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S. 3589 / Use Your Endowment Act

115th Congress. Photo Credit: Pew Research Center

The Use Your Endowment Act would ban colleges or universities with endowments above $10 billion from receiving CARES Act funds.

Tax-Free School & University Financing

 

Giovanni Paolo Panini, An architectural capriccio with figures among Roman ruins

The #SmartCampus transformation requires significant capital to meet the sustainability goals of the US education industry’s leadership.  Campuses are cities-within-cities and are, to a large degree, financed in a similar fashion.  Municipal bonds* are an effective instrument for school districts, colleges and universities — and the host community in which they are nested — for raising capital for infrastructure projects while also providing investors with $10,000 to $100,000 to allocate toward a tax-free dividend income stream that runs in the range of 2 to 8 percent annually.

An aging population may be receptive to investment opportunities that protect their retirement savings from taxation.

Once a month, we walk through the prospectuses of one or two bond offerings of school districts, colleges and universities and examine offering specifics regarding infrastructure construction, operations and maintenance.  We pay particular attention to details regarding “continuing operations”. Somehow the education industry has to pay for its green agenda.  See our CALENDAR for the next Finance & Management Standards Monthly online teleconference; open to everyone.

We encourage our website guests to visit the EMMA website for more information.  The interactive map below hastens you toward state-by-state listings of tax-free bonds that contribute to the construction and operation of education facilities; some of which involved university-affiliated medical research and healthcare delivery enterprises.

CLICK ON IMAGE FOR INTERACTIVE MAP

 

If you need help cutting through this list please feel free to click in any day at 11 AM Eastern time.  Use the login credentials at the upper right of our hope page.  We collaborate with subject matter experts at Municipal Analytics and UBS.

Issue: [Various]

Category: Administration & Management, Finance, #SmartCampus

Colleagues: Mike Anthony, John Kaczor, Liberty Ziegahn

 

*College and university infrastructure projects are classified with public school districts under the rubric “municipal bonds” at the moment.  CLICK HERE for more information.


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5.28.20

Financial Metadata

Luca Pacioli / “Father of Accounting”

The Accredited Standards Committee X9, Incorporated (ASC x9) has filed an announcement with the American National Standards Institute (ANSI) about a new standardization project titled X9.145 Framework for Financial Instrument Identification.  From the project prospectus:

Project Need: Adopting an open system (in contrast to singular identifiers) of shared symbology serves to establish the foundation for the needs of any modern data management solutions related to the efficient trading, settlement, and reporting of financial instruments. Such a system will enable firms and technology service providers to shift resources from laborious, inefficient, error-prone, and typically manual processes to new investments in tools and products that will better serve clients, consumers, regulators, and the industry at large.

Stakeholders: Brokerage firms, banks/investment services, hedge funds, investment managers, custodians, utilities/industry infrastructure (exchanges, CCPs, clearing, etc.), regulators, data vendors, technology/software vendors.

Background: Adoption of an open-source data framework of shared identifiers and open-source metadata answers the call for greater transparency for the United States financial market. The Object Management Group Financial Instrument Global Identifier (FIGI) introduces a metadata-driven methodology for the management of identifying financial instruments across contextual use cases, and enabling interoperability between existing identifiers. The FIGI enables financial firms and technology service providers to shift resources from laborious, inefficient processes to new investment in tools and products that will better serve clients. Simply stated, the FIGI provides an open-source industry-wide framework that can be used intra- or inter-company to enable the interoperability of the hundreds of vendor-owned identifiers and existing standards that are not currently interoperable or freely redistributable. The FIGI further enables usability by allowing extensibility without restrictions, aside from maintaining the open source nature of the core standard. The FIGI is the only machine-readable identifier standard that can represent any financial instrument.

No comments are due at this time.  The filing with ANSI is only notification that a new standardization project (PINS) has begun.

The education industry needs to prepare for the digital current transformation so we will keep on eye on it; at least reviewing its status along with other financial standardization activity once a month.  You always get a front row seat on the action when you follow standards action.  See our CALENDAR for our next online Finance & Management standards meeting; open to everyone.

We encourage direct participation in the ASC x9 process by anyone in the education industry (CLICK HERE).

 

Distributed Ledger Technology

Issue: [19-145]

Category: Finance,  Management

Colleagues: Mike Anthony, Jack Janveja, Richard Robben

Source: ANSI Standards Action / Page 19


LEARN MORE:

ASC X9 Study Group Report: Distributed Ledger and Blockchain Technology Study Group

ISO/TC 68/SC 8 Reference data for financial services

A Common Language for the Blockchain?

 

Finance

The Italian Luca Pacioli, recognized as The Father of accounting and bookkeeping was the first person to publish a work on double-entry bookkeeping, and introduced the field in Italy.

We walk through action in financial standards that affect the education facilities industry once per month; with special attention to the way money flows into physical infrastructure.   About $75 billion is in play for new construction; often financed through bond offerings.   Another ~$225 billion is in play just to operate and manage the physical infrastructure.  Three hundred billion is about the size of Denmark’s entire economy and would make the wildly fragmented education facility industry a Fortune #3 Company.

Every dollar passing through the business or academic side of the education industry has rules for how it is received and tracked.*   At the moment we track, but do not dwell. on the grant management standards asserted by state and federal funding agencies.  When we do, we place them on the agenda of our Federal Regulations monthly teleconference when commenting opportunities are available.

