4-103. All items listed in Section V.J of this policy and items noted in Section V.K are eligible as collateral.
    2. The required collateral accepted as security for deposits at financial institutions that do not participate in the collateral pool shall be collateral whose market value is equal to one hundred five percent (105%) of the value of the deposit and secured thereby; less so much of such amount as is protected by the Federal Deposit Insurance Corporation or the Federal Savings and Loan Insurance Corporation. The required collateral accepted as security for deposits at financial institutions participating in the collateral pool will be set by the Department of Treasury.
    3. At the time of designation as an institution's depository or at any time thereafter, additional collateral with a market value of one hundred thousand dollars ($100,000) shall be required where the capital to asset ratio of a savings and loan association, savings bank, or bank is less than five percent (5%). This additional collateral shall be in addition to the collateral required by other provisions of this policy.
    4. The market value of required collateral shall be evaluated by the institution monthly and more frequently if required by unusual market conditions. Any depository not providing collateral with a market value as specified in II.B above must provide additional, adequate collateral within two working days of a request by the institution. Failure to provide the additional collateral may be considered an act of default.
    5. In the case of a checking account, the market value of the collateral accepted as security for deposits shall be the amount specified in Section II.B based on the highest daily depository book balance in the account for the preceding month excluding large deposits covered below. The amount of the depository balance must be determined on or before the fifth day of the month in question. Large deposits, such as registration receipts, which may result in insufficient collateral, either should be invested immediately or additional collateral should be in place. (If the investment is in a certificate of deposit, the certificate must be collateralized.) Alternatively, depositories may be allowed to post collateral daily to cover the current depository book balance.
    6. Any loss to the institution due to a depository's default shall be satisfied out of collateral pledged by the depository to whatever extent possible. The collateral security shall be liable for any loss, including and not limited to the principal amount of the deposit, for accrued interest through the date of default, for additional interest through the date of recovery on the principal and accrued interest at the rate the deposit was earning, and for attorney's fees incurred in recovering deposits and other losses.
    7. An institution must either be provided the actual securities pledged as collateral for deposits, or trust receipts from trustee custodians for the collateral in lieu of the actual delivery of the securities. A trustee custodian is one which meets the requirements of T.C.A. § 9-4-108. When any trustee custodian holds collateral for an institution's depository which is related to the custodian through shared ownership or control, such collateral shall be held in a restricted account at a Reserve Federal Bank or branch thereof or at a Federal Home Loan or branch thereof.
    8. In lieu of the actual deposit of eligible collateral, the institution is authorized at its option to accept trust receipts therefore.
      1. Trust receipts shall be issued by trustee custodians in a form acceptable to the institution following the deposit of eligible collateral with the trustee custodian by an institution's depository.
      2. Eligible collateral deposited with a trustee custodian shall be subject in all respects to the claims and rights of the institution to the same extent as though such collateral had been physically deposited with the institution.
      3. Each trust receipt shall be nonnegotiable and irrevocable and shall continue in full force and effect until surrendered by the issuing trustee custodian with the release of the institution endorsed thereon.
      4. The institution may present the trust receipt at any time to the issuing trustee custodian and upon delivery thereof shall be entitled to receive any and all collateral represented thereby from the trustee custodian, and such collateral shall thereafter be held by the institution as if deposited with the institution by the depository as collateral, without further liability on the party of the trustee custodian.
      5. Following delivery of the collateral to the institution, the institution is permitted to register such collateral in the name of the institution and to hold it on behalf of the depository.
    9. Institutions with depositories participating in the collateral pool administered by the Department of Treasury will not be responsible for monitoring the collateral securities pledged. As provided in T.C.A. § 9-4-501 through 9-4-523, the Department of Treasury will monitor the collateral securities pledged.
  3. Depository Institutions
    1. Subject to the other requirements of this policy, accounts may be authorized and established at depositories which are either under the supervision of the Department of Financial Institutions, the United States Comptroller of the Currency or the Federal Home Loan Bank Board.
    2. Before a depository may be used by an institution for the deposit of funds in a checking account, it must provide documentation verifying the following:
      1. That the depository is supervised by the Department of Financial Institutions of the State of Tennessee, the United States Comptroller of the Currency, or the Federal Home Loan Bank Board;
      2. The capital to asset ratio of the depository as of the current date and the date of the last audited financial statements of the depository;
      3. That the depository can comply with the collateral security requirements for all accounts;
      4. The names of the members of the board of directors and officers of the depository;
      5. The name of the holding company of the depository, if applicable; and
      6. The names of the owners of ten percent (10%) or more of the stock of the depository.
    3. Each institution shall identify the nature and level of services which must be provided by a depository before a checking account is established. Such services should include but are not limited to the minimum services in the standard request for proposals for depository services as set forth in guidelines established pursuant to this policy. Some or all of these services may be required without charge to the institution.
    4. Each institution shall solicit proposals from all qualified depositories with offices within a reasonable distance from the campus, and shall determine those depositories which can provide the nature and level of services for accounts as required by the institution on a competitive basis. The agreement with the depository cannot exceed 5 years.
  4. Depositing Funds
    1. Each institutional department will deposit funds each day when $500 in funds has been accumulated. All funds must be adequately secured. In all cases, a deposit must be made at least once each work week (Monday - Friday) if there are any funds to be deposited.
    2. The $500 is considered in excess of the established change fund amount.
  5. Investments
    1. All investment decisions shall be in accordance with this policy and must be approved by the chief business officer or his or her designee.
    2. All investments in which funds are deposited outside the State of Tennessee must be authorized by the president.
    3. A trustee custodian account should be used for handling and holding all investments, other than the Local Government Investment Pool and collateralized certificates of deposit.
    4. All investments must be made subject to "delivery versus payment."
    5. All funds which are received by an institution and which are available for a sufficient period of time for investment in any interest generating medium should be invested within three (3) days after receipt of such funds.
    6. At a minimum, each institution shall determine rates of return on all feasible authorized mediums of investment prior to making an investment; and funds shall be invested in those mediums expected to pay the highest rate for the period of time for which the funds are available for investment.
    7. All investments of funds in certificates of deposits where the period of investment will exceed thirty (30) days shall be determined on the basis of competitive bids, with appropriate records maintained for audit purposes, including the person obtaining the bids, the institutions which submitted the bids, the amount and rate of return of each bid, and the person who approved the investment. Where more than one bid provides the highest rate of return available, investments should be made in such a manner that no one institution making one of the high bids receives a disproportionate amount of the investments on the basis of two or more equal bids over a reasonable period of time. Records shall also be maintained on the basis for selecting LGIP and other investments as an investment medium.
    8. An investment plan should be developed that specifies liquidity requirements for providing cash needed by an institution.
    9. Investments of endowments in equity securities shall be limited to funds from private gifts or other sources external to the institution. Endowment investments shall be prudently diversified.
    10. Funds of the institution may be invested in a savings account or certificate of deposit of any depository provided the requirements of this policy including Sections III.A and III.B, and the collateral security requirements of Section II. are met. Other authorized investments, subject to the limitations of Section V.L, are set forth in T.C.A. § 9-4-602.
    11. All investments via repurchase agreements must include the following:
      1. There must be a written agreement in accordance with the standard agreement set forth in guidelines established pursuant to this policy.
      2. The agreement must state explicitly that the exchange of assets represents a simultaneous purchase and resale transaction "and is not intended to be collateralized loan."
      3. The purchased securities must be transferred to the Trustee Custodian Account.
      4. The purchased securities must, at the time of purchase, have a current market value of at least 100% of the amount of the repurchase agreement.
    12. The following terms and conditions shall apply to investments:
      1. Prime banker's acceptances must be issued by domestic banks with a minimum AA rating or foreign banks with a AAA long term debt rating by a majority of the rating services that have rated the issuer. The short term debt rating services that rate the issuer (minimum of two ratings must be available). Banker's acceptances shall not exceed five percent of total investments on the date of acquisition. The amount invested in any one bank shall not exceed five percent of total investments on the date of acquisition.
      2. Prime banker's acceptances are required to be eligible for purchase by the Federal Reserve System. To be eligible the original maturity must not be more than 270 days, and it must
        1. arise out of the current shipment of goods between countries or within the United States, or
        2. arise out of storage within the United States of goods under contract of sale or expected to move into the channel of trade within a reasonable time and that are secured throughout their life by a warehouse receipt or similar document conveying title to the underlying goods.
      3. The combined amount of banker's acceptances and commercial paper shall not exceed thirty-five percent of total investments at the date of acquisition.
      4. Prime commercial paper shall not have a maturity that exceeds 270 days. Acquisitions shall be monitored to assure that no more than five percent of total investments at the date of acquisition are invested in commercial paper of a single issuing corporation. The total holdings of an issuer's paper should not represent more than two percent of the issuing corporation's total outstanding commercial paper. Purchases of commercial paper shall not exceed thirty-five percent of total investments at the date of acquisition. Prime commercial paper shall be limited to that of corporations that meet the following criteria:
        1. Senior long term debt, if any, should have a minimum rating of A1 or equivalent, and short term debt should have a minimum rating of A1 or equivalent, as provided by a majority of the rating services that rate the issuer. If there is no long term debt rating, the short term debt rating must be A1 by all rating services (minimum of two).
        2. The rating should be based on the merits of the issuer or guarantee by a non-bank.
        3. A financial review should be made to ascertain the issuer's financial strength to cover the debt.
        4. Commercial paper of a banking institution should not be purchased.
      5. The amount invested in money market mutual funds shall not exceed ten percent of total investments on the date of investment.
  6. Lead Institutions and Colleges of Applied Technology
    1. Each college of applied technology is authorized to establish a checking account. The type of account will be based upon the needs of each college of applied technology. A request for the establishment of such an account must be submitted jointly by each college of applied technology president and lead institution president, and be approved by the Chancellor. Each account will be subject to a $5,000 maximum for any one transaction. Activity in this account shall be limited to operating transactions, and shall not include travel reimbursement. All transactions must be based on the concept of competitive bidding where possible with appropriate documentation maintained for review. All checks must be co-signed by any two of three authorized employees (president, assistant director, and a third employee) designated in the request for establishing the account. The documentation for the transactions must be reviewed at least quarterly by a person(s) designated by the president of the lead institution.
      1. The request to establish such an account should, at a minimum, include a description of the type of account, the procedures that will be followed in administering the account, those persons authorized to sign the checks, the bank where the account will be established, and the person(s) at the lead institutions who will be assigned the responsibility for the quarterly review.
    2. The president of the college of applied technology or designee is authorized to establish a depository account for the deposit of miscellaneous revenues received by the college of applied technology. These funds shall be transmitted at least monthly to the lead institution for deposit and investment on behalf of the college of applied technology.
    3. The lead institution shall maintain a separate chart of accounts on behalf of each of the colleges of applied technology under its jurisdiction pursuant to the provisions of this policy and shall ensure that all interest income generated by the colleges of applied technology is appropriately credited to the individual college of applied technology accounts.
    4. The lead institution shall maintain appropriate fiscal records to ensure the existence of an audit trail for each college of applied technology under its jurisdiction.
  7. General
    1. The Chancellor or designee may approve exceptions to the requirements of this policy in appropriate cases.
Sources: 

Authority

T.C.A. § 49-8-203; All other Federal and State statutes, codes, rules and regulations referenced in this policy.

