Self-Supporting Funds FAQ
Q. What are self-supporting funds?
A. Self-supporting funds are used to record revenue and expenses generated from the sale
of products or services to University departments, students/faculty/staff, or the general
public.
Four fund types distinguish the types of self-supporting activities:
3E – Storerooms and Services – Products or services provided primarily to University
departments.
3J – Auxiliary Enterprises not under Indenture – Products or services provided primarily to
students, faculty and staff.
3M – Auxiliary Enterprises under Indenture – Products or services provided primarily to
students, faculty and staff; however, bond financing is involved in providing facilities for
these activities.
3Q – Departmental Activities – Products or services provided primarily to the general public.
The State Legislative Audit Commission University Guidelines require the establishment of
accounting entities which classify all self-supporting funds into similar and related groups.
These groups of funds with similar activities are known as “Entities.” The Banner level 3
fund code is used to identify the entity of a self-supporting fund. A listing of entities is
located in the Introduction to Self-Supporting Funds (GL 105) Participant Guide
in Topic
1.4: Accounting Entities for Self-Supporting Fund-Defined by Banner Fund Code Hierarchy.
Q. How are self-supporting funds identified in Banner?
A. The fund codes for self-supporting funds fall into the numeric range of 300000 - 399999.
Q. What types of transactions are allowed on self-supporting funds? Are there any
restrictions on self-supporting funds?
A. The State Finance Act restricts the use of these funds to the support, maintenance, and
development of the self-supporting activity generating the revenue in the fund. In other
words, expenditures are restricted to those necessary to fund the activities that generate
the revenue. Self-supporting funds cannot be created to receive revenue that has its
offsetting expenditures paid from appropriated or other University funds. Also, selfsupporting funds cannot be generated or used by units for discretionary purposes.
Q. Our office will be involved in an activity that could be classified as a selfsupporting activity (e.g., selling tickets to a luncheon for students and their
parents), but the dollar level will be fairly immaterial. Is there a
dollar/materiality level that we should consider prior to establishing a selfsupporting fund? If the activity is not material enough to warrant establishing a
new self-supporting fund, how should we record this activity?
A. Generally, a self-supporting fund will not be established unless at least $3,000 of
revenue or expenses is generated each year. If an individual activity will not generate that
amount, a number of smaller activities that are similar in nature can be combined into one
fund.
Q. How do I determine if I need a self-supporting fund rather than an agency
fund?
A. A self-supporting fund is appropriate when the University has a financial interest or risk
associated with the activity. If the University acts simply as an agent or caretaker of the
funds, an agency fund is appropriate for the activity.
Q. I need to set up a new self-supporting fund. What steps do I need to take?
A. In order to establish a new self-supporting fund, complete a Fund, Program, Index Code
Request Form (MS Excel). Instructions are available at the following link FPI Code Request
Instructions. The form and instructions are also available from the OBFS Website.
The first three tabs on the file must be completed. The second tab, Self-Sup Fund
Supplemental Info, requires rate development and Pro Forma Budget for three fiscal years.
The third tab, Self-Sup Fund Attestation Stmt, attests that the Department Head is aware of
this specific activity and that the requestor has unit authority to make the request. Email the
completed form to [email protected]. University Accounting and Financial
Reporting will inform you when the fund is established.
Q. Will my self-supporting fund have default organization and program codes
assigned to it? Can I use multiple organization and/or program codes with one
self-supporting fund?
A. Default organization and/or program codes will be assigned if you check the “Yes” box in
item 2d and enter the organization and program codes to be used as defaults on the Fund,
Program, and Index Code Request Form. If you are requesting a new program code in
addition to a new fund code, University Accounting and Financial Reporting will add the new
program code as a default if you checked the “Yes” box as directed above.
Multiple organization and/or program codes may be used with one self-supporting fund if
the NACUBO functions of the programs are consistent with the fund type and entity codes
assigned to the fund.
Q. How do I make deposits into my self-supporting fund, and how is revenue
recorded in a self-supporting fund?
