UF/IFAS Internal Management Memoranda


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Internal Management Memoranda

EFFECTIVE DATE: October 21, 1996

INTERNAL MANAGEMENT MEMORANDUM NUMBER: 6C1-6.40-12 (Revised)

SUBJECT: IFAS; Policy and Procedures for Distributing Accretion of Value Resulting from Sales of University of Florida Foundation, Inc. (UFF) SHARE Owned Livestock

General -- Various classes of livestock (beef cattle, equine, swine, etc.) are required for use in the research, extension and/or academic programs of the Institute of Food and Agricultural Sciences (IFAS). Livestock for these programs are made available as follows:
1. Purchased with State appropriated funds.
2. Purchased with UFF SHARE funds.
3. Donations to UFF SHARE.
Policies -- The following policies apply pertaining to livestock purchased or owned by the UFF SHARE.
1. Livestock purchased with State appropriated funds and progeny of State owned animals shall not be sold to the UFF SHARE.
2. An annual livestock lease agreement will be prepared for each unit covering each class of livestock, including beef cattle, equine, and swine, owned by the UFF SHARE and used by that IFAS unit in research, extension, and/or academic programs (copy of the livestock lease agreement is attached). A monthly printed inventory reflecting gains and losses that took place in the covered class of livestock during the month is provided quarterly to the UFF to be attached to the annual lease agreement.
3. Poultry (chicks, poults, pullets, eggs, etc.) may be purchased with UFF SHARE funds, but must be immediately placed on state inventory. Donations of poultry or eggs to the UFF will be transferred immediately to state inventory.
4. The accretion of value resulting from sales of cuts of carcasses of UFF SHARE owned livestock will be handled as follows:
  The Animal Science Meats Laboratory Manager will provide a list showing the specific animals by inventory number to be slaughtered and whose carcasses are to be sold by "cuts" over a period of time. Each group of "cuts" carcasses will be assigned a "group number" for control purposes. All funds received from sales of "cuts" from carcasses within a group will be deposited into the UFF (Animal Science SHARE) account with a back-up memorandum stating "...funds are for cuts of meat involving carcasses for group. The Animal Science Department will establish a sub-account for each group. Inventory adjustment information will be submitted and appropriate distribution of accretion value will be accomplished as soon as all funds are received for all "cuts" of carcasses within a specific group."
5. The accretion of value resulting from UFF SHARE owned livestock will be distributed as follows:
  1. The UFF SHARE shall first be reimbursed for the inventory value of said animals. (Such inventory value in the case of donated animals would be the appraised value resulting from an independent appraisal secured by UFF SHARE; in the case of purchased animals, the receipted purchase price; or, in the case of progeny either zero or the cost of the breeding or stud fee).
  2. The remaining proceeds at time of sale shall be divided between UFF SHARE and the IFAS Research Incidental Income Account, based on the actual annual accounting of direct maintenance costs by fund sources (i.e., State and UFF SHARE) for the prior year. All concerned units will be notified annually of the ratio to be used.
  3. At the close of the fiscal year, there will be an adjustment based on the actual annual accounting of direct maintenance costs by fund sources (i.e., State and UFF SHARE).
6. Other policies are enumerated in the annual lease agreement.
Procedure for distributing proceeds at the time a leased animal has been sold (see Paragraph 2-e(1) and (2), above). For example:
1. Five leased beef cattle are sold February 8, 1988, for $500 a head. Therefore, the buyer pays $2,500 (5 x 500) to the UFF SHARE.
2. The inventory value is $200 a head.
3. Computation would be as follows:
```
                   2/8/88 -- Five beef cattle @ $500 = $2,500
                   Less: Inventory value @ $200/head = $1,000
                                       Net Proceeds    $1,500
```
  Divide net proceeds based on the previous year's ratio which is:
```
                   6.5% to State (Research Incidental)    $97.50
                   93.5% to UFF (SHARE)                $1,402.50
```
4. In this case, SHARE would retain $2,402.50 ($1,000 inventory value, plus 93.5% of the net proceeds -- $1,402.50; SHARE would pay the State (Research Incidental) $97.50 (6.5% of the net proceeds).

