University Funds

The University receives funding from a variety of sources, such as state appropriations, tuition revenue, grant funding, donations, fees, sales revenue, and indirect cost recoveries. Fund Accounting is an accounting system commonly used by non-profit & governmental organizations (including universities) which emphasizes accountability (not profitability) to ensure proper stewardship and expenditure of financial resources received in compliance with applicable regulations, guidelines and restrictions associated with the funds received. Fund accounting helps ensure proper stewardship of University assets by segregating funds according to their intended purposes.

Financial resources received are recorded in a collection of different fund types, with each fund type having a different purpose depending on the source of revenue. Segregating these financial resources into separate fund types helps us properly classify and monitor resources appropriated, awarded, contributed, and entrusted to the University. Properly classifying and monitoring these financial resources into separate fund types enables us to compile accurate financial statements which help illustrate how the University meets its mission of teaching, research, public service, and economic development.

Fund Types

Fund types are used to classify resources into funds according to specified activities, designations, or restrictions for financial accounting and reporting purposes. These distinctions may be imposed by sponsors, donors, external regulations, or directives issued by the Board of Trustees.

A fund is an accounting entity with a self-balancing set of accounts consisting of assets, liabilities, and fund balances.

For detailed descriptions of the various fund types, see Fund Type Descriptions.

Fund groups

In higher education accounting, funds are classified into one of 5 groups:

• Current funds
• Endowment and similar funds
• Loan funds
• Plant funds
• Custodial funds

In Banner, fund types are used to classify funds with similar sources that roll up to one of these 5 fund groups. Separate funds are maintained within each fund type to insure compliance with limitations and restrictions placed on the use of resources.

Current funds

This fund group includes those resources that can be used to carry out the missions of the University: teaching, research, public service, and economic development. The term "current" means the resources are spent in the near future for general operating purposes. Current funds may be either unrestricted or restricted.

Unrestricted current funds - Resources with no limitations placed on them by external agencies or donors. The major categories for these funds are:

• State appropriations and income fund deposits - State appropriations are appropriations made to the University by the State Legislature. Income fund deposits are from tuition and other receipts deposited into the income fund for operating purposes. See State Funds FAQs.
• Institutional support - Derived from indirect cost recovery, educational and administrative allowances, unrestricted gifts, and revenues from intellectual property (patents, copyrights, royalties). See Educational and Administrative Allowance Funds FAQs and Indirect Cost Recovery (ICR) Funds FAQs.
• Self-Supporting Activities - Funds established by units to record revenue generated by the sale of products or services and related expenses. See Self-Supporting Funds FAQs.
  • Departmental activities - Revenues from various self-supporting activities of the University provided to external customers, including the hospital and independent operations.
  • Auxiliary enterprises - Revenues from various auxiliary enterprises operated by the University for students, faculty, and staff (for example, bookstore, housing, and student unions).
  • Stores and services - Revenues from the various storeroom and service activities operated by the University for internal customers, including charges to sponsored projects.

Restricted current funds - Resources with externally established limitations placed on them by external agencies or donors. These resources may be limited to specific purposes, programs, or university units. The major categories for these funds are:

• Federal appropriations - Appropriations made to the University by the federal government for operating purposes, primarily in agriculture.
• Sponsored programs - Grants and contracts from federal, state, and private sources.
• Private gifts - Funds provided by donors to the University. See Gifts Funds FAQs.
• Service plans - Self-supporting funds approved by the Board of Trustees under the State of Illinois statutes to bill and collect for health care professional services provided at University facilities. These include the Medical Service Plans (MSPs), Nursing Service Plans (NSPs), and Dental Service Plans (DSPs).
• Endowment farms - Income earned from endowment assets held by the University and from trusts held by others.
• Endowment income - Income earned from endowment assets and from trusts held by others
• Other restricted - Funds received from other sources that are restricted to a specific purpose (fund type 4N).

Endowment and Similar Funds

Donors or other outside agencies sometimes give money with the stipulation that the principal remain intact. The income generated from such principal may be spent, but typically for some specific purpose. This group also contains several other types of funds that are similar to endowments. The monies are kept in separate funds to ensure they are used as intended.

Loan Funds

This fund group includes loans available to students, faculty, and staff. Because these funds come from a variety of sources, the University establishes separate fund types and funds.

Plant Funds

This fund group is used to account for the acquisition, construction, and maintenance of the University's physical plant and to control related assets. This group contains 4 subgroups:

• Investment in plant - All capitalized assets in the service of the University except those of endowments and similar funds.
• Renewal and replacement - Funds transferred from various sources to finance maintenance and replacement of physical assets.
• Retirement of indebtedness - Accumulation of resources for interest and principal payments and other debt service charges related to debt used to acquire capital assets. This includes funds held for future debt payments (sinking funds).
• Unexpended plant - Resources on hand from various sources used to finance the acquisition or construction of plant assets.

Custodial funds

This fund group is used to account for resources held by the University as custodian or fiscal agent for others, including student organizations.

Additional Resources

Fund Type Descriptions
Account Type Definitions
Accounting & Financial Reporting FAQs
NACUBO Function & Allowable Fund Type Combinations

Last Updated: May 18, 2020