A. Deposits are made through the applicable campus' University Student Financial Services
and Cashier Operations (Cashiering) office on a Report of Money Received or Report of Cash
Sales form and are recorded to the revenue account code entered on the form.
Q. Where do I find the balance of my self-supporting fund?
A. A difference between self-supporting funds and other University funds is the location of
the activity’s balance. The balance for University funds that are budget-based is found in
the Operating Ledger. For self-supporting funds, the Operating Ledger reflects only the
current year revenue and expense activity. To determine the financial status of a selfsupporting fund, the unit should monitor the balances, most importantly the Fund Balance,
in the General Ledger.
As revenue and expenses are recorded in the Operating Ledger of a self-supporting fund,
General Ledger balances, such as Claim on Cash and Fund Balance, are simultaneously
updated in the fund. The Fund Balance reflects the accumulation of all inception-to-date
revenue, expense, and transfer activity in the fund. Banner form FGITBSR and the FIGL
Asset/Liability Detail Statement in EDDIE and View Direct are available to see the fund
balance of your self-supporting funds.
Q. What happens if I generate a profit/deficit with my self-supporting fund? If
self-supporting funds are supposed to be “break-even” funds in theory, what are
the ramifications of operating at a profit/deficit?
A. The State Legislative Audit Commission University Guidelines detail the amount of cash
that self-supporting funds can retain at year-end. For the majority of the entities, the
computation of “Excess Funds” is done by entity and campus. The Excess Funds
computation is complicated; therefore, the following formula displays the calculation at a
high level that you may use to determine your risk of having excess funds. The amounts
used are as of the fiscal year-end.
Cash
Less – highest month expenses (by entity). If month not know, use average monthly
expenses.
Less – deferred revenue and deposits
Less – accounts payable
Less – accrued payroll
Less – obligations paid in the grace period (July and August)
Excess Funds (if amount is positive)
The Guidelines also state that entities may not have cash deficits for an entire fiscal year as
this indicates that the self-supporting activity is being subsidized. Individual deficit cash
balances may be reviewed by the Office of the Executive Assistant/Assistant Vice President
for Business and Finance and a deficit reduction plan may be required and/or the fund may
be charged interest expense based on the deficit amount.
Q. What is “unrelated business income” (UBI) and how does it relate to the
activity that takes place in my self-supporting fund?
A. Unrelated business income is derived from an activity that meets all of the following
criteria:
1. The activity is a “trade or business,” i.e. there is an expectation of a
profit from the operation,
2. The activity is regularly carried on, and
3. The activity is not substantially related to any of the University’s
exempt purposes.
Federal tax law provides the following exceptions, modifications and special rules that must
be considered when determining if an activity is an unrelated trade or business.
•
The law provides an exception for a trade or business if it is (1) conducted primarily
for the convenience of students, employees, patients, etc.; (2) conducted with a
volunteer labor force; or (3) selling merchandise substantially all of which was
received as gifts or contributions.
•
Income from dividends, interest, royalties and the rental of real property generally is
excluded from the unrelated business income computation, but a few exceptions to
this rule exist.
•
Income (ticket sales, etc.) from an athletic program including the sale of exclusive
broadcasting rights is not included as unrelated business income; however,
commercial advertising sold by the University in publications and athletic broadcasts
may be considered unrelated.
•
Certain “qualified sponsorship payments” are not included in unrelated business
income. A qualified sponsorship payment is any payment to a tax-exempt
organization by a person in a trade or business where there is no arrangement or
expectation of any substantial return benefit by the payer.
•
Presentation of performing arts by students is a related activity, and the appearance
of professional artists may also be related. The IRS determines whether the income
derived from professional entertainment events is considered unrelated business
income by looking at how the event is conducted, not the content of the event.
