Systems and Procedures
A Division of The Office of Budget and Finance
A Division of The Office of Budget and Finance
The Copyright Revision Act of 1976 requires educational institutions to pay royalties for the internal use, and in some cases, the public performance of nondramatic musical compositions. As a result, in order to comply with the law, the University has entered into contractual agreements with four (4) separate licensing agencies; The American Society of Composers, Authors, and Publishers (ASCAP), Broadcast Music Incorporated (BMI), Global Music Rights, and the Society of European Stage Authors and Composers (SESAC). Royalties are paid to these agencies based on Full Time Equivalent (FTE) students. The annual fee is not dependent upon the University paying a fee for the performance.
These contracts do not apply to dramas, plays, operas, operettas, reviews, musical comedies, ballets, and like works. These examples are considered "dramatico-musical" works and are not included or covered under the license agreements.
The Public Broadcasting Service (PBS) and National Public Radio (NPR) have negotiated voluntary license agreements with the four licensing agencies. The University's radio or television stations affiliated with PBS or NPR are covered by those agreements, and do not fall under the University's agreement with the four licensing agencies, nor do they require a separate agreement with the licensing agencies.
All University locations are affected by the law and reporting requirements. As individual contracts are renegotiated, some of the conditions contained in this procedure may change and will be revised as necessary.
All contracts must be signed as specified in Policy FN11 Contracts and Leases and FNG02 Limited Delegation of Contract Approvals.
This procedure outlines compliance with the four licensing agencies regarding royalty payments for copyrighted music and is not intended to outline compliance with the Copyright Act of 1976 in its entirety.
The amount of the annual fee is based on the total FTE fall semester enrollment figures for graduate and undergraduate students submitted annually by the University. The rates per student are specified in the contracts of the agencies.
This annual fee covers all uses of copyrighted "musical attractions," with some limitations (e.g., limited to nondramatic performances, does not authorize the broadcasting, telecasting, or transmission by wire, etc.). University radio stations are excluded from this agreement, and therefore, must have a separate agreement, unless affiliated with NPR or PBS.
This annual fee is a general coverage provision which covers the majority of the "internal" uses of music subject to royalties. Radio stations with less than $10,000 in revenue from the sale of airtime are covered under the University's blanket licensing agreement with BMI.
This annual fee covers all uses of copyrighted "musical attractions," with some limitations (e.g., limited to nondramatic performances, does not authorize the broadcasting, telecasting, or transmission by wire, etc.). University radio stations are excluded from this agreement, and therefore, must have a separate agreement, unless affiliated with NPR or PBS.
This fee is paid upon receipt of invoice, and covers all uses of music, including performances. This agreement includes coverage for "carrier current" radio stations and class "D" FM radio with 20 watts or less power broadcasting within the confines of campus.
The Board of Trustees holds the license for two University radio stations.
There are several "limited area broadcasting" radio stations at University Park and non-University Park locations. Additional fees are not due BMI or SESAC if the radio stations do not exceed specified minimum budgetary or gross income requirements (see BMI and SESAC, above). A separate agreement is required with ASCAP and Global Music Rights.
NOTE: "Limited area broadcasting" is defined as a broadcast system that does not use conventional free-radiating antenna techniques, but rather employs:
- A cable distribution system that allows reception only by direct connection to a radio or television, or
- Operates under Part 15 of the Federal Communication Commission (FCC) Regulations using systems referred to as "carrier-current" or "leaky cable."
Any University department, agency, or organization which presents a musical work must submit three (3) copies of the program to Accounting Operations, which acts as coordinator of music royalty fees, on the last working day of each month. It is the responsibility of the Business Area Financial Officer to ensure that the performances are reported to Accounting Operations. The Accounting Operations' office is responsible for submitting the programs to the agencies by the date specified in the respective contracts.
The reporting requirements applicable to the various FCC-Station licensed and "limited area broadcasting" radio stations are transmitted to Accounting Operations via the Report Form, which is issued annually from Accounting Operations to the Financial Officer/Director, Finance & Business of each non-University Park location, and to the Financial Officer of the School of Communications at University Park. Each Financial Officer completes and returns the Report Form to Accounting Operations by the specified date. If radio station activities change after the annual report is returned to Accounting Operations, a new report is completed and sent to Accounting Operations.
