Procedure for Fund Balance and Reserves Policy

This procedure applies to self-supporting funds, capital improvement fee fund, contingency fund, and operating reserves.The objectives of this procedure are as follows:

  1. Ensure that adequate reserves are maintained for college financial activities.
  2. Provide for process that records and reports fund balance and reserves activity.

Process

  • The Budget and Planning Office will monitor all reserve funds and make appropriate entries to maintain reserves in accordance with this policy. Use of any of the following reserves and contingency funds must be approved by the TMCC President.
  • Self-supporting accounts. The College will maintain a reserve for each of these programs to provide for adequate cash flow, multi-year planning, and operation contingencies. The minimum reserves will be equal to 15 percent of each fund’s program’s operating revenues from the prior year unless a different level is agreed upon as necessary to sustain its operations. To ensure continuity and encouraged growth of these programs, 50 percent of any excess funds after meeting the required reserve level shall be retained by the program and used as part of its succeeding year’s budget plan. Additionally, expenditures from self-funding programs are subject to indirect cost contributions that are consistent with other grants and contracts defined on the Budget and Planning website. See Policy 1799: Reserves.
  • Capital Reserves will be monitored and expenditures may be limited to maintain adequate reserves. These funds will can only be used for capital expenditures.
  • Contingency Fund. The college will maintain at least 3% of operating budget revenues in contingency accounts. This fund can be utilized for unexpected expenses and college initiatives. Any unused funds will be transferred at year-end to institutional initiatives (invest in the future fund).
  • Operating Reserves. The college will maintain operating reserves of at least 15% of the operating budgeted revenues. This fund can be utilized for unexpected expenses and college initiatives.
  • The Budget and Planning Office will prepare a report (at least annually) listing the reserve amounts in each of the reserve funds.
  • Use of Invest in the Future funds will be approved through the annual college resource allocation process.