APPROVED: May 14, 2003
EFFECTIVE: July 1, 2003
REVISED: May 10, 2006
REVISED: June 13, 2007
REVISED: March 13, 2019
REFERENCES: C.R.S. 23-60-202
/ Dr. Byron McClenney /
Dr. Byron McClenney
In recognition of its fiduciary responsibility, the Board will exercise control over the administration by the Colorado Community College System (“System” or “CCCS”) of funds, services, and property. The Board will establish policies that provide oversight over the financial stability and security of the System while providing management discretion required to handle day-to-day operations of the System and its Colleges.
College and System Office reserve funds (unrestricted net assets) are subject to this Policy. Reserves are defined, for the purpose of this Policy, as audited year-end unrestricted net assets, including such sources as general fund, tuition, fee revenue and auxiliary revenue, but not including the reserves for compensated absences. Further, sources of funding that are for pass through (e.g., Colorado Vocational Act, Local District Colleges),for Federal or other special purpose grants, or are associated with long-term PERA pension and PERA health care liabilities, are not included in the reserve calculation or subject to this Policy. The reserves of the Colleges and System Office will accumulate through management of revenues and not by annual allocation of System resources through the Board approved budgets.
The Board hereby establishes a minimum unrestricted net asset balance to be held in reserve by each College and the System Office equal to 6% of the prior fiscal year’s audited average operating expenditures for the fiscal year. This calculation shall exclude the following: depreciation, non-Student Financial Aid federal program expenses, disbursements for the Area Vocational Schools and the Local District Colleges, and long-term PERA pension and PERA health care liabilities. Beginning in FY 2019-20, and all fiscal years thereafter, the minimum unrestricted net asset balance to be held by each College and the System Office shall increase to 7.25%. Reserve levels shall be calculated for the System Office, each College, and the System as a whole based on audited financial statements for the fiscal year most recently closed.
Any use of reserves for capital projects or operating expenses above the expense threshold where Board approval is required must be included in the Colleges’ or System Office’s master plan and/or program plan and be presented to the full Board in an agenda item for approval. Capital projects, for the purpose of this Policy, are defined as those requiring a program plan by the Colorado Commission on Higher Education.
Colleges and the System Office have the discretion to expend reserves unless the following conditions exist:
When any of the above conditions exist, reserve spending must be approved by the System Chancellor (as outlined below) or the Board, as appropriate, prior to expenditure.
The System Chancellor may approve expenditures below the required reserve balance in the following situations:
The System Office reserve dollars shall only be used to assist a College faced with extreme financial circumstances. The Board shall be notified of any such use of these reserves for this purpose.
After fiscal year-end close and the completion of the financial audit, the System Controller shall report to the Board the reserves (unrestricted net assets) for each College and the System Office for the fiscal year just completed based on audited Financial Statements. This report should also include the amount each entity is above or below the Board established minimum reserve requirement. For the System Office or Colleges that have unrestricted net asset levels that equal more than half the System Office or Colleges’ prior fiscal year audited operating expenditures, the System Officer or College shall include a report to the Board that outlines the future uses of these funds.
For any use of reserve for capital investment as outlined above or for any situation in which the System Chancellor has authorized an expenditure from reserves that reduces the level below the Board established Policy, the System Office shall report in writing to the Board at the next meeting of the Board the situation that gave rise to the need to take reserves below the required level.
The System Chancellor shall promulgate such procedures as may be needed to implement this Policy.