Interim Operating Advances

Scope

All Indiana University units and employees.

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Policy Statement

The University may make interim operating advances available to departments in the Auxiliary Enterprise fund group in instances where a department temporarily overdraws available cash from its organization in connection with its normal activities, subject to the fee terms and conditions noted below.

Cash balances will be reviewed by the Office of the Treasurer at least annually. Balances will be reviewed at the consolidated auxiliary level (for example, Bloomington Residential Programs and Services (RPS) cash balances will consist of all units such as housing and dining combined). The sum of all campus auxiliary cash balances may also be taken into consideration. If the auxiliary reports to a campus, the campus may elect to cover the cash deficit with funds from a campus account. 

Financing Terms
If an interim cash advance is deemed appropriate, departments will be charged interest at a rate equal to the average short-term rate over the overdraft period. The total interest charge will be computed on the account's monthly average cash overdraft balance, for the applicable fiscal year or time period. Operating advances will be approved by the University Treasurer along with the highest-ranking financial officer of the campus with notification to the highest-ranking fiscal officer of the auxiliary. 

Departmental Responsibility to Correct Overdrafts

For auxiliary units which are charged an interim operating advance fee, the unit will be required to submit a written plan of resolution to the University Treasurer. The plan should identify the original cause of the overdraft, the actions to be taken to reduce the overdraft, and must specify a projected date by which the overdraft will be eliminated.

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Reason for Policy

The goal of this policy is to encourage campuses to monitor auxiliary cash balances. Campuses should strive to maintain positive cash balances within auxiliary entities. The policy provides a mechanism for campuses and auxiliaries to access working capital when appropriate if periods of negative balances occur. Note that this policy was suspended for most of FY20 through FY22 due to potential reduced auxiliary net income from operations.

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History

This policy was established on August 1, 2006.

Revised to add scope November 2016.

The policy was substantively reviewed by the Office of the Treasurer and revised in June 2023.

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