Operating Funds Cash Reserves Policy
G8.09 Operating Funds Cash Reserves Policy
The purpose of this policy is to memorialize the university’s philosophy regarding the creation, utilization and prioritization of its cash reserves. As directed by its Board of Governors, the university has established cash reserves for its operating funds with minimum limits of not less than $40 million for the University System (“Cash Reserves”). Moreover, no less than $40 million of the university’s Cash Reserves shall be in U.S. Treasury or Federal Agency Securities. On an annual basis, the total amount of Cash Reserves will be reported to the Board of Governors by university administration.
In spending money from its Cash Reserves, the university is committed to ensuring full satisfaction of its bonded financial obligations. Accordingly, the university’s first priority in spending down its reserves is to fully and timely make all bond payments, including payments for both principal and interest.
In theory, the university’s Cash Reserves may be comprised of monies both appropriated by the State of Missouri and received from other revenue sources (e.g., tuition and fees). In practice, however, the amount of appropriations received by the university is less than the university’s incurred instructional expenses, such that appropriations are not included in the university’s Cash Reserves. In the unlikely future event that appropriations exceed expenses, such that the excess appropriations are added to the university’s Cash Reserves, in spending money from its reserves, the university will first exhaust all appropriations (for the purpose(s) set forth in the applicable appropriation language) before spending money received from other revenue sources.