Accounting Operations monitors for compliance, and notifies the respective Financial Officer when a contract is needed for compliance.
Annual fees for all three copyright agreements are paid from University general funds. Funds to cover the majority of the annual fee are budgeted on a permanent basis each year to General Ledger Account 52571000, Cost Center 5210710005.
Fees for ASCAP, BMI, and Global Music Rights are paid annually by dates specified in their respective contracts, while SESAC is paid upon receipt of their invoice. Funds used to pay these fees are disbursed via Non-PO Invoice by Accounting Operations from: General Ledger Account 52571000 Fees & Charges.
For ASCAP and BMI, a copy of the program for each musical attraction are submitted to each agency on a quarterly basis, by dates specified in their respective contracts.
Accounting Operations completes the annual enrollment reports to the agencies as requested and/or defined in their respective contracts.
The Associated Student Activities (ASA) and the Center for the Performing Arts (CPA), contribute to account 52571000 on an annual basis. The amount that each department (ASA and CPA) contributes is determined by Accounting Operations and each department is notified of their respective share.
Collection of the funds from ASA and CPA is accomplished by the use of either a Journal Entry (CPA) or a University Invoice (ASA), which is initiated by Accounting Operations.
Violation of a financial policy should be reported to your supervisor, unit manager, Human Resources representative, and/or office responsible for the policy and/or procedure. Where those resources are inadequate, you may choose to make an anonymous report through the Penn State University hotline by calling 1-800-560-1637.
The Financial Officer is responsible for ensuring that procedures pertaining to the accountability and safeguarding of all cash receipts, cash funds, and other assets are established and followed in accordance with approved University policies and procedures. Regular audits relating to advances, cash, travel, equipment accountability, and other expenditures provide a means to protect University assets. The Financial Officer is responsible for working with Internal Audit when audits are being performed in the administrative area. Audits relating to sponsored activities or other audits performed by external auditors may also be performed. The Financial Officer would also be responsible for working with the external auditor and/or a central university office related to these procedures.
University Records must be retained and managed in accordance with Policy AD35 University Archives and Records Management and the University's Records Retention Schedules that have been approved by the Records Management Advisory Committee (RMAC), the Office of General Counsel, and Senior Vice President and Chief of Staff. These Records Retention Schedules are derived from - or based upon - federal, state, and local statute or regulations (i.e., Federal Acquisition Regulations, the OMB Uniform Guidance, Internal Revenue Service, and other regulations governing the auditability and retention of financial records), University Policy, industry standards, and business needs. All University Records must be maintained in such a manner to provide ease of access for review, establish a suitable audit trail for all transactions, and to be reviewed prior to disposition.
University Records and Transitory/Disposable Records are defined below.
Upon completion of the retention period, University Records must be disposed of via secure destruction or transfer to University Archives, unless an exception to the disposition process set forth below applies. In many cases, retention periods and disposition methods may be generally determined by comparing the type of record (i.e., reports, correspondence, etc.) to similar records series with known retention periods listed on the Records Retention Schedule. If the disposition method for University Records states "Review by Archives" on the Records Retention Schedule, the Unit responsible for those records should consult the University Archivist for a final determination of disposition. For University Records that must be securely destroyed, units may arrange for shredding services by either contacting the Blue/White Shredding Program or the Inactive Records Center (IRC).
Exception to the disposition process are as follows:
To safeguard the privacy of individuals, records that contain Personally Identifiable Information (PII), as defined in University Policy AD53 Privacy Policy, or student records, as defined in University Policy AD11 Confidentiality of Student Records, must be securely destroyed beyond recovery. For additional information regarding privacy and the protection of an individual's personal information, see Policy AD53 Privacy Policy.
Additional questions may be directed to the Records Management Officer.
For questions, additional detail, or to request changes to this procedures, please contact the Director, Accounting Operations.
November 18, 2022