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The Internal Bank integrates the three primary functions of treasury management: (1) cash management, (2) limited term investment management (i.e., management of non‐endowment assets), and (3) debt management (both short‐ and long‐term). The Internal Bank manages about $765M in assets as of June 30, 2018 from a combination of activities involving operating cash, bond proceeds, and loan payments.
The internal bank utilizes external consultants to assist with the management of the investment and debt portfolio. University Shared Services Enterprise (USSE) provides services related to limited term investment management for the administration of the Public University Fund (PUF). The PUF is invested by Oregon State Treasury into the Oregon Short Term Fund and the PUF Core Bond Fund. PFM Financial Advisors provides consulting services for debt management to OSU.
OSU borrows money principally to support capital projects—that borrowing requires managing debt. Debt management includes maintaining and understanding impacts to OSU’s Aa3 credit rating with Moody’s Investors Service, determining the types of debt recommended to fund projects per the Debt Policy, issuing approved debt, identifying internal bank fund sources to support capital projects and strategic initiatives, and monitor/advise/report on post issuance compliance usage of tax‐exempt funded spaces.
The internal bank distributes funds for capital projects and strategic initiatives through the Central Loan Program. Funds available for lending include the following:
The Central Loan Program can provide lending to departments or units for:
Temporary loans are used to provide funding on an as‐needed basis during project construction. Temporary loans pay monthly interest on the total balance outstanding plus any current negative balance. Internal Bank funds are advanced, up to the maximum loan amount, as the project requires. Principal payments are typically not made on temporary loans with the exception of gift funded loans where principal amounts may be paid during the construction process as gift funds are received.
Permanent loans are used for asset purchases or when a construction project is substantially complete. Debt service payments on permanent loans to amortize the project’s cost over the stated loan term are made on a semi‐annual basis.