ITEM 126-106-R0305 May 19-20, 2005
MONTANA BOARD OF REGENTS OF HIGHER EDUCATION
Policy and Procedures Manual
SUBJECT: FINANCIAL AFFAIRS
Policy # Establishment of Reserve Revolving Accounts
1. The campuses of the Montana University System shall establish “Reserve Revolving Accounts” in the Designated Subfund for the purpose of managing and mitigating the impact of significant unanticipated revenue shortfalls and/or significant unanticipated expenditure increases.
2. The “Reserve Revolving Accounts” will be utilized exclusively for:
a. the systematic deposit of General Operating funds according to an approved Business Plan;
b. the transfer of funds from this Account to cover documented, significant, and unanticipated revenue shortfalls in the General Operating Subfund;
c. the transfer of funds from this Account to cover documented, significant, and unanticipated expenditure increases in the General Operating Subfund.
1. All business plans must contain a pledge that the account will be reserved exclusively for the deposit of General Operating funds and will be used exclusively to cover significant unanticipated revenue shortfalls and significant unanticipated expenditure increases in the General Operating account.
2. The business plan developed by each campus shall provide a plan whereby the balance in the “Reserve Revolving Account” will reach and be maintained at a minimum level of 2% of the campuses General Operating Budget. It is recognized that it may take years for campuses to build a balance that reaches the 2% level. The business plan should detail the planned systematic deposits to the “Reserve Revolving Accounts” and the estimated time period required to reach the 2% level.
3. All transfers out of the “Reserve Revolving Accounts” must be supported by documented significant and unanticipated revenue shortfalls or documented significant unanticipated expenditure increases from the Regents approved budget level. Transfers out of these accounts are not intended to be made on a routine basis, but only in the event of significant fiscal challenges resulting from the revenue shortfalls or unavoidable expenditure increases.
4. Any balance remaining in the “Reserve Revolving Accounts” at year-end will be retained in the account for use in future years.
5. The Commissioner is authorized to approve business plans for “Reserve Revolving Accounts.”
6. Each campus shall provide a status report on their “Reserve Revolving Account” as part of their operating budget submission each fiscal year. The status report should include prior year actual and current year budgeted transfers to the account, prior year transfers out of the account and the beginning and ending account balance for the prior year. If funds were transferred out of an established “Reserve Revolving Account” the report must also include documentation of the significant unanticipated revenue shortfall or increase in expenditures and that the transfer was necessary to mitigate the impact of the revenue shortfall or expenditure increase.