ÖгöÉÙ¸¾ÊÓƵ

Introduction

Last modified: November 4, 2010

ÖгöÉÙ¸¾ÊÓƵ System of Georgia (ÖгöÉÙ¸¾ÊÓƵ) institutions receive funding annually from either the Georgia State Finance and Investment Commission (GSFIC) or State Appropriations for capital facility repair and rehabilitation. These funds are called Major Repair and Rehabilitation Funds, more commonly referred to as MRR funds.

Certain other construction projects that are managed by ÖгöÉÙ¸¾ÊÓƵ institutions are funded by GSFIC and are accounted for in the same manner as MRR projects that are funded by GSFIC.

18.1.1 MRR Formula

Last modified: November 4, 2010

MRR funds are generated annually by the budget formula as a function of the average estimated building replacement cost and total square footage in the ÖгöÉÙ¸¾ÊÓƵ System at each institution. The average building replacement cost is assessed each year, and was most recently valued at $95 per square foot. The formula is funded at approximately 1% of average replacement cost, although the factor also has been subject to periodic adjustments.

All institutional square footage is included in the formula; i.e., auxiliary enterprise funded square footage as well as residential instruction (RI) and other square footage. Although included in the formula, auxiliary enterprise space typically cannot be repaired or renovated using MRR funds. However, special approval may be granted by the Vice Chancellor for Facilities in the event of life safety concerns.

The combination of all square footage in the ÖгöÉÙ¸¾ÊÓƵ System of Georgia generates the total formula amount that is part of the systemÖгöÉÙ¸¾ÊÓƵ™s annual budget request. As an example of how the formula works, an institution with 1,000,000 square feet of space would generate an amount in the formula of $950,000 (1,000,000 square feet X $95/square foot X .01).

---

18.1.2 MRR Allocation

Last modified: November 4, 2010

The formula, however, is not the basis upon which funds are allocated to institutions for capital facility repair and rehabilitation. The MRR allocation distributes funds to institutions on the basis of RI square footage, and also includes a factor for age and type of facilities.

Not all funds generated by the MRR formula are initially distributed to institutions. A portion, roughly 3-5%, is set aside to provide for emergencies and contingencies. Institutions may request funding for emergencies that cannot be addressed through regular MRR allocations. Requests for emergency MRR funding should be addressed to the Vice Chancellor for Facilities.

---

18.2 Project Development Process

Last modified: November 4, 2010

The annual consolidated capital request process explains the initiation and prioritization of MRR and other capital projects. The ÖгöÉÙ¸¾ÊÓƵ Real Estate and Facilities Office has guideline publications on institution Master Planning and MRR Guidelines that provide a framework for institutions to address their MRR needs.

For further information, contact the Vice Chancellor for Facilities.

18.3 Project Payment Process

Last modified: November 4, 2010

MRR may be funded by either State appropriation or State general obligation bonds. Each fiscal yearÖгöÉÙ¸¾ÊÓƵ™s MRR allocation and funding for that allocation will be either entirely State appropriations or entirely general obligation bonds.

18.3.1 State Appropriated MRR

Last modified: December 22, 2010

For those institutions receiving State appropriated MRR funding, all related invoices may be paid from the State appropriated funding source. Since State appropriations lapse, institutions receiving State appropriated MRR funding should ensure that these funds are expended or encumbered by fiscal year end. Institutions should follow the guidelines presented below to manage the accounting process for State appropriated MRR expenditures:

1. Institutions receiving State appropriated MRR funding should record the revenue as State Appropriations.

2. It is the responsibility of each institution to maintain records for each MRR project managed by the institution.

3. Institutions may wish to use the Project Indicator ChartField to assist them in tracking budget and expenditures on these projects. Use of the fiscal year as the leading digits in the Project ID field will enable current year and prior year project identification via query.

4. State appropriated MRR expenditures should contain Classification code 16000 to distinguish the funding source.

5. At the beginning of each project, determine if the project should be capitalized. If so, it will be considered construction work in progress in the Capital ledger.

6. If the entire project is not capital, but components should be capitalized, capitalize the components as purchased.

7. When purchases are made, use the following methodology for recording capital and non-capital activity. These journal entries assume current year budgeted and expended MRR funds. Journal entry origin is indicated to provide additional clarification.

   • For non-capital items:
     Purchasing/Accounts Payable Business Processes:
     DR   7xxxxx   (Appropriate expense account)  Actuals ledger
                 CR   xxxxxx   Cash

   • For capital items:
     Purchasing/Accounts Payable Business Processes:
     DR   8xxxxx   Capital Expense   Actuals ledger
                 CR   xxxxxx   Cash

     Manual Journal:
     DR   169xxx   Construction WIP   Actuals ledger
                 CR   8xxxxx   Capital Expense (Contra)
                       (Use same account as in Actuals entry)

8. At the completion of a capital project, the asset must be added to the Capital ledger, probably as a parent/child relationship, depending on the asset. This will result in the following entry on the Capital ledger: *

   Asset Management Business Process:
         DR   16xxxx   (Appropriate capital account)   Capital ledger
               CR   169xxx   Construction WIP

---

18.3.2 GSFIC-Funded MRR and Institution-Managed Projects

Last modified: December 22, 2010

Institutions receiving MRR allocations and certain institution-managed construction projects that are funded with state general obligation bonds are subject to oversight by GSFIC. Each institution must pay all invoices for its MRR and institution-managed projects, and then seek reimbursement from GSFIC. Institutions should follow the guidelines presented below to manage the accounting process for these MRR and institution-managed projects.