History

TBR Meetings: September 29, 1978; September 30, 1983; December 13, 1985; September 18, 1987; September 16, 1988; June 30, 1989; September 21, 1990; June 28, 1991; September 23, 1994; June 21, 1996; October 2, 1998; June 23, 2000; September 26, 2003; December 8, 2006; March 28, 2014.

Policy Number: 
4:01:00:10
Policy/Guideline Area: 
Business and Finance Policies
Applicable Divisions: 
Community Colleges, System Office
Purpose: 

The purpose of this policy is to establish a plan for allocation of resources among community colleges as required by T.C.A. § 49-7-202 (c) (4) (D)):

For fiscal years ending on and after June 30, 2013, the commission shall have no authority for recommending individual community colleges operating budgets or in approving or disapproving the transfer of any funds between community colleges as may be determined necessary by the board of regents.

The intent of this policy is to:

Reinforce the performance incentives present in the higher education funding formula adopted by the Tennessee Higher Education Commission; and

Support development of a unified system of community colleges as dictated by the Complete College Tennessee Act of 2010, including providing financial incentives for cooperative action among institutions.

This policy provides for the pooling of community college resources to be used for system level investments, provision of funding for certain new program start-up expenses, expenses shared among all community colleges, to reward collaboration, and to allocate remaining resources among all community colleges.

Policy/Guideline: 
  1. Community College System Investment Account (“Account”)
    1. Account Established
      1. There is established at the Board Office a Community College System Investment Account for the benefit of the Tennessee Community College System.
      2. For each fiscal year, the target funding level of the Account will be an amount equal to point five percent (0.5%) of the Community College System recurring state appropriation.
      3. To achieve the target funding level, the difference between the estimated funding level at fiscal year-end and the target funding level will be calculated.  Should a deficit exist, an amount equal to 1/12th of the deficit amount will be withheld from the monthly Community College System state appropriation and deposited to the Account.
      4. The Chancellor is authorized to allocate funds within the Account among the categories of uses provided below.
    2. Uses of Account
      1. System Level Investments.  It is the Board’s intent that funds be available to initiate or maintain activities that promote the interest and wellbeing of the community college system and its students.  Examples of system level investments may include, but are not limited to, activities designed to communicate the benefit to students of considering attending community colleges, funding to support block scheduling and fast track activities.  The Vice Chancellor for Community Colleges, in consultation with the Presidents, shall recommend the allocation of funds for specific system level investments, subject to approval by the Chancellor.
      2. Program Start-Up Funding.  It is the Board’s intent that funds be available to offset the cost to an individual college of development of a new program offering that is portable to other colleges and meets the needs of students at multiple colleges or the system as a whole.  Guidelines shall be established that specify the process and criteria used in determining which program start-up proposals should be funded through this mechanism.
      3. Community College System Shared Expenses.  Eligible expenses include, but not be limited to, salaries, benefits and operational expenses that directly support the operations of the Office of Community Colleges, common licensing of software, and other expenses borne individually by colleges.  The Vice Chancellor for Community Colleges, in consultation with the Presidents, shall recommend the allocation of funds for system level shared expenses, subject to approval by the Chancellor.
      4. Reporting.  On an annual basis the Chancellor shall file a written report with the Board Committee on Academic Policies and Programs and Student Life summarizing the activities funded through the Investment Account.
    3. Allocation of Funds to Community Colleges
      1. After funding of the Account, remaining state appropriations are to be distributed to individual community colleges in the following order:
        1. Allocation of Remaining Recurring State Appropriation.
          1. Board staff, in consultation with THEC staff, shall annually determine the percentage of the total Community College System recurring state appropriation that is attributable to each individual college as calculated within the THEC higher education funding formula.
          2. The allocation of recurring state appropriation remaining after distributions to the Investment Account and for Collaboration shall be calculated by multiplying the remaining recurring state appropriation by the percentage determined for each college in I.B.1.
    4. Delegation
      1. The Board acknowledges and grants authority for the development of guidelines necessary to implement the provisions of this policy, such guidelines to be consistent with and in furtherance of the provisions of this policy.
    5. Exceptions
      1. Exceptions to this policy may be recommended by the Vice Chancellor for the Community Colleges for interim approval by the Chancellor.
Sources: 

Authority

T.C.A. § 49-8-203; 47-7-202; Complete College Tennessee Act of 2010

Hidtory

TBR Board Meeting June 28, 2012; Board Meeting March 28, 2014.

Policy Number: 
4:01:00:00
Policy/Guideline Area: 
Business and Finance Policies
Applicable Divisions: 
TCATs, Community Colleges, Universities, System Office
Purpose: 

It is widely recognized that budget control is essential for effective financial management of any organization. In view of this, it is the purpose of this policy to provide clear and specific responsibility for proper budget management and control among the institutions governed by the Tennessee Board of Regents. It is the control mechanism aspect of budgeting that is the focus of this policy.

Definitions: 
  • Budgeting - the process whereby the plans of an institution are translated into an itemized, authorized, and systematic plan of operation, expressed in dollars, for a given period. Budgets are the blueprints for the orderly execution of program plans; they serve as control mechanisms to match anticipated and actual revenues and expenditures.
Policy/Guideline: 
  1. Submission of Budgets
    1. It is recognized that a budget is a plan and that circumstances may necessitate revisions or changes to the original plan from time to time. In view of this, institutions are to submit detailed budgets to the Tennessee Board of Regents for approval three times for each fiscal year. The three submissions are described briefly as follows:
      1. Proposed Budget - This is the original budget prepared in the spring that is for the fiscal year to begin July 1. It is normally submitted to the Tennessee Board of Regents for approval at the June Board meeting.
      2. Revised Budget - This budget is a revision of the proposed budget and is normally referred to as the "October Revised Budget". It is prepared as of October 31 after actual fall enrollments and other estimated costs and closing balances are known and is normally submitted to the Tennessee Board of Regents for approval at the December Board meeting.
      3. Spring Estimated Budget - This budget is the final budget submitted for the current year operations. It is submitted in the spring at the same time as the Proposed Budget for the coming year. This is the final approved budget for the institutions and therefore contains the control totals against which final year-end amounts are compared.
    2. It should be noted that the approval of a budget does not waive statutory, policy, or other restrictions for expending funds.
  2. Operating Budgets
    1. Level of Budget Control
      1. Institutional budget control amounts are approved for the major educational and general functional classifications of Instruction, Research, Public Service, Academic Support, Student Services, Institutional Support, Operation and Maintenance of Plant, and Scholarships and Fellowships where applicable.
      2. Auxiliary Enterprises are controlled on a profit or break-even basis.
      3. Additionally, control amounts are approved for educational and general transfers, both mandatory and non-mandatory. Funds transferred to other funds whether mandatory or non-mandatory are restricted in the other funds for the designated purpose. This restriction, however, does not prevent subsequent reallocations or transfers to other funds.
      4. All discretionary allocations of the fund balance must be approved.  Once approved the institution may not exceed those functional control limits established by the Board without prior approval of the Chancellor.
    2. Budget Revisions
      1. Revisions within Functional Area
        1. Institutions may make budget revisions within a given functional area at the campus level.
        2. The revisions should be properly documented and approved by the president, or designee.
      2. Revisions between Functions
        1. Budget revisions from one functional area to another that exceed 1% of total expenditures must receive prior approval of the Chancellor if proposed at other than the three regular budget submission times.
        2. The request for revision should be submitted by the president in writing with a detailed explanation.
      3. Revision of Overall Expenditure Total
        1. Budget revisions to one or more educational and general functional areas that increase the overall educational and general budget must receive prior approval of the Chancellor if proposed at other than the three regular submission times.
        2. The request for revision should be submitted in accordance with item 2 above and should include the source of funding for the proposed revision.
  3. Plant Fund Budgets
    1. Unexpended Funds
      1. General
        1. The purpose of the Unexpended Plant Fund is to account for the unexpended resources derived from various sources to finance the acquisition of long-term plant assets and the associated liabilities.
        2. These funds will be used for capital projects such as major additions and/or renovations to physical facilities.
        3. Institutions may request approval for transfer of funds to the Unexpended Plant Fund during the regular budgetary process or special request to the Chancellor.
        4. All funds added or transferred into the Unexpended Plant Fund will be controlled by specific project.
        5. Commitments or expenditures for any capital project shall be in conformance with all applicable state laws and requirements of the State Building Commission.
        6. All project budget revisions and the utilization of reallocated project balances shall be approved by the Chancellor or designee.
      2. Extraordinary Maintenance
        1. Within the Unexpended Plant Fund, each institution shall establish an account for extraordinary maintenance to be used for unusual or unanticipated maintenance needs.
        2. The annual budget shall include a minimum balance in the extraordinary maintenance account. This minimum shall be the greater of 0.1% of plant funds or $150,000 at universities and $100,000 at community colleges.
        3. All projects in the extraordinary maintenance account shall be approved by the Chancellor or designee.
    2. Renewals and Replacements
      1. The resources set aside for renewals and replacements, as distinguished from additions and improvements to plant, are accounted for in this fund group.
      2. Institutions which have the responsibility to replace auxiliary equipment must transfer at least 5% of auxiliary gross margin to the renewal and replacement fund.
    3. Retirement of Indebtedness
      1. The purpose of this fund is to account for the accumulation of resources for interest and principal payments and other debt service charges relating to plant fund indebtedness.
      2. Additions to this fund are to be set up in separate debt service accounts.
  4. Guideline and Position Controls
    1. Aside from functional budget control, institutions are required to comply with certain other controls.
      1. A schedule of these controls will be distributed with the budget guidelines each year.
    2. Position control is a part of the personnel budget process.
      1. The number of authorized permanent positions at each institution is controlled within unrestricted education and general accounts and auxiliaries.
      2. Controls exist on the total number of positions at the institution and on the classification of those positions (administrative, faculty/academic, professional, clerical/support).
      3. Positions are reported to the Board office each year in the proposed and revised budgeting processes, and at additional times as requested by the Board office during the legislative session.
      4. Authorized permanent positions for each institution are approved at the June and December Board meetings.
      5. Changes may be requested by special request to the Chancellor in the interim between budget periods.
  5. Legislative Controls
    1. Each budget year will normally have unique guidelines and requirements depending on legislative or executive branch requirements.
      1. A schedule of these requirements will be prepared each budget cycle.
      2. It is the responsibility of the institution to ensure that all budget guidelines for a given fiscal year are incorporated into the budget and are carried out operationally.
  6. Budget Control
    1. Each institution shall develop appropriate controls and procedures and ensure that established control limits are not exceeded.
    2. Summary management reports should be prepared for top level administrators to evaluate the current financial status of the institution.
  7. Follow-up by Board Staff
    1. At the end of each fiscal year, the Board staff will review the annual financial report of each institution.
    2. Actual year-end amounts will be compared to the Spring Estimated Budget or the Spring Estimated Budget as officially revised, which is the final approved budget for the year.
    3. Functional expenditure totals will be analyzed for adherence to the approved control levels.
    4. The financial information will also be examined for compliance with all budget guidelines and/or Board policies in effect for the fiscal year just completed.
    5. The Chancellor shall report any institutional deficiencies or non-compliance with budget controls and guidelines to the Board.
Sources: 

