Establish UCOP reserve policy

Current Status  Updated May 2017

CSA due date is April 2018

Initiated

Analysis Underway

Partially Implemented

Fully Implemented

Fully Implemented CSA Confirmed

Project Goals

  • To develop and implement a comprehensive UCOP policy and practice to establish and fund appropriate operating reserves for UCOP. The scope will focus on general operating reserves, while also considering facilities reserves, IT equipment & infrastructure reserves, strategic priorities reserves, and any other appropriate reserves as identified through this project. This will include unrestricted, centrally-controlled restricted, and restricted funds.

Plan Assumptions

  • The reserve policy will establish appropriate size of reserves and reserve ratios.
  • The reserve policy will clearly define the purposes for which the reserves may be used.
  • The workstream will determine the affordability of establishing reserves and the impact on the campus assessment.
  • The reserve policy will take into account the operating risks associated with existing and potential future funding sources for on-going operations.
  • The reserve policy will take into consideration any existing deficits and their impact on reserve requirements.
  • This work-stream will also take into consideration the current practice of funding of special one-time projects and initiatives through the “temporary” budget from our prior-year budget surpluses and consider how this funding and practice may be impacted and/or altered by the implementation of a reserve policy. (Note: review of the approval and funding of one-time items is included in the “Budget Process” workstream.)
  • Funding of reserves will be dependent on availability of funds and making budget trade-offs to make funds available.
  • Reserves and transactions in reserve accounts for UCOP will be clearly reflected in a UCOP-specific balance sheet and/or designated fund balances.
  • The reserve policy developed will include a recommendation for appropriate governance and regular reporting of reserves as well as balances and expenditures against reserves.
  • The reserve policy developed will have a mechanism for regular reviews of reserve levels and ratios.
  • This workstream will seek input from appropriate UC stakeholders.
  • Reserve policies will reflect standard accounting practices and reserve policy best practices in higher education (e.g. GAAP, GFOA, and NACUBO).
  • The policy will recommend reserve limits and guidelines for maintaining reserves, with minimum and maximum limits established.

CSA Reporting Requirements and Milestones

By April 2018

  • UCOP will develop an operating reserve policy that governs how large its reserve should be and the purposes for which it can be used.

Workstream Milestones (preliminary)

1. Stakeholder analysis and formation of Reserve Policy Working Group — identify key UCOP stakeholders and form working group to support workstream. May 31, 2017
2. Executive summary “Current State” report detailing current UCOP reserve practices, relevant reserve best practices, and gaps in UCOP practices. This document will also confirm the scope of this workstream. This milestone will include consideration of best practices as informed by organizations such as NACUBO, GFAO, Education Advisory Board, comparable university systems, and other relevant benchmarks. August 1, 2017
3. Review Current State report with senior leadership to inform of progress and seek feedback August 23, 2017
4. Review Current State report with President to inform of progress and seek feedback August 30, 2017
5. Reserve policy options analysis and preliminary recommendations report detailing options for UCOP reserve policy and preliminary recommendations. October 1, 2017
6. Review reserve policy options analysis and preliminary recommendations report with senior leadership to inform of progress and seek feedback October 10, 2017
7. Review reserve policy options analysis and preliminary recommendations report with President to inform of progress and seek feedback October 16, 2017
8. Review reserve policy options analysis and preliminary recommendations report with appropriate committee of the Regents to inform of progress and seek feedback November 15-16, 2017
9. Final reserve policy recommendation — (internal stakeholder review) present final recommendation with proposed implementation timeline for Reserve Policy to senior leadership December 7, 2017
10. Final reserve policy recommendation — (President’s review) present final recommendation with proposed implementation timeline for reserve policy for the President’s approval December 15, 2017
11. Final reserve policy recommendation — present final recommendation with proposed implementation timeline for reserve policy to the Finance and Capital Strategies Committee of the Regents and the full Regents as appropriate. January 24-25, 2018
12. Reserve policy implementation — implement reserve policy including documentation of annual maintenance and key operating assumptions. April 2018