*Non-substantive Amendments

Policy

Contractors doing major work on the College’s facilities, and users of the College’s facilities are required to place sums of money into either deposit accounts or have payment withheld as retainage to compensate for any damages incurred by them during the usage periods, or failure to complete the job correctly. Specific amounts for each will be set by administrative requirements.

These funds are held and accounted for separately in the college’s financial records.

Reason for Policy

Sets forth policy and procedure related to deposits and retainage accounts.

To Whom Does the Policy Apply

Contractors on the College’s facilities and users of the College’s facilities

Supplemental Resources

• Facilities Rental Contracts
• Application & Certificate For Payment

Contacts

Office of the Controller
(201) 684-7117

*Nonsubstantive amendments to policy

Policy

The authorization to enter into a contract on behalf of Ramapo College is designated by the Board of Trustees. The College President, Provost, Vice President for Fiscal Health, Vice President for Operational and Administrative Integration, Controller, or the Director of Procurement may enter into contracts whose value is below $100,000. Any binding contract regardless of value must be approved by the Vice President for Fiscal Health. A contract in excess of $100,000 requires the signature of the Vice President for Fiscal Health or the Vice President for Operational and Administrative Integration, and the College President.

Reason for Policy

This policy strengthens financial practices of the College in accordance with internal control standards and State College Contracts Law.

To Whom Does the Policy Apply

All employees of the College

Related Resources

Approval Authority Levels (Intranet)

Green Purchasing Guidelines (Intranet)

Contacts

Director of Purchasing
purchase@ramapo.edu

Non-substantive Amendments*

Policy

The College will write off delinquent student account balances deemed uncollectible according to established thresholds.

Reason for Policy

To provide guidelines and parameters necessary for authorized write offs of delinquent student accounts receivable balances.

To Whom Does the Policy Apply

Business Services and Office of Student Accounts

Supplemental Resources

• None

Contacts

Office of the Controller
(201) 684 – 7117

*Nonsubstantive amendments to policy

Policy

The following individuals are certified by the Board of Trustees as authorized signatories for College banking transactions:

• President
• Vice President for Fiscal Health
• Vice President for Operational and Administrative Integration
• Controller

The Recording Secretary of the Board of Trustees is authorized to execute and seal documents required by the financial institutions as certification of this approval.

Reason for Policy

The College needs to have a reasonable number of employees designated to transact banking business in the event that manual signatures are required.

To Whom Does the Policy Apply

Designated signatories for College bank accounts.

Related Documents

Contacts

Office of the President

Policy Statement

This policy governs the incentive budgeting strategy in which divisions of the College are permitted to carry forward from one fiscal year to the next a portion of the remaining balances in the non-salary accounts of the units within their division. The sharing of the unexpended balances in the non-salary accounts between the Divisions and the College will be 25% to the Divisions and 75% reverting to Ramapo’s unallocated unrestricted net assets.

Reason for Policy

This policy provides guidance and parameters to help reduce or eliminate unnecessary year-end spending which in turn may increase the College’s unrestricted net asset balance; increase accountability for spending decisions at the unit level; and enable Divisions to develop reserves to meet contingencies, purchase equipment that would be too costly to acquire within a single years’ budget allocation, or provide funds for strategic initiatives.

To Whom Does the Policy Apply

President, and Division Heads, Budget Managers

Related Documents

Procedure 480: Budget Savings Incentive

Contacts

Budget Office 
(201) 684-7266

I. Timeline
The current incentive reserve addition is calculated a month after the final accounts payable check run of the fiscal year based on the unexpended non-salary account balances within each unit.

II. Availability
The incentive reserve addition is calculated on a unit level and set up as a reserve of net assets.

Each Division Head can view their portion of the reserve balance by unit via the College’s web-based budgeting and planning tool. The Incentive Reserve addition funds are allocated by Division, not by unit. It is the Division Head’s prerogative on
how to use and distribute the funds available and to provide approval of any intradivisional transfer of these funds.

The reserve is available to the Division in the current or future years. Any unit requesting additional funds during the fiscal year must make the request through their respective Division Head. The Division Head or designee makes the decision on the validity of the request and notifies the Budget Office of the amount and of the requesting unit if funds are to be distributed.

