Issued March, 2004

Background

On Feb. 27, 2004, the campus issued a new STIP policy, Distribution of Income from UC Regents' Short Term Investment Pool (STIP). The policy affects all funds that generate STIP, which in general include gifts for a) Regents endowments and funds functioning as endowment, b) current use, including foundation endowments, c) loans, d) plant, e) many private grants, and f) some auxiliary enterprise funds. The policy introduces several significant changes.

• STIP will now be distributed to the Chancellor and departments on a proportional basis, rather than as a function of the STIP interest rate. This change will be phased in over a five-year period beginning in fiscal year 2003-04. In the first year, the distribution will be: 80% to departments and 20% to the Chancellor. The Chancellor's share will increase each year until it reaches 50% in 2007-08. However, all income from funds with average adjusted cash balances of less than $1,000 but greater than $0 will go to the Chancellor.
• Underscoring the fact that income from earned STIP is not the same as the funds whose cash balances generated it, the campus will no longer deposit STIP directly into those funds. We will now receive STIP in its own unique fund, 69798 - Generic STIP. This new fund is discretionary and can be used for any valid University purpose.
• In the past, there were no STIP consequences to units that carried overdrafts in STIP-generating funds even though those deficits diminished the overall income which the campus received. Beginning in 2003-2004, units will now receive charges for lost STIP in the form of negative (deficit) STIP allocations.
• Deans have been delegated the authority to administer the new STIP fund, including decisions regarding redistribution of the positive income and negative charges.

College of Letters & Science Policy and Procedures

Policy

• At this time, the L&S deans each have determined that they generally will return both positive and negative STIP* to departments as identified by the STIP org of the source fund. Should there be an exception to this practice, deans will communicate directly with the affected department. Please note that in the future L&S Divisions may adopt procedures that differ from each other.
• L&S chairs and directors are delegated the authority to determine their own department's procedures regarding use of the redistributed STIP income. As these procedures are developed, it may be helpful to consider that the Generic STIP fund is not bound to the restrictions of the original 'source' funds. It can help provide the discretionary resource that has been lacking for many L&S departments.
• L&S Deans have several STIP-producing funds in their own orgs. Redistribution of these funds will be determined on a fund-by-fund basis. The deans will communicate these decisions to affected departments.

Procedures

• STIP is calculated and distributed to deans on a quarterly basis. When a division's policy indicates that income is to be redistributed to a department, it will be transferred to a single org in that unit via temporary budget journals. There will be a separate line for each source fund, with sufficient information in the journal line description to identify that fund, the quarter, and the fiscal year. Positive and negative STIP will be allocated separately. An email notification will be sent to all L&S managers when our STIP temporary budget journals are processed.
• Should your department have a STIP-generating fund with terms that are in conflict with the new campus policy, please inform your division's budget officer.
• Negative STIP charges:

  To offset the loss of income produced by STIP-earning funds with cash balance deficits, units will now be assessed a charge. These negative STIP charges will be transferred to departments concurrently with any positive STIP income received through the positive balances of other funds. The negative STIP charge highlights the necessity of avoiding overdrafts in STIP-generating funds. If your department has received negative STIP:

  • Overdrafts in source funds that produce negative STIP must be cleared within 30 days of receiving the charge. Contact your division's budget officer to report progress or problems or to obtain assistance.
  • In L&S, the Generic STIP fund 69798 may not carry a long-term deficit, and should not end the fiscal year in deficit. If you do not receive sufficient positive STIP to offset a negative STIP charge, it will be necessary to arrange a fund exchange by contacting your division's budget officer within 30 days of receiving the charge.

If you have further questions, please contact your division's budget officer or Claudia Lopez, director of Budget & Analytical Studies (3-2252 or clopez@berkeley.edu).

*The types of STIP-generating funds most commonly found in L&S departments are: endowment income 34100-39899; gifts 39600-56999; and private grants 57000-59999 and 91000-93999.