Send bella@standardsmichigan.com an email for a detailed advance agenda.  To join the teleconference at 11 AM ET today click on the login credentials at the upper right of our home page.

*Electronic Code of Federal Regulations


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CLICK ON IMAGE FOR DOWNLOAD


Standing Agenda / Finance

 

Qualified Zone Academy Bonds

Image Credit: Envato

From the Wikipedia:

Qualified Zone Academy Bonds (QZABs) are a U.S. government debt instrument created by Section 226 of the Taxpayer Relief Act of 1997. It was later revised and regulations may be found in Section 54(E) of the U.S. Code. QZABs allow certain qualified schools to borrow at nominal interest rates (as low as zero percent) for costs incurred in connection with the establishment of special programs in partnership with the private sector…

…Funds can be used for renovation and rehabilitation projects (including energy projects), as well as equipment purchases (including computers). QZABs cannot be used for new building construction. The school district must obtain matching funds from a private-sector/non-profit partner equal to at least 10% of the cost of the proposed project. Information on the two QZAB federal mandates, 10% match and academy, can be obtained by visiting the American Association of School Administrators (AASA) school financing toolkit (see resources below).

…The normal annual allocation each year has been $400,000,000. However, during 2008, 2009, and 2010, the American Recovery & Reinvestment Act (ARRA) increased these amounts to 1.4 billion. The 2011 allocation has returned to the $400,000,000 level. The allocation is divided up by all fifty states and US possessions. QZABs are a temporary program, subject to reauthorization. The last authorization was for the calendar years 2012 and 2013. Authorizations must be used within two years following the year for which they were given, meaning that authorizations given in 2012 must be used by December 31, 2014. As of July 21, 2014, the reauthorization of the QZAB program for years 2014 and 2015 has not been passed by the U.S. Congress.  [Emphasis added*]

From the US Department of Education:

…Schools usually fund large projects, like building renovation or construction, through debt mechanisms such as tax-exempt bonds or loans. School districts must then pay a substantial amount of interest on this debt. For schools serving low income students, QZABs reduce the burden of interest payments by giving financial institutions holding the bonds (or other debt mechanism) a tax credit in lieu of interest. The school district must still pay back the amount of money it initially borrowed, but does not have to pay any interest — typically about half the cost of renovating a school. The credit rate for QZABs sold on a given day is set by the Treasury Department…

With the COVID-19 pandemic disrupting education facility construction projects — and the prospect of at least 10 percent of the built environment rendered redundant for all time — it is enlightening to review the several sources of financing for these construction projects.

We review education industry construction project status and financing at least twice a month during our US Census Bureau Monthly Construction and Finance teleconferences.   See our CALENDAR for the next online meeting; open to everyone.  Use the login credential at the upper right of our home page.

 

* The Rebuild America’s Schools Act of 2019 (H.R. 865/S. 266)

H.R. 865 / Rebuild America’s Schools Act of 2019


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National Education Foundation 

5.28.20

Data Point: Research Expenditures

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Not-for-Profit Update

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Financial Services

Portrait of Luca Pacioli (1445–1517) | Father of Modern Accounting

 

We find few accredited financial service standards developers that have direct, meaningful effect upon #TotalCostofOwnership of the real assets of the education industry; though the finance sector is heavily regulated by government agencies and informed by leading practice discoveries of several finance professional consortia*.   Also the education industry’s use of public money requires rigorous oversight.  That much said we find that the existing suite of financial service standards coming from Geneva are too high level to have direct perceptible effect on money flows through the $300 billion education facility industry.   We put the student loan debacle in the United States aside; though a significant component of the cost of earning a degree involves indirect costs associated with physical infrastructure.

Vocabulary, instrument lexicon and data exchange issues are important; especially for a global industry (CLICK HERE for ISO TC/68 consensus product catalog).

We limit our interest to the arcane and rather dreary world of tax-free bonds that school districts, colleges and universities rely upon to fund capital improvements and “continuing operations”.  We see the prospect of disruption on the horizon as distributed ledger technologies roll out; the topic of our monthly Blockchain teleconferences.   See our CALENDAR for the next online meeting; open to everyone.

For the moment, let us acknowledge Technical Committee 68 of the International Standardization Organization for which the American National Standards Institute is the Global Secretariat.   The prospectus of this standardization project is linked below:

ISO/TC 68 Financial services: Background, structure and information

For obvious reasons, because the finance sector runs on the order of 20 percent of any economy there are many nations involved and a respectable number of published standards.

This consensus product suite may interest business school and/or international studies students.  There are many colleges and universities selling fintech degrees and those programs should get “woke” about this an all other international finance standards.  We are happy to point students in the right direction any day during our 11 AM/ET “open office hours” teleconferences.

Finance staff on the business side of the education industry, who would like to keep pace with the rollout of smart contracts in grant and infrastructure enterprises,  are encouraged to communicate directly with Accredited Standards Committee X9, Inc. for more information about the US Technical Advisory Group.  Janet Busch is listed as the contact person (janet.busch@x9.org).  Our colleagues in other nations interested in participating should communicate directly with Stefan Marinkovic at the ISO Offices in Geneva (marinkovic@iso.org)

We keep all ISO standards on the standing agenda of our International and Finance standards monthly teleconferences.   See our CALENDAR for the next online meeting.

Issue: [16-135]

Category: Finance, International, Blockchain

Colleagues: Mike Anthony, Christine Fischer, Richard Robben

 

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