III. Uses and Limitations
Reserves set aside for this program are for use in periods of financial stability and should only be used as a last resort when other funding is not available from current sources. In addition, at the discretion of the College President and the Vice President for Administration and Finance, these funds may be expended to meet a College emergency but would be restored in full within the earliest reasonable timeframe. The Vice President for Administration and Finance is responsible for approving transfers of reserve funds in a manner that does not negatively impact the minimum reserve level required to be maintained by the College.

Accumulated reserves do not have a timeframe limitation but are limited to not exceed 10% of a unit’s non-salary budget in a single year and to not exceed 50% of a single years’ non-salary budget over the term of the reserve. Any increases to unit budgets approved during the year to address deficits caused by inadequate budget controls are deducted from the available reserve balances prior to the calculation.

Policy Statement

The Vice President for Administration & Finance is authorized, with the prior written approval of the President and the Finance Committee Chair of the Board of Trustees, to borrow sums as set out in the Short-term Borrowing Procedures, when such borrowing is necessary to meet College financial obligations.

Reason for Policy

To set out process and procedures for short-term borrowing to meet financial obligations of the College.

To Whom Does the Policy Apply

College officers and Controller

Related Documents

Procedure

Contacts

Vice President for Administration & Finance / Controller
(201) 684-7621
(201) 684-7494

When it is necessary to meet College financial obligations, the Vice President for Administration and Finance is authorized, with the prior written approval of the President and the Finance Committee Chair of the Board of Trustees, to borrow sums not to exceed $4,000,000 for periods not to exceed 120 days.

The Controller is authorized to arrange for an appropriate line of credit to be available to the College for such purposes. The terms and conditions of that banking arrange­ment will be reported to the Finance Committee of the Board and to the Board of Trustees at the next regularly scheduled meeting(s).

*Non-substantive amendments

Policy Statement

The establishment of a doubtful accounts allowance ensures that the receivables are not overstated for financial reporting purposes.

Reason for Policy

To provide guidelines and parameters necessary to establish an allowance for doubtful accounts to reflect the amount of student accounts receivables that is estimated will be uncollectible.

To Whom Does the Policy Apply

Business Services and the Office of Student Accounts

Related Documents

None

Contacts

Office of the Controller
(201) 684-7117

Policy

The President is authorized to enter into formal agreements and contracts necessary to form such joint ventures with schools, communities, colleges and universities, corporations, and other entities after first consulting with appropriate experts, constituents, and State authorities.

Reason for Policy

To set forth a policy to increase the educational opportunities available to faculty, staff and students

To Whom Does The Policy Apply

Faculty, staff and students

Related Documents

None

Contacts

Office of the President
201-684-7610

Policy

This policy governs the use of debt to finance capital projects. The College will use debt prudently to help achieve its strategic objectives while maintaining a credit rating that appropriately balances financial flexibility with cost of capital. It is the objective of the College to maintain no less than a single “A” category underlying rating for all debt at the time of issue. The College may use debt management strategies to structure its overall debt portfolio with the approval of the Board of Trustees.

Reason for Policy

• Prudent utilization of debt to provide a low cost source of capital to fund long-term capital investments in order to achieve the College’s mission and strategic objectives and to address priority items in the Capital Plan.
• Manage the College’s overall debt level in order to provide appropriate access to capital and to maintain a credit rating deemed acceptable by the Board. The minimum target underlying rating for a College issue is the single “A” category by the major rating agencies.
• Limit risk within the College debt portfolio by balancing the goal of attaining the lowest cost of capital with the goal of managing interest rate risk.
• Manage outstanding debt over time to achieve a low cost of capital and to take advantage of interest rate cycles and refunding opportunities.
• Assure projects financed have a feasible plan of prepayment and that pledges are utilized prudently.
• Issue debt through the New Jersey Educational Facilities Authority (NJEFA) or other independent financing organization and continue to comply with all debt agreements between the College and financing organization.

To Whom Does The Policy Apply

• Board of Trustees
• President and Senior Officers
• Associate Vice President for Administration and Finance
• Executive Director of the Budget
• Controller/Treasurer

Related Documents

• Debt Management Procedures
• Borrowing Policy
• Reserves Policy

Contacts

Vice President for Administration and Finance
201-684-7621

Debt Capacity

It is the objective of the College to maintain no less than a single “A” category underlying rating for all debt at the time of issue. Core financial ratios that are strongly correlated with single “A” rated higher education peers will be monitored to ensure central oversight of College-wide leverage levels. The following ratios will be reported annually to the Board at the meeting following the approval of the audited financials: Expendable Resources to Debt, Expendable Resources to Operations, Debt Service to Operations, and operating margins. These core ratios will be monitored against the goals listed below from Moody’s “A2” Medians for Public Universities.

