Sec. 1 Purpose
The purpose of this policy is to govern the manner and extent to which Institutional Funds, including Gift Funds, of The University of Texas System Administration (“System Administration”) may be expended for Business Meals, Entertainment and other uses of Institutional/Gift Funds (collectively referred to as “Allowable Expenses”) and to specify the fund sources that may be used for such purposes.
Sec. 2 Principles
a) Allowable Expenses governed by this policy must be deemed appropriate in the best judgment of the approving authority, cost effective, within budget authority, Ordinary and Necessary, and serve a clear System Administration business purpose (see Sections 4 and 5 for Allowable Expenses and Appendix A for maximum permitted amounts).
b) Compliance with this policy is the responsibility of all System Administration employees.
c) State Funds may not be used to pay for Allowable Expenses governed by this policy.
d) Except as discussed in Sections 5.1 a) and 6.6, Allowable Expenses must not create a taxable event for an employee or other person.
e) System Administration retains the right to deny reimbursement for any expenses deemed inappropriate.
Sec. 3 Authority and Applicability
Authority is provided by Rule 20101 and Rule 20205 of the Regents’ Rules and Regulations. This policy applies to all employees of System Administration.
Sec. 4 Policy on Business Meals and Entertainment Expenses
4.1 Allowed Business Meals and Entertainment Expenses.
a) Business Meals with Outside Guests. A Business Meal with Outside Guests is allowable when the meal is an Ordinary and Necessary Expense in conducting System Administration business and at least one System Administration employee is present at the Business Meal in addition to any Outside Guest. Such costs are only payable/reimbursable for those guests present for a business purpose.
b) Employee-Only Business Meals (Administrative Meetings and Trainings). Business Meals, inclusive of Light Refreshments, involving only System Administration employees may be paid or reimbursed when provided in connection with administrative meetings, external meetings, or formal training. Meals are allowable only if all of the following criteria are met:
i. the activity is directly concerned with the business of System Administration;
ii. the Business Meal is an Ordinary and Necessary Expense and not a matter of personal convenience;
iii. the Business Meal occurs infrequently; and
iv. the meeting time encompasses a regular meal time and could not reasonably be scheduled during Regular Working Hours (e.g. department retreat, training event or Staff Council events.)
Payment or reimbursement for Light Refreshments only requires meeting i., ii., and iii. out of the listed criteria.
c) Entertainment. Entertainment expenses are allowable if Ordinary and Necessary and in furtherance of System Administration’s mission. Entertainment is distinct from Business Meals.
i. At least one System Administration employee must be present at the Entertainment event in addition to any Outside Guest.
ii. Entertainment expenses including tickets for events not attended by a System Administration employee and/or not directly for the purpose of furthering System Administration’s mission are gifts and must satisfy the requirements of 5.1g.
d) Holiday Functions. Annually, executive officers/department heads may host a holiday event (generally in December) for their own departments and direct reports and be paid or reimbursed per employee up to the amount for Holiday Functions specified in Appendix A. Alcoholic beverages, transportation and lodging are not eligible for reimbursement related to Holiday Functions. The limitations in this subsection do not apply to a holiday event hosted by the Chancellor.
4.2 Payment of Business Meals or Entertainment with Subordinates. The most senior employee present (excluding the Chancellor) at the Business Meal or Entertainment activity must pay for the expense and submit the reimbursement request. Subordinates may not pay on behalf of more senior employees.
4.3 Maximum Permitted Amounts. Payments or reimbursements of expenses for Business Meals expenses cannot exceed the maximum per person rates specified in Appendix A.
4.4 Limitations Concerning Alcoholic Beverages. System Administration employees who consume alcoholic beverages may not be on active duty (i.e. performing the essential duties of a job) when the alcohol is consumed (see Tex. Gov’t Code §2113.012). Alcoholic beverages that are purchased and consumed in a business establishment are subject to the limitations in Appendix A.
