Hospitality Policy April 2017

Agenda Hospitality Definition Scope/Applicability Hospitality Fundamentals Summary of Changes and Refresh Hospitality Form and Procedures Frequently Asked Questions

Hospitality Defined Hospitality is an activity or gathering that involves some type of hosting related expenditure for an official university business purpose.

Hospitality Defined What types of events or activities can include the provision of hospitality? Fundraising Events Conferences Hosting Guests Entertainment Services Employee meetings Recognition Events Activities to promote employee morale Recruitment Travel

Hospitality Defined Expenses typically incurred at a hospitality event: Meals and beverages (which can include alcohol depending on funding source) Light refreshments Gifts Promotional Items Entertainment Services 9/19/2018

Scope/Applicability The hospitality policy applies to employees, students, donors, guests, visitors, volunteers, independent contractors and consultants, guest speakers and visiting professors.

Everyone! Scope/Applicability Who is subject to this Policy? Cal Poly – University Cal Poly – Corporation Cal Poly – Foundation Cal Poly – ASI Including Students! Everyone!

All of them Scope/Applicability Which funding sources are subject to this policy? With the caveat that the policy has different levels of restrictions for hospitality expenses charged to SL001 vs. an auxiliary funding source or a miscellaneous trust fund SL001 is our most restrictive funding source student tuition, fees and state appropriations All of them

Hospitality Fundamentals Why do we have to be careful about how hospitality events are handled and funded? Hospitality affects every department. Hospitality expenses are audited and scrutinized much more than other supplies and services. Hospitality expenses are funded by taxpayer dollars, student tuition and fees, and donated funds. i.e. It’s not our money. Hospitality expense documents are considered public records and can be requested by anyone for any reason.

Hospitality Fundamentals It is the policy of the CSU that hospitality expenses may be paid to the extent that such expenses are: Necessary Reasonable in amount Serve a bona fide business purpose consistent with the mission of the CSU Not in lieu of compensation or to provide personal benefit to employees i.e. hospitality expenses are not paid in order to compensate an individual for services performed for the University.

Hospitality Fundamentals Does the funding source used affect your ability to pay for hospitality related activities? The CSU Operating Fund (i.e. SL001) may NOT be used for the following: Alcohol and/or tobacco Entertainment services Memberships in social organizations Promotional items for employees only Gifts Business meetings for employees only Any other funding sources may be used if the funds are not restricted by laws, regulations or funding source agreements. See hospitality policy for more info.

Summary of Changes Allowable Hospitality Expenditures and Occasions (Page 6) The previous policy disallowed any expense that resulted in a personal benefit. Current version has been modified to add the following: “Any personal benefit derived by the official host or employee should be incidental to the purpose of the event.” Translation = Some personal benefit is inevitable, but primary purpose is to conduct official University or Auxiliary business. * Refer to the meal caps in the hospitality matrix in two slides

Summary of Changes Employee Meetings and Recognition Events (Page 7) The previous policy stated that meals could not be provided to employees solely for their convenience or where a personal benefit is derived. Policy has been modified to add the following statement: “Meals or light refreshments provided to employees solely for their convenience, and not for the purpose of conducting University or Auxiliary business are considered taxable income by the IRS and are therefore not permitted under this policy.” Translation = Events must be primarily for business purpose * Refer to the meal caps in the hospitality matrix in two slides

Summary of Changes Prohibited Expenditures (top of page 9) Get well expenses (e.g. cards and flowers) are now allowable Statement added to address coffee and bottled water services (e.g. Watergate) * Refer to the meal caps in the hospitality matrix in two slides

Coffee and Bottled Water Coffee and bottled water may be purchased using any funding source that doesn’t specifically restrict these types of purchases, if purchased for an official University or Auxiliary business function (e.g. meetings, hosting guests, etc.). Coffee and bottled water services may not be purchased for employee convenience (i.e. daily use). If a work location does not have accessible drinking water, bottled water may be purchased for daily use from any funding source that doesn’t specifically restrict this type of purchase. * Refer to the meal caps in the hospitality matrix in two slides

Gift Cards * This is how Fiscal Services handles water service for it’s employees.

Gift Cards According to the IRS, gift cards redeemable for general merchandise are considered cash equivalents regardless of dollar amount and should be reportable and taxable. Departments are encouraged to use tangible promotional items (e.g. Cal Poly branded shirts and hats) to reward or incentivize individuals. General purpose gift cards means the user can go into pottery barn and buy whatever item they choose in the store as opposed to a card that is redeemable for a specific tangible item

Gift Cards Department choosing to use gift cards have the following options: Gift card redeemable for a specific item of property or merchandise not to exceed $100. Gift card from the University Store (not to exceed $100). University Store gift cards exceeding $100 are considered reportable and taxable income to the employee. Nominal 3rd party gift cards, with a value of $10 or less, for on campus vendors may also be purchased (e.g. Starbucks, Yogurt Creations, Jamba Juice, etc.) General purpose gift cards means the user can go into pottery barn and buy whatever item they choose in the store as opposed to a card that is redeemable for a specific tangible item

