|Effective:||02/08/10||Approved By: Senior Associate Vice President for Financial Affairs and Chief Financial Officer|
For Assistance Contact: Accounting Services
This guideline provides the approval, accounting, payment and closure procedures for capital projects:
- Texas Education Code (TEC) — Chapter 61. Texas Higher Education Coordinating Board
- UT System Regents' Rules and Regulations — Rule 80301: Capital Improvement Program
- UT System Regents' Rules and Regulations — Rule 80402: Office of Capital Projects Management of Major Construction and Repair and Rehabilitation Projects
- University of Texas (UT) System — UTS 168 — Capital Expenditure Policy
- University of Texas (UT) System — LERR and Faculty STARs Budget Rules & Procedures
Table of Contents
- Major Capital Projects $10 million and above
- Capital Projects Below $10 million
- Project Status Report
Capital projects are an integral aspect of UTSA's overall strategic growth. UTSA's master plan provides direction for the future physical development of the campus.
Major capital projects are those involving new construction or repair and rehabilitation costing $10 million or more, repair and rehabilitation that is architecturally or historically significant, or debt funding. Major capital projects require approval from the UT System Board of Regents (BOR); are added to the UTSA Capital Improvement Program (CIP) if approved; and are managed by the UTSA Real Estate, Construction and Planning department.
Projects costing less than $10 million are managed by the UTSA Office of Facilities (Facilities).
Additionally, equipment financing projects may be funded by equipment loans, which may be made available for UTSA's capital needs following BOR approval for Revenue Financing System (RFS) financing.
NOTE: The UT System does not manage projects, but is involved in recording appropriations and expenditures of debt proceeds on behalf of the BOR.
1. Supporting Documents
This section lists the key documents required for major capital projects. For information on the processes related to these documents, see sections 2 to 6 below.
Also known as the Accounting Source Document, this form is distributed by the UT System. It is the authorizing document used to record project funding, appropriations and changes, movement of funds and expenditures, encumbrances, and in certain cases, expenditures and other miscellaneous debits and credits. When a project is added to the CIP, a Form 2 is generated to record temporary funding and move funds as necessary to cover initial expenditures. When the project receives BOR approval, new Project IDs are established to record project funding. Temporary funding is removed and full funding for the project is set up.
This letter signed by the UTSA president formally requests that a project be placed on the agenda for a BOR meeting. The letter must include the following:
- The official project name (the project name must match the name in the CIP database)
- A description of the project, including its scope
- The estimated total project cost (TPC) for budgetary purposes
- The identified funding source(s)
Approval by the UT System’s executive vice chancellor (EVC) for Academic Affairs or Health Affairs is also required.
Projects that are fully or partially financially self-supportive require a detailed pro forma (financial projection). These are normally projects that will generate new auxiliary enterprise revenue to service the debt.
- UTSA Financial Affairs will contact the UT System Office of Finance to obtain the debt issuance assumptions (i.e., amortization term and rate) to be used in developing the pro forma.
- The pro forma should cover a minimum of six years from the completion of the project and should forecast all operating revenues and expenses for that auxiliary enterprise. For example, revenues and expenses for a new parking garage will be incorporated into the overall parking operations budget as there may be economies of scale, and/or certain costs may not be easily allocated to one particular project.
- Revenues will be compared to total expenditures to compute net income for the project for each forecast year.
- The annual debt service costs are estimated based on the amortization term and interest rate. Divide net income by debt service in each forecast year.
- A 1.3x Debt Service Coverage (see the UT System Institutional Debt Capacity Methodology for more information) is required for revenue-generating projects to be approved by UT System.
- The pro forma must be developed or validated by UTSA's senior associate vice president for Financial Affairs and deputy CFO (SAVPFA) or designee.
- The pro forma is submitted with the Project Planning Form (PPF) when seeking BOR Design/Development (DD) approval.
NOTE: The pro forma should be submitted to UTSA Financial Affairs for review two weeks in advance of submission to UT System.
If gifts are a source of funding for a capital project, see the Gift Funding definition for more information.
Project Planning Form (PPF)
The PPF is a uniform, web-based data collection system through the UT System Office of Capital Projects (OCP) website designed to gather a complete set of data points pertinent to a specific project.