•
Retail sales from the operation of a general book and supply store on the University’s
campuses for the convenience of the students, faculty and staff generally are exempt
from unrelated business tax. However, not all sales are necessarily considered
related. Items that are directly related to the University’s educational purposes are
exempt when sold to students, faculty and staff as are some low-cost non-educational
items that are in recurrent demand, such as toiletries, University insignia items,
newspapers and magazines, etc. When book stores are open for sales to the general
public, sales of similar items to the general public do not fall within the convenience
exception and should be reported as unrelated business income.
•
Food service activities open to the general public are not related to the University’s
exempt purposes and are generally considered unrelated business activities.
However, food service at an exempt activity where the food is available only to
attendees is exempt. Catering services to non-University customers constitute
unrelated business income.
•
Income from scientific research carried on in the public interest is exempt from
unrelated business income. The term “research” does not include ordinary testing or
inspection of materials commonly carried on as an incident to commercial or
industrial operations where “a standard procedure is used, no intellectual questions
are posed, the work is routine and repetitive and the procedure is merely a matter of
quality control.” Income from such testing generally would constitute unrelated
business income.
While the University must report unrelated business income, expenses that are directly
related to the production of that income are allowed as deductions in computing unrelated
business taxable income.
However, when facilities or personnel are used both to carry on exempt activities and to
conduct an unrelated trade or business, expenses, depreciation and similar items
attributable to the facilities or personnel must be allocated between the two uses on a
reasonable basis.
For more information and a questionnaire that will assist in determining whether an activity
should be reported as unrelated business income, please refer to Section 18.13 of the OBFS
Business and Financial Policies and Procedures Manual.
Q. How does the BBA (budget balance available) in my self-supporting fund roll
into the next fiscal year? If I have a balance or deficit remaining on a selfsupporting fund, will it keep rolling forward from year to year?
A. The BBA on a self-supporting fund does not roll forward into the next fiscal year. The
BBA compares how actual revenues and expenses are doing in relation to budgeted
revenues and expenses. At the beginning of the fiscal year, you should provide to your
campus Budget Office new fiscal year budgets that reflect your anticipated revenue and
expenses. Only open encumbrances are rolled forward in the operating ledger to the new
fiscal year. General ledger balances, such as cash and fund balance, are rolled forward to
the new fiscal year. (See “Where do I find the balance of my self-supporting fund”?)
Q. How do I adjust the budget in my self-supporting fund?
A. Self-supporting fund budgets may be adjusted by processing a journal voucher in Banner
using rule code 260 for a temporary budget revision or rule code 261 for a permanent
budget revision.
Q. Can I transfer funds between my self-supporting fund and other fund types
(e.g., State funds, gift funds, ICR funds, agency funds, etc.)?
A. No, units are not allowed to perform any type of funds transfers from their selfsupporting funds to any other fund types within their own unit or a different unit.
Transferring specific expenses (e.g., a p-card expense or an invoice voucher) may be
allowable given the particular circumstances; however, completing lump sum transfers or
budget transfers between self-supporting funds and other fund types is not allowable.
Q. Are there any special year-end requirements related to self-supporting funds?
A. Yes, departments are required to submit a Fact Sheet for each active (non-terminated)
self-supporting fund at fiscal year-end. (See OBFS Website for more information
concerning the Fact Sheet.)
Q. What size of a self-supporting contract needs the involvement of Grants &
Contracts?
A. Technical testing agreements and other contracts greater than $5,000 should be
reviewed by Grants & Contracts before a self-supporting fund is established and any work is
begun.
Q. What happened to all of the money I had in my self-supporting fund at the end
of June?
A. Cash, other assets, liabilities and fund balance roll forward at fiscal year-end and can be
viewed using a balance sheet type report. The operating statement shows only the revenues
and expenses for the current fiscal year. (See “Where do I find the balance of my selfsupporting fund?”)
Q. Our office made a mistake and deposited gift money into a self-supporting fund.
How do we get this fixed?
