What is Treasury Operations?

Treasury Operations has four areas of focus:

• Short-term cash management - This includes UO's checking account, making sure there's enough cash in our accounts to pay bills while also investing in very low-risk investments.
• Longer-term investments - Cash that's not needed for immediate expenses is invested into longer duration assets including fixed income securities and a quasi-endowment at the UO Foundation.
• Debt issuance & compliance - The university has debt from both UO-issued and state-issued bonds, which require regular monitoring for compliance with state and federal regulations.
• Internal Bank - The bank serves several purposes, including: internal loans, interest distributions, and other strategic projects and processes. 

How are UO's funds invested?

University funds are invested according to guidelines in the treasury management procedures. The investments are divided into three tiers:

• Tier 1 - The safest level of investment, which holds cash that can be accessed immediately. Generally these funds are bank deposits, but can also include U.S. Treasury Obligations and money market funds.
• Tier 2 - These funds are not needed on a daily basis, but should be easily accessed within days. Investments can include the Oregon State Treasurer's Short Term Fund (OSTF) and fixed income securities.
• Tier 3 - Funds in tier 3 are not expected to be needed in the foreseeable future. These investments can be long term in nature, with yields commensurate with additional risk.

What are Internal Bank Loans?

Treasury Operations manages the Internal Bank, which is responsible for lending and collecting internal loans to various departments within the UO. Loans can be made for capital projects, but there are no loans made to fund operating expenses. The loan approval process varies depending on the project, but ultimately must be approved by the Senior Vice President of Finance and Administration (SVPFA). It is important that repayment sources are carefully analyzed to ensure adequate cashflow in future years.

What are the terms for Internal Bank Loans?

Normally the repayment period will match the life of the underlying asset, which is generally defined as:

• 3-10 years for equipment & vehicles
• 20 years for building renovations
• 30 years for new building construction

The loan rate is fixed for the life of the loan at origination and is currently 5.25%, the rate can be changed by the SVPFA. There are no origination or modification fees, and generally pre-payments can be accommodated. Payments are normally made twice per year, with 60% of the total annual payment due in June and 40% in December.

What are these interest charges/earnings that are posted to my fund?

Although cash and investments are commingled at the overall university level, Banner tracks cash balances for each unit/department within UO (by fund code). This cash balance is reflected in GL account code A0901 and is similar to a checking account, if it has a negative balance its overdrawn, if it is positive there’s cash available to spend. It's important to note that cash balances are distinct from fund balance - only account code A0901 is used for interest calculations - any other account codes & fund balances are excluded.

Every month Treasury Operations runs a report that calculates each fund’s average daily cash balance for the previous month. Average daily cash balance is defined as the sum of each day’s ending cash balance in the month, divided by the number of days in the month (equal to the average of each day’s ending balance). Using the average cash balance for each fund in the university for the month, interest earnings or charges are calculated. The current annual interest rate is 1.75%, or approximately 0.0047945205% per day.

Interest earnings are posted to Banner account code 05141 and charges to 28817, and can be posted to any FOAPAL/Index under a unit’s control. Various rules govern the overall methodology, since FY18:

• Generally, funds with negative cash balances are charged interest and positive balances are not paid interest.
• Grant funds and research subject accounts are not charged interest.
• Some funds are not charged the fixed rate due to legal restrictions, existing agreements, or IRS rules.

To change posting instructions, please contact us.

What is private business use and why should I care?

Private business use (PBU) means use of university facilities financed by tax-exempt bonds by a nonqualified user (All nongovernmental entities, including charities and other non-profit entities) in a trade or business.  Usage of facilities for UO generally means leases and facilities use agreements, but can also include management/service contracts and research agreements. 

Treasury Operations is responsible for tracking and reporting on PBU that happens across campus, to both the IRS as well as state authorities. Therefore, it is important that all agreements that give rise to PBU are reviewed and documented by Treasury Operations. Generally speaking, if an agreement goes through Purchasing and Contracting Services, General Counsel, or Innovation Partnership Services, then it will be routed through Treasury Operations. 

There are several exceptions to the creation of PBU and the vast majority of agreements at UO fall into one of the exception categories. We recommend contacting us to discuss any agreement that you might have questions about or if you're new to PBU. Our goal is to turn agreements around as quickly as possible, so we're happy to have a call with you most anytime.

My question wasn't answered above, what do I do now?

We'd love to talk it over with you, contact us!