Excess Borrowings Policy, Use of

Policy Category: 
Financial
Approved By: 
Board of Governors
Effective Date: 
September 29, 2005 [Revised 20 January 2006; 12 November 2009; 4 March 2010]


PURPOSE

The purpose of this policy is to establish the use of excess borrowings resulting from the issue of bonds in Fall 2005.

SCOPE

This policy establishes the use of excess borrowings resulting from the issue of the bonds in Fall 2005. 

POLICY

1.    The excess borrowings shall be used to create an internally restricted "Investment".

2.    The funds shall be invested under the current Statement of Investment Policies and Guidelines for Trust & Endowment Funds.

3.    Each year a minimum of 30% of the rate of return earned shall be added to this endowment fund in order to preserve its capital.

4.    Each year a maximum of 70% of the rate of return earned shall be used by the University in a manner proposed by the Priorities and Planning Group (PPG) and approved by the Board of Governors.

5.    In the year of a negative return, the endowment fund will be credited with the amount of the negative return.

6.    Spending from the endowment must be approved by the Board of Governors. 

7.    The debt being retired from the issue of these debentures in October 2005 represents debt acquired to fund the Hangar, various Residences, Energy Conservation Projects and ATAC.  These project loans, all but ATAC, shall continue to be amortized over their initial terms; an internal sinking fund shall be established with the objective of repaying the principal and interest to the end of the debenture.  For ATAC, the difference between the initial amortization costs and the principal and interest payments on the debenture shall be used annually  for deferred maintenance with respect to the ATAC building and upgrading of equipment in that building.