Standards for the Expenditure of Trust Funds

Definition

The term "trust funds" as used in public higher education refers to non-appropriated funds held by the College.

Bridgewater State College Revenue Sources

Bridgewater State College has two primary sources of income: state appropriations and funds held in trust, which are generated from fees.

  • The expenditure of state appropriated funds is governed by detailed state regulations which control expenditures for the College. Statutory authority for enforcing state regulations rests with several entities including the State Auditor, the State Comptroller and the Board of Higher Education.
  • Although technically "public" funds, trust funds are not "appropriated" funds, and therefore, are not subject to the same spending rules and regulations as appropriated funds. In many cases, other external regulations govern expenditures of  trust funds. For example, the Massachusetts State College Building Authority governs the dormitory trust fund. Where third-party regulations do not exist, responsibility for regulating and controlling the expenditure of  trust funds rests with the Board of Trustees. The Board of Higher Education does not have statutory authority for trust funds.

Role of Trust Funds

For Bridgewater State College, trust funds play an important role in financing the education of our students. The statutory authority for trust funds in the Commonwealth is Massachusetts General Laws Chapter 15A, Section 22, and various other statutes for public institutions of higher education. These statutes allow the Board of Higher Education and Boards of Trustees to create financial accounts to fund and account for certain campus projects, programs and activities. These statutes stipulate that all income received be held in trust and be expended for the purposes for which the trust funds were established. Without trust funds, the Commonwealth’s appropriation would have to be increased or many services and activities currently provided by the college could not be undertaken. Trust funds can also provide a vehicle to manage supplemental programs such as student activities to better meet the needs of the Bridgewater State College community.

Trust funds are used in connection with a variety of campus activities such as auxiliary enterprises (e.g., student housing, bookstores, and food service), student activities and public services. Revenues generated through each activity are used to fund the costs of the associated program or activity. The expectation is that over time each trust fund should become self-supporting.

Purpose of the Standards

It is important that the development, utilization and management of trust funds be conducted in a manner that complies with applicable laws and statutes and meets with the approval of the Bridgewater State College Board of Trustees. Expenditures from trust funds should be consistent with this overall, long-range goal.

The standards for the expenditure of trust funds are intended:

  1. To provide some guidance and suggestions on selected expenditures made in the interest of promoting the mission of the College.

To outline recommended standards for the various types of expenditures that might be made from these funds.  The intent of these standards is to provide greater clarity and more uniformity in the determination of appropriate and inappropriate expenditures of these funds.

Underlying Principles

A number of important principles underlie these standards:

  1. These standards should not be construed as an attempt to usurp departmental authority or to centralize decision-making. Bridgewater State College must have the flexibility to fulfill its distinctive mission within the public higher education system.

  2. Expenditures of trust funds should be made with the assumption that those decisions and choices will become public knowledge.

  3. Accountability is a critical component of our local autonomy. The College will be held accountable for choices and decisions, including the expenditure of trust funds.

  4. Bridgewater State College is a member of and a participant in the larger community we serve. As such, we must interact with community groups and civic associations and it is appropriate for the College to make modest and limited expenditures in support of these entities.

  5. State colleges, like private colleges, must engage in activities that promote employee morale, generate philanthropic support and enhance the well being of the College. Accordingly, reasonable and appropriate expenditures to support such activities can and should be made.

  6. Trust funds should not be spent in a manner, which gives the impression of lavishness or extravagance. Travel, entertainment and other expenditures should be made in moderation and good taste.

Responsibility and Reporting

  1. Responsibility for these specific trust fund guidelines and regulations rests with the Bridgewater State College Board of Trustees. The Bridgewater State College detailed expense policies provide the specific expenditure criteria with which the institution must comply.   

  1. Responsibility for trust fund administration rests with the President and the Vice President for Administration and Finance. Records should be maintained in accordance with proper accounting procedures including documentation of receipts, disbursements and bank accounts.

  1. All trust fund activities are subject to regular audit inspection by the State Auditor’s Office.

  1. Clear goals and objectives shall be established for each trust fund. An annual budget will be developed, reviewed by the President and submitted to the Board of Trustees for approval. Such budgets should include sufficient detail to permit the identification of major expenditures.

  1. The President shall provide a detailed accounting of trust fund expenditures to the Board of Trustees on a quarterly basis. Audited financial statements shall be submitted to the Board of Higher Education on an annual basis. Additional reports may be requested at the discretion of either board.

  1. The level of detail in the quarterly reports must be sufficient to satisfy Board member inquires and audit requirements and should also include:

  • Certification by the President that all records were maintained in accordance with proper procedures, including documentation of receipts, disbursements and bank account, and

  • The relationship of the expenditure to Bridgewater State College's mission should be clearly stated or evident.

