A set of budget reserve policies recently adopted
by the Shoreline Community College Board of Trustees will help ensure the
college maintains its hard-won fiscal health.
“Despite the years of state budget cuts, Shoreline Community
College is now healthier financially than it has been in many years,” President
Lee Lambert said at the September Board of Trustees meeting. Lambert said that
prudent practices and sacrifices across the campus put the college is in a
position to establish a set of targeted reserve accounts and policies.
Trustee Chair Phil Barrett said that putting the college in
a strong financial position is the board’s primary duty. “We can’t do any of
the great things that happen at this college if we don’t take care of the
financial side,” he said.
General Policy Statement
Adequate fund balance and reserve levels are necessary
components of the college's overall financial management strategy and key
factors in assessing the college's financial strength and fiduciary integrity.
Maintenance of a fund balance assures adequate resources for cash flow and
mitigation of short-term revenue shortages, and enables multi-year planning for
self-support program improvements.
Expenditures drawn from reserve accounts shall require prior approval
from the president or the board (per policy governance), unless previously
authorized for expenditure within the college's annual budget. Notice of such action will be presented to
the Board of Trustees at their monthly meetings.
Barrett noted the potential loss of accreditation at City
College of San Francisco, due in large part to fiscal inattention, as evidence
of the importance of a strong financial foundation. “I lay San Francisco’s
problem directly at the feet of their trustees,” Barrett said. “That is not happening
Indeed, the adopted reserve policies were called for
commendation in a recent accreditation report. The preliminary verbal report
given during the Oct. 3-5, 2012 by evaluators for the Northwest Commission on
Colleges and Universities gave high marks for the fiduciary responsibility of
The policies adopted Sept. 26, 2012 by the unanimous vote of
the Trustees call for specific amounts or percentages to be set aside for
specific purposes. The budget reserve areas and amounts include:
General Fund Balance
This reserve is intended to provide adequate cash flow,
emergencies, budget contingencies, multi-year planning, revenue shortfalls,
unplanned but necessary expenditures or operating changes that occur outside of
the planned annual budget. The account
includes 10-12 percent of the previous year’s operating expenditures, unless a
different level is necessary to sustain operations. This year, that means $4.1
million in the reserve.
This maintains local capital reserves to manage facilities
needs that are not funded or are underfunded by the state. The board designated
$1.5 million to this fund, with future designations made by the president or
This account holds in reserve 10 percent of the previous
year’s tuition collections to provide financial cover in the event of
unforeseen fluctuations in enrollment. This year, that equals $1.59 million.
Innovation and Opportunities
The college will establish and maintain a fund to facilitate
college investment in new business initiatives that can bring a return on that
investment. The board has initially designated $2 million, with future amounts
dependent upon the college’s overall financial performance and made by the president
or president’s designee. The Board of Trustees will receive semi-annual reports
on expenditures made from this fund.
Designated Program Reserves
This fund provides for adequate cash flow, multi-year
planning, and operating contingencies for designated programs such as auxiliary
services and self-support programs. The specific programs covered by this
reserve are designated by the president or president’s designee and cover at
least 15 percent of each fund’s operating expenditures, unless a different level
is necessary to sustain operations.
As required by law, regulations and/or agreement, the
college will maintain funds that are restricted by use, complying with federal,
state and grantor rules. The amount in this account fluctuates depending on the
programs and regulations.
Board of Trustees
This establishes and maintains a reserve in the event of an
unbudgeted emergency and is available at the discretion of the Board of
Trustees. At the start of each fiscal
year, from 5-8 percent of the previous fiscal year’s operating budget surplus
goes into this fund. Available this year for this fund is $159,207.
The College President will begin each year with a minimum of
$200,000 in a contingency account to cover unanticipated expenses during that