Authority

T.C.A. § 49-8-203

History

TBR Meetings:  September 30, 1983; December 8, 2006; March 28, 2014.

Policy Number: 
B-110
Policy/Guideline Area: 
Business and Finance Guidelines
Applicable Divisions: 
TCATs, Community Colleges
Purpose: 

The purpose of the following guideline is to outline significant provisions for consistent capitalization procedures for fixed assets at the institutions governed by the Tennessee Board of Regents.

Policy/Guideline: 
  1. Introduction
    1. These guidelines largely represent a consolidation of the existing practices and are intended to serve as a reference document for institutional staff responsible for fixed asset administration.
      1. The guideline includes provisions for capitalizing land, land improvements, leasehold improvements, buildings, additions and improvements to buildings, infrastructure, nonexpendable personal property, software, and livestock.
        1. Additionally, the guideline also includes provisions for the inventory of sensitive items.
    2. Property records should be maintained for all land and capitalized assets.
      1. Procedures should ensure the proper recordkeeping of capitalized assets, including the initial recording, movement and eventual disposal of assets and should ensure that these assets are periodically inventoried.
      2. Property records for assets acquired with federal funds should conform to OMB Circular A-110, Uniform Administrative Requirements for Grants and Other Agreements with Institutions of Higher Education, Hospitals and Other Non-Profit Organizations.
  2. Land
    1. Land is generally considered to have an unlimited life and is therefore a non-depreciable asset. Land acquired by the institution should be recorded at its original cost which includes a variety of expenditures related to its acquisition and its preparation for use as intended by the institution.
    2. The following are examples of expenditures that should be capitalized as a part of the cost of land:
      1. The original acquisition price.
      2. Commissions related to the acquisition.
      3. Legal fees related to the acquisition.
      4. Cost of surveys.
      5. Cost of an option to buy the acquired land.
      6. Cost of removing unwanted buildings from the land, less any proceeds from salvage.
      7. Unpaid taxes (to the date of acquisition) assumed by the institution.
      8. Cost of permanent improvements (e.g. landscaping) and improvements that will later be maintained and replaced by other governments (e.g. street lights, sewers).
      9. Cost of getting the land in condition for its intended use, such as excavation, grading, filing, draining, and clearing.
    3. Land acquired through forfeiture should be capitalized at the total amount of all taxes, liens, and other claims surrendered, plus all other costs incidental to acquiring ownership and perfecting title.
      1. Assumption of liens, mortgages, or encumbrances on the property increases the purchase price and should be included in the original cost.
      2. A liability should be recognized for the amount of the lien, mortgage, or encumbrance assumed by the institution.
    4. Land acquired by donation, or the intent to donate, e.g., for one dollar, should be recorded on the basis of an appraisal of the market value at the date of acquisition.
      1. The cost of the appraisal itself, however, is expensed at the time incurred.
      2. When costs are incurred but the land is not acquired, the costs should be expensed.
    5. Land held for investment purposes should be classified as investments rather than as property.
  3. Land Improvements
    1. Expenditures for land improvements that have limited lives and exceed $50,000 should be capitalized in a separate account from the Land and depreciated over their estimated useful lives.
      1. Examples of land improvements include, but are not limited to, site improvements such as landscaping that has a limited life (e.g. shrubbery, flowers, trees); retaining walls, parking lots, fencing, sidewalks, sculptures, and art work.
      2. Land improvements are normally depreciated over a useful life of 20 years.
    2. As assets near the end of their estimated lives, the estimates should be reviewed for accuracy of the original estimate and adjusted to reflect the anticipated number of years of continued use.
      1. Any adjustment of estimated lives is a change in accounting estimate and should be applied to current and future depreciation calculations.
  4. Leasehold Improvements
    1. Leasehold improvements include improvements to existing or new leased spaces. These improvements should be capitalized if the cost exceeds $50,000 and the cost is borne by the institution.
    2. Leasehold improvements are generally depreciated over the lesser of the original term of the lease or the useful life of the improvements.
    3. If the lease contains an option to renew for additional years but renewal is uncertain or the likelihood of renewal is uncertain, the improvements should be depreciated over the original term of the lease or the useful life of the improvement.
  5. Buildings
    1. The cost of a building includes all necessary expenditures to acquire or construct and prepare the building for its intended use.
      1. Buildings consist of relatively permanent structures, including all permanently attached fixtures, machinery and other appurtenance that cannot be removed without damaging the building or the item itself.
    2. Buildings are erected for the purpose of sheltering persons or property. Examples include, but are not limited to such items as academic buildings, dormitories, apartments, barns, etc.
      1. All buildings costing $100,000 and above should be capitalized.
      2. Buildings costing less than $100,000 should be expensed.
      3. Buildings are normally depreciated over a useful life of 60 years.
    3. Buildings acquired by purchase should be capitalized at their original cost. The following major expenditures are capitalized as part of the cost of buildings:
      1. The original bargained purchase price of the building.
      2. Cost of renovation necessary to prepare the building for its intended use.
      3. Cost of building permits related to renovation.
      4. Unpaid taxes (to date of acquisition) assumed by the institution.
      5. Legal and closing fees.
    4. Buildings acquired by construction should be capitalized at their original cost. The following major expenditures are capitalized as part of the cost of buildings:
      1. Cost of constructing new buildings, including material, labor, and overhead.
      2. Cost of excavating land in preparation for construction.
      3. Cost of plans, blueprints, specifications, and estimates related to construction.
      4. Cost of building permits.
      5. Architectural and engineering fees.
      6. Landscaping and other improvements related to the building construction that cannot be separately identified from the building project (e.g. wiring within the building, shrubbery and sidewalks around the building).
    5. Buildings acquired by donation, or the intent to donate, e.g. for one dollar, should be recorded on the basis of an appraisal of the market value at the date of acquisition.
      1. The cost of the appraisal itself, however, should not be capitalized.
      2. Removable fixtures, including but not limited to furnishing for the new building, should be distinguished from the cost of the building and capitalized or expensed in the appropriate accounts even if they are acquired as a part of the purchase or the construction project.
    6. The cost of a building that is acquired but immediately removed to prepare the land for construction of a new building is treated as part of the cost of the land rather than as part of the cost of the new building.
    7. The cost of removing an old building that you have occupied in the past but that is now deteriorated and must be removed prior to constructing a new building, should be capitalized as a part of the cost of the new building.
      1. The precedent supporting this treatment is the requirement to capitalize all normal costs of readying an asset for use, i.e., capitalizing demolition costs of unwanted building(s) with the purchase of land, capitalizing renovation costs when a building is purchased, capitalizing excavating costs in preparation for construction of a new building and, when a building is constructed with plans to expand later any demolition costs are capitalized with the cost of the addition.
    8. As assets near the end of their estimated lives, the estimates should be reviewed for accuracy of the original estimate and adjusted to reflect the anticipated number of years of continued use. Any adjustment of estimated lives is a change in accounting estimate and should be applied to current and future depreciation calculations.
  6. Additions and Improvements to Buildings
    1. Additions
      1. Additions represent major expenditures that are capital in nature because they increase the service potential of the related building.
      2. Additions costing $50,000 or above should be capitalized.
      3. Additions costing less than $50,000 should be treated as repairs and maintenance even though they have the characteristics of capitalized expenditures. Example:
        1. A new wing is added to an existing building at a cost of $700,000. The cost would be capitalized.
        2. A new wing is added to an existing building at a cost of $49,999. The cost would be expensed since it does not meet the dollar level established for capitalization.
      4. Two major issues are involved with accounting for additions and generally require some professional judgment:
        1. Useful life: If the estimated useful life of the addition is independent of the building to which it relates, the addition is treated as a separate asset and depreciated over its estimated useful life, regardless of the life of the original asset. If the addition is not independent of the original asset, the useful life must be determined in relation to the original building. In this case, the cost of the addition is depreciated over the shorter of the estimated life of the addition or the remaining life of the original building.
        2. Capitalized costs: If the original building was constructed with a plan to expand, cost related to the original building incurred when the addition takes places should be capitalized. However, costs that could have been avoided with appropriate planning at an earlier date should be expensed rather than capitalized.
    2. Improvements
      1. Improvements represent the substitution of a new part of an asset for an existing part.
        1. For example, the roof of a building may be replaced or a new HVAC may replace an old HVAC system.
        2. If the new part of the asset is similar in nature to the part being eliminated, the substitution is a called a replacement.
        3. If the new part represents an improvement in quality over the part being eliminated, the substitution is called betterment.
      2. Both replacements and betterments are subject to capitalization if the cost is $50,000 or more.
        1. The appropriate accounting treatment is determined by whether the original part of the existing asset is separately identifiable.
        2. If separate identification is possible, the new expenditure should be substituted for the portion of the book value being replaced or improved.
          1. Example: Roof replacement at cost of $50,000 (original cost separately identified is $30,000).
            1. Building (new roof)                            $50,000
            2. Accumulated Depreciated                   27,000
            3. Loss on replacement of roof                  3,000
            4. Building (old roof)                              $30,000
            5. Cash                                                 50,000
        3. The separately identified asset is depreciated over the shorter of the expected life of the separate asset or the remaining life of the building.
        4. If separate identification is not possible, the cost of replacements and betterments is treated as an increase in the book value of the Building, thereby increasing the basis for depreciation over the remaining life of the Building.
        5. If the replacement or betterment is designed primarily to enhance the quality of the service potential of the building, the cost is charged to the Building asset account.
        6. An appropriate increase in depreciation expense is recognized in future years but the useful life is not increased. Example:
          1. Building              $70,000
          2. Cash                  $70,000
        7. If the replacement is designed primarily to extend the length of the service life of the asset, the book value is increased by debiting Accumulated Depreciation. The revised book value is then depreciated over the revised useful life. Example:
