Plant Funds

The capital construction plant fund is used to account for all capital construction projects. A capital construction project is defined as any new building construction regardless of cost, as well as remodeling or renovation projects with an estimated cost of $75,000 or more. These projects result in the creation of a new capital asset or the addition to the book value of an existing capital asset for the university. The use of a Fund 71 project FOPPS is required in order to capture all the costs of the construction and fairly present the value of these capital assets on the university’s balance sheet and statement of net position. Capital construction projects are typically managed by Facilities Management (FacMan).

Resources for the capital construction fund arise from:

• Donations from private sources restricted to capital construction projects
• Designated appropriations of governmental agencies
• Income and gains from the investment of capital construction funds
• Grants restricted to capital construction projects
• Cash transfers in from other funds groups
• Issued debt

In the Finance System, expense accounts are used to budget the construction project. A month-end entry is made to offset that month’s expenses and record them in an asset account code for construction-in-progress (CIP). At year-end the construction-in-progress and any related debt are moved to Fund 74, the investment in plant (IIP) fund. This allows the university to use the Finance System to monitor the budget for the project while still showing the gradual creation of a new capital asset with proper year-end accounting.

The renewal and replacement (R&R) plant funds are used primarily to accumulate resources over the years to save toward a planned capital construction project or the purchase of equipment. As such, the primary funding sources of R&R plant funds are cash and fund balance transfers from other fund groups, most typically the unrestricted current funds. Fund 72 is used for transfers from general funds (1x funds). Fund 78 is used for transfers from auxiliary funds (2x funds). This is required in order to keep the funds separate for the purpose of charging General Administrative Recharge (GAR) and General Infrastructure Recharge (GIR) to auxiliary funds.

Fund 70 is used when the university is cost sharing with a sponsored project (grant or contract) and the purpose is restricted to the purchase of equipment or a capital construction project. All cost share funds are subject to the terms of the associated grant or contract. Fund 70 may be funded by transfers from other R&R funds or other non-sponsored current funds.

Resources for the R&R plant funds are:

• Cash and fund balance transfers from other fund groups, usually the unrestricted current funds
• Income and gains from the investment of R&R funds
• Donations from private sources restricted to R&R funds
• Insurance proceeds from claims on the loss of capital assets
• Proceeds from the sale of equipment

R&R plant funds are used to:

• Transfer to a capital construction plant fund
• Purchase capital equipment with a per unit cost of $5,000 or more
• Transfer the cash and fund balance back to the original source funds as one-time funding to support current operations or large operating purchases
• Fulfill the university’s capital cost share obligations

Since purchases from the R&R plant funds are only to be used to acquire capital assets, it is inappropriate to spend funds from R&R FOPPS for any operating expenses (salaries, office supplies, travel, equipment less than $5,000, etc.). It is acceptable to use the R&R plant fund to build cash and fund balance toward the purchase of non-capital equipment, but the funds should be transferred back to the current fund if they are to be spent for non-capital asset purposes.

CU has elected to combine capital construction plant funds and R&R plant funds to report them under the unexpended plant fund column in the financial statements.

The retirement of indebtedness (ROI) plant fund is used to make payments of principal and interest on debt, trustee fees and expenses. The payment of principal from the ROI plant fund results in a matching reduction of the debt actually recorded in the investment in plant (IIP) fund along with its related capital asset.

Resources for the ROI fund are:

• Cash and fund balance transfers from other fund groups, usually the unrestricted current funds
• Income and gains from the investment of ROI funds
• Donations from private sources restricted to ROI funds

The investment in plant (IIP) fund is used only to record the book value of our capital assets, accumulated depreciation and related expenses and any external debt related to the capital assets. The IIP fund balance is the investment in capital assets, net of related debt on the statement of net position.