1. Expendable Resources to Debt of at least .30
   This is a measure of the College’s leverage on its assets. Expendable Resources is defined as unrestricted net assets plus restricted expendable net assets plus foundation unrestricted and temporarily restricted net assets less foundation net investment in plant. Expendable Resources is divided by outstanding debt. As of June 30, 2006, the College’s ratio of unrestricted resources to debt was approximately .10.
2. Expendable Resources to Operations of at least .37
   While this measure of liquidity is less directly affected by the issuance of new debt, it provides a useful indication of the institution’s financial cushion relative to operations and its ability to service debt. This ratio is expendable resources divided by operating expenses. As of June 30, 2006, the College’s ratio of expendable resources to operations was approximately .28
3. Debt Service to Operations not to exceed 4.3%.
   Debt Service to Operations is the typical measure used to evaluate an institution’s use of borrowed funds. The use of debt with bullet or balloon structures that defer principal payments until far in the future makes the calculation of debt service more difficult, therefore the College will include not only required annual principal and interest payments in its definition of debt service, but also an annual equivalent for sinking funds. Ratio is calculated by peak annual debt service divided by total operating expenses. As of June 30, 2006, the College’s debt service to operations was approximately 13.4%.
4. Operating Margin will remain positive
   Operating margin indicates the excess margin (or deficit) by which annual revenues cover operating expenses. It is calculated by adjusted total restricted revenues (adjustments include limiting investment income to 5% of average of previous three year’s cash and investments and subtracting net assets released for construction and acquisition of fixed assets), less total unrestricted operating expenses, divided by adjusted total unrestricted revenues.As of June 30, 2006, the College’s operating margin was -2.20.If the College is unable to maintain a rating in the single “A” category, the Board will develop a long range plan to address those factors that resulted in a downgrade. The plan will be reviewed on an ongoing basis.

Debt Compliance and Reporting

1. Continuing Disclosure Compliance
   The College will meet the ongoing disclosure requirements in accordance with SEC Rule 15c2-12. The College will submit all reporting required with respect to outstanding bonds or certificates of participation to which such Rule is applicable.
2. Post Issuance Compliance Requirements
   The College will develop and implement procedures to comply with any post issuance compliance requirements, including but not limited to, maintaining items found on the Tax-Exempt Bond Financing Compliance Check Questionnaire.