          1. Accumulated Depreciation – Building $70,000
          2. Cash            $70,000
          3. Note:
            1. Alterations that modernize rather than improve the quality of a building should be expensed unless the alteration is so extensive as to increase the estimated life of the building.
            2. Re-roofing costs that are not replacing a separately identified asset should not be capitalized unless they are part of a major renovation of a building.
        8. Examples:
          1. An old gymnasium is converted to a block of individual rooms at a cost of $500,000. This is considered a major renovation and would be a building capitalization. This renovation enhances the service quality of the building but does not extend the life of the building.
            1. Debit: Building  $500,000
            2. Credit: Cash   $500,000                         
          2. A deteriorating roof on an existing building (the original roof costs are not separately identified) is replaced at a cost of $55,000. These costs should be expensed in the year(s) costs are incurred.
            1. Debit:  Maintenance of buildings  $55,000                         
            2. Credit: Cash  $55,000
          3. A dormitory is completely renovated at a cost of $1,000,000 including a new roof. It is estimated that the renovation will add an additional 10 years to the life of the building. The entire project costs would be capitalized under buildings.
            1. Debit:  Accumulated depreciation $1,000,000             
            2. Credit: Cash  $1,000,000 
            3. Note: The life of the building should be changed to reflect the additional 10-years of service. The debit to accumulated depreciation is the accumulated depreciation on the original building.
          4. A parking lot is repaved at a cost of $20,000 in order to restore to its original condition. This would be considered maintenance and would not be capitalized.
            1. Debit: Paving expense  $20,000
            2. Credit: Cash  $20,000
      3. As assets near the end of their estimated lives, the estimates should be reviewed for accuracy of the original estimate and adjusted to reflect the anticipated number of years of continued use.
        1. Any adjustment of estimated lives is a change in accounting estimate and should be applied to current and future depreciation calculations.
  7. Infrastructure
    1. Infrastructure is defined as improvements related to the skeletal structure and function of the campus.
      1. Examples include, but are not limited to, roads, steam lines, chiller systems, storm sewers, tennis courts, sewer lines, severe weather systems, athletic scoreboards, turf, lighting, radio and television towers, water lines, signage, all-weather track, telecommunications and computing wiring, and energy management systems.
    2. Improvements valued at or above $50,000 should be capitalized.
    3. Improvements valued at less than $50,000 should be expensed.
    4. The same accounting rules that apply to improvements to buildings also apply to improvements to infrastructure. Infrastructure items are normally depreciated over a useful life of 20 years.
    5. As assets near the end of their estimated lives, the estimates should be reviewed for accuracy of the original estimate and adjusted to reflect the anticipated number of years of continued use.
      1. Any adjustment of estimated lives is a change in accounting estimate and should be applied to current and future depreciation calculations.
  8. Nonexpendable Personal Property
    1. Examples of nonexpendable personal property include machinery, implements, tools, furniture, vehicles and other apparatus with a unit cost of $5,000 or more and a minimum life expectancy in excess of one year.
    2. The following list includes some of the costs that should be capitalized in the appropriate asset account:
      1. The original bargained acquisition price.
      2. Freight, insurance, handling, storage, and other costs related to acquiring the asset.
      3. Cost of installation, including site preparation, assembling, and installing.
      4. Cost of trial runs and other tests required before the asset can be put into full operation.
      5. Cost of reconditioning equipment acquired in a used state.
    3. Nonexpendable personal property acquired by donation, or the intent of donation, e.g. acquisition for one dollar, should be recorded on the basis of an appraisal of the market value at the date of acquisition.
      1. Furniture – Movable furniture that is not a structural component of a building. Examples include, but are not limited to, desk, tables, filing cabinets, and safes.  Office furniture purchased in components should be capitalized only if the individual components that cannot be separated cost at least $5,000.  Furniture is normally depreciated over a useful life of 20 years.
      2. Office and operational equipment – Office and operational equipment other than computers and peripherals. Examples include, but are not limited to, copiers, sorters, folders, filing system, printing press, shop equipment, athletic equipment, kitchen equipment, generators, and yard equipment. Office and operational equipment are normally depreciated over a useful life of 10 years.
      3. Computers and peripheral – Computers and peripheral equipment are normally depreciated over a useful life of 5 years.
      4. Educational and scientific equipment – Classroom or laboratory equipment used to conduct the normal program of education and research activity.  Examples include, but are not limited to, audiovisual equipment, classroom demonstration models, electronic instruments, lab equipment, surveying equipment, radio equipment, pianos, and other musical instruments. Educational and scientific equipment are normally depreciated over a useful life of 10 years.
      5. Motorized vehicles – Examples include, but are not limited to, cars, mini-vans, vans, boats, and light general-purpose trucks. Motorized vehicles are normally depreciated over a useful life of 5 years.
      6. Heavy equipment – Examples include, but are not limited to, buses, heavy general-purpose trucks, forklifts, snowplows, and agricultural equipment.  Heavy equipment items are normally depreciated over a useful life of 10 years.
      7. Library holdings – Library holdings include library books, music, artistic, and reference materials included in the institution’s library collection. Examples include, but are not limited to, books, microfilm, microfiche, government documents, films, videocassettes, audiocassettes, phonograph records compact disc - audio, slide set, filmstrip, transparency, maps, multimedia kit, three-dimensional models, non-catalogued pamphlets, computer software manuscripts and archives, photographs, and compact disc. Library holdings are normally depreciated over a useful life of 10 years.
    4. The same accounting rules that apply to building improvements apply to improvements to nonexpendable personal property.
    5. As assets near the end of their estimated lives, the estimates should be reviewed for accuracy of the original estimate and adjusted to reflect the anticipated number of years of continued use.
      1. Any adjustment of estimated lives is a change in accounting estimate and should be applied to current and future depreciation calculations.
  9. Software
    1. Software with a cost of $100,000 or greater should be capitalized and amortized.
      1. Capitalized software costs will include external direct costs of materials and services consumed in developing or obtaining internal-use computer software.
      2. Training costs are not internal-use software development costs and should be expensed as incurred.
      3. Data conversion often occurs during the application development stage. Data conversion costs should be expensed as incurred.
      4. Internal costs incurred for maintenance should be expensed as incurred.
    2. Software costs are normally amortized over a useful life of 10 years.
    3. For each module or component of a software project, amortization should begin when the computer software is ready for its intended use, regardless of whether the software will be placed in service in planned stages that may extend beyond a reporting period.
      1. For purposes of this guideline, computer software is ready for its intended use after all substantial testing is completed.
      2. Amortization shall begin the year in which the first module is placed in service. A full year of amortization will be charged the first year regardless of the actual implementation date.
    4. Software with a cost less than $100,000 should be expensed unless the institution determines, and provides justification, for capitalizing.
      1. For example, if an institution purchases a separate software package to support the Banner system (example Luminous Premier), it may be appropriate to capitalize the cost even if less than $100,000 since it is directly related to the Banner system.
      2. It should be noted that software licensing agreements that are not perpetual in nature will be expensed, regardless of cost.
    5. As assets near the end of their estimated lives, the estimates should be reviewed for accuracy of the original estimate and adjusted to reflect the anticipated number of years of continued use.
      1. Any adjustment of estimated lives is a change in accounting estimate and should be applied to current and future depreciation calculations.
  10. Livestock
    1. Livestock should be expensed.
  11. Works of Art, Historical Treasures and Other Similar Assets
    1. Works of art, historical treasures, and other similar assets should be capitalized whether held as individual items or as a collection. These can include, but are not limited to, paintings, works of art on paper, photography, sculptures, maps, manuscripts, recordings, film, artifacts, textiles, and other memorabilia.
    2. These items with a cost (or fair value at the date of donation) in excess of $5,000 will be capitalized at their historical cost or fair value at the date of donation.
    3. Collections that meet all of the following criteria will not be capitalized:
      1. Held for public exhibition, education, or research in furtherance of public service rather than financial gain.
      2. Protected, kept unencumbered, cared for, and preserved.
      3. Proceeds from the sales of collection items must be used to acquire other items for collections.
    4. Notwithstanding paragraph Xl.C above, any collections already capitalized at June 30, 1999, will remain capitalized and any additions to such collections will be capitalized.
    5. Capitalized collections or items which are exhaustible, such as exhibits whose useful lives are diminished by display or educational or research applications, should be depreciated over their estimated useful lives. Inexhaustible collections or items are items where the economic benefit or service potential is used up so slowly that the estimated useful lives are extraordinarily long. Depreciation is not required for collections which are inexhaustible.
    6. Capitalized collections deemed exhaustible should be depreciated over a useful life of 10 years.
  12. Sensitive Minor Equipment
    1. Sensitive minor equipment items are of a movable nature which is particularly vulnerable to theft and have a cost or fair value (for donated items only) between $1,500.00 and $4,999.99, regardless of funding source.
      1. The following items are examples of items that may be viewed as sensitive minor equipment: binoculars, boat motors, boat trailers, boats, cameras, camera lenses, canoes, computers, external computer storage devices, ham radios and receivers, marine band transmitters and receivers, microscopes, musical instruments, scientific equipment, oscilloscopes, PDAs, printers, projectors, radio scanners, external computer scanners, spectrum analyzers, televisions, two-way radio transmitters and receivers, vector scopes, video cameras, video recorders and players, and waveform monitors.
      2. All weapons, regardless of cost, should be considered sensitive minor equipment.
    2. Each institution will perform a risk assessment to determine which items should be designated as sensitive minor equipment for that institution.
      1. The useful life of sensitive minor equipment is estimated at 3 years, after which the fair value will be considered to be nominal.
    3. Although sensitive minor equipment items are not capitalized, they must be identified and inventoried.
      1. Physical inventory of sensitive minor equipment should be conducted annually.
      2. Sampling is an acceptable method of conducting the physical inventory of sensitive minor equipment. 
Sources: 

Authority

T.C.A. § 49-8-203

History

New Guideline approved at Presidents Meeting, August 17, 2010. Revised at Presidents Meeting, February 4, 2014; Revised at Presidents Meeting, August 19, 2014; Revised at Presidents Meeting, May 19, 2015.