UTSA is required to submit a complete, current PPF when a project is presented to the BOR, including projects returning to the BOR for additional approvals.
The PPF is accompanied by
- The President’s Letter (PPFs submitted without the President’s Letter are considered incomplete and will not be accepted)
- Any required exhibits or attachments such as a project pro forma
The PPF System can be accessed at UT System https://apps.utsystem.edu/FinanceCIP.
NOTE: The PPF may also be used outside the project approval phase to update important project information such as TPC increases of less than 10%, changes in expected delivery dates, changes in projected expenditures, etc.
These project details will be updated in the CIP at least quarterly by the senior project manager.
Business Plan (New Construction Only)
Below are examples of elements that may be included in the Business Plan depending on the nature of the project and funding sources:
- Project description including funding, space utilization efficiency metrics and other relevant background information
- Justification for the project and reasonable options for moving forward with the project
- Summary of economic analysis including items such as comparative cost data and project life cycle cost analysis
- Opportunity and risk analysis (opportunities related to UTSA's goals and risks applicable to the project such as revenue, cost, regulatory and environmental risks)
- Success criteria (measurable and time-specific criteria that will indicate the project is achieving the goals set by UTSA)
- Impact of project postponement (implications if the project is not approved or is delayed)
- Appendices as appropriate, such as site maps, engineering reports and other supporting documents
This forecast is used for projects that are not financially self-supporting. The Office of the Controller can contact the UT System Office of Finance to obtain the most recent six-year forecast on file. The process is as follows:
- Add the new project and its incremental debt into the Future Debt tab
- Build incremental revenues and expenses associated with the project into the UTSA Statement of Revenues, Expenses and Changes in Net Position (SRECNP)
- Meet at least two of the following requirements:
- At least 1.8x Debt Service Coverage
- At least 80% Expendable Resources-to-Debt
- No more than 5% Debt Service-to-Operations
- Submit with PPF when seeking BOR DD Approval
NOTE: If gifts are a source of funding for a capital project, see the Gift Funding definition for more information.
2. Approval Process
The approval process is as follows:
- Real Estate, Construction and Planning drafts the President’s Letter and forwards it to the president’s office for review and to obtain the applicable signature(s).
- Real Estate, Construction and Planning sends the signed President’s Letter, PPF, project Business Plan (if applicable) and any other attachments (such as a pro forma if the project is revenue generating or a six-year forecast if the project is not revenue generating) to the EVC for Academic Affairs.
NOTE: PPF requirements are the same for Library, Equipment, Repair and Rehabilitation (LERR) projects as for any other project, except that a President’s Letter is not required for LERR projects; approval in the LERR budget serves in place of a President’s Letter. Additions to the CIP for LERR repair and rehabilitation projects are automatically approved provided that the TPC and funding sources have not changed from the documentation that accompanied the LERR budget (LERR Library and Equipment projects are not included in the CIP).
- The President’s Letter, PPF, project Business Plan (if applicable) and other attachments are submitted to the BOR for review and approval.
NOTE: Once added to the CIP, LERR repair and rehabilitation projects are subject to the TPC change rules applicable to all major capital projects (per UT System Regents' Rules and Regulations — Rule 80402: Office of Capital Projects Management of Major Construction and Repair and Rehabilitation Projects). TPC changes may generally be approved by the Chancellor in lieu of the BOR, unless the cost change will cause a variance of more than 10% from the original BOR-approved TPC, and that variance exceeds $500,000.
- The UT System Office of Finance provides the Finding of Fact before BOR DD approval.
- The BOR provides DD approval, appropriates funding and authorizes expenditures.
NOTE: UTSA may spend temporary funding up to 5% of the preliminary project cost for DD (or up to 10% with explicit EVC for Business Affairs approval) once the project is approved for inclusion in the CIP. These costs cannot be reimbursed until debt is issued.
3. Project Funding
Major capital projects managed by Real Estate, Construction and Planning are mainly funded by the UT System following BOR approval, using funding from sources such as Tuition Revenue Bonds (TRB), the Permanent University Fund (PUF) and the Revenue Financing System (RFS). The UT System Office of the Controller will notify the UTSA capital and special project (CSP) accountant when the funding is available.
