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Category:
Financial



Responsible Office:

Policy Title:
Reserve Policy Operating Funds: General IFR, SUTRA and Stabilization Funds

Document Number:
7562

Effective Date:
June 01, 2011


This policy item applies to:
State-Operated Campuses
Table of Contents
Summary

Policy
Definitions
Other Related Information
Procedures
Forms
Authority
History
Appendices


Summary

Since the beginning of New York State’s current fiscal crisis in 2008, questions and concerns have been raised repeatedly about the level of fund reserves (or “cash balances”) held by SUNY state operated campuses. Maintaining adequate reserves is essential to establishing financial stability at Colleges and Universities. Indeed, the level of current unrestricted net assets is reviewed by the Middle States Commission on Accreditation as part of the fiscal component of the accreditation process. However, while it is critical that a campus maintain adequate fund balances “to ensure the long-term viability of the campus and the sustainability of the programs it provides”, maintaining excessive reserves for “future needs” without having a specific plan for those funds can “damage an organization’s reputation” and make it very difficult – in SUNY’s case – to make a strong argument that the University cannot sustain additional cuts to State financial support.

Within SUNY, the ability to generate reserves varies, making the application of a blanket reserve policy significantly challenging. The reserve policy outlined below is based on a comprehensive review of guidelines, policies and procedures from other educational and business sources, including NACUBO (National Association of College and University Business Officers) and GFOA (Government Financial Officers Association).

The basis for determining an adequate reserve level that is commonly used is the “Primary Reserve Ratio”, which is the level of expendable net assets divided by total expenses using audited financial statement information. The ratio can be used to determine the number of months a campus could operate if it brought in no additional revenue but maintained its expenses by using expendable reserves to pay its bills. Because of the reporting complexities associated with SUNY’s financial statements, a more meaningful and practical measure will be used for this policy. SUNY will calculate an unrestricted operating reserve ratio using the unrestricted cash balance divided by the annual disbursements, as of and for the year ended June 30, for operating activity in the accounting system. Campuses will have the ability in the accounting system to designate income fund reimbursable accounts that are restricted and the cash in the restricted accounts would be excluded from the unrestricted operating reserve calculation. A review will be done by System Administration to make sure that restricted accounts are appropriately designated.


Policy

Reserve Policy Operating Funds: General IFR, SUTRA and Stabilization Funds

This policy applies to cash available in the General IFR, SUTRA, and Stabilization funds (to be referred to as the “operating funds”)

System Administration will monitor actual activity in the strategic investment reserves compared to plan; campuses will be asked to explain large discrepancies in the actual versus planned amounts.


Definitions

There are no definitions relevant to this policy.


Other Related Information

There is no related information relevant to this policy.


Procedures

There are no procedures relevant to this policy.


Forms

There are no forms relevant to this policy.


Authority

There is no authority relevant to this policy.


History

Presented at the March 22, 2011 Board of Trustees Finance Committee.


Appendices

There are no appendices relevant to this policy.