Administrative Practice Letter III-J Attachment III

Illustration: Calculation of Required Campus Contribution to the Unified Operating Reserve

Scenarios:

#1: The campus has generated a deficit for the current fiscal year and its Operating Reserve balance is above the 10% reserve balance target.

#2: The campus has generated a deficit for the current fiscal year and its Operating Reserve balance is below the 10% reserve balance target.

#3: The campus has generated a surplus for the current fiscal year and its Operating Reserve balance is below the 10% reserve balance target.

#4: The campus has generated a surplus for the current fiscal year and its Operating Reserve balance is above the 10% reserve balance target.

STEP 1: GATHER THE FOLLOWING DATA FROM THE STATS3EN_UNRES_EG REPORT:

Data	Scenario #1 ($ in thousands)	Scenario #2 ($ in thousands)	Scenario #3 ($ in thousands)	Scenario #4 ($ in thousands)
1A. Total Revenues	$201,792	$27,082	$109,680	$35,626
1B. Total Expenses [includes transfers]	(207,957)	(28,558)	(108,789)	(34,560)
1C. Operating Increase (Decrease) Modified Cash Flow:	(6,165)	(1,476)	891	1,066
1D. Plus Depreciation	12,347	1,308	5,901	1,410
1E. Less Transfers to Capital Reserve Funding	–	–	–	(550)
1F. Less Debt Service Principal	(2,792)	(79)	(1,465)	(288)
1G. Less Other Capital and Financing Activities	(4,108)	(6)	(3,805)	(838)
1H. Net Change Before Transfers From (To) Reserves	(718)	(253)	1,522	800
1I. Transfer From (To) Budget Stabilization Reserve	–	–	–	–
1J. Net Change After Budget Stabilization	(718)	(253)	1,522	800
1K. Other Net Transfers From/(To) Reserves	16,237	(37)	1,038	(107)
1L. Net Change in Cash & Reserve Transfers	$15,519	$(216)	$484	$907

STEP 2: USING GENERAL LEDGER ACTIVITY, CALCULATE THE OPERATING RESERVE BALANCE PRIOR TO CLOSE OUT OF CURRENT YEAR ACTIVITY:

Data	Scenario #1 ($ in thousands)	Scenario #2 ($ in thousands)	Scenario #3 ($ in thousands)	Scenario #4 ($ in thousands)
2A. Balance in Operating Reserve at End of Prior Fiscal Year	$25,190	$1,656	$3,256	$8,543
2B. Transfers In (Out) During Current Fiscal Year	(16,117)	(22)	712	(44)
1C. Operating Increase (Decrease) Modified Cash Flow:	15,787	–	–	–
2D. Adjusted Operating Reserve Balance	$24,860	$1,634	$3,968	$8,499

STEP 3: CALCULATE 10% TARGET BALANCE FOR THE OPERATING RESERVE:

3A. Calculate Adjusted E&G Expenses Using Data From Step 1:

Data	Scenario #1 ($ in thousands)	Scenario #2 ($ in thousands)	Scenario #3 ($ in thousands)	Scenario #4 ($ in thousands)
3A.1 Total Operating Expenses & Transfers (Step 1B)	$207,957	$28,558	$108,789	$34,560
3A.2 Less depreciation expense (Step 1D)	(12,347)	(1,308)	(5,901)	(1,410)
3A.3 Plus debt service principal (Step 1F)	2,792	79	1,465	288
3A.4 Adjusted E&G Expenses	$198,402	$27,329	$104,353	$33,438

 

3B. Apply Target Percentage to Calculate the Target Reserve Balance:

Data	Scenario #1 ($ in thousands)	Scenario #2 ($ in thousands)	Scenario #3 ($ in thousands)	Scenario #4 ($ in thousands)
3B.1 Target Percentage	10%	10%	10%	10%
3B.2 Target Operating Reserve Balance (Step 3A.4 * Step 3B.1)	$19,840	$2,733	$10,435	$3,344

STEP 4: CALCULATE AMOUNT THAT ACTUAL OPERATING RESERVE IS OVER (UNDER) TARGET BALANCE:

Data	Scenario #1 ($ in thousands)	Scenario #2 ($ in thousands)	Scenario #3 ($ in thousands)	Scenario #4 ($ in thousands)
(Step 2D minus Step 3B.2)	$5,020	$(1,099)	$(6,467)	$5,155

STEP 5: DETERMINE REQUIRED YEAR END CONTRIBUTION TO CENTRALLY HELD UNIFIED RESERVES:

Data	Scenario #1 ($ in thousands)	Scenario #2 ($ in thousands)	Scenario #3 ($ in thousands)	Scenario #4 ($ in thousands)
5A. Is the ‘Net Change Before Transfers From (To) Reserves’ (Step 1H) positive?	No	No	Yes	Yes
5B. If the answer to Step 5a is ‘No’, STOP – the campus does not meet the requirements to make a contribution	STOP	STOP	Continue	Continue
5C. Is the amount from Step 4 (Amount That Actual Operating Reserve is Over (Under) Target Balance) Greater Than Zero?	–	–	No	Yes
5D.1 If the answer to Step 5C is ‘No’, determine the amount of current year ‘Net Change Before Transfers From (To) Reserves’ needed to help build the campus Operating Reserve to the 10% target balance (smaller of Step 1H or absolute value of Step 4)*	–	–	$1,522	–
5D.2 Amount of current year ‘Net Change Before Transfers From (To) Reserves’ subject to contributions to the Unified Reserves (Step 1H minus Step 5D.1)	–	–	–	$800
5E. Contribution to the Unified Operating Reserve: 10% of Step 5D.2	–	–	–	$80

Back to APL III-J.