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* Trustees put college on solid foundation

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.

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.

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.

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 here.”

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 college officials.

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 Reserve

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.

Capital 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 president’s designee.

Tuition Contingency Reserve

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 Reserve

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.

Restricted Reserves

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 Reserve

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.

President’s Reserve

The College President will begin each year with a minimum of $200,000 in a contingency account to cover unanticipated expenses during that fiscal period.

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