Policy Number: 
B-100
Policy/Guideline Area: 
Business and Finance Guidelines
Applicable Divisions: 
TCATs, Community Colleges, System Office
Purpose: 

This Emergency Preparedness Plan Guideline outlines procedures to improve the protection of lives and property through the effective use of institutional resources at Tennessee Board of Regents institutions. The guideline’s purpose is to mitigate the potential effects of the various hazards that might impact a TBR institution, to prepare for the implementation of measures which will preserve life and minimize damage, to respond effectively to the needs of the institution’s community during emergencies, and to provide a recovery system to return the institution and its community to a normal status as soon as possible after such emergencies.

Definitions: 

The following definitions are provided as guidelines to assist personnel in determining the appropriate response:

  • Minor Emergency - Any potential or actual incident that does not seriously affect the overall functional capacity of the institution. Emergencies in this category will be handled according to the established procedures of those work units responsible for responding to these emergencies. Notifications to senior administrators regarding the incident will be made consistent with the standard protocols of the responding work units.
  • Major Emergency - Any potential or actual incident that substantially disrupts a significant portion of the overall operations of the institution. Outside emergency services, as well as major commitment of campus support services, may be required. The institution’s Police Department or Local Law Enforcement (in the absence of an institutional police department) will take immediate action to meet the emergency and safeguard persons and property. Major policy considerations will be required from higher levels of campus authority. The Emergency Preparedness Plan may be activated at the direction of the Chancellor, President, or designee in the event of a major emergency.
  • Building Emergency - A condition during which a specific building and its occupants are subjected to, or potentially subjected to, special precautions/actions necessary to maintain order and to safeguard institutional personnel and property. Upon determination that conditions exist which could lead to a state of emergency or have the potential of existing in a single building through events restricted to a building (e.g., bomb threat, equipment malfunction, etc.), the designated administrator (e.g., Physical Plant Director) shall be notified immediately. The administrator will immediately inform the President or designee. The appropriate administrators shall implement the necessary procedures and notify appropriate personnel to ensure the safety and protection of the persons and property in the building. The Emergency Management Response Team shall be informed as soon as is possible.
  • Disaster - An event or incident that seriously impairs or halts the operations of the institution. A disaster may result in multiple casualties and severe property damage. A coordinated effort of all campus services will be required. Outside emergency resources will be required. The emergency response plan will be activated by the Chancellor, President, or designee.
Policy/Guideline: 
  1. Introduction
    1. An emergency management plan addresses all types of emergency functions at a Tennessee Board of Regents institution.
    2. A state of emergency may be declared at any time an emergency reaches such proportions that it cannot be handled by routine measures.Such emergencies may include, but not be limited to:
      1. tornados
      2. earthquakes
      3. winter storms
      4. fires
      5. infectious diseases
      6. hazardous chemical spills
      7. transportation accidents
      8. explosions
      9. utility outages
      10. civil disturbances
      11. bombs
      12. hostage situations
      13. terrorist activities
      14. active threats
      15. technological hazards
    3. Since emergencies normally occur without warning, plans and procedures should be designed to provide sufficient flexibility to accommodate contingencies of assorted types and magnitudes.
    4. The institutional emergency management plan must be reviewed and revised, as necessary, on at least an annual basis by senior administrators in conjunction with the institutional emergency response management team.
    5. Additionally, aspects of the plan must be tested in training exercises and drills consistent with Federal and State law.
    6. Units that are not responsible for maintaining an independent emergency management plan are still responsible for developing and maintaining local building emergency procedures to address the safety of occupants with the assistance of and oversight by campus safety officers.
    7. Campuses will have a system in place that assigns and trains people within campus units as necessary to develop department/building specific responses to general emergencies, helps communicate campus requirements, provides information during emergencies and coordinates department/building specific drills.
  2. Minimum Procedures of an Institutional Emergency Response Plan
    1. Pursuant to this guideline, Policy 4:01:05:70, all TBR institutions are required to have a written institutional Emergency Management Plan that is developed and implemented consistent with the concepts and principles of the National Incident Management System, incorporating elements of the Incident Command System.
    2. In developing the plan, the institution should utilize the Guide for Developing High-Quality Emergency Operations Plans for Institutions of Higher Education found at http://rems.ed.gov/IHEGuideIntro.aspx 
    3. Institutions should undertake emergency operations planning within the context of local or regional, state and federal emergency planning. In order to promote coordination among these entities, the Institution should include a local or regional emergency planning representative to assist it in developing its emergency management plan.
    4. An institution’s Emergency Management Plan should be developed along the following outline:
      Basic Plan
      1. Introductory Material
      1.1. Cover Page
      1.2. Promulgation Document and Signatures Page
      1.3. Approval and Implementation
      1.4. Record of Changes
      1.5. Record of Distribution
      1.6. Table of Contents
      2. Purpose, Scope, Situation Overview, and Assumptions
      2.1. Purpose
      2.2. Situation Overview
      2.3. Planning Assumptions
      3. Concept of Operations
      4. Organization and Assignment of Responsibilities
      5. Direction, Control, and Coordination
      6. Information Collection, Analysis, and Dissemination
      7. Training and Exercises
      8. Administration, Finance, and Logistics
      9. Plan Development and Maintenance
      10. Authorities and References
      Functional Annexes
      NOTE: This is not a complete list, but it is recommended that all emergency management plans include at least the following functional annexes:
      1. Evacuation
      2. Deny Entry or Closing (Lockdown)
      3. Shelter-in-Place or Secure-In-Place
      4. Accounting for All Persons
      5. Communications and Notifications
      6. Continuity of Operations (COOP)
      7. Recovery
      8. Public Health, Medical and Mental Health
      9. Security
      10. Rapid Assessment
      Threat- or Hazard-Specific Annexes
      NOTE: This is not a complete list. Each institution’s annexes will vary based on its threats and hazard analysis.
      1. Hurricane or Severe Storm
      2. Earthquake
      3. Tornado
      4. Hazardous Materials Incident
      5. Mass Casualty Incident
      6. Active Shooter
      7. Pandemic or Disease Outbreak
      8. Bomb Threat or Explosion 
    5. The Exhibits are included as template or guidance documents only. Institutional administrators may elect to customize the attached documents for inclusion in its emergency management plan or they may draft new documents outlining their institutional plan to address the emergency situations presented in the appendices.
    6. Emergency Response Management Team - The institutional emergency management plan should designate appropriate administrators to an Institutional Emergency Response Management Team (ERMT).
      1. The institutional emergency management plan may designate that the Chancellor or President is the highest institutional authority in any emergency situation. The plan must establish a clear chain of command outlining institutional employees with authority to act in response to the emergency.
      2. The Emergency Response Management Team should serve in a support role to the President during an emergency.
      3. Institutions have the discretion to determine which administrators to appoint to the ERMT and it is advisable that institutions give serious consideration to the inclusion of the personnel listed in Exhibit 1.
      4. Exhibit 1: EMRT Administrators Specific Responsibilities outlines the potential responsibilities of each administrator during a crisis. 
            1. President
            2. Chief Academic Affairs Officer
            3. Chief Business/Finance and Administration Office
            4. Chief Student Affairs Officer
            5. Chief Public Relations Officer
            6. Chief of Institutional Police Department or Director of Security Department
            7. Director of the Institutional Health Clinic
            8. Chief Information Officer
            9. Physical Plant/Facilities Director
    7. Declaration of Emergency– The institutional emergency management plan shall designate an employee (or group of employees) authorized to Declare an Emergency.
      1. The plan may provide that the Chancellor, President, or designee with or without consultation from the ERMT, will make a determination of whether declaration of an emergency is appropriate.
      2. If an emergency is declared, the employee(s) authorizing the declaration will cause ERMT members (as well as others as directed by the Chancellor, President) to be contacted, advise them that an emergency has been declared, and direct them to respond to the Emergency Operations Center (EOC).
      3. A systematic calling plan must be established to ensure that all ERMT members receive timely notification of the official declaration of emergency.
    8. Emergency Operations Center - The institutional emergency management plan should designate a campus location that will serve as an Emergency Operations Center. An alternative location should be designated in the event that the primary location is not available.
      1. Members of the Emergency Response Management Team and others as designated by the President should be present in the EOC during emergencies, to the extent practicable.
      2. Institutions should consider having all activities, such as requests for personnel, equipment, and supplies monitored and coordinated from the EOC to ensure a coordinated effort and to ensure the best use of the resources needed to handle the emergency situation.
      3. A log should be maintained in the EOC which reflects all significant events and actions taken in the EOC.
      4. A communications log should also be maintained which reflects the time and date of every significant communication to/from the EOC, whom the communication was received from/sent by, to whom the communication was directed, the nature of the communication, and any EOC action resulting from the communication.
    9. Command Post - The institutional emergency management plan should authorize the establishment of a Command Post on campus that is near the scene of the emergency.
      1. The plan should designate an employee, such as the Chief of the Institutional Police Department, Director of Public Safety, or Facilities Director, depending on the type of emergency, to establish and manage a command post near the scene of the emergency.
      2. Upper level managers and directors from the institution whose personnel are directly involved in the emergency response will report to the command post, as will commanders from responding agencies external to the institution.
      3. Operational decisions relative to the emergency response will be coordinated from the command post.
      4. The command post will maintain contact with the EOC for purposes of instruction, status reports, and requests for support.
