Each year the University is required by the Legislative Audit Commission’s University Guidelines of 1982 (as amended 1997 and 2020) to perform an “Excess Funds Test” as of June 30th. This test is required on an entity-by-entity (or fund-by-fund) basis.
The University Guidelines of 1982 (as amended 1997 and 2020) state:
“All funds remaining in the accounting entities at the end of the fiscal year shall be paid into the Income Fund within 45 days of the close of the lapse period [October 15] except as follows: Each entity is allowed to retain a working capital allowance at the end of the fiscal year.”
The working capital allowance is defined in the University Guidelines of 1982 (as amended 1997 and 2020) as:
- "The highest month's disbursements (including not more than 1/12 of total annual transfers to bond reserves) for the fiscal year just completed; (Universities shall not organize disbursement patterns to create artificially high disbursement levels.)
- Encumbrances and current liabilities (excluding refundable deposits) chargeable to current year's operations and paid prior to the end of the State's lapse period (60 days after the close of the fiscal year).
- Deferred income and refundable deposits arising from previous cash transactions.”
Guidelines for Excess Funds
- Budget Officers are responsible for monitoring their Agency account balances carefully to avoid any excess funds problems.
- The Budget Officer should carry over an unencumbered balance no larger than the amount equal to the account's highest month of expenditures.
- Cash value balances in accounts with a rolling 3-year stale balance will be returned to Income Fund/Central Funding Sources.
- Cash value balances in accounts that have significant growth or are not routinely monitored to spend down to the highest month's expenditures will be transferred to the Income Fund.
- Departments must notify Central Offices if they have extenuating circumstances and are unable to meet the guidelines.