Usually, before the full amount of funding becomes available, UT System will generate and send a Form 2 to record temporary funding in order to cover initial expenditures. When the project receives BOR approval, new Project IDs are established to record project funding. Temporary funding is removed and full funding for the project is set up.
4. Project ID Establishment and Maintenance
UT System-funded projects are normally set up per the following process:
- Upon notification from the OCP Project Unifier System (OPUS), the UTSA CSP accountant downloads Form 2.
- The CSP accountant establishes a new Project ID for the approved capital project.
- The CSP accountant creates separate Activities within the Project ID based on Real Estate, Construction and Planning’s specifications.
- The budget should equal the total approved project cost and should approximate the line items in the PPF.
- Project IDs and Activities for LERR capital projects are established based on the project submitted for CIP approval.
- Project IDs and Activities for equipment financing projects are established based on institutional requirements.
NOTE: Contracts submitted to the UTSA Business Contracts Office for execution that are CIP-approved projects must include supporting documentation (email, etc.) to substantiate inclusion in the CIP. If UTSA funds will be used to supplement a CIP-approved project, additional documentation will be required.
5. Payment Process
The preferred expenditure order created by the UT System Office of Finance allows institutions to earn as much income on debt proceeds as possible prior to expending the debt.
The preferred expenditure order is below:
- TRB Debt proceeds
- PUF Debt proceeds
- Income on PUF Debt proceeds
- RFS Debt proceeds
- Gift funds
- Other institutional funds
Payments are processed through the third-party management software Owner Insite for review and approval by the relevant levels of project management established within Owner Insite. Disbursements and Travel Services (DTS) is able to review invoices following approval notifications from Owner Insite and process these for payment in PeopleSoft. DTS will then update the status in Owner Insite.
6. Project Close Out
The UT System Office of the Controller completes a Project Close Out form (see Form 4/5) once construction of a capital project funded by the UT System has been completed or the UT System funding has been fully expended and expenditures are no longer recorded against it:
- The UT System Office of the Controller sends the completed Project Close out form.
- Accounting Services reconciles UTSA amounts with UT System amounts.
- The disposition of remaining funds is determined according to the types of funds remaining:
- If remaining RFS or TRB funding is not yet issued, the authorization lapses.
- If remaining RFS or TRB funding has been issued and debt proceeds are on hand, those proceeds are either used by the UT System Office of Finance to pay debt service or they are moved to another fully-authorized project (with necessary institutional and/or legislative approval). Remaining PUF funding lapses, unless the Chancellor approves transferring the funds to another fully-authorized PUF project. Remaining institutional funds are returned to the originating source of the funds.
- Real Estate, Construction and Planning and the SAVPFA receive Form 4/5 from the UT System Office of the Controller. The approved form authorizes UTSA to close the Project ID and provides instructions to lapse any remaining funds in the capital project budget.
- Real Estate, Construction and Planning verifies that the project is ready to be closed and notifies the SAVPFA, who verifies the request and forwards it to the senior vice president for Business Affairs for approval.
- When the request is approved, the CSP accountant processes, deactivates and closes the Project ID.
Funding may come from various UTSA departments. The procedure for projects funded with departmental funds includes the following steps (for other projects, see Projects Initiated by Facilities further below):
- The requesting department completes and submits the Project Request form to Facilities, which manages the project. The form is available on the Facilities website (instructions are included in the form).
- Facilities reviews the completed Project Request form.
- Facilities identifies and documents the scope of work and estimated project cost in a Project Cost Estimate (PCE).
- Facilities sends the PCE to the requesting department for review and approval.
- The requesting department reviews and approves the PCE to ensure the following:
- The request type and project scope are accurate;
- The total project cost (TPC) estimate amount is approved; and
- The correct funding source(s) is identified and funds are available.
NOTE: Major repair and rehabilitation of buildings and facilities may be funded from appropriated funds, but not from general revenue (state) funds that are not expressly identified or allocated for such purposes.
- The requesting department completes the Project Funding Form (PFF) and obtains the signatures of the authorized administrator(s) for the funding source(s) and the appropriate vice president or designee.
- The requesting department returns the completed and signed PFF to Facilities for further processing.
Projects Initiated by Facilities
The following projects are initiated by Facilities
- Projects that include funds previously allocated for deferred maintenance: Facilities completes a Capital Projects Transaction Request Form signed by the associate vice president for Facilities and sends the form to the CSP accountant. For projects greater than $100,000, documentation with approval from the senior vice president for Business Affairs (senior VPBA) is required.