Debt Management Strategies

1. Mix of Fixed and Variable Rate Debt, Derivatives and Other Hedging Products
   The College may structure its overall debt portfolio, using a combination of fixed and variable rate debt, to provide an appropriate and prudent balance between interest rate risk and the cost of capital as well as to integrate asset-liability management.Variable rate debt can be a valuable tool for the College to use in the management of its assets and liabilities. Variable rate debt allows the College greater diversification in its debt portfolio as well as reduces its overall interest costs. However, the use of variable rate debt increases interest rate risk that the College must consider as the interest rate is subject to market fluctuations and tax risk.In considering the use of variable rate debt, the College shall assess the amount of short-term investments and cash reserves since the earnings from these funds can serve as a natural hedge offsetting the impact of higher variable rate debt costs. In addition, the College should also consider other strategies to allow assets and liabilities to move in tandem, such as entering into interest rate swaps under appropriate circumstances, and in accordance with these guidelines.In general, and as guidance to the appropriate level of variable rate interest rate exposure as specified within these guidelines, the College should maintain its flexibility and continuously review new products and opportunities to allow it to take advantage of changing interest rate environments and new products or approaches as they become available.In addition to considering asset/liability mix, variable rate debt can be used to manage the overall cost of capital. For example, in low interest rate environments, the College should consider ways to lock in low fixed rates, through conversions, fixed rate debt issuance, and either traditional or synthetic refundings. In high interest rate environments, the College should consider ways to increase variable rate debt exposure and evaluate other alternatives that will allow the College to reduce its overall cost of capital.The College should consider maintaining a portion of its portfolio in variable rate debt. In doing so, the College shall attempt to increase and manage its variable rate exposure in a manner that takes into consideration its investment portfolio and stays within a range of 20% to 30% variable rate debt as it relates to all of the College’s outstanding indebtedness. Any synthetic fixed rate debt, achieved through a swap transaction whereby the College swaps underlying variable rate for fixed rate should not be counted toward this variable rate ceiling.
2. Purchase of Insurance or Credit Enhancement
   The College will evaluate insurance and credit enhancement opportunities and utilize them if they are deemed cost effective.
3. Refunding Targets
   The College will monitor its debt portfolio for refunding and/or restructuring opportunities. Advance refunding transactions must weigh the current opportunity against possible future refunding opportunities. Since there are limitations on the number of allowable re-financings, it is important to use refinancing opportunities wisely. In evaluating refunding opportunities, the College will consider the value of the call option to be exercised, including the amount of time to the call date and the amount of time from the call date to maturity.In general, the College will consider refinancing when a current or advanced refunding of debt provides a net present value savings of at least three percent. Refinancing or restructuring opportunities that provide savings of less than three percent, or with negative savings, may be considered if there is a compelling objective such as: a.) realizing lower savings is appropriate given the results of call option analysis on a maturity-by-maturity basis, or analysis of current vs. historic interest rate levels, or b.) to restructure financial or legal covenants that prove disadvantageous to the College.Where analyzing or pursuing the implementation of refinancing transactions using fixed rate swaps or other derivative products, the College should generate a greater projected savings than the savings guidelines the College would consider for traditional bonds. The higher savings target reflects the greater complexity and higher risk of derivative financial instruments. Such comparative savings analyses shall include the consideration of the probability (based on historical interest rate indices, where applicable, or other accepted analytic techniques) of the realization of savings for both the derivative and traditional structures, where applicable. Such analyses should also consider structural differences in comparing traditional vs. derivative alternatives, e.g., the noncallable nature of derivative transactions.
4. Hedging Instruments
   The College will consider the use of interest rate swaps and other interest rate risk management tools after carefully evaluating the risks and benefits of any proposed transaction. Such agreements or contracts include without limitation, interest rate swap agreements, forward payment conversion agreements, or contracts providing for payments based on levels of or changes in interest rates, to exchange cash flows or a series of payment, or to hedge payment, rate spread or similar exposure.In general, interest rate swaps are utilized to reduce the cost and/or risk of existing or planned College debt. By using swaps in a prudent manner, the College can take advantage of market opportunities to reduce debt service cost and/or interest rate risk. The use of swaps must be tied directly to College debt instruments. Swaps may not be utilized for speculative purposes. Master swap agreements entered into by the College shall contain terms and conditions as set forth in the International Swaps and Derivatives Association, Inc. (ISDA) Master Agreement, as amended.
5. Fixed Rate Debt
   When issuing fixed rate bonds the existing yield curve will be considered. Optional call dates may be negotiated to less than the traditional 10-year period after analyzing the cost to the College. Bonds without optional call dates should be limited in the institution’s debt portfolio, and should be issued only if investors are willing to pay a substantial premium. Discount and premium coupons issued for callable bonds are expected to be in the range of 96% to 104% of par value but may vary outside that range under exceptional circumstances.
6. Term of Debt
   The College will determine the appropriate duration and the specific amortization schedule of par value but may vary outside that range under exceptional circumstances. each bond issue by evaluating itsoverall debt portfolio. Considerations will include the life of the assets being financed, interest rate costs, risk assessment, general market conditions, and the College’s future financial plans. If and when bullet or balloon payments are used, the College will budget appropriately over the life of the bond issue such that the bullet or balloon maturity payments do not unduly impact any one fiscal year.
7. Use of Tax-Exempt versus Taxable Debt
   In general, the College will look to avoid the use of taxable debt where other alternatives are available, including equity financing. However, the College may have to utilize taxable debt in certain situations where Federal tax law limits the use of tax-exempt debt for particular projects, especially those where use of the project includes both private and non-profit purposes. The College may also consider taxable debt under other circumstances where market conditions and debt flexibility make it an appropriate alternative. When utilized, the College will consider structuring taxable debt to shorten its term and allow it to be redeemed at the earliest possible date.