To: University Business Managers
From: Dennis Press, University Controller
Date: September 22, 2014
The purpose of this memorandum is to provide information concerning the distribution or short term interest income (commonly referred to as Money Market income or MMK income) on institutional trust and special funds in the ConnectCarolina environment. A broad-based working group developed an approach for the distribution of MMK income. The recommended approach was reviewed and approved by Finance Stakeholders. Important changes have been made to the administration of MMK income. These changes include:
- Money market income will be calculated on Average Daily Balance (ADB) of cash in participating funds and will generally be invested automatically. Advantages for automatic investment include the elimination of departmental requests via journal entry for participation in MMK.
- Individual departments will be responsible for cash deficits, and each deficit fund shall be assessed the interest expense. That is, negative investment earnings will be allocated to cash deficits. If an interest expense cannot be assessed to a participating fund, the department shall fund the expense from an appropriate unrestricted source after the distribution.
- Federal funds, other contracts and grants administered through OSR, contract trusts administered through Accounting Services, and residual funds established for unspent contracts and grants will not earn investment income nor incur interest expense except as required to comply with federal or other applicable requirements.
- Self-supporting activities, for purposes of this document are defined to include major auxiliary operations including recharge centers / internal service funds, and other auxiliary operations. Major auxiliary operations, such as Athletics, UNC Faculty Physicians (UNCFP), the Dental Faculty Practice, Student Auxiliaries and Energy Services, shall continue to invest based on their average daily cash balances. Recharge centers / internal service funds shall not earn investment income nor incur interest expense. Other auxiliary operations may be addressed on a case by case basis regarding their participation.
- Facilities and Administration funds (F&A funds), restricted and unrestricted gifts, gifts to support loan funds and expendable plant funds, foundation grants to the university, university endowment principal and income, special funds and agency Funds (i.e. Foundations and other funds for which the University serves as custodian) shall continue their current MMK participation.
To receive MMK income distributions, the participating fund shall have at a minimum an average daily balance of $1,000. If the average daily balance falls below negative $1,000 (i.e. cash deficit is greater than $1,000), then the participating fund will be assessed an interest expense.
The legacy MMK system distributed income quarterly. In ConnectCarolina, monthly distributions are planned, although the initial distribution will be quarterly and occur in December 2014. Legacy reports will be available through Finance Central after Oct. 1, and future quarterly reports will be available through InfoPorte. More information about InfoPorte reporting will be available in future months.
Please address any questions to Chandrika Rao at firstname.lastname@example.org. Thank you.