Budget Principle: 1.06 Subject: Internally Restricted Funds

Last Modified: February 2014

INTERNALLY RESTRICTED FUNDS

DEFINITION
Internally Restricted Funds are restrictions of operating funds from the Net Assets of the College. There are three types of internal restrictions: Appropriations, Specific Reserves and Reserve Funds. All three types of internal restrictions result in a transfer of spending authority into future fiscal years subject to appropriate approvals.

PRINCIPLE

Appropriations

Where a department has been allocated a budget for a purchase in a fiscal year and that purchasecould not be completed due to circumstances out of the department’s control, the department may request that the unspent portion of the budget be appropriated to the next fiscal year.

Specific Reserves

Specific Reserve balances are established at the end of each fiscal period and recorded under Internally Restricted Net Assets in the College’s financial statements. The following table presents the accounts and purpose of the College’s Specific Reserves:

Other projects and initiatives / Source of funds available for future projects and initiatives to invest and improve in the College’s facilities, physical infrastructure, information, communications and technology infrastructure, information systems, equipment, program development and other strategic initiatives. Also included are funds required to be set aside in order to comply with Ministry direction or contractual commitment with a 3rd party.
Ancillary services reserve fund / Source of funds available for the following:
Residence Maintenance – major capital renewal of the residence facilities.
Food Services Equipment – renewal of capital equipment in the Food Services operation.
Ancillary General Reserves – strategic projects and initiatives, significant one-time capital costs and contingency for unforeseen losses.
Contingency reserve fund / Contingency fund maintained at 3% of budgeted operating revenues to be drawn upon in the event that a major unexpected loss (greater than $3 million) is realized by the College.
Employment stabilization funds / Restricted funds set aside for employee re-training as per the terms and conditions of current collective agreements with support staff and academic staff unions.
Other student aid / Restricted funds set aside for student aid.

The Finance and Administrative Services Department determines the balance of Specific Reserves available to fund Strategic Investment Priorities during the annual budget development process. Specific Reserves are a source of funds for Strategic Investment Priorities and are not directly linked to specific expenditures.

Reserve Funds

Reserve Funds are generally established by the President’s Council to address long-term, strategic initiatives and major capital projects. They may also be established to comply with long-term Ministry or contractual covenants.

Reserve Funds are expected to be multi-year commitments with additions and disbursements in future years.

Non-Ministry and Non-Contractual Reserve Funds which are established for more than one year will be increased during the year-end process by the equivalent of the estimated interest that the Reserve Fund would have earned during the year had the balance forward been invested with the College’s surplus operating funds.

PROCEDURES

The College practices a multi-year budget allocation model for Strategic Investment Priorities. During annual budget development and at each quarter of the fiscal year, approved budget allocations for Strategic Investment Priorities are reviewed and projected expenditures updated on a quarter by quarter basis. Project activities and expenditures may roll over multiple fiscal years provided the Project Sponsor has approved any amendments to due dates of project deliverables and completion.

Funding for Strategic Investment Priorities is only required to be approved once as per the process established by the Finance and Administrative Services department. Unspent funding may be carried over multiple fiscal periods provided that the projects are active. Projects that are inactive for more than a year will be suspended and funding re-purposed to other College priorities.

Appropriations

Funding from the Appropriations balance as at the most recent fiscal year-end may be requested as follows:

  • Requests must be submitted within the first quarter of the new fiscal year (up to and including June 30th)
  • Requests may be made to fund purchases initiated in the previous fiscal year (for example, Purchase Order issued) but not paid until the new fiscal year.
  • Requests must be for purchases of $5,000 or greater.
  • Requests may be submitted to the Director, Finance and Administrative Services via email or hard copy document format and must include the following:
  • Name and position of requester
  • Cost center and object code(s) with unspent funds from previous fiscal year
  • Purchase Order Number (or other appropriate document identifying commitment made in previous fiscal year)
  • Scanned copy of invoice (requester must initiate payment process as per usual process prior to submitting request for appropriation)
  • Amount requested
  • Director, Finance and Administrative Services will assess request and advise requester of the decision in writing.
  • If approved, Finance and Administrative Services staff will process a journal entry to transfer expenditure from requester’s cost center to appropriation account.

Specific Reserves

Specific Reserves are a source of funds for Strategic Investment Priorities. Individual project requests from Specific Reserves will not be accepted. Finance and Administrative Services administers Specific Reserve accounts and will determine when accounts are created and expire.

Authority to Spend:

  • from Appropriationsis granted once the College’s annual budget is developed with an estimated provision for appropriations and approved by the Board of Governors.
  • from Specific Reserves is granted once the College’s annual budget is developed and approved by the Board of Governors. The annual budget will include a budgeted Statement of Financial Position. This Statement of Financial Position will include projected Specific Reserve balances accounting for planned expenditures from these Specific Reserves. Budgeted expenditures are included in the Strategic Investment Priorities schedule of the Annual Budget.
  • from Reserve Funds requires the approval of the Board of Governors.

Budget Principle 1.06Page 1 of 4Finance and Administrative Services