Procedures for actual annual accounting of direct maintenance costs by fund sources (see Paragraph 2) e)(3)) are:

Each unit (Department or Research Center) involved will maintain auditable records annually for each class of livestock (i.e., beef cattle, equine, or swine). These records will be maintained on a fiscal year basis.
Set up a file for each class of livestock and include the lease and any lease amendments including copies of monthly class inventory reports on animals leased from UFF SHARE. Also, place in the file a copy of any fiscal document (purchase order, invoice, etc.) involving a direct cost expenditure for the maintenance of that class of livestock.
At the conclusion of each fiscal year, these records will be used to effect any year-end adjustment pertaining to any sales (during that fiscal year) of livestock leased from UFF SHARE. For example:
1. The Animal Science Department had 365 beef cattle during fiscal year 1985-86. Of these, 229 were state owned and 136 were leased from UFF SHARE.
2. A total of $120,512 in direct costs was expended for feed, fertilizer, temporary labor, etc. to maintain these beef cattle. Of this amount, $77,427 was from state appropriated funds and $43,085 was from UFF SHARE funds.
3. Thus, the average direct cost to maintain one animal was $330 ($120,512 divided by 365).
4. Computation would be as shown in the following example. Upon completing the computation with copies of fund deposit documents attached will be sent to Director, Planning and Business Affairs, Room 2022 McCarty Hall, for proper adjustment.

EXAMPLE SUMMARY OF STATE-SHARE DATA For Beef Cattle: 1987-88 Animal Science Department # of Animals Total Expenditures Total Cost/ State SHARE Number State SHARE Expenditure Animal 229 136 365 $77,427 $43,085 $120,512 $330 ___________________________________________________________________ a) SHARE Animals: 136 x 330 (Cost/Animal) = $44,880 (Cost to maintain SHARE animals) b) SHARE expenditures: $43,085 c) Therefore, SHARE should receive (43,085) or 96.0% of net 44,880 from sale of SHARE beef cattle during FY 85-86. d) 100 head of SHARE owned beef cattle on lease to IFAS were sold during 1987-88. 100 @ $500 = $50,000 Inventory Value 100 @ $200 = $20,000 Net Proceeds $30,000 e) Based on c) above, SHARE is entitled to 96% of the total net proceeds; therefore, SHARE should receive (96% x $30,000) or $28,800, plus inventory value of $20,000. SHARE's total receipts for beef cattle sales for FY 87-88 should be $48,800. f) State (Research Incidental) should receive ($50,000 - $48,800) or $1,200. g) Since the net proceeds were divided at time of sales based on ratio indicated for previous fiscal year year (93.5% SHARE; 6.5% State), aforementioned $50,000 is allocated as follows: SHARE -- $20,000 (Inventory value), plus $28,050 (93.5%) of total net proceeds) or total of $48,050. State (Research Incidental) -- $1,950 (6.5% of total net proceeds) Now, the amounts stated above in g) must be adjusted based on computations shown in e) and f). e) SHARE should receive $48,800 g) SHARE did receive $48,050 Owed to SHARE $ 750 g) State (Research Incidental) did receive $1,950 f) State (Research Incidental) should receive $1,200 Research Incidental pays to SHARE $ 750 upon receipt appropriate invoice from SHARE

