Society for College and University Planning
Using Reserve Funds to 'Patch Up' Current Budget Deficits?
"Dean Dad" says you can—maybe—use reserves to fix shortfalls (after some caveats): "The relevant question is whether the shortfall is fleeting or structural. If it’s fleeting, then spend away. If it’s structural, then make the changes that need to be made."
The starter for this blog post is a specific situation at SUNY New Paltz, but that's just the excuse to examine what reserves really are, whether they are useable or not in the first place, and when it might be okay to use them to patch up budgetary shortfalls:
I’ve written before on public college reserves, and how they differ from ‘endowments’ as usually understood. The short version is that endowments are supposed to produce income which can be used for various reasons, but reserves are supposed to be liquid and available either for capital projects (buildings) or short-term budget gaps. Reserves aren’t about generating income, even though it’s nice when they do; they’re there for emergencies and opportunities. Of course, that refers only to general college reserves.
Labels: reserves, deficits, financial crisis, recession, resource and budget planning, Funding, Budget