    10. Evacuations and Relocations - The institutional emergency management plan should authorize an appropriate administrator to determine that an evacuation is necessary and issue an evacuation order.
    11. Shelters - Institutions should designate appropriate locations as “Shelter Locations” at each campus/facility.
      1. Suggested Procedures for a “Shelter in Place” or “Lock Down” are in Exhibit 3: Shelter-in-Place/Lock-down Procedures.
    12. News Media - Institutions should have a procedure to manage media inquiries during an emergency situation.
      1. The Emergency Preparedness Plan must include a news media procedure to direct the management of media inquiries during emergencies. If none exists, the institution’s Public Relations/Media Office should be responsible for coordinating the institution’s response to news media inquiries at all times, including emergency situations.
      2. At the Tennessee Colleges of Applied Technology, the President, or a direct designee, is the only authorized administrator to respond to news media inquiries.
      3. No institutional employee, other than employees of institution’s Public Relations Office or the designated administrator, should release information to news media representatives, unless instructed to do so.
      4. All news media requests should be directed to Public Relations/Media Office, the designated administrator, or the EOC.
      5. The news media procedures must designate a location for press conferences during emergency incidents.
      6. The procedure must include provisions regarding a process through which the institution’s Public Relations/Media Office will notify the TBR Public Relations Office of published press releases related to the emergency situation.
      7. News media personnel should not be allowed into secure areas without an appropriate escort.
      8. Exhibit 4: Crisis Media Relations lists institutional / local media contacts and information regarding the release of student and employee records.
    13. Volunteer Management – Institutions should have a procedure to manage volunteers who respond to an emergency situation.
      1. Volunteers should be directed to the EOC or a central location for registration and assignment. During the registration process volunteers will be required to provide some form of reliable identification.
      2. A volunteer log should be maintained which will reflect the name, address, date of birth, driver’s license or social security number, any particular skill of each volunteer, the name of the supervisor to whom they are assigned, and the number of the identification card issued to the volunteer.
      3. If practical, each volunteer will sign a standard Volunteer Release Form and be issued an identification card that will be affixed to their outer clothing.
      4. Volunteers will be assigned to a supervisor involved in the emergency response.
      5. Exhibit 5: Volunteer Registration Form is a model Volunteer Statement/Understanding of Agreement (e.g., Volunteer Registration Form) that may be executed by institutions to register volunteers during an emergency response period.
    14. Purchasing Guidelines - Institutions should have a procedure to manage purchases during an emergency situation.
      1. All emergency purchases will be handled in the shortest possible time frames.
      2. To the greatest extent possible, institutional employees will make purchases using procurement cards.
      3. For those purchases which cannot be made by use of procurement cards, Business Affairs personnel will facilitate the timely acquisition of needed resources in a manner consistent with emergency situations.
      4. A record of all emergency related expenditures will be maintained by the work unit making those expenditures.
        1. A copy of those records will be forwarded to the EOC and the original purchase documents will be handled consistent with institutional purchasing guidelines.
    15. Transportation Services - Institutions should have a plan to transport persons and/or equipment during an emergency.
      1. An appropriate institutional department should be designated to be responsible for providing vehicles for evacuations and other emergency related activities.
      2. Distribution of vehicles should be made in such a manner as to maintain accountability while being responsive to the emergency needs of the institution.
      3. The Physical Plant or appropriate personnel should be prepared to experience an increase in emergency maintenance to institutional vehicles, to include minor off-site repairs related to such problems as flat tires, dead batteries, etc.
      4. Exhibit 6: Institutional Vehicles is a template to outline the type and number of institutional vehicles on campus.
    16. Lines of Communication – Institutions should establish a plan for alternate communication options for use during an emergency response period.
      1. Generally, the primary means of communications during an emergency are telephones, cell phones, satellite phones, and two-way radios.
      2. If the institutional phone system has been rendered inoperable or if the emergency incident is a bomb threat, then the EOC, EMRT, and other necessary personnel will use cell phones and radios.
      3. Radios will be the primary communications medium if landline phones, satellite phones, and cell phones are inoperable.
      4. In the event that phones, cell phones, and radios, become inoperable, consideration should be given to the use of “runners” to transmit messages.
      5. Exhibit 7: Log of Campus Radios/Communication Devices is a template to outline the type and location of one-way and two-way radios at the institution.
    17. Documentation of Activities – Institutions should have a procedure to document activities in response to an emergency.
      1. Each department/office should be instructed to maintain a record of all emergency-related activities performed by the personnel of that work unit. The record will reflect the personnel worker hours (for non-exempt staff), as well the assignments of personnel, and the work performed by each work unit, and other resources expended in response to the emergency.
    18. Campus Maps and Building Prints - Institutions should ensure that copies of campus maps, site maps and building prints / records are in a central location.
      1. To the extent that doing so does not compromise security of the institution, the institutional Emergency Preparedness Plan shall ensure that accurate copies of main and satellite campus maps/site plans, prints of buildings and record plans of buildings are attached to the plan.
      2. If the determination is made that security concerns outweigh the inclusion of such material in the Emergency Preparedness Plan, then the institution must ensure that accurate copies of campus maps and building prints are maintained in a secure location that is readily accessible by law enforcement personnel, the President and the ERMT.
    19. Student Assistance Coordinating Committee (Threat Assessment Team) – Institutions should have a Student Assistance Coordinating Committee/Threat Assessment Team that meets regularly to discuss the needs of distressed, disturbed, disruptive, or dangerous students.
      1. Institutions must establish a Student Assistance Coordinating Committee that will meet regularly to evaluate the needs and provide necessary assistance to students who are identified as distressed, disturbed, disruptive, and/or dangerous.
      2. Institutions have the sole discretion to determine which administrators to appoint to the Committee; however, it is advisable that institutions give serious consideration to the inclusion of personnel from the following institutional departments, if applicable:
        1. Judicial Affairs
        2. Disabled Student Services
        3. Student Health
        4. Counseling Services
        5. Academic Support Services
        6. Police Department.
      3. Exhibit 8: Model Student Behavior Information is a model document that addresses institutional management of student behavior matters, including release of student records via the Partners in Education Program; student misconduct reports/methods to report students of concern; and student civility codes.
    20. Faculty and Staff Training Regarding Student Behavior Management - Institutions should require all faculty and designated staff to complete training regarding the identification and management of distressed, disturbed, disruptive or dangerous students.
      1. Institutions must establish a method to maintain records certifying that all faculty, including adjunct faculty, and designated staff complete annual training regarding the identification and management of distressed students.
      2. Institutions have the sole discretion to determine which staff members must participate in the training; however, it is advisable for institutions to include all personnel who have direct contact with students (e.g., student affairs, financial aid, residence life, etc.)
    21. Maintenance of Emergency Management Plan - Institutions must properly maintain the Emergency Management Plan and review it at least on an annual basis.
      1. Electronic and hard copies of the Emergency Management Plan will be maintained by all members of the Emergency Response Management Team and department/office heads who will have significant roles in responding to emergencies.
      2. The plan should also be maintained in the Institutional Police Department or Department of Public Safety, if one exists.
      3. Institutions are advised to put a copy of the plan in the library and to post it on the internet.
      4. An electronic copy of the plan must be maintained in a manner that will permit access during an emergency (e.g., Acrobat Adobe copy on diskette or memory stick, internet posting, etc.).
      5. Department/office heads should establish appropriate procedures within their work units to facilitate plan implementation.
      6. On an annual basis the President or designee, in consultation with the ERMT will review the plan and update/modify the plan as necessary.
    22. Emergency Response Plan Training - Institutions shall conduct appropriate training for all personnel regarding the Emergency Preparedness Plan and the Plan shall be publicly posted.
      1. Members of the ERMT and department/office heads should ensure that they and members of their staff are knowledgeable concerning the contents of the Emergency Preparedness Plan.
      2. All employees must have knowledge of the contents and procedures of the institution’s plan. On a periodic basis different aspects of the plan should be tested, either through simulated exercises or in-service training, as appropriate.
      3. A Safety Committee/Risk Management Committee may be established to assist in these training exercises as necessary.
      4. The Emergency Response Management Team Members should receive training in the (NIMS) National Incident Management System method of handling emergency situations.
      5. The Safety Committee / Risk Management Committee or appropriate personnel may consult the Tennessee Emergency Management Association (TEMA) Training and Education Office to request information regarding special training seminars.
  3. Exhibits to Guideline B-100
    1. Exhibit 1: EMRT Administrators Specific Responsibilities
    2. Exhibit 3: Shelter-in-Place/Lock-down Procedures
    3. Exhibit 4: Crisis Media Relations
    4. Exhibit 5: Volunteer Registration Form
    5. Exhibit 6: Institutional Vehicles
    6. Exhibit 7: Log of Campus Radios/Communication Devices
    7. Exhibit 8: Student Behavior Information
    8. Exhibit 9: Fire Drills
    9. Exhibit 10: Bomb Threats
    10. Exhibit 11: Tornado Procedures
    11. Exhibit 12: Earthquake Procedures
    12. Exhibit 13: Biological Hazards
    13. Exhibit 14: Hostile Intruder/Violent Person
    14. Exhibit 15: Terrorist Attack
    15. Exhibit 16: Flood, Snow, and Ice
    16. Exhibit 17: Hostage
    17. Exhibit 18: Protests/Demonstrations
    18. Exhibit 19: Explosion/Train or Aircraft Crash
    19. Exhibit 20: State and Local Emergency Telephone Numbers
    20. Exhibit 21: Building Contact Telephone Numbers
    21. Exhibit 22: Local Utility Company Telephone Numbers
    22. Exhibit 23: Emergency Response Campus Resources
  4. Resources
    1. The following resources should be beneficial in developing and implementing the institutional emergency management plans:
      1. http://www.ready.gov/campus
      2. http://www.tnema.org 
      3. http://training.fema.gov/IS/
      4. http://www.fema.gov/response-recovery
Sources: 

