Guidelines for the Accounting of Year-End Fund Balance and Board-Required Reserve
These guidelines set forth the process to be used for the accounting of Board required reserves and year-end general operating fund balances of the colleges and universities and the Office of the Chancellor.
Purpose:
The purpose of these guidelines is to provide for consistent budgeting and reporting of year-end fund balances and carryforward amounts. It also provides for consistent recording of the Board Required Reserve in MnSCU accounting, including any increases or decreases during the year.
Definitions:
The year-end general operating fund balance includes in the MnSCU accounting system ending balances in Fund 110 (General Operations), Fund 120 (Customized Training), Fund 830 (Repair and Replacement), and Fund 400 (State Grants). Within the state of Minnesota's accounting system (MAPS), the general operating funds are contained within GFS Fund 105.
The year-end fund balance is the remaining balance showing in MAPS at the close of the fiscal year and consists of the following four components:
- Reserved: balances which use is restricted by external parties. Some examples include faculty contract obligations, encumbrances, and dedicated appropriations.
- Designated for Programs: balances that have been designated by the institution for specific purposes. Some examples include capital expenditures, debt service, anticipated severance and retirement costs, specific departments, programs or activities.
- Designated for Reserve: balance designated for Board required reserve. The Board required reserve is part of an institution's year-end fund balance, which is designated as a reserve and for which no use is presently planned.
- Undesignated: balances that are not restricted or designated
Guidelines:
At the close of each fiscal year, institutions are required to provide the Office of the Chancellor details as to their plans for the use of the year-end fund balance. The detail will include a description and dollar amount for the use. The Office of the Chancellor will categorize the uses in terms of reserved, designated, and undesignated in order to meet financial statement and Minnesota Department of Finance reporting requirements.
The year-end fund balance is a resource that must be budgeted in the next fiscal year within MnSCU accounting using object code 9805 (estimated balance forward in). The amount budgeted in MnSCU will match the MAPS year-end fund balance in GFS Fund 105.
The Board required reserve must be budgeted within MnSCU accounting in a separate cost center using activity code 030009. The portion of the year-end fund balance that is designated for the Board-required reserve should be attributed to object code 9805 (estimated balance forward in). Any new funds within the current fiscal year being attributed to the Board required reserve should be budgeted using a Current Budget Transaction involving object code 9803 (non-mandatory transfer in) and any reduction in the reserve as 7104 (non-mandatory transfer out). If there is a need to use a portion of the reserve during the year, expenditures should not be coded to the reserve cost center. Instead, the budget should be reduced within the reserve cost center and increased in the appropriate cost center.
Colleges and universities are responsible for the accurate accounting of the year-end fund balance and Board required reserve. The Office of the Chancellor will monitor this activity through normal budgetary reviews.
Approved: January 2002
Implementation Date: FY2002
If you have questions or comments please email us (accounting@so.mnscu.edu) or refer to the staff directory link at the top of this page for additional contact information.
