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POLICY:

It is the policy of the university that General Fund balances may be carried reasonable, documented, and consistent with the intent of state appropriations.

PURPOSE:

Applicability: This policy applies to all positive budget balances within the General Fund, with the exception of positive balances in the program of Reimbursed Activities, which must be fully obligated by June 30th of each fiscal year.

Background: General Fund resources are allocated to California State University, Northridge to support the activities of instruction, research, public service, academic support, student services, institutional support, the operations and maintenance of plant, and the provision of grants and scholarships. Funds are provided through a combination of state appropriations, student fees, and various other revenues and reimbursements collected by the university.

CSU regulations mandate that the university not exceed its assigned General Fund budget. Because of the nature of fiscal management within a university environment, good business practices suggest that some General Fund balances will remain at the end of the fiscal year. In addition, the university is regularly faced with various long term commitments and initiatives that are not part of the regular expenditure profile of the campus. These commitments are an integral part of the campus General Fund mission and may impact the university for time periods in excess of a single fiscal year. Prudent business practices would suggest the advanced planning and funding of these commitments.

It is within the context of these issues that the University Policy and Procedures for the Carry-Forward of General Fund Balances has been developed.

PROCEDURES:

The following procedures shall apply in implementing this policy:

A. Year-end General Fund balances carried forward for general support purposes require no additional action on the part of campus departments. Where possible the university will bank carry-forward funds as allowable. Any remaining balances will be shown on the university's year-end financial statements as an unencumbered budget balance.

B. Year-end General Fund balances carried forward as part of a multiyear CSU allocation will be shown on the university's year-end financial statement as an unencumbered budget balance unless these funds can also be banked. The administrative division or the University Budget Office (as appropriate) must request future spending authority for these items. The request must include:

• The amount to be carried forward

• The time period in which the funds will be expended

• The reason the carry-forward of funds is required

• A copy of the CSU allocation order allowing for the carry-forward of fund.

C. All requests for carry-forward funding must be approved as appropriate, and sent to the University Budget Office, with a copy to the Office of the University Controller, at least five working days prior to the end of the fiscal year.

D. In some cases, specific year-end General Fund balances carried forward as part of a university wide or divisional based plan may be encumbered for future expenditure within the university's accounting system. Encumbrances may include equipment, supplies, contracts, service orders, etc., but may not include future payroll items. Encumbrances will be processed by the University's Accounts Payable Department upon receipt of a signed memorandum from either a division's chief administrative officer or the University's chief fiscal officer, with approval of the President or designee. The memorandum must specify the amount to be carried forward and include a copy of the approved plan. Plans must contain sufficient detail to allow Accounts Payable Department to establish specific encumbrances for each line item of the plan by university department and expenditure type. (The submission of preliminary departmental requisitions, to include all required fields, would assist in this process.)

The University's Accounts Payable Department must receive all approved memoranda no later than five working days before the end of the fiscal year. A copy of each memorandum (with attachments) must be sent to the University Budget Office.

No later than the last working day of September in the subsequent fiscal year a purchase order must be issued which is consistent with the approved plan and which references the same requisition number(s) and account number(s) through which the original encumbrance was established. All equipment and materials must be received, and all contracts and service orders must be completed, no later than the last working day of December (six months following final approval of the plan).

Notice of completion of the approved expenditure plan should be forwarded to the Office of the University Controller upon issuance of a purchase order by the University Purchasing Department. Notice should include a copy of the purchase order for post audit review.

IMPLEMENTATION:

A. To the extent possible, and within the confines of prudent fiscal management and multiyear planning, departments, units and divisions of the university should engage in local efforts to appropriately expend or encumber General Fund balances by June 30 of each fiscal year in support of their mission. This may include the accelerated payment of a multi-year contractual obligation in which the university has received the services, product or equipment specified in the contract.

B. General Fund balances remaining on June 30 may be carried forward to subsequent fiscal years as specified below:

1. Carry Forward of Funds at the Divisional Level: Each administrative division may carry forward year-end General Fund balances for general support purposes in an amount not to exceed $50,000.In addition, each division may carry forward year-end General Fund balances from multiyear programs as authorized by CSU allocation order.

Additional year-end General Fund balances may be carried forward at the divisional level under the following conditions:

a. A comprehensive expenditure plan must be developed at the divisional level. The plan may incorporate individual plans from more than one unit within each division. The amount to be carried forward may not exceed $50,000 or 0.2% of the division's original General Fund expenditure budget (whichever is greater). Exceptions to this dollar limit may be made by the University President. Copies of the approved plan must be forwarded to the Office of the University Controller and the University Budget Office.

b. The plan must support future expenditures that might normally not be possible utilizing a single year's budget due to the type of expenditure, the anticipated magnitude of the expenditure, or the multiyear nature of the expenditure. Planned expenditures may not obligate the university for ongoing support beyond the timelines of the approved plan. Examples of such expenditures might include the future replacement of a significant number of desktop computers to take advantage of new technology or enable the implementation of a major software revision.

c. Where possible, the expenditure plan must be detailed. Planned expenditures should be itemized to include estimated price, date of purchase or contract, and proposed vendor. The plan should include a justification for the carry-forward of funds to include why the expenditure(s) could not be made at the end of the current fiscal year.

d. Funds carried forward must be spent in accordance with approved expenditure plan. Funds that are not spent under the approved plan, or within the approved timelines, will revert to the President for university wide use.

e. Documentation that provides evidence that funds carried forward were expended under the provisions of the plan must be forwarded to the University Budget Office and the Office of the University Controller. This material should be transmitted when the expenditure plans have been implemented. The University Controller will retain a copy of the approved plan, along with documentation concerning its implementation, for a period of two years following completion of the plan.

2. Carry Forward of Part-time Faculty Expenses: Each fiscal year the Division of Academic Affairs employs part-time faculty in offering instructional courses to students. Under current state processes, many of these part-time faculty are continued in payroll status through the months of August and/or July in compensation for teaching assignments completed in the prior fiscal year.

To accommodate the needs of the academic departments in providing for these subsequent year costs, the Division of Academic Affairs may carry forward General Fund balances in an amount not to exceed $600,000 under the following conditions:

a. Departmental requests for the carry-forward of part-time faculty funds must be coordinated at the division level and combined with the divisional request for the carry-forward of funds as described in Section II- A.

b. By September 30th of each fiscal year the Division of Academic Affairs will document to the University Budget Officethat the funding carried forward for July/August part-time faculty expenses were indeed expended for that purpose.

3. Carry Forward of University-wide Funds: The university may carry forward year-end General Fund balances from multiyear programs as authorized by CSU allocation order.

In addition, the university (separate from Division level plans) may carry forward year-end General Fund balances in an amount approved by the President. Funds carried forward:

a. Will be included as a resource within the subsequent year's university planning process.

b. Will not obligate the university for ongoing support. An example of such an expenditure might be the implementation of a major software product over a period of several years.

RESPONSIBILITIES:

Approval responsibilities include: The University President (or designee), the Chief Fiscal Officer, and the Heads of Administrative Divisions. Management and document retention responsibilities include: the University Budget Office, and the Office of the University Controller.

FURTHER INFORMATION:

Office of Budget Planning and Management (818) 677-4233

Approved by the President