|
|
1. Background. Every business venture, whether in the private or the public sector, must contend with the possibilities of the unexpected which may present opportunities or court financial ruin. Reserve accounts are established, and funding levels are designated, to meet these contingencies. In addition, paragraph 8.1.1 of the "Compilation of Policies and Procedures for California State University Auxiliary Organizations" provides for "the establishment or revision of reserves and their funding level" in accordance with management review.
2. Establishing the reserve accounts. This policy establishes the following four (4) accounts with the associated definitions and funding levels:
Emergency Reserve Account: The Emergency Reserve Account is established to meet unanticipated needs which arise during a fiscal year involving emergency insurance costs and similar legal obligations. Funding Level: Not lower than $53, 439.00, or as designated by the ASI Board of Directors (BoD).
Administration Reserve Account: The Administration Reserve Account is established to provide for retirement, medical, and other legal obligations to ASI personnel. In addition, the Administration Reserve Account provides for additional staffing needs which would be taxing to one fiscal year's budget. Funding Level: Not lower than $54,001.00, or as designated by the ASI BoD.
Equipment Reserve Account: The Equipment Reserve Account provides for repairs and replacement of major equipment. Funding Level: Not lower than $50,000.00 or as designated by the ASI BoD.
Operations: The Operations Account provides for three (3) months operating funds for current operations during any critical operating budget circumstance. It is not anticipated that this account would be accessed without a major area or statewide emergency. Funding Level: Not lower than $51,854.00 or as designated by the ASI BoD.
4. Reaching the reserve account limits: It is ASI's policy that the limits defined above will be reached incrementally in order to avoid turmoil and disruption of ASI activities. The University Accounting office will coordinate with the ASI Executive Director in supplementing these accounts until the defined limits are reached and will continue to coordinate with the Executive Director thereafter to maintain the limits.
5. Periodic review: The reserve accounts and this policy will be reviewed annually by the ASI Executive Director for sufficiency. It will be the ASI Executive Director's responsibility to bring any areas of interest regarding the Reserve Accounts to the ASI Board of Directors.
|
