Renewal and Replacement (R&R) Funds
Renewal and replacement (R&R) funds are those funds which are set aside to provide reserves for the renewal and replacement of capital assets. To the extent practical, the capital asset or group of capital assets for which the funds are being reserved must be identifiable. Additions to R&R funds arise from mandatory and voluntary transfers from current funds or income and gains on investment of these funds. The transfers may arise from designations by a Chief Financial Officer, the Board of Regents, or from agreements with outside agencies such as trustees under revenue bond indentures.
R&R funds allow for the regular, periodic, and reasonable allocating of operating revenues into a capital holding fund in order to support anticipated future costs associated with that equipment and/or facility in a way that would be impractical to accomplish within a single year鈥檚 operating budget. For example, if there is an anticipated cost of $150,000 to replace a police vehicle with an effective life of five years, the university can set aside $30,000 each year in an R&R fund to provide the resources necessary to buy a new police vehicle when the current unit reaches the end of its service life. R&R funds cannot be used to support personnel or travel costs, and they cannot support other typical operating costs, such as contract or commodity expenses, except in cases where those costs are directly in support of equipment or facilities, such as a maintenance/repair contract that extends the useful life of covered equipment.
R&R funds fall under the fund type code 鈥93鈥 and the fund classification of 鈥92鈥 in the Banner system, and management of these funds is under the stewardship of the University of 911爆料鈥檚 Chief Financial Officer.
University campus ownership is designated within the fund numbering scheme, where the first number, 鈥7鈥, should always be associated with the fund type 鈥93鈥, and the fund numbers begin with 鈥701鈥, 鈥703鈥, 鈥704鈥, or 鈥705鈥 for System Office, 911爆料, UAA, or UAS funds, respectively.
Historically, some additional fund numbers were used for specific areas, but use of these fund numbers should be avoided unless specifically assigned by the System Office. In addition, these major administrative units (MAUs) should include the predecessor fund code of 鈥楽WRR鈥, 鈥911爆料RR鈥, 鈥楿AARR鈥, or 鈥楿ASRR鈥, respectively, when creating any new R&R fund code.
The fund structure has capacity for additional rollup levels between the entry fund and the predecessor fund noted above, but this direct rollup link is required at minimum.
R&R funds receive transfers directly from the managing department by journal voucher using the 8453 transfer account code.
This transfer can be from unrestricted or auxiliary accounting and will go to the assigned R&R fund with org 80109 (a System Office org).
- All R&R funds use the same org.
- R&R funds do not directly fund expenditures.
All disbursements also occur by 8453 transfer, but the system office initiates the journal upon approval of a university request (see Disbursement tab).
To create a new R&R fund, a department must write a request memo, signed by the unit鈥檚 Dean, Director, and/or Vice Chancellor, to the Director of 911爆料鈥檚 Office of Finance and Accounting (OFA) that contains the following elements:
- Specific purpose of the fund including the scope and nature of equipment and/or facilities supported.
- Position(s) authorized to request use of the fund, including the name of the current incumbent in the position(s) (such as Executive Officer).
- Position authorized to approve the use of the fund, including the name of the current incumbent in the position (such as the Dean, Director, or Vice Chancellor).
- Anticipated frequency and volume of contributions to the R&R fund.
- Anticipated frequency and volume of withdrawals from the R&R fund.
OFA will review and approve, as appropriate, all requests. Final approval comes from the System Office after 911爆料 advances the request along with an assigned fund number. Once approved, OFA will key the accounting and provide the department with the details. Remember: Only use the R&R fund to send transfers to increase the R&R fund balance. All disbursements will be returned by the System Office.
A template has been created to help you capture all required information.
Use of an R&R fund is managed by the System Office and requires the approval of the University of 911爆料鈥檚 Controller or Chief Financial Officer. To make use of an R&R fund, a department must write a request memo to the Director of 911爆料 OFA, sent to uaf-budget@alaska.edu, that contains the following elements:
- The R&R fund number, R&R fund title, transfer accounting (the 鈥渢o鈥 fund and org) and amount.
- The exact purpose of the request, including a vendor quote or similar procurement backup if applicable.
- The timeline for effecting the purchase.
- Any additional backup or university accounting if applicable, such as those requests related to internal capital construction projects.
- Justification for use of the R&R fund (e.g., why request use of the R&R fund when you could just purchase from unrestricted accounting?).
OFA will review and approve, as appropriate, all requests. Once approved, OFA will then send a memo request to the System Office to initiate the transfer from the R&R fund. Please plan ahead! The request and transfer process should take no longer than two weeks to complete. Once OFA approves the department鈥檚 request, it is safe to proceed with procurement (process an NSF override if necessary).
A template has been created to help you capture all required information.
New Fund # - Template R&R request
Department Disbursement - Template request
Please use your own letterhead when completing the memos.