Authority

T.C.A. § 49-8-203; All Federal and state regulations on Emergency Management.

History

February 12, 2008 Presidents Meeting (New); November 11, 2014 Presidents Meeting.

Policy Number: 
B-095
Policy/Guideline Area: 
Business and Finance Guidelines
Applicable Divisions: 
TCATs, Community Colleges, System Office, Board Members
Purpose: 

This guideline establishes when an electronic signature may replace a written signature and when an electronic record may replace a paper document in official activities of the Tennessee Board of Regents (TBR) and its institutions.

Definitions: 
  • Electronic signature - is defined as an electronic sound, symbol, or process, attached to or logically associated with a record and executed or adopted by a person with the intent to sign the record.  An electronic signature must be attributable (or traceable) to a person who has the intent to sign the record with the use of adequate security and authentication measures that are contained in the method of capturing the electronic transaction (e.g., use of personal identification number or personal log-in identification username and password), and the recipient of the transaction must be able to permanently retain an electronic record of the transaction at the time of receipt.
  • Electronic record - is defined as any record created, used, or stored in a medium other than paper, such as: information processing systems, computer equipment and programs, electronic data interchange, electronic mail, voice mail, text messages, information in PDAs and similar technologies. To the extent that facsimile, telex, and/or telecopying, and/or former hard copy documents are retained in electronic form, through a scanning process, they are also considered electronic records.
  • Record - is information that is inscribed in a tangible medium or that is stored in an electronic or other medium and is retrievable in perceivable form. Financial and other documents or forms are records.
  • Electronic transaction - is a transaction conducted or performed, in whole or in part, by electronic means or electronic records.
  • Electronic - relates to technology having electrical, digital, magnetic, wireless, optical, electromagnetic, or similar capabilities.
  • Approved electronic signature method - is one that has been approved in accordance with this guideline and applicable state and federal laws, and which specifies the form of the electronic signature, the systems and procedures used with the electronic signature, and the significance of the use of the electronic signature.
  • Certificate - is an electronic document used to identify an individual, server, a company, or some other entity and to associate that identity with a public key. A certificate provides generally recognized proof of an entity’s identity.
  • Public-key infrastructure (PKI) - is a form of information encryption that uses certificates to prevent individuals from impersonating those who are authorized to electronically sign an electronic document.
  • Public key - is a value provided by some designated authority as a key that, combined with a "private key" derived from the public key, can be used to effectively encrypt messages and digital signatures.
  • Private key - is an encryption/decryption key known only to the party or parties that exchange messages. In traditional private key cryptography, a key is shared by the parties so that each can encrypt and decrypt messages.
  • Approval authority - for purposes of this guideline, shall mean the Chancellor, the President of an institution or designee. An electronic signature created through the use of Public Key Infrastructure (PKI) or any method that permanently encrypts a record must be approved by the TBR Chief Information Officer. The TBR Chief Information Officer shall forward information regarding the PKI signature method to the Office of Information Resources (OIR) for approval.
Policy/Guideline: 
  1. References
    1. T.C.A. § 47-10-101, et.seq. – Tennessee Uniform Electronic Transactions Act
    2. T.C.A. § 10-7-101, et.seq. – Tennessee Public Records Act
    3. TBR Guideline G-070 – Disposal of Records-RDA 2161
    4. TBR Policy 1:08:00:00 – Information Technology Resources
  2. Scope
    1. This guideline applies to the TBR Central Office and all TBR Institutions, and applies to all forms of electronic signatures and electronic records used to conduct the official business of the TBR and its institutions.
    2. Such business shall include, but not be limited to electronic communications, transactions, procurements, contracts, grant applications and other official purposes.
  3. Use of Electronic Signature
    1. Mutual agreement by the parties
      1. This guideline applies only to transactions between parties each of which has agreed to conduct transactions by electronic means.
      2. Whether the parties agreed to conduct a transaction by electronic means is determined from the context and surrounding circumstances, including the parties’ conduct.
    2. Signature required by TBR or Institutional policy
      1. When a TBR or Institutional policy requires that a record have the signature of an authorized person, that requirement is met when the electronic record has associated with it an electronic signature using an approved electronic signature method.
      2. When a TBR or Institutional policy requires a written signature on a document, that requirement is met when an electronic document has associated with it an electronic signature using an approved electronic signature method.
    3. Signature required by law
      1. When there is a legal requirement, in addition to TBR or Institutional guideline, that a record have the signature of an authorized person, that signature requirement is met when the electronic record has associated with it an electronic signature using an approved electronic signature method which complies with applicable TBR/institutional policy, Tennessee law, and federal law.
      2. When a legal requirement, in addition to TBR or Institutional policy, requires a written signature on a document, that requirement is met when an electronic document has associated with it an electronic signature using an approved electronic signature method, which complies with applicable TBR/institutional policy, Tennessee law, and federal law.
    4. The signing of a record using an approved electronic signature method does not mean that the record has been signed by a person authorized to sign or approve that record. Appropriate procedures must be used to confirm that the person signing the record has the appropriate authority and intent to sign the record.
    5. If parties have agreed to conduct a transaction by electronic means and a law requires a person to provide, send, or deliver a signed document to another person, the requirement is satisfied if the information is provided, sent, or delivered, as the case may be, in an electronic record capable of retention by the recipient at the time of receipt.
      1. An electronic record is not capable of retention by the recipient if the sender or its information processing system inhibits the ability of the recipient to permanently retain the electronic record containing the signature.
  4. Approval of Electronic Signature Methods by the Approval Authority
    1. The final approval of any electronic signature method will be by the approval authority.
      1. In determining whether to approve an electronic signature method, consideration will be given to the systems and procedures associated with using that electronic signature, and whether the use of the electronic signature is at least as reliable as the existing method being used.
      2. This determination will be made after a review of the electronic signature method by the appropriate authorities.
    2. If approved electronic signature methods require the use of encryption technology that uses public or private key infrastructure and/or certificates, the Information Technology Department at the Institution will be responsible for the administration of such public or private keys and certificates, and information will be provided to TBR’s Information Technology Department.
    3. An approved electronic signature method may limit the use of that method to particular electronic records, particular classes of electronic records, or particular TBR or institutional departments.
      1. An electronic signature used outside of its defined parameters will not be considered valid by TBR or the Institution.
    4. In the event that it is determined that a previously approved electronic signature method is no longer trustworthy, the approval authority must revoke the approval of that electronic signature method.
      1. If there is an on-going need for electronic signatures, which were made by the revoked method, the approval authority will take steps to see that appropriate electronic signatures are obtained by an approved electronic signature method.
    5. An inventory of all approved electronic signature methods shall be maintained by the TBR Office of Information Technology.
  5. Rules and Procedures
    1. With respect to the use of electronic signatures or electronic transactions, the following requirements pertain to approved electronic signature methods:
      1. Specific transactions that may be conducted by electronic means must be identified;
      2. Specific transactions that may not be conducted by electronic means must be identified;
      3. The manner and format in which electronic records must be created, generated, sent, communicated, received, and stored, and the systems established for those purposes must be specified;
      4. The method must:
        1. Comply with any law or regulation that requires electronic records which must be signed by electronic means;
        2. Specify the type of electronic signature required, the manner and format in which the electronic signature must be affixed to the electronic record, and the identity of, or criteria that must be met, by any third party used by a person filing a document to facilitate the process;
      5. Control processes and procedures must be developed to ensure adequate preservation, disposition, integrity, security, confidentiality, and auditability of electronic records;
      6. Control processes and procedures must be developed for any other required attributes for electronic records that are specified for corresponding non-electronic records or that are reasonably necessary under the circumstances;
      7. An inventory of all approved electronic signature methods must be maintained; and
      8. Approval of an electronic signature method must be obtained as follows:
        1. An analysis of the nature of a transaction or process to determine the level of protection needed and the level of risk that can be tolerated. The analysis shall include:
          1. The full range of technological options and follow commercial trends where appropriate
          2. Identifying and documenting any potential costs, quantifiable and unquantifiable, direct and indirect, in performing a cost/benefit analysis;
          3.  Developing a comprehensive plan for converting a traditional process to an electronic one; and
          4. Identifying all information relevant to the process.
        2. Comply with G-070 for the records produced by electronic processes, including long-term retention where necessary. Consider retaining an electronic document in paper-based form for important or sensitive contexts;
        3. Request legal review to verify that the electronic signature method complies with applicable laws governing the creation and use of electronic signatures;
        4. Outline the steps of the electronic signature method so that you can demonstrate the reliability of your process;
        5. Submit to the approval authority;
        6. Implement upon approval; and
        7. Provide implemented method to the TBR System Office.
  6. Sample Procedures
    1. Procedure to Authorize and Implement Electronic Signature Methods (Exhibit 1)
    2. Procedure for Email Transactions - Personal/Professional Service Contracts (Exhibit 2)
    3. Procedure for SciQuest Transactions (Exhibit 3)
    4. Procedure for Web Time Entry Transactions (Exhibit 4) 
  7. Sanctions
    1. Any individual or party that makes inappropriate or illegal use of electronic signatures, transactions and/or records is subject to sanctions up to and including dismissal, suspension, and criminal prosecution as specified in published TBR and institutional policies, Tennessee and federal laws.
Sources: 

Authority

T.C.A. § 49-8-203; All pertinent state and federal laws.

History

Presidents Meeting November 6, 2007; Presidents Meeting August 19, 2009

Policy Number: 
B-090
Policy/Guideline Area: 
Business and Finance Guidelines
Applicable Divisions: 
TCATs, Community Colleges, System Office
Purpose: 

This guideline explains the procedure by which Tennessee Board of Regents institutions must develop a comprehensive written Information Security Program (the “Program”) as mandated by the Gramm-Leach-Bliley Act (“GLBA”) Standards for Safeguarding Customer Information Rule. An institution’s Program must include the components described below pursuant to which the institution intends to:

1. Protect the security and confidentiality of customers’ nonpublic financial information;

2. Protect against any anticipated threats or hazards to the security or integrity of such information; and

3. Protect against unauthorized access or use of such records or information in ways that could result in substantial harm or inconvenience to customers.

The Program may consist of existing institutional policies and procedures that are incorporated by reference into the Program, including but not limited to policies such as, computer / electronic records confidentiality policies, Family Educational Rights & Privacy Act policies, employee/personnel records confidentiality policies, etc.

