A5. Operating Reserves

5. Operating Reserves
A.5.01 - Operating Fund Balance:
The System shall maintain an unrestricted operating fund balance.  The fund balance shall be a reserve fund to enable the System to respond positively to unexpected variations in cash flow, financial emergencies, and expenditures deemed to be critical to the mission and purposes of the System.  All expenditures from operating fund balances must be approved by the Board of Trustees.  The range of fund balance to be maintained shall be determined annually by the Board with consideration given to guidelines promulgated by credit rating agencies (e.g. Moody's, Standard & Poor's) to ensure the System's favorable credit ratings.

A.5.02 - College Fund Balance:
Operating fund balances derived from savings realized at the end of each fiscal year may be established for individual colleges at the end of each fiscal year.  Items for which the colleges may expend from fund balances must be reviewed in advance by the Chancellor, and approved by the Board of Trustees.  Expenditures may only be made if the System operating fund balance is at the funding level designated by the Board of Trustees.