(Approved by the Board of Regents, August 27, 1993)
  (Paragraph 16 superseded by VIII-12.00, April 7, 1995)
  Objective:  To establish for all institutions an exclusive
  mechanism to finance, over time, facilities and other capital costs
  not financed through State capital budget appropriations, UMS debt
  instruments or third party financing.
   1.  The Board authorizes and establishes a system-wide funding
       mechanism, wholly internal within UMS, to finance, over time,
       facilities and other capital costs (as defined in Board of
       Regents Policy VIII-1.10), $250,000 or greater, not financed
       through State capital budget appropriations, UMS debt
       instruments, or third party financing ("Eligible Projects").
       This funding mechanism shall be known as the System Funded
       Loan Program ("Program").
   2.  The Program shall be the exclusive method of funding Eligible
       Projects and no Institution shall finance Eligible Projects in
       any other manner.  Since the resources for the Program must be
       managed effectively, this Policy applies to any funding of
       Eligible Projects whether or not the funds for a particular
       Eligible Project are available wholly within the cash
       resources of the Institution requesting the funds.
   3.  The Program, for accounting purposes, is an element of plant
       fund activity.
   4.  Funds made available through the Program may be used only for
       Eligible Projects and only in accordance with this policy.
   5.  UMSA shall administer the Program and make funds available to
       an Institution under the Program in accordance with this
       Policy and procedures or processes adopted by UMSA from time
       to time.
   6.  At any time, the funds then available (on a System-wide basis)
       under the Program shall be in an amount not to exceed the
       agreed upon cash reserves, which is defined as those funds in
       excess of a 30 day requirement within self-support activities.
       This amount shall be determined on a System-wide basis, and
       not in respect to any one or more specific Institution.  In
       establishing the amount of funds to be available under the
       Program, UMSA shall consider among other matters, use of
       System-wide funds and resources, System-wide priorities among
       Institution's needs, maintenance of adequate cash and
       unreserved fund balance, and System-wide debt restrictions.
   7.  The Program is established as an extraordinary source of funds
       for Eligible Projects.  Institutions should not consider the
       Program as a funding source available in the ordinary course
       of business.  Institutions shall conduct its activities so
       that all expenditures can be met from cash resources available
       and shall submit to UMSA annual cash flow projections for the
       coming five year (fiscal year) period.
   8.  UMSA shall obtain the Board approval of an Eligible Project
       and of funding under the Program if the cost is $1 million or
       more, prior to making funds available for any Eligible
       Project.  Eligible Projects costing less than $1 million shall
       have the approval of the Vice Chancellor for General
   9.  An Institution interested in funding an Eligible Project under
       the Program shall make a proposal to UMSA.  The proposal shall
       (i) identify the Eligible Project, (ii) state the amount of
       funds requested, (iii) state the period for which the funds
       are requested, and (iv) identify the revenue stream from which
       the Institution shall return the funds made available.  It is
       anticipated the Institutions shall submit proposals as part of
       their annual capital budget process.  However, in
       extraordinary circumstances, UMSA may accept proposals at
       other times.
  10.  UMSA shall evaluate proposals for funding under the Program
       considering, among other matters (i) financial viability, (ii)
       the Institution's overall development plan, (iii) System-wide
       debt restrictions, (iv) fund availability under the Program,
       and (v) competing demands for financing under the Program.
  11.  In the event funds to finance a particular Eligible Project
       are charged against the cash resources of one or more
       Institutions other than the one seeking funding, UMSA shall
       make any and all arrangements and communications with the
       appropriate Institutions.
  12.  Before UMSA makes funds available under this Policy for each
       Eligible Project, UMSA and the Institution requesting the
       funds shall enter into a Project Account Initiation Agreement
       which binds the Institution to (i) a definition of the
       Eligible Project, (ii) the budget and funding sources for the
       Eligible Project, (iii) the revenue stream for return of the
       Program funds, (iv) the applicable interest rate and (v) the
       schedule for return of funds.  It is anticipated that the
       Project Account Initiation agreement will be agreed to before
       UMSA requests the Board's approval for making Program funds
       available for an Eligible Project.
  13.  The Institution shall comply with the terms of the Project
       Account Initiation Agreement and shall maintain the records
       defined in the UMS Financial Accounting and Reporting Manual.
       These shall include quarterly reports that present a) the cash
       position of the Institution's self-support activities; b) the
       cash position of the System funded Loan Program at that
       Institution; and c) other reports so that UMSA may monitor
       project activity to ensure expenditures stay within budget,
       debt is repaid on a timely basis, and the project begins and
       is completed on a timely basis.  On an annual basis, the
       Institution shall prepare and submit to UMSA a report that
       presents the cash position, revenues, expenditures and annual
       debt service for each component of the self-support
       activities, e.g. dormitories, dining halls.
  14.  UMSA will provide quarterly reports to the Institutions that
       present a) the cash position of the System Funded Loan
       Program; b) the cash position of UMS self-support activities;
       and c) debt service ratios.  UMSA will also prepare and
       analyze an annual System-wide debt burden report that presents
       the cash position, revenues, expenditures and annual debt
       service requirements for each component of self-support
       activities of each Institution.
  15.  Funds made available under the Program shall accrue interest.
       The rate of interest shall, in the absence of other
       arrangements, be adjusted monthly to equal the monthly rate
       earned on cash balances invested by the State Treasurer.
  17.  "Bridge loans", i.e., short-term loans granted in anticipation
       of receiving replacement funds, may temporarily exceed debt
       affordability limits provided that the replacement loan is
       within the limits.
  18.  Projects less than $250,000 are not normally considered part
       of the Program.  An Institution may internally finance such
       projects only if sufficient self-support cash resources are
       available, as defined in paragraph 6 above, at that
       Institution.  If sufficient self-support cash resources are
       not available, the Institution may then request to use the
       System Funded Loan Program.