Establish UCOP reserve policy

Project Goals

  • To develop and implement a comprehensive UCOP policy and practice to establish and fund appropriate operating reserves for UCOP. The scope will focus on general operating reserves, while also considering facilities reserves, IT equipment & infrastructure reserves, strategic priorities reserves, and any other appropriate reserves as identified through this project. This will include unrestricted, centrally-controlled restricted, and restricted funds.

Plan Assumptions

  • The reserve policy will establish appropriate size of reserves and reserve ratios.
  • The reserve policy will clearly define the purposes for which the reserves may be used.
  • The workstream will determine the affordability of establishing reserves and the impact on the campus assessment.
  • The reserve policy will take into account the operating risks associated with existing and potential future funding sources for on-going operations.
  • The reserve policy will take into consideration any existing deficits and their impact on reserve requirements.
  • This work-stream will also take into consideration the current practice of funding of special one-time projects and initiatives through the “temporary” budget from our prior-year budget surpluses and consider how this funding and practice may be impacted and/or altered by the implementation of a reserve policy. (Note: review of the approval and funding of one-time items is included in the “Budget Process” workstream.)
  • Funding of reserves will be dependent on availability of funds and making budget trade-offs to make funds available.
  • Reserves and transactions in reserve accounts for UCOP will be clearly reflected in a UCOP-specific balance sheet and/or designated fund balances.
  • The reserve policy developed will include a recommendation for appropriate governance and regular reporting of reserves as well as balances and expenditures against reserves.
  • The reserve policy developed will have a mechanism for regular reviews of reserve levels and ratios.
  • This workstream will seek input from appropriate UC stakeholders.
  • Reserve policies will reflect standard accounting practices and reserve policy best practices in higher education (e.g. GAAP, GFOA, and NACUBO).
  • The policy will recommend reserve limits and guidelines for maintaining reserves, with minimum and maximum limits established.

CSA Recommendations

By April 2018

  • UCOP will develop an operating reserve policy that governs how large its reserve should be and the purposes for which it can be used.