Sec. 5 Other Uses of Institutional/Gift Funds
5.1 Allowed Other Uses of Institutional/Gift Funds.
a) Club Memberships. Club memberships are limited to executive officers and the Chief Executive Officer of University Lands and require advance approval of the Chancellor. Specific procedures for club membership payments or reimbursements are provided directly to those individuals who hold memberships. If the club membership is used for personal benefit, the charges incurred will be paid by the individual receiving the benefit and the monthly dues will be prorated based on the personal use. The prorated amount will be added to the individual’s taxable income reported on Internal Revenue Service (IRS) Form W-2.
b) Departmental Beverages. Expenses for coffee, tea, bottled water, soda, and related supplies used in departments may be purchased for the consumption of departmental visitors and employees.
c) Flowers. Flowers may be purchased for memorial services or extended illnesses of an employee, an employee’s family, or a retiree. Family is defined as the employee’s spouse, as well as children, stepchildren, parents, brothers, sisters, grandparents, great-grandparents, grandchildren and step-grandchildren of the employee or the employee’s spouse and must be sent in the name of the department or office. Costs for flowers for the above purposes may not exceed the amount listed in Appendix A. Flowers may be paid by reimbursement to the purchaser or by direct payment to the florist. Departments should collaborate with other System Administration units to minimize the duplication of sending flowers to a single recipient (i.e., four departments sending multiple arrangements for funerals). Flowers may also be purchased for other occasions that serve a bona fide business purpose of System Administration. For example, flowers for decorative purposes may only be purchased as a part of an official System Administration business event.
d) Holiday Greeting Cards. Holiday greeting cards may be sent each year from the Chancellor and U.T. System to System Administration employees, the institutions, and friends of the U.T. System. In the event that a department or office chooses to send holiday greeting cards to customers and constituents unique to that office, such cards must be issued in the name of the department or office. Cards are not to be sent to other offices within System Administration.
e) Gifts for Employees – Other than Retirement Gifts.
i. Gifts for Employees. Gifts, other than retirement gifts, for employees are prohibited with the exception of modest gifts for employee service or achievement and may not exceed the amount specified in Appendix A. Awards and gifts provided to employees are not an entitlement and may be awarded on an infrequent, ad hoc basis to recognize significant events or accomplishments.
ii. Regents. Any gift given to a Regent requires notification to the Office of General Counsel (OGC), regardless of amount. This includes event tickets provided that are unrelated to performance of official duties.
iii. Prohibition on Gifts of Cash or Cash Equivalents. Gifts of cash, cash equivalents, gift cards or certificates, bonds, and securities are prohibited.
f) Retirement Gifts and Functions for Employees.
i. Retirement Gifts. System Administration funds may not be used for a retirement gift that would be taxable to the recipient. Due to the complexity of IRS guidelines, all proposed retirement gifts of tangible property in excess of the limit in Appendix A must be reviewed by OGC before the gift is purchased to determine whether the gift would be taxable to the recipient and therefore prohibited by this policy.
ii. Expenses for Retirement Functions and Retirement Gifts. Expenses incurred for retirement functions and retirement gifts may be paid or reimbursed according to the allowable rate in Appendix A.
iii. Prohibition on Gifts of Cash or Cash Equivalents. Gifts of cash, cash equivalents, gift cards or certificates, bonds, and securities are prohibited.
g) Gifts for Non-Employees. Gift cards/cash equivalents may not be purchased for non-employees. Allowable gifts for non-employees with a direct relationship to System Administration include the following:
i. Donor gifts. The Office of External Relations, Communications, and Advancement Services or the Chancellor’s Office may purchase thank you gifts not to exceed the amount specified in Appendix A per non-employee, paid from Gift Funds only. A thank you gift must not directly correlate with a specific donation.
ii. Volunteer gifts. Engraved certificates, pins, or mementos of a similar nature, with a value that does not exceed the amount specified in Appendix A for each volunteer, may be purchased to recognize special achievement and outstanding service.
iii. Guest Speaker Gifts. The host department may purchase thank you gifts or mementos not to exceed the amount specified in Appendix A for each guest speaker, in recognition of the information and knowledge shared with attendees at the event or conference.
5.2 Nonallowable Personal Celebrations. Reimbursements or payments for employee birthday celebrations, wedding or baby showers, anniversaries, farewell gatherings (other than retirement), and other similar events are not permitted. This includes purchases of related decorations.