- Projects that are funded by campus reserves, project reserves, utility reserves, interest on construction funds or renovation allocations: Facilities obtains approval from the senior VPBA and forwards the approval and pages 1 and 2 of the PCE to the CSP accountant. The CSP accountant completes the PFF and establishes the Project ID, and works with Financial Affairs to identify and confirm the funding source and to process the appropriate transfers. After SAVPFA approval, the CSP accountant sends a copy of the PFF to Facilities and a copy to the Office of Budget and Financial Planning.
For UTSA department-funded projects, responsibilities for Project ID establishment and maintenance are determined by the TPC.
Projects with a TPC less than $100,000
- The PCE is signed by the project requestor and returned to Facilities.
- The requesting department is responsible for ensuring that the funding source on the PCE has the correct Function Code (see Financial Guideline — Chart of Accounts). Facilities also assists in ensuring the correct Function Code is used. Departments may transfer project amounts to appropriately coded funding sources for such projects.
- Funds are expended directly from the funding source identified in the PCE and coordinated by Facilities.
Projects with a TPC of $100,000 or more
- The project requestor signs the PCE and returns it to Facilities.
- Facilities forwards the PFF, Budget and PCE to the CSP accountant.
- The CSP accountant reviews the PFF for completion, accuracy and funding.
- The CSP accountant creates a Project ID (see Financial Guideline — Chart of Accounts).
- The CSP accountant completes a transfer to the newly created Project ID from the funding source identified on the PFF.
- The SAVPFA reviews and signs the PFF and the CSP accountant sends a copy to Facilities and to the Office of Budget and Financial Planning as needed (if funds are being transferred from another capital project, the Office Budget and Financial Planning does not receive a copy of the PFF).
- Upon selection of a vendor, Facilities forwards the completed PCE, contract and other documentation to the Business Contracts Office for execution of the contract.
Facilities identifies construction costs from UTSA-funded projects.
- If the project is performed by
- An external vendor: The vendor submits their invoices to Facilities as construction work is completed and/or in accordance with the terms and conditions of the contract.
NOTE: External vendors are selected and approved in accordance with established bidding guidelines and procedures. See the UTSA Purchasing Department Bid Terms and Conditions for more information.
- Facilities: Facilities creates the invoices and interdepartmental transfers (IDTs).
- An external vendor: The vendor submits their invoices to Facilities as construction work is completed and/or in accordance with the terms and conditions of the contract.
- Facilities forwards the appropriate payment document with supporting documentation to DTS for processing.
- DTS creates and approves the voucher and processes the payment.
- Accounting Services reviews the voucher to
- Verify that the proper Account Code is used,
- Determine whether the project meets applicable capitalization thresholds and
- Process proper correction if needed.
Capital vs non-capital expenditures
Payments for Construction-in-Progress or furniture/equipment with a value of $5,000 or more are coded as capital expenditures.
Payments for furniture/equipment below $5,000 are coded as non-capital expenditures.
4. Project Close out
For projects funded by UTSA departments, Facilities completes the Capital Projects Transaction Request Form when construction is completed and expenses are no longer recorded against the project.
The Capital Projects Transaction Request Form includes the total amount expended for the project, the project budget and any excess funds remaining. Facilities signs and sends the form to the CSP accountant to transfer any remaining funds back to the project funding source. The CSP accountant then initials the form and returns it to Facilities. Facilities sends a copy to the department.
For all capital projects, the CSP accountant prepares a quarterly Capital Project Status Report that includes
- Budget information
- Amount expended
- Amount encumbered
- Available budget balance
The report is sent to Real Estate, Construction and Planning (for major capital projects $10 million and above) or to Facilities (for capital projects below $10 million) to update the estimated date of completion and current status field, and the final report is sent to the SAVPFA for dissemination as appropriate.
|02/16/22||Added gift funds to the preferred expenditure order (section B. 5. Payment Process).|
|08/27/21||Combines and supersedes the “Capital Projects Managed by the UT System Office of Facilities Planning and Construction” and “Institutionally Managed Capital Projects” guidelines. Significant content updates to reflect current practices and organizational structures.|