The Budget, Finance and Facilities subcommittee of the Board shall review the report. It shall then be approved by the full Board of Trustees. The Board of Trustees is responsible for reporting any violations of trust fund expenditure standards to the Board of Higher Education as well as follow-up action taken to address each violation.

    1. Wherever specific expenditures require Board of Trustees approval, any one of the following may give approval: the full Board, the Budget, Finance and Facilities subcommittee of the Board or a designated Trustee(s). If approval is granted by the Budget, Finance and Facilities subcommittee or a designated Trustee(s), the action must be contained in the next quarterly trust fund report submitted to the Board for approval.

    2. Wherever specific expenditures require prior approval, the approval of the annual budget by the Board of Trustees satisfies prior approval requirements for any expenditure noted in these standards if that annual budget includes sufficient detail to permit the identification of said expenditure.

    3. The President or his/her designee has discretion over individual contracts where trust funds are used up to $250,000 except in the following seven circumstances which require prior approval regardless of the amount of the expenditures:

      • expenditures which personally benefit the President

      • expenditures for furnishings or decoration of the President’s office or home

      • expenditures for individual membership dues over $500

      • expenditures for attendance at charitable dinners or events

      • expenditures for trustee travel

      • expenditures for entertainment of guests in the President’s home

  • expenditures for purchase or lease of motor vehicles used by the President.

    1. Individual expenditures for contracts over $250,000 require the prior approval of the Board of Trustees.

 Categories of Expenditure

  1. Expenditures of a Personal Nature

  1. Whenever an expenditure would personally benefit or might be seen to personally benefit an individual, that person is prohibited from approving such an expenditure, regardless of the dollar amount. In all such circumstances, the President and/or his/her designee must approve the expenditure in advance.

  1. In the case of the President, the Board of Trustees must provide prior approval of such expenditures. This may be accomplished through approval of the annual budget for such expenditures.

  1. General Campus Projects

  1. When furnishings or decorations are for the President’s home or office and are to be funded from trust funds, they must have the prior approval of the Board of Trustees. All such expenditures shall conform to college and state policies and procurement regulations and guidelines.

  2. Contractor and consultant fees paid from trust funds shall conform to state law pertaining to such activities.

  3. Publications, including Presidential reports, newsletters, advertisements, magazines, invitations and others should avoid the appearance of extravagance.

  4. Individual’s membership fees for civic, academic and/or professional organizations must have prior approval of the President or his/her designee. In the case of the President, the Board of Trustees must give prior approval.

  5. Outright contributions to charitable organizations are prohibited. However, where attendance at a charitable dinner or event will further the public purpose of the College, expenditures up to $1,000 may be permitted subject to the approval of the President. Expenditures in excess of $1,000 must have prior Board approval.

  6. Contributions from trust funds to individuals (or their associated committees) seeking elected public office are strictly prohibited.

  7. Contributions from trust funds to political action committees (PACs) or equivalent organizations are prohibited.

  1. Travel and Subsistence Costs

  1. Employee Travel: When traveling to and from College business activities, actual expenditures for transportation, including bus, railroad, airline, subway, taxi and personal auto should be reimbursed to the extent that these expenditures exceed the normal daily cost of commuting to and from the College. Where practical, the least expensive mode of transportation should be selected.

A comprehensive travel expense voucher must be filed for each trip.  The voucher should reflect the cost of registration for a convention or meeting; transportation including local transportation, lodging, meals and miscellaneous costs. Invoices in support of each item of cost shall be attached to the voucher. If one or more cost items should be reported on the voucher, noted as paid and an original receipt of the airfare ticket or other invoice attached to the voucher.

In particular, all individuals should fly coach class or as discount fares where available.

Reimbursement for personal automobile mileage shall be at the established college rate, plus documented parking and tolls.

The use of rental cars may be appropriate under certain circumstances. Prior written approval by the area Vice President, the President and/or her/his designee is necessary.

When traveling on College business staff members should live and conduct business in a cost efficient manner that is both comfortable and safe. Where appropriate and available, travelers should take advantage of discount rates on hotel stays. All charges other than basic room charges and tax, such as room service or telephone calls must be separately identified on the expense report and paid by the traveler if the expense is not allowable according to the Bridgewater State College Business Expense Policy..

 Business meals including food and beverages must be reasonable and appropriate under the circumstances.

Examples of reasonable expenses:

  • Meal expenditures which have a clear business purpose

  • Meals while traveling out-of-town on College business

  • Expenditures for the purpose of recruiting potential employees

  • Meals incurred as part of attendance at conferences or meeting of professional organizations

      Expense documentation should include:

      • Date, city, restaurant and description of meal (lunch, dinner, etc.)