Definitions: 
  • Customer - is defined as a consumer who has a customer relationship with a financial institution.
  • Consumer - means an individual (or that individual’s legal representative) who obtains or has obtained a financial product or service from a financial institution that is used primarily for personal, family, or household purposes.
  • Non-public financial information - is any record that an institution obtains from a customer in the process of offering a financial product or service, or such information provided to the institution by another financial institution. The term nonpublic financial information means any information:
    • That a student or other third party provides in order to obtain a financial service from the institution:
      • About a student or other third party resulting from any transaction with the institution involving a financial service; or
      • Otherwise obtained about a student or other third party in connection with providing a financial service to that person; and
    • Any list, description, or other grouping of consumers (and publicly available information pertaining to them) that is derived using any personally identifiable financial information that is not publicly available.
  • Offering a financial product or service - includes, but is not limited to:
    • Offering/processing student loans;
    • Granting emergency or long term loans to students or employees;
    • Receiving income tax information from a student’s parent when offering a financial aid package;
    • Offering career counseling services to individuals who seek employment at financial institutions; and
    • Management consulting activities on any subject to a financial institution and on financial, economic, accounting, or audit matters to any company.
  • Financial Institution - refers to any institution the business of which is significantly engaged in financial activities, which may include but are not limited to:
    • Extending credit and servicing loans;
    • Lending, exchanging, transferring, investing for others, or safeguarding money or securities;
    • Insuring, guaranteeing, or indemnifying against loss harm, damage, illness, disability, or death.
      • The FTC has classified institutions of higher education as financial institutions for purposes of compliance with the Gramm-Leach-Bliley Act’s safeguarding rule as such institutions process student loans.
  • Service Providers - refers to all third parties who, in the ordinary course of institutional business, are provided access to customers’ covered data and information. Service Providers may include, but are not limited to, business retained to store, transport, and/or dispose of covered data; collection agencies; and technology systems support providers.
Policy/Guideline: 
  1. Introduction
    1. Federal law requires that financial institutions, the definition of which includes the Tennessee Board of Regents and its institutions, comply with the Gramm-Leach-Bliley Act and, in so doing, safeguard the confidentiality of nonpublic financial information of its constituents.
    2. This guideline is issued to aid Tennessee Board of Regents institutions in drafting Information Security Programs to comply with the Federal Trade Commission’s “Standards for Safeguarding Customer Information” Rule promulgated under the authority of the Gramm-Leach-Bliley Act.
  2. Scope of Program: Non-public Financial Information
    1. The Program shall apply to any paper or electronic record maintained by an institution that contains nonpublic financial information about an individual or a third party who has a relationship with the institution.
    2. Such nonpublic financial information shall be kept confidential and safeguarded by the institution, its affiliates and service providers pursuant to the provisions of the Program.
  3. Requirements of an Information Security Program
    1. Program Coordinator
      1. The institution’s Security Information Program must include the designation of a Program Coordinator (“Coordinator”) who shall be responsible for implementing the Program.
      2. The Coordinator may be a single employee as designated by the Program.
        1. In the alternative, the Program may designate several employees as Coordinators such that one employee serves as the institution’s primary Coordinator who works in conjunction with departmental Coordinators who are responsible for oversight of safeguarding records in their departments in accordance with the institution’s Program.
      3. The Coordinator shall, at a minimum, perform the following duties:
        1. Consult with the appropriate offices to identify units and areas of the institution with access to customers’ nonpublic financial information and maintain a list of the same;
        2. Assist the appropriate offices of the institution in identifying reasonably foreseeable internal and external risks to the security, confidentiality, and integrity of customers’ nonpublic financial information and make certain that appropriate safeguards are designed and implemented in each office and throughout the institution to safeguard the protected data;
        3. Work in conjunction with the institution’s contract officer(s) to guarantee that all contracts with third party service providers that have access to and maintain nonpublic financial information of the institution’s customers include a provision requiring that the service provider comply with the GLBA safeguarding rule;
        4. Work with responsible institutional officers to develop and deliver adequate training and education for all employees with access to customers’ nonpublic financial information; and
        5. Periodically evaluate and monitor the effectiveness of the current safeguards for controlling security risks by periodically verifying that the existing procedures and standards delineated in the Program are adequate.
    2. Security and Privacy Risk Assessments
      1. The Program shall identify reasonably foreseeable external and internal risks to the security, confidentiality, and integrity of nonpublic financial information that could result in the unauthorized disclosure, misuse, alteration, destruction, or otherwise compromise of such information, and assess the sufficiency of any safeguards in place to control those risks.
      2. Risk assessments should include consideration of risks in each office that has access to customers’ nonpublic financial information.
      3. The GLBA requires that the risk assessment section of the Program must, at a minimum, include consideration of the risks in the following areas:
        1. Employee training and management.
          1. A GLBA employee training program shall be developed by the Coordinator in conjunction with the human resources office and legal counsel, if necessary, for all employees who have access to individuals’ nonpublic financial information, such as information technology/systems employees and those employees who use such data as part of their essential job duties.
          2. The training shall occur on a regular basis, as deemed appropriate by the Coordinator, and it shall include education on relevant policies and procedures and other safeguards in place or developed to protect nonpublic financial information.
        2. Safeguards of information systems/technology processing, storage, transmission and disposal (including network and software design).
          1. Programs should include safeguards so that network and software systems are reasonably designed to limit the risk of unauthorized access to nonpublic financial information.
        3. Methods to detect, prevent, and respond to attacks, intrusions, or other system failures. 
    3. Implementation of Safeguards
      1. The Program must include information regarding the design and implementation of information safeguards to control the risks identified through the risk assessment described in the previous component, “B. Security and Privacy Risk Assessments.”
      2. The Program shall also include methods to regularly test or otherwise monitor the effectiveness of the safeguarding procedures.
        1. The Program’s monitoring may include technology system checks, reports of access to technology systems, and audits.
    4. Oversight of Service Providers and Contracts
      1. The GLBA requires institutions to take reasonable steps to select and retain third party service providers that are capable of complying with the GLBA by maintaining appropriate safeguards for the customer information to which they have access.
      2. The GLBA requires that the institution’s current and potential service providers that have access to customers’ nonpublic financial information maintain sufficient procedures to detect and respond to security breaches.
      3. The Program must include a reference to the institution’s duty to require, by contract, that all applicable third party service providers implement and maintain appropriate GLBA safeguards for customers’ nonpublic financial information.
    5. Evaluation and Revision of Program
      1. The GLBA mandates that an institution’s Program be subject to periodic review, evaluation, and adjustment.
      2. The Program must include a plan by which it will be evaluated on a regular basis and a method to revise the Program, as necessary, for continued effectiveness.
  4. Assessment of the Information Security Program
    1. The Coordinator, in conjunction with the appropriate administrators, shall assess the effectiveness of the Program annually.
      1. The Coordinator shall make certain that necessary revisions to the Program are made at the time of the annual review to address any changes in the institutional organization that may affect the implementation and effectiveness of the Program.
  5. Publication of the Information Security Program
    1. To promote uniform compliance with the Program by all personnel employed by TBR institutions and to achieve the institution’s duty to safeguard the confidentiality of customers’ nonpublic financial information, the institution shall, at a minimum, display and disseminate the Program in accordance with the institution’s standard distribution methods.
    2. The institution’s current Program shall be available upon request for review and copy at all times.
Sources: 

Authority

T.C.A. § 49-8-203; All state and federal statutes, codes, Acts, rules and regulations referenced in this guideline.

History

November 5, 2003

Policy Number: 
B-080
Policy/Guideline Area: 
Business and Finance Guidelines
Applicable Divisions: 
TCATs, Community Colleges, System Office
Purpose: 

The purpose of this guideline is to establish the process and procedures for reporting and resolution of institutional losses at institutions governed by the Tennessee Board of Regents.

Definitions: 
  • Resources -  as used herein, shall refer to assets such as cash or other financial resources, supplies, inventories, equipment and other fixed assets, real property, intellectual property, or data.
Policy/Guideline: 
  1. Introduction
    1. Administrators at all levels of management should be aware of the risks and exposures inherent in their areas of responsibility, and should establish and maintain proper internal controls to provide for the security and accountability of all assets and other resources entrusted to them.
    2. It is the responsibility of each institution to establish a process to identify, report and investigate losses of state or institutional funds, property or other resources, whether by malfeasance or misfeasance.
    3. Tennessee Board of Regents (TBR) Policy 4:01:05:50, Preventing and Reporting Fraud, Waste or Abuse, includes requirements for reporting suspected instances of fraud, waste or abuse to the system office where such matters are subsequently reported to the Comptroller of the Treasury (T.C.A. § 8-19-501(a)).
  2. Reporting and Resolution Process
    1. Reporting Losses – For each reportable incident, the institution must complete a “Notification of Loss Report” (Exhibit 1) or “Property Loss Report” (Exhibit 2).
      1. The Notification of Loss Report should be used to report single incidents of shortages or losses of any asset, resource or data immediately upon occurrence or discovery. This report should be used to report the loss or shortage of any amount which is the result of acknowledged or suspected fraud, waste or abuse by either an employee or a non-employee (for example, a vendor, contractor, or student).
      2. The Property Loss Report may be used to report property losses in any quarter in which losses occur and may include more than one incident or loss of property. However, see item 1 above if the property loss is a result of fraud, waste or abuse.
      3. The institution must also report covered property losses to the State of Tennessee, Department of Treasury, Office of Risk Management.
    2. Reporting Resolution – The investigation unit identified on the notification report will file a “Case Resolution Report” (Exhibit 3) at the conclusion of the investigation. Depending upon the nature and extent of the investigation, an Internal Audit Report may be issued in lieu of a Case Resolution Report.
    3. Distribution of Reports – Each notification and resolution report should be submitted to the following officials or offices:
      1. President 
      2. Vice President for Business and Finance
      3. Internal Audit Director
      4. Office of Safety and Security/Campus Police (as appropriate)
      5. TBR Vice Chancellor for Business and Finance
      6. TBR System-wide Chief Audit Executive
  3. Requirements Regarding Losses and Shortages
    1. Cash or Other Financial Resources – Institutions maintain cash, procurement cards, credit cards and other financial resources to facilitate its business needs. Institutions must report cash shortages or losses equal to or greater than $500 immediately to TBR.
      1. Some cash shortages result from human error and are the cost associated with doing business. However, objective reviews must be completed to eliminate misconduct and provide assurance that controls are effective.
      2. Regardless of amount, management should routinely perform objective reviews of shortages or other losses to identify any unusual items, recurring issues or a pattern of financial shortages.
    2. Property – Institutions maintain inventory records for capitalized property and sensitive minor equipment, as required by Tennessee Board of Regents Guideline B-110, Fixed Assets and Sensitive Minor Equipment. Institutions must report property losses to TBR at least quarterly.
      1. Losses of physical property due to inventory shrinkage, vandalism, unexplained events, natural disasters, or acts of God should be reported to TBR on a quarterly basis on the Property Loss Report (Exhibit 2). A Case Resolution Report is not required to be submitted for such losses.
      2. However, unexplained losses and those due to shrinkage or vandalism should be objectively reviewed by management to identify any unusual items, recurring issues or a pattern of losses.
      3. Occurrences that are potentially serious situations that would create public concern regardless of amount (e.g., the loss of certain chemicals) must be reported to the TBR and the Office of Risk Management immediately, followed by a written report.
  4. Property Claims Process
    1. Property Claims – Individual occurrences exceeding $25,000 must be reported to the TBR Office of Facilities Management and the Office of Risk Management immediately, followed by a written report.
      1. The Office of Risk Management website at http://treasury.tn.gov/risk/ contains contact information under the “Contact Us” link and details of the insurance claim process under the “Claims Process” link.
      2. Each report of damage for a claim should include a detailed description of the loss and the estimated cost. In addition to the reporting requirements noted above, the department where the loss occurred should also receive a copy of this report.
  5. Actions
    1. TBR will evaluate the information provided and make a determination concerning external reporting obligations, if any, and the feasibility of pursuing available legal remedies in cases of misconduct, including fraud, waste or abuse.
Sources: 

Authority

T.C.A. § 49-8-203; T.C.A. § 8-19-501

History

November 6, 2002, Presidents Meeting; February 28, 2008, Presidents Meeting; February 29, 2008; Presidents Meeting November 7, 2012; Presidents Meeting February 11, 2015.

Pages

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