2134  SYSTEMWIDE RESERVE LOANS

Projects that cannot be funded through annual Maintenance and Repair 
allocations due to excessive cost or emergency need may be funded through 
loans from the major repair and replacement reserve fund.

If a loan is required, the campus should forward a project description and a 
five year financial plan to the office of Auxiliary and Business Services for 
review and approval.  The project description should include a brief 
statement of the work to be performed, a preliminary cost estimate, reasons 
why the work is required, and the impact of not funding the project.  The 
financial plan should demonstrate the ability of the campus to repay the loan 
with operational surpluses by comparing projected revenues and expenses 
including the estimated project payments.  The format and instructions for 
the five year financial plan are contained in Appendix BA 2910.10.  Auxiliary 
and Business Services will notify the campus within two weeks of receiving 
the above materials whether the loan is approved.

Loan payments will be scheduled over a period of five years and will accrue 
interest at a rate, adjusted annually, equal to the prior year average annual 
earned interest rate for the State Surplus Money Investment Fund.  In 
addition, 25% of the annual payment will be assessed to the campus as an 
income test.  The annual payment and income test will be included in the 
campus debt service assessment in the fiscal year following the initial 
allocation of funds.

When the final project cost is determined, the campus will notify Auxiliary 
and Business Services of the actual loan amount required.  Auxiliary and 
Business Services will request the office of Budget Planning and 
Administration to issue an allocation order to the campus Dormitory 
Building Maintenance and Equipment Reserve Fund - Housing for the 
amount of the loan.  Funds will be available for encumbrance until the 
project has been completed and the campus has notified Auxiliary and 
Business Services that the project should be closed.  At the end of the five 
year period when the loan is paid off, Auxiliary Business Services will notify 
the campus and reduce the annual debt service accordingly.