Gift Cards Gift cards should only be provided on an infrequent basis, and not be provided in lieu of compensation. Typical situations that would warrant the use of gift card includes: Incentivizing students and staff to complete a survey Thanking a donor Thanking a faculty member for serving on a committee General purpose gift cards means the user can go into pottery barn and buy whatever item they choose in the store as opposed to a card that is redeemable for a specific tangible item

Hospitality Justification Form Purpose Document the business purpose of the hospitality expenses being incurred. Assist departments to select the appropriate funding source. Provides approval and chartfield information for on campus services provided by Cal Poly Corporation. * Refer to the meal caps in the hospitality matrix in two slides

Hospitality Justification Form * Refer to the meal caps in the hospitality matrix in two slides

Hospitality Form Changes Hospitality Authorization Form is now the Hospitality Justification Form (HJF). Requestor and approver no longer required since the HJF must accompany the payment request submitted. Dollar amount removed from the form. Blanket checkbox removed from form. * Refer to the meal caps in the hospitality matrix in two slides

Hospitality Form Changes Checkboxes to indicate if alcohol or food will be served as part of the event were removed since those will be covered in the event planning guidelines. No signature required since payment request documents submitted to Payment Services for processing will include necessary approval signature. * Refer to the meal caps in the hospitality matrix in two slides

Hospitality Procedures Who can approve hospitality expenses? Employees holding a minimum employment classification of Department Head, Department Chair, MPP or Confidential with fiscal authority for the funding source being used. Can an approving official delegate their approval authority? Approving authority can be delegated to an employee that holds an appropriate employment classification and has fiscal authority over funds used.

Hospitality Procedures When determining whether a hospitality expense is appropriate the approving authority must evaluate: Importance of the event in relation to costs to be incurred Benefits derived from such an expense Availability of funds Alternatives that would be equally effective in accomplishing the desired objectives

Hospitality Procedures How do I submit hospitality expenses? Hospitality expenses are submitted using AFD approved forms and must be accompanied by a Hospitality Justification Form. The Hospitality Justification Form requires an explanation of the event, attendees and explains allowable funding sources. One Hospitality Justification Form is submitted per event. * So for example, a student recognition event with three vendors providing services would only require one hospitality authorization form.

FAQ’s Does the new hospitality policy allow me to use gift cards to promote the university? Departments are encouraged to use tangible university promotional items (with a value of < $100) in place of gift cards. General purpose gift cards purchased from the University Store with a value of < $100 are allowable.

FAQ’s Can I provide coffee or water services? Coffee and water services for employee meetings or events that qualify as a hospitality event are always allowable as long as the funding source does not have any restrictions that disallow the expense. Only recently discovered that State appropriations and donor monies have been used for regular coffee and water service for employees. Refer to the hospitality matrix for a grid of allowable types of hospitality expenses and occassions.

FAQ’s My department received a gift from a donor that is specifically for coffee, water and food for daily employee use? Can my department accept the gift? A donor’s gift purpose cannot allow expenditures that are not allowable based on CSU policy, regardless of which auxiliary holds the monies or pays for the expenses. Department could still accept the donation in this situation, but the purpose of the donation would be written such that it can be used for hospitality expenses as defined in the hospitality policy. Only recently discovered that State appropriations and donor monies have been used for regular coffee and water service for employees. Refer to the hospitality matrix for a grid of allowable types of hospitality expenses and occassions. 9/19/2018

FAQ’s Can my department provide daily water or coffee services for the employee’s convenience? A designated employee in the department can contract directly with the vendor, collect monies from all employees in the department and remit payment to the vendor for the monthly bills. * This is how Fiscal Services handles water service for it’s employees. 9/19/2018

FAQ’s Am I required to complete a Hospitality Justification Form prior to an event? No*. The HJF can be completed at the time the payment request is completed. Departments can however choose to use the HJF as a pre-authorization. *Exception: On campus services (e.g. Cal Poly Corporation dining) requires submission of the HJF at the time services provided. Users regularly submit Direct buy forms and invoices that do not provide sufficient documentation requring the accounts payable department to route documents back to the requestor, slowing down the vendor payment or reimbursement process. The form enables accounts payable to turn payment around more quickly.

FAQ’s I’m hosting a candidate from out of the area for a recruitment. Are expenses incurred on the candidate’s behalf considered hospitality? Travel related expenses are not considered a hospitality expense and are always submitted on a Travel Claim Form. Non-travel related expenses incurred by the department to host the candidate, e.g. dinner with department personnel would be considered a hospitality expense. Users regularly submit Direct buy forms and invoices that do not provide sufficient documentation requring the accounts payable department to route documents back to the requestor, slowing down the vendor payment or reimbursement process. The form enables accounts payable to turn payment around more quickly.

Policy Overview Documentation Resources Cal Poly Hospitality Policy https://afd.calpoly.edu/fiscalservices/forms/hospitality_policy.pdf Cal Poly Hospitality Justification Form https://afd.calpoly.edu/fiscalservices/forms/hospitality_form.pdf 9/19/2018

Interim University Controller Marc Benadiba Interim University Controller Fiscal Services mbenadib@calpoly.edu 756-5864