LEASE AGREEMENT (IFAS - Animals) This Lease is made as of the 1st day of July, 1996, between the UNIVERSITY OF FLORIDA FOUNDATION, INC. (Lessor), a Florida corporation not for profit, and the UNIVERSITY OF FLORIDA (Lessee), for and on the behalf of the Board of Regents of the State of Florida, for the benefit of the Institute of Food and Agricultural Sciences (IFAS). In consideration of the mutual covenants contained in this Lease, Lessor and Lessee agree as follows. 1. Lessor hereby leases to Lessee, to be used for Lessee's research, extension, or resident instruction purposes, certain animals (including but not limited to cattle, horses, and swine) more particularly described in Exhibit A, as amended from time to time by the reports furnished pursuant to paragraph 5. 2. This Lease shall be for a period of one year from the date executed and shall be renewed automatically unless either party provides written notice of its intent to terminate prior to the anniversary date of the Lease. 3. Notwithstanding paragraph 2 above, either party may terminate this Lease or remove one or more animals from the terms of this Lease prior to the anniversary date for any reason by providing forty-five days advance written notice, provided, however, that Lessor may not terminate this Lease or remove a particular animal from this Lease as to an animal involved in an on-going experimental treatment or research process. This proviso shall apply only to termination or removal prior to the anniversary date of this Lease and shall not affect the termination rights expressed in paragraph 2 above. 4. Lessee shall be solely responsible for the physical needs of the animals and shall take all appropriate measures, including the provision of veterinary care, to maintain said animals in good health and safe keeping. Any increase, decrease, or improvement in the size, weight, or physical condition of one or more animals resulting from Lessee's purposeful testing or experimental or resident instruction activity shall be considered permissible and not in violation of any of Lessor's rights under this Lease. 5. Lessee shall make quarterly reports to Lessor of all animal increases (due to acquisition or birth) and losses occurring as a result of death (whether induced by natural causes, experimentation, testing, or research), theft, or other causes. Lessee shall incur no costs or liability to Lessor for any such decreases. Each report will be deemed to be an amendment revising Exhibit A describing the animals subject to this Lease. 6. Lessee may, from time to time, sell one or more live animals covered under this Lease. The proceeds of any such sale shall be paid to Lessor for deposit into the appropriate fund or funds according to the provisions of Internal Management Memorandum Number 6C1-6.40-12 (Revised) as said memorandum may be revised from time to time (the IMM). 7. Lessee may, for purposes of research, testing, or resident instruction, slaughter one or more of the animals, provided, however, that if the carcasses are sold, Lessee shall pay the proceeds to Lessor according to the provisions of the IMM. If the carcasses are not sold, but are otherwise disposed of, Lessee shall incur no costs or liability to Lessor for said animals. 8. Progeny produced by any female animal subject to this Lease shall be the property of Lessor. Lessee is authorized to sell any by-products of such living progeny and proceeds from any such sale by Lessee shall be paid to Lessor for deposit into the appropriate fund or funds. 9. Lessee assumes any and all risks of personal injury and property damage attributable to the negligent acts or omissions of Lessee and its officers, employees, servants, and agents while acting within the scope of their employment. Lessor assumes any and all risks of personal injury and property damage attributable to the negligent acts or omissions of Lessor and its officers, employees, servants, and agents while acting within the scope of their employment. Lessee, as a state agency, warrants and represents that it is self-funded for liability insurance, both public and property, with such protection being applicable to Lessee's officers, employees, servants, and agents while acting within the scope of their employment by Lessee. Lessee and Lessor further agree that nothing contained herein shall be construed or interpreted as (1) denying to either party any remedy or defense available to such party under the laws of the State of Florida; (2) the consent of the State of Florida or its agents and agencies to be sued; or (3) a waiver of sovereign immunity of the State of Florida beyond the waiver provided in Section 768.28, Florida Statutes. 10. Lessee is fully responsible for compliance with all laws, rules, regulations, and policies pertaining to animal care and animal research. 11. This Lease contains all the agreements between the parties and may not be amended except in writing signed by both parties, except as otherwise provided in paragraph 5. UNIVERSITY OF FLORIDA, for and on behalf of the Board of Regents of the State of Florida By:_____________________________________ John V. Lombardi Title: President Date:___________________________________ UNIVERSITY OF FLORIDA FOUNDATION, INC., a Florida corporation not for profit By:_____________________________________ Leslie D. Bram Title: Associate Vice President for Administration Date:___________________________________ UNIVERSITY OF FLORIDA Institute of Food and Agricultural Sciences By:_____________________________________ ________________________________________ Title:__________________________________ Date:___________________________________ Approved: Approved as to Form and Legality ________________________________ ________________________________________ Office of Administrative Affairs Office of General Counsel University of Florida University of Florida

This information is managed by the
Office of the Vice President for Agriculture and Natural Resources.
Send any corrections, additions or deletions to
apc@ifas.ufl.edu.