Sec. 6 Procedures
6.1 Responsibilities.
a) Executive Vice Chancellor and Chief Operating Officer. The Executive Vice Chancellor and Chief Operating Officer is responsible for revising this policy as necessary to meet the changing needs of System Administration and statutory requirements. The Executive Vice Chancellor and Chief Operating Officer is also responsible for final approval of exceptions submitted in accordance with this policy and periodically reviewing the rates in Appendix A and adjusting as appropriate.
b) Department Heads. Department heads (or equivalent with budget authority over a cost center) are responsible for ensuring that Business Meals, Entertainment, and other expenses conform to the requirements of this policy and that claims submitted for payment or reimbursement include the appropriate supporting documentation (See Section 6.2). The department head is responsible for restricting reimbursements to Allowable Expenses and occasions and for ensuring that expenses incurred are appropriate to the fund source.
c) Office of the Chief Financial Officer (OCFO) – Financial Shared Services (FSS). FSS within the OCFO is responsible for ensuring that payment or reimbursement requests submitted by departments contain the signature (including e-signatures and email approvals) of an authorized approver, for reviewing all supporting documentation to verify that the amounts are accurate and that the appropriate cost centers are charged, and for questioning or returning those requests that do not appear to be in accordance with this policy. In addition, FSS is responsible for ensuring that supporting documentation is retained in accordance with System Administration’s Records Retention Schedule and for updating accounts as appropriate. FSS will also monitor the 60-day window for timely submission required by IRS regulations.
d) Employee. Each employee is responsible for following the Reimbursement Procedures established by this policy.
e) Chancellor. The Chancellor is responsible for approving club memberships for executive officers and the Chief Executive Officer of University Lands in advance.
f) Executive Officers. In addition to their responsibilities under this policy as Department Heads and Employees, Executive Officers, including the Chancellor, are responsible for initial approval of exceptions to this Policy for individuals within departments reporting to them. No Executive Officer can approve an exception for their own reimbursement or payment request or for an event covered by this policy where they were a participant.
g) Office of General Counsel. The Office of General Counsel is responsible for reviewing all retirement and other gifts of tangible property that represent exceptions to this policy and/or are in excess of the limits in Appendix A as well as any gifts to Regents to determine whether the gift would be taxable to the recipient.
6.2 Documentation.
a) Payments or Reimbursements. For payments or reimbursement, documentation supporting the expense must include an original itemized receipt showing payment was made. Payment or reimbursement requests should identify the following:
i. Who – Identify the individuals, groups, or departments involved or benefiting from the expenditure;
ii. What – Describe what was purchased or reimbursed;
iii. Where – State the location of the event, service, or delivery (if applicable);
iv. When – Include the date(s) of the event, purchase, or service; and
v. Why – Document the business purpose of the activity conducted (e.g., negotiation, training, planning, decision-making, or contract oversight). Clearly explain why the expense is necessary, reasonable, and benefits System Administration’s institutional operations.
The description must be sufficiently detailed so that an independent reviewer can readily understand the business necessity of the expense. Single-word justifications such as “meeting” or “collaboration” do not provide sufficient business justification.
Examples of acceptable justifications include:
• “Working lunch with ABC Corp to negotiate contract renewal terms and service deliverables.”
• “Dinner meeting with donor to discuss funding strategy and timeline for the capital campaign.”
b) Exceptions. Documentation for exceptions to this policy must include an Exception Approval Form representing initial approval of the exception and including a certification from the Appropriate Executive Officer that the expenses listed are accurate, incurred for official business purposes, represent an appropriate use of funds, and warrant an exception to standard policy. If OGC approval for a gift is required, documentation demonstrating this approval must also be included in the payment or reimbursement request. Final approval of any exceptions is the responsibility of the Executive Vice Chancellor and Chief Operating Officer or his or her delegate.
6.3 Approval of Allowable Expenses.
a) Required Approvals for Allowable Expenses. For reimbursement of Allowable Expenses, the authorized approver must be the department head with budget authority (or higher level) of the host or the individual requesting reimbursement. An individual may not approve the Allowable Expenses of a person to whom he or she directly reports. When the authorized approver is a participant in the event, the person to whom the authorized approver reports (or a higher officer) must approve the expense or reimbursement.
b) Policy Exceptions. If an employee is seeking payment or reimbursement of an amount in excess of the maximum rates as specified in Appendix A or other exceptions to this policy, the exceptions to this policy must be documented and approved in accordance with Section 6.2b. Exceptions may create taxable benefits to the person seeking reimbursement. Exceptions may not be approved for Section 4.1d related to Holiday Function per employee amounts.