A. If gift money is incorrectly deposited into a self-supporting fund, contact University
Accounting and Financial Reporting (UAFR) at (217) 333-4568 for assistance to make the
adjusting entries. Units do not have authorization to make these correcting entries. Once
you contact the UAFR staff, you will be asked to provide the following information and
documentation: (1) the full C-FOAP string where the gift money currently resides; (2) the
exact dollar amount that needs to be transferred to the Banner gift fund; (3) the Banner gift
fund where the gift money needs to be transferred to; and (4) copies of any gift
documentation from the donor (e.g., a letter, copy of the check) and a completed gift
transmittal form summarizing the donor information and the related donation (see
http://online.uif.uillinois.edu/Transmittal/ for the website containing the gift transmittal
forms). Once the UAFR staff receives this information and documentation from your unit,
they will work with the University of Illinois Foundation to make the appropriate adjusting
entries.
Q. Our office received a payment from an outside organization in connection with
a sponsorship agreement. Should this payment be deposited in a self-supporting
fund?
A. If the sponsorship payment is determined to constitute advertising, it is considered a
non-qualified sponsorship and should be deposited in a self-supporting fund and may create
unrelated business income (UBI). (See “What is “unrelated business income“ (UBI)...?”). A
qualified sponsorship payment for which the sponsor will receive no substantial benefit other
than the use or acknowledgement of the business name, logo or product lines is considered a
donation and should be recorded as a gift.
Q. Can our office charge expenses incurred in fundraising/development activity to
a self-supporting fund?
A. No, expenses related to fundraising/development activity cannot be posted to selfsupporting funds unless specific exemptions exist. All expenses for fundraising activity
generally need to be posted to an applicable fundraising/development C-FOAP string on
either a gift, state, or institutional cost recovery (ICR) fund. See Section 11.6 of the OBFS
Policies and Procedures Manual for further guidance on these restrictions.
Q. We need to terminate one of our self-supporting funds that we no longer use.
How do we get this done?
A. A self-supporting fund cannot be terminated until all balances, encumbrances, etc. have
been cleared from the fund. Once the fund has been cleared of all activity and balances,
send an email request to [email protected] asking to terminate the fund.
The UAFR office will investigate the fund to ensure that all balances have been cleared, and
will then terminate the fund.
Q. My department sells t-shirts, caps and other items to students, faculty, staff
and alumni. Is there anything special we need to be aware of with this activity?
A. When a department sells tangible personal property such as t-shirts, caps or other items
to students, faculty, staff, alumni or the general public for use or consumption, the sales are
subject to state and local sales tax. The sales tax must be collected, reported and remitted
to the state unless a specific exemption applies to the sale. Units should contact University
Accounting and Financial Reporting to determine the correct procedure for reporting and
recording the sales and sales tax amounts for each campus. University Accounting and
Financial Reporting files the required sales tax returns for each campus under separate
registration numbers. See Section 18.6 of the OBFS Financial Policies and Procedures
Manual for further guidance on this issue.
If units maintain an inventory of items for sale, the inventory must be controlled and the
value must be reported at year-end on the Fact Sheet for the fund involved.
Further, if the sales are not related to the exempt purposes of the University, the sales may
create unrelated business income. See “What is “unrelated business income“ (UBI)...?” and
Section 18.13 of the OBFS Financial Policies and Procedures Manual for further guidance on
this issue.
Q. My department keeps a supply of items on hand for sale to other University
departments, students, faculty, staff and the public. How should we handle this
issue?
A. Campus units must maintain appropriate inventory control of each item of merchandise
for resale. Use of a perpetual inventory system is the preferred method of inventory control
and valuation. Campus units must complete a physical count and valuation of merchandise
for resale at least once each year and report the results of that physical count to University
Accounting and Financial Reporting, generally on the Fact Sheet submitted at year-end. See
Section 5, Receivables of the OBFS Financial Policies and Procedures Manual for further
guidance on this issue.
Q. I have a question that is not on this listing. Who do I contact?
A. All other questions regarding self-supporting funds can be directed to University
Accounting and Financial Reporting at (217) 333-4568. A Who to Ask list is located on the
UAFR website.