Carryforward Fund Balances and Reserve Guidelines
Learn about new campus guidelines for carryforward fund balances and reserves
Beginning with the 2018/19 fiscal year, the campus will build on its existing review process by providing policy guidance on carryforward balances, defined by Days Fund Balance (a proxy for Days Cash on Hand).
These new guidelines:
- Establish a baseline of financial resources to reasonably protect the university against disruption in the event of unexpected revenue shortfalls or unanticipated expenditures, while confirming to stakeholders that their resources are being used prudently
- Intended to be a starting point for budget discussions to increase consistency and transparency, while recognizing the need for units to maintain flexibility to manage risks unique to their programs and operations i.e. revenue volatility and expense profile
Guidelines
Generally, for unrestricted carryforward fund balances, the following guidelines should be applied:
|
Type of Unit |
Days Fund Balance |
|
Administrative or Academic Units on a fixed base budget |
Up to 30 days |
|
Administrative or Auxiliary Units with significant reliance on self-support & external revenues |
30 – 90 days |
|
Clinical Units with significant reliance on patient revenues |
30 – 90 days |
|
Academic Units with significant reliance on extra-mural support & expected to provide PI bridge funding |
30 – 180 days |
Days Fund Balance Report
The Days Fund Balance Report has been developed to include a high-level view by Vice Chancellor, with further breakdown by Level 3 and Level 4 Financial Unit. Balances and expense data are included for all funds including Core Funds, Unrestricted Funds and Restricted Gift Funds with the following exclusions:
- Contract & Grant Funds
- Internal Loan Fund 13042
- Recharge Operating Fund 12100
- PPM Project Balances tagged as ‘Faculty Portfolio’
The calculation for Days Fund Balance = June 30th Ending Fund Balance ÷ (Annual Operating Expenses / 365)
Red/Green formatting indicates if the unit is inside or outside of the assigned # of days guideline. The Campus Budget Office did an initial mapping of each unit into one of four categories; please review & contact CBO if a change is needed.
The Days Funds Balance report is available from the Business Analytics Hub (bah.ucsd.edu) under the Financial Resource Management Dashboard.
Implementation
During annual Phase I Tactical Budget Meetings with the CFO, discussions include a unit’s projection of anticipated carryforward balances, expected cash‐flow from operations and planned one‐time investments. Possible outcomes from these discussions may include requests to deploy and invest carryforward funds to:
- match or cost‐share specific activities or programs,
- advance high priority needs in lieu of a core funding allocation (full or partial), or
- invest (spend‐down) funds within a specific time period or conversely direct units to slow expenditures to build balances within a specific time period.
FAQ
Q: How do I interpret the red / green coding in the DFB Report?
A: Green indicates that the unit’s Days Fund Balance is within their appropriate range per the guidelines. Red indicates that the unit is out of range, either too high or too low (also can be negative if unit ended the year with a deficit).
Q: Which fund balances are included in the DFB calculation?
A: All Core Funds, Unrestricted Funds and Restricted Gift Funds, as defined by the Managerial Reporting Fund Hierarchy, are included with the following exclusions:
- Contract & Grant Funds
- Internal Loan Fund 13042
- Recharge Operating Fund 12100
- PPM Project Balances tagged as ‘Faculty Portfolio’
Q: Which expenses are included in the DFB calculation?
A: Total expenses include Compensation Expenses, Non-Compensation Expenses and Non-Operating Expenses/Transfers, as defined in the Managerial Reporting Account Hierarchy.
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