This issue of the Financial Management Office Newsletter includes information about the following:
- Office of Strategic Development and Partnership (OSDP) and GASB 87
- Bursar Office Updates
- Many Facets of Stipends
- Resources
The FMO Newsletter is distributed monthly. Should you have any questions about this newsletter, contact Amy Kunz via email at amykunz@hawaii.edu.
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Office of Strategic Development and Partnership (OSDP) and GASB 87
Target Audience: All
The Office of Strategic Development and Partnership (OSDP) was established in 2019 within the University of Hawaiʻi System – Office of Budget and Finance. OSDP’s responsibilities include the administration of the University’s Real Property matters, which were previously assigned to the former Office of Procurement and Real Property Management (OPRPM); now operating as the Office of Procurement Management (OPM).
OSDP is working in conjunction with the University’s General Accounting Office to fulfill the Real Property compliance requirements of the General Accounting Standards Board (GASB) Statement No. 87 (GASB 87). GASB 87 was issued in June 2017 and its objective is to better meet the information needs of financial statement users by improving accounting and financial reporting for leases by governments.
Specifically related to Real Property, GASB 87 requires the University to analyze all Real Property leases, contracts, and agreements that convey the control of the right to use another entity’s land or building assets. OSDP will be sending an email to FAs, which will include a listing of all active Real Property leases (active as of July 1, 2020) that require a rental payment that are associated with the FA’s campus/department. OSDP will request the FA’s assistance and support to confirm and provide additional information related to the Real Property leases for your respective campus/department.
In separate communication, the General Accounting Office will also be providing guidance and requesting updated information for the non-Real Property leases managed by the FA’s for their respective campus/department.
The University must implement GASB 87 by fiscal year-end of June 30, 2022 with a retroactive application in fiscal year 2021 for presentation in the University’s Financial Statements for audit compliance. We look forward to working with you and greatly appreciate your assistance in helping the University attain GASB 87 compliance.
Should you have any questions, you can contact Michael Shibata at (808) 956-4205, email: shibatam@hawaii.edu or Sharene Chow at (808) 956-4342, email: skchow@hawaii.edu.
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Bursar Office Updates
Target Audience: All
New Financial Aid Application of Payment Procedure:
Starting with the Fall 2021 semester, the University System implemented cross campus payment application for disbursed financial aid. Payments are now being applied to home campus tuition and institutional fees first followed by host campus tuition and fees, with any remaining funds being refunded to the student. The purpose of this new implementation is to assist students that are enrolled in multiple campuses to reduce the amount of outstanding account balances at multiple campuses. Notification of the new system payment procedure was sent out to students, faculty and staff on July 30th.
New Financial Holds Procedure:
On July 1st, the financial holds process became a fully automated process. The automated process places financial holds on student accounts based on the total outstanding balance due, with specific thresholds and holds are released once a balance is paid in full.
The threshold amounts have been established based on total past due financial obligations and having a total balance due greater than $200 will restrict future registration plus other sanctions (e.g. transcript hold), and having a total balance due less than $200 will allow future registration but all other sanctions are still in place.
The automated process ensures holds are placed and removed from accounts several times per day, without manual intervention, and captures any adjustments made to the students’ accounts. This automation releases holds in a timely manner which assists students who have paid their balances in full by removing the financial hold associated with their account, as well as allowing students who pay their account balance down to $200 to enroll in the future term. The automated hold restriction/release process will assist different departments with a restriction or removal of restrictions to a student’s ability to receive transcripts, diplomas and depending on the amount due, registration.
For any questions, please contact Denise DeArment at dearment@hawaii.edu.
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Many Facets of Stipends
Target Audience: Fiscal Administrators and Staff
When “stipends” are being processed in KFS, there needs to be an understanding of the purpose of these payments, who the recipients are, and who it benefited primarily. The following are three real examples of stipend payments that will show different tax reporting impacts.
Stipends (i.e. Reimbursement)
In this example, a “stipend” was initially processed as “Grant-In-Aid”. Upon further investigation, the stipend was actually being processed to “reimburse” a student for buying a hard drive to store data for a class. Subsequent inquiries revealed that this hard drive will remain as property of the University.
Because the hard drive will remain as property of UH, the reimbursement will have no tax effect on the student. This transaction of reimbursing a “business expense” of the University is similar to reimbursing employees for something they bought for work.
Stipends (i.e. paying fees for class)
In this example, a “stipend” was processed in KFS to pay for background checks for a practicum course. All students in this class are required to pay for background checks as a prerequisite to a particular course.
As these stipends are paid for a required fee in a class for these students, such payments should be processed as qualified scholarship in “Grant-In-Aid” in KFS. By definition in the IRS tax code, qualified scholarships are considered nontaxable income to the recipients (students).
Stipends (i.e. paying peer advisors)
In this example, a “stipend” was processed in KFS to pay students who are “summer trainees” in a peer advisor program.
In order to receive this stipend, these students will need to complete summer training and be selected to participate in the peer advisory service. If selected, these students must be available to serve the minimum of a full academic-year and requires a minimum of 170 hours each semester, averaging 10 to 11 hours per week over 17 weeks.
Based on this scenario, “stipends” should not be processed in the “Grant-In-Aid” section in KFS, but should be processed using object code 7245 (awards or prizes). These stipends should be reported as income to the students in Form 1099-Misc (for U.S. students) or Form 1042-S (for international students).
Should you have any questions, please call (808) 956-9059 or email me at kenlum@hawaii.edu