6.4 Funding Sources/Limitations.
a) Gift Funds. Gift Funds that contain restrictions may be used for Allowable Expenses only if the purpose is in compliance with the terms of the gift or related endowment. Care must be taken to assure that the use of Gift Funds does not violate the donor’s restrictions, if any, and the donor’s intent. Some expenses in this policy require payment by Gift Funds only.
b) Institutional Funds. Cost Centers specifically budgeted for official occasions and funded by Institutional Funds must be used for Allowable Expenses covered by this policy.
c) State Funds. State Funds may not be used for any Allowable Expenses covered by this policy.
6.5 Taxable Income. This policy is intended to meet IRS regulations. Failure to adhere to the requirements may result in the reporting of taxable income. The non-business portion of club memberships is taxable income to the employee. An employee request for reimbursement beyond 60 days of the expense is generally taxable if approved. Gifts or other expenses involving non-employees that are approved as exceptions to this policy may create taxable income for those non-employees and should be avoided.
6.6 Reimbursement Procedures. A request for reimbursement of Allowable Expenses must be submitted to FSS via the Concur Expense reimbursement system within 60 days of incurring the expense. Expenses older than 60 days when submitted by an employee for reimbursement in the Concur Expense reimbursement system will, if approved for reimbursement, generally be treated as taxable income to the submitting employee in accordance with IRS regulations. An explanation for the delay in submission is required.
6.7 Direct Payment to Vendor. To issue a direct payment to a vendor for an Allowable Expense, the expense must be in accordance with this policy, documented by an itemized invoice, and submitted to FSS via a completed Vendor Expense Report Form (VER Form). Allowable Expenses vary greatly, however, and Contracts and Procurement personnel within OCFO should be consulted regarding whether a purchase order is needed if the proposed items may reasonably be used for a purpose other than an Allowable Expense. Requestors are encouraged to schedule adequate time prior to an event for any required bid processes.
Definitions
Appropriate Executive Officer – the executive officer having responsibility over the department seeking payment of an expense under this policy. For the Chancellor, the Appropriate Executive Officer is the General Counsel to the Board of Regents. For the General Counsel to the Board of Regents, this is the Chancellor. For executive officers other than the Chancellor requesting payment or reimbursement, the Chancellor is the Appropriate Executive Officer. The Chancellor may delegate this approval to his or her Chief of Staff or the equivalent.
Business Meals - Business Meals are all food or beverage expenses, regardless of whether characterized as meals, snacks, or other types of food and beverages, incurred in the conduct of official System Administration business. Examples include meals, a buffet line, sandwich line, heavy hors d’oeuvres, or similar fare served in connection with a reception, luncheon, dinner, or conference.
Entertainment - any activity which is of a type generally considered to constitute entertainment, amusement, or recreation.
Gift Funds - Institutional Funds paid from a cost center beginning with “55” and with the source typically being from restricted gifts received, restricted endowment earnings, or interest earned on these other two restricted items.
Institutional Funds - for purposes of this policy, institutional funds are defined as cost centers specifically budgeted as official occasions by Budget and Planning within OCFO. Gift Funds are a subset of institutional funds.
Light Refreshments – Light Refreshments are a subset of Business Meals and include nonalcoholic and edible items commonly served between meals, but not intended to substitute for meals, such as tea, coffee, soda, bottled water, doughnuts, cookies, fruit, or similar items. A buffet line, sandwich line, heavy hors d’oeuvres, or similar fare is not considered to be light refreshments.
Non-employee – an individual who is not employed by System Administration or its institutions such as a donor or volunteer.
Ordinary and Necessary Expense – an expense is ordinary if it is common and acceptable for an institution of higher education. It is necessary if it is helpful and appropriate for that institution to conduct business. An expense doesn't have to be required to be considered necessary. To be ordinary and necessary, an expense must not be lavish or extravagant. An expense isn't considered lavish or extravagant if it is reasonable based on the facts and circumstances.
Outside Guest – an individual who is not employed by System Administration.
Regular Working Hours – the hours that an employee of System Administration normally works (generally 8 a.m. to 5 p.m. exclusive of the lunch period.)
State Funds – within this policy, funds paid from any cost center beginning with “21” or “25.” These funds are appropriated by the General Appropriations Act.
