Operating Reserves

Purpose

The purpose of this policy is to define the operational reserves for Tacoma Community College.

To Whom Does This Policy Apply

The policy applies to all budget authorities of Tacoma Community College.

References

RCW 28B.50.140

WAC 132K.995.990

Board Policy Manual, Chapter VI Fiscal Responsibility

Definitions

Fund: A fiscal and accounting entity with a self-balancing set of general ledger codes in which cash and other financial resources, together with all related liabilities and residual equities or balances, and changes therein, are recorded and segregated for the purpose of carrying on specific activities or attaining certain objectives in accordance with special regulations, restrictions, or limitations.

Fund Balance (Reserves): The difference between a fund’s assets and liabilities.

Budget: A plan of financial operation embodying an estimate of proposed expenditures for a given period of time and the proposed means of financing them.

Operating Budget: A plan of current expenditures and proposed means of financing them. The operating budget is the primary means of ensuring that the financing acquisition, spending, and service delivery activities of the College are controlled.

Policy

In compliance with the Tacoma Community College Board of Trustee’s direction, the College will maintain an operational reserve balance to ensure the College has the ability to carry out its mission. The Board in its fiduciary capacity for prudent financial management, directs the College to accumulate and maintain sufficient reserves to accomplish specific, strategic objects of the College. The Tacoma Community College Board of Trustees has directed the college to begin each fiscal year with local operating reserves of no less than 15% of the annual operating revenue budget of the College except for Board-approved expenditures.

The operational reserves are intended for use in non-recurrent situations. Examples of such situations may be:

• One time expenditures for program start-up
• Expenditures to cover building damages from natural disasters
• Non government-funded portions of capital projects
• Other situations as determined by the President and/or approved by the Board of Trustees

Procedure

Assessment of this reserve balance will be provided through the annual budgeting process. The funds included for this assessment are:

Fund 148 – Dedicated Local - exclusive of restricted fee revenue

Fund 149 – Operating Local

Fund 570 – Other Auxiliary

Fund 145 – Grants and Contracts – exclusive of restrictions, reimbursable grants.

All recommendations to expend reserve funds will be forwarded to the Executive Staff and the President. Approval must be obtained prior to expenditure.

Expenditures of greater than $50,000 will be submitted by the President to the Board of Trustees for approval prior to the use of such funds.