1. It is the responsibility of each institution to maintain records for each MRR and construction project that is funded by GSFIC but managed by the institution.

2. Institutions may wish to use the Project Indicator ChartField to assist them in tracking budget and expenditures on these projects. Use of the fiscal year as the leading digits in the Project ID field will enable current year and prior year project identification via query.

3. MRR and institution-managed GSFIC project expenditures should contain Classification code 16500 to distinguish the funding source.

4. At the beginning of each project, determine if the project should be capitalized. If so, it will be considered construction work in progress in the Capital ledger.

5. If the entire project is not capital, but components should be capitalized, capitalize the components as purchased and budget an expense for the expense portion. It will be necessary to post a budget amendment.

6. When purchases are made, use the following methodology for recording capital and non-capital activity. These journal entries assume current year budgeted and expended MRR and GSFIC funds. Journal entry origin is indicated to provide additional clarification.

   • For non-capital items:
     Purchasing/Accounts Payable Business Processes:
     DR   7xxxxx   (Appropriate expense account)   Actuals ledger
               CR   xxxxxx   Cash

     Manual Journal:
     DR   12xxxx   A/R-GSFIC   Actuals ledger
               CR   4853xx   State Gifts (Noncapitalized)

   • For capital items:
     Purchasing/Accounts Payable Business Processes:
     DR   8xxxxx   Capital Expense   Actuals ledger
               CR   xxxxxx   Cash

     Manual Journal:
     DR   12xxxx   A/R-GSFIC   Actuals ledger
               CR   4854xx   State Gifts-Capitalized

     Manual Journal:
     DR   169xxx   Construction WIP   Capital ledger
               CR   8xxxxx   Capital Expense (Contra)
                         (Use same account as in Actuals entry)

7. As reimbursements are received from GSFIC, debit Cash, and credit Accounts Receivable (A/R).

8. At the completion of a capital project, the asset must be added to the Capital ledger, probably as a parent/child relationship, depending on the asset. This will result in the following entry on the Capital ledger: *

   Asset Management Business Process:
   DR   16xxxx   (Appropriate capital account)   Capital ledger
             CR   169xxx   Construction WIP

   * Note: For institutions using the GeorgiaFIRST model of the PeopleSoft Financials software, this will be a manual add using the CWIP trans code, which will automatically debit fixed asset 16xxxx and credit 169000.

9. Remember to withhold retainage if appropriate.

---

18.4 Procedures for Year-End Encumbrances

Last modified: January 10, 2011

1. At the end of the fiscal year, adjustments are necessary for encumbered expenses related to GSFIC-funded projects to ensure accurate Budgetary and GAAP ledgers. Note that the entries below are not required for MRR encumbrances that are funded by State appropriation. In the Actuals ledger, a manual journal entry must be made to record the gift revenue related to the encumbered expense:

   Year-End Manual Journal:
   DR   12xxxx   A/R-GSFIC   Actuals ledger
           CR   4853xx   State Gifts (Noncapitalized)
           Or   4854xx   State Gifts-Capitalized

   Because the encumbered expense is not recognized for GAAP purposes, neither is the related gift revenue. The adjustment made above in the Actuals ledger must be reversed in the GAAP ledger:

   Year-End Manual Journal:
   DR   4853xx   State Gifts (Noncapitalized)   GAAP ledger
           Or   4854xx   State Gifts-Capitalized
           CR   12xxxx   A/R-GSFIC

2. In the subsequent fiscal year(s), payments made for prior year encumbrances will follow the same journal steps as Items 6 through 8 in Section 18.3.2, with the exception of the GSFIC Receivable and related Gift Revenue entry in the Actuals ledger (Section 18.3.2, Item 6). This entry was accomplished in #1 above.

   An adjusting entry does need to be made in the GAAP ledger, as payments are made for prior year encumbrances as follows:

   Manual Journal in Subsequent Year(s):
   DR   12xxxx   A/R-GSFIC   GAAP ledger
           CR   4853xx   State Gifts (Noncapitalized)
           Or   4854xx   State Gifts-Capitalized

   When all such encumbrances are processed, the A/R balance in the GAAP ledger will zero out and State Gift Revenue will be recorded accurately for GAAP purposes in the correct fiscal year.

© 2024 Board of Regents of the ÖгöÉÙ¸¾ÊÓƵ System of Georgia
270 Washington Street, S.W.,
Atlanta, Georgia  30334
U.S.A.

↑ Top