      • Name(s), company, affiliation(s) and business relationship(s) of person(s) in attendance

      • Business purpose for incurring the expenses

      • Amount spent

      In addition, an original  receipt must document business meal expenses. Any meal not accompanied by an original receipt will be reimbursed at the appropriate per diem rate for meals.

      Expenditures of a personal nature, unreasonable or excessive expenses, and those not specifically related to the conduct of College business are not reimbursable. The following are indicative of the type of expenditures that should not be reimbursed:

      • Excessive or extravagant costs (e.g., exclusive/expensive restaurants and/or hotels)

      • Personal entertainment (e.g. optional tours)

      • Fines for traffic or parking violations

      • Insurance for a personally owned car

      • Personal articles lost or stolen

      • Expenses incurred in connection with personal business

      • Political club memberships

      • Briefcases and luggage

      • Any unexplained or undocumented expenditures

  1. Non-employee Travel: Trust fund expenditures to pay for spouse or personal guest travel are not permitted. If the spouse or guest is a participant on a conference panel or program, expense reimbursement should be sought from the sponsoring organization or personal funds must be used.

    Students may be allowed to incur college related travel expenses charged to trust funds with approval from appropriate college officials. The Chairman of the Board of Trustees must approve all trustee travel. In all cases, the activities and expenses must be clearly related to the mission of the College.

    For such individuals, expense documentation should conform to the documentation required for employee expenses. In addition, the listing of unallowable expenses noted for employees also applies to the aforementioned individuals.

  1. Personal and Student Loans

  1. Personal loans shall not be granted to College staff or Board members.

  2. In certain rare circumstances, it may be permissible to provide salary advances to employees if the College cannot meet payroll due to technical difficulties. (E.g. computer failure, etc.) Such advances should be repaid promptly to the trust fund.

  3. In the case of students, loans from trust funds can only be made by the President or her/his designee and should be made only in exceptional circumstances.

  1. Employee and Student Recognition Activities

  1. Certain expenditures of trust funds to enhance employee and student morale or to recognize achievement, longevity, performance or retirement can be made within moderate limits. These circumstances include but are not limited to:

  • College social functions, and

  • Employee and student recognition awards/dinners

  1. Entertainment of College Donors, Alumni, Friends, Guests and Visitors

  1. Such entertainment should be in moderation and good taste.

  2. It is appropriate for the College President to entertain guests in his/her home as part of official duties. An annual budget for such purposes must be approved by the Board of Trustees.

  3. Areas of expenditure for entertainment can include:

  • Equipment and furniture rentals

  • Materials and supplies

  • Food and beverages

  • Entertainment

  • Travel and related expenses (in conformity with the travel guidelines noted above)

  1. Sports, theater and other entertainment tickets cannot be purchased with trust funds unless the event is being held on campus or the expenditure benefits the mission of the College or directly supports its instructional programs.

  1. Miscellaneous

  1. Moving expenses are appropriate for the President and selected officers of the College. Attracting individuals of high quality can require moving them from other parts of the state or country. Moving expenses should not exceed the regional, average cost of moving between two points. A minimum of three competitive bids for moving costs must be sought in all cases. These expenditures must not include storage fees while an employee waits to sell or purchase a home. Approval for moving expenses may be granted by the President for positions at the cabinet and dean level. The President shall report the position title and costs related to moving expenses at the next meeting of the Board.

  2. Purchase, lease or reimbursement of any motor vehicle for the exclusive use of the President must have prior approval from the Board of Trustees. The lease or purchase of a moderately priced, full-sized vehicle is appropriate. If the President desires a more expensive vehicle, the difference between the stated limits and the actual cost of the vehicle must be paid with personal funds. If the President desires reimbursement in lieu of a college purchase or lease, the reimbursement shall not exceed the cost for a moderately priced full-sized vehicle.

  3. Purchase of flowers, gifts and cards in moderation from trust funds may be appropriate. Appropriate occasions include but are not limited to:

  • Death or illness of an employee, student, trustee or person of special importance to the College, or immediate family of said persons.

  • Flowers or gifts may be purchased as a token of appreciation for contributions that enhance the mission of the College.

    1. Private clubs initiation fees and membership dues are not an allowable expense.

III. Closing Comments

As noted previously, these standards for the expenditure of trust funds are not all-inclusive. It would be impossible to outline every possible type of expenditure, which might be made from these funds. However, when a trust fund expenditure decision must be made, it should be made in recognition of the public nature of these funds and in moderation and good taste.

Last Modified: March 26, 2004