Designated balances and reserves in the CSU operating fund represent equity balances that are held or designated for specific purposes. They are used to address non-recurring expenses by managing short-term obligations and commitments, provide funding for capital projects, infrastructure repairs and facility maintenance, and help to ensure that operating costs can be paid during times of catastrophic events and economic and budgetary uncertainty. Designated balances and reserves are determined and reported annually by the campuses and the system office and are published on
CSU’s financial transparency portal.
Designated balances and reserves are not used to fund recurring expenses, such as salary increases. The use of one-time monies to pay ongoing, permanent expenses can lead to structural deficits.
The CSU has prudently managed designated balances and reserves to meet certain strategic goals. As of June 30, 2022, designated balances and reserves in the operating fund totaled $2.5 billion. They are held for economic uncertainty, catastrophic events, capital needs, and short-term obligations as displayed in the chart.
Reserves for Economic Uncertainty
| $713,829,000
|
Designated for Catastrophic Events
| $47,971,000
|
Designated for Capital
| $281,951,000
|
Designated for Short-Term Obligations
| $1,427,545,000
|
Reserves for Economic Uncertainty
Reserves for economic uncertainty are part of the university’s prudent fiscal strategy. Reserves are held for costs that may occur due to short-term recessionary cycles or state budget fluctuations. As of June 30, 2022, reserves for economic uncertainty totaled $714 million and represent about 33 days of operation for all 23 campuses and the Chancellor’s Office. This is well below the need to maintain three to six months of operating expenses.
Designated for Catastrophic Events
These designated balances are to be used in the event of a natural disaster or other catastrophic event. Typically, these balances are used to pay for costs not covered by insurance and totaled $48 million. Balances designated for catastrophic events are sufficient to cover expected needs.
Designated for Capital
Balances designated for capital are for new projects and to repair current buildings and include planning costs and equipment acquisition associated with those buildings. Capital reserves fall well short of the expected need, which is at least 10 percent of the cost of academic projects approved in the most recent multiyear capital plan. With over $16.5 billion of academic facility and infrastructure needs identified in the 2022-23 through 2026-27 multiyear capital program, over $1.6 billion is required. Balances designated for capital totaled $282 million.
Designated for Short-Term Obligations
Amounts designated for short-term obligations are for open contracts and purchase orders, near-term debt service payments, financial aid obligations and programs that are in development. Balances designated for short-term obligations totaled $1.4 billion at the end of last year, which are sufficient to cover expected needs and are typically paid in the following fiscal year.