Subject: Contingency Fund Policy
Approved by: Executive Committee of the Board of Regents
Approval date: April 20, 2012
Effective date: May 1, 2012
Administered by: Vice-President (Administration)
1 — GENERAL
The purpose of this policy is a) to establish a contingency fund to mitigate the effects of revenue shortfalls and emergencies on the general operations of the University, and b) to establish guidelines for managing the disbursement and replenishment of these funds.
This Policy covers the General Operating Fund.
2 — CONTINGENCY FUND ESTABLISHMENT, REPLENISHMENT AND CEILING
At the end of fiscal 2012, any remaining funds in the Provision for Revenue Shortfall and the Emergency Reserve within the General Operating Fund will be appropriated and used to create a Contingency Fund in the Special Purpose Fund.
The General Operating Fund budget in future years will not include either a Provision for Revenue Shortfall or an Emergency Reserve.
Annual spending allocations on unrestricted endowments and unrestricted trusts, and unrestricted donations, that are not committed to fundraising or have not been committed to another purpose by the Board, that in total amount to the lower of
- a) 0.5% of total budgeted General Operating Fund revenues and interfund transfers in,
- b) the actual amount available from unrestricted endowments, trusts and donations or,
- c) the amount required to bring the Contingency Fund to the ceiling as defined in section 2.3 of this policy,
- will be placed in the Contingency Fund each year.
The maximum amount that will be held in the Contingency Fund will be 5% of the total budgeted General Operating Fund revenues and transfers in. Once this maximum amount is reached, the spending allocations that have been supporting the Contingency Fund as provided in section 2.2 above will be available for one-time purposes, as may be approved by the Board of Regents, until such time as they are required to replenish the Contingency Fund.
3 — USE OF THE CONTINGENCY FUND
3.1 Due to a Shortfall in Revenue
At the end of a fiscal year an amount in the Contingency Fund up to the lesser of a) the difference between the original budgeted and actual total General Operating Fund revenues and transfers in and b) the yearend deficit in the General Operating Fund may be transferred to the General Operating Fund.
3.2 Due to an Emergency
At the end of a fiscal year an amount in the Contingency Fund up to the lesser of a) the cost of an emergency and b) the yearend deficit that exists after the transfer, if any, is made under section 3.1 above may be transferred from the Contingency Fund to the General Operating Fund.
For the purpose of this policy an emergency is defined as an event resulting in significant costs which were not reasonably foreseeable when the budget was approved and which cannot reasonably be avoided.
4 — AUTHORIZATION AND REPORTING
The Controller is responsible for identifying a revenue shortfall or an emergency.
The President must authorize any transfer from the Contingency Fund to the General Operating Fund.
The Controller shall report annually to the Finance and Administration Committee of the Board of Regents on the use, balance and other relevant information concerning the Contingency Fund.