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 nonrecurring 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
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 significant structural deficits.
The CSU has prudently managed designated balances and reserves to meet certain strategic goals. As of June 30, 2023, designated balances and reserves in the operating fund totaled $2.5 billion.
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 because of short-term recessionary cycles or state
budget fluctuations. As of June 30, 2023, reserves for economic
uncertainty totaled $766 million and represent about 33 days
of operation for all 23 universities and the Chancellor’s Office.
This is significantly below the recommended practice of
maintaining three to six months of operating expenses.
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.
Balances designated for catastrophic events totaled $45
million, which is sufficient to cover expected needs.
Balances designated for capital are for new projects and
to repair current buildings that include planning costs and
equipment acquisition associated with those buildings. Capital
reserves fall well short of the expected need, which is at
least 10% of the cost of academic projects approved in the
most recent multi-year capital plan. The projected need for
capital projects in 2024-25 is $4.0 billion and the projected need
through 2028-29 is $31.1 billion. Balances designated for capital
totaled $284 million.
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.