Guide Sheet #5

Non-appropriated funds come from non-governmental sources, while appropriated funds are received from federal, state or county governments. Non-appropriated funds include: earnings accounts, county/regional checking accounts and designated funds, gift accounts, grants and contracts. Historically the term “non-appropriated account” has been used in reference to county office checking accounts. Today, county offices have greatly diversified their funding sources so they may have a number of different non-appropriated accounts. The OSU Extension Business Office web site is an important tool in understanding the guidelines and procedures to be used in handling all funds.

OFFICE CHECKING ACCOUNTS

Accounting System
All OSU offices use either a pegboard or QuickBooks (or similar) accounting system for non-appropriated funds. All funds received must be receipted. Payment of obligations should be by check.

Bank Deposits
Make bank deposits when $200 has been accumulated or at least once per week. All checks received are restrictively endorsed upon receipt: “For deposit only, XXX County.” Keep all funds in a locked location. Verify amount on hand to that recorded on receipts. Determine if deposits are made in a timely fashion. The county director should open and scan the returned checks and statement and sign/date the bank statement. Segregation of duties is critical. Segregation deters fraud or concealment or an error because another individual's cooperation (collusion) is needed to conceal wrongdoing.

Grants, contracts and donation earnings are not permitted to be deposited into checking accounts. Transfer these funds to a University housed fund number.

Checks
A purchase authorization form signed by the director is suggested for expenditures. An original and itemized invoice or receipt is needed to support any check written. The county director also signs all checks with another educator identified as a back-up. Do not pre-sign blank checks. Checks cannot be written to OSU employees who are able to sign checks for the office; for all others the amount cannot exceed $50. Payments for purchases over $1,000 or equipment must be processed through OSU.

The local checking account may not be used to pay for travel expenses, cash advances, honorariums, scholarships, payroll, purchases requiring contractual agreements, Advertising (except for classified ads under $1000), payments to individuals for services, insurance, letterhead, business cards, university logo items, moving expenses, painting services, vending services, personal expenses, signs, equipment, charter bus, van, boat, guns, weapons, ammunition, explosives, aircraft, alcohol, accounting or auditing services, equipment leasing, off-campus leased space, painting services, radio equipment, building renovation, building construction, building repair, off campus leased space, satellite dishes, antenna, security alarm systems, telephone, pager equipment and supplies, utilities, vehicles, vending services, video production, controlled substances, radioactive material, gas cylinders, gasoline, catering, or people (unless reimbursing for supplies under $50).

Reducing Liability
Structure responsibilities of secretarial staff so there are checks and balances. If one secretary records funds and prepares the deposit, another should reconcile the bank statement and deposits to amounts recorded in the ledger. Periodically, conduct an unscheduled count of funds on hand. Verify amount on hand to that recorded on receipts.

Handling Funds for Committees or Other Groups
Extension policy prohibits handling monies “on behalf” of committees or related organizations. The organization’s treasurer should handle funds.

EXPLANATION OF OTHER NON APPROPRIATED FUNDS:
Earnings Funds handle the income and expenses associated with activities that charge a fee. Examples would include programs where a registration fee is charged or Extension publications. Some field offices maintain checking accounts through local banks to handle earnings activities. Semi-annual accounting of balances are requested. Field office checking accounts are considered state funds, just as if the funds were in an account at the University.

Designated Funds - This fund series should be used to deposit Local Checking Account funds that are deposited into the University to maintain appropriate balances in the local checking account. Checking account balances should not regularly exceed $20,000.

Development Funds enable Extension to accept donations or gifts to help support activities. These are handled through endowment accounts for large donations ($50,000 minimum or any combination totaling) where the principal remains invested, but the interest is available to be spent subject to any restrictions by the original donor. Current use accounts handle smaller donations and are usually not restricted in how the funds can be used. The OSU Development Office oversees gifts to University departments including Extension. Gifts should not be deposited into local checking accounts.

Grants and Contracts – OSURF (Ohio State University Research Foundation) is a non-profit corporation set up by OSU to handle proposals that faculty submit each year to outside funding agencies. Follow procedures set up by the OSU Extension Business Office in seeking, administering grants and contracts, and working with OSURF. Expect to have OSURF charge overhead.

Grants are similar to, but distinctly different from gifts and contracts. Grants are application driven. The organization seeking funds (OSU Extension) for a particular activity submits an application or proposal to a granting agency.

Contracts are activity driven. The funding agency determines they want to carry out a specific activity or program and decide that the best way to do so is to contract or hire another agency (OSU Extension) to run the program. Both grants and contracts require reporting on the use of the funds. Release time accounts are used to handle funds that may be refunded to a unit for faculty and staff time that is “released” to work on a project. Release time forms are used to document match monies for grants. Directors should be aware of grants developed by staff prior to submission.

Written by: Dr. Barbara Ludwig, District Director
Reviewed by: Dr. Nikki Conklin, Dr. Gail Gunderson, Dr. Garee Earnest, Bill Owen, Lou Fourman and Linda Kutilek
2003 Revisions by: Dr. Bill R. Haynes
2005 Revisions by: Cynthia Tschanen, Brian McClain
2008 Revisions by: Cynthia Buxton, Dr. Garee W. Earnest