What are designated balances and reserves?
Designated balances and reserves are an integral part of how CSU campuses manage operating activities and are held and utilized for designated purposes, as articulated by state law and CSU policy. Designated balances and reserves accumulate annually primarily from tuition, fees, and other revenues in excess of annual expenses. Designated balances and reserves do not include monies that are held on behalf of another entity, such as the federal government for student financial aid, or held pursuant to a bond indenture or other similar requirement. Figures below are presented for funds identified in the CSU policy Designated Balances and Reserves.
Designated balances and reserves are maintained by the 23 campuses and the system office for CSU operating activities, which include student housing, campus parking, student unions, health facilities, university and educational operating activities, among others.
Designated balances and reserves fund non-recurring expenses to manage short-term obligations and commitments, provide funding for capital infrastructure repairs and maintenance, pay for costs associated with catastrophic events and natural disasters, and help ensure that operating costs can be paid during times of economic and budget uncertainty.
Total balances and reserves for all CSU activities over the past five years are displayed here. Further information is provided below for each of the three categories of designated balances (short-term obligations, capital, catastrophic events) and reserves for economic uncertainty.
Within the short-term obligation category, designated balances are for open commitments, encumbrances, near-term debt service payments, and financial aid obligations. These amounts vary year-to-year and are typically paid during the following fiscal year.
Reserves for short-term obligations are sufficient to cover the expected need.
Capital facilities and maintenance designated balances are accumulated over time to repair, replace, and construct academic buildings, student housing, parking, and student body centers, among others.
Reserves for capital facilities and maintenance fall short of the goal to eliminate deferred maintenance and pay at least ten percent of future capital needs.
Designated balances are also maintained to pay for costs associated catastrophic events and natural disasters such as fires, floods, or earthquakes.
Catastrophic event balances may also be used to pay for self-insured retention amounts associated with insurance coverage for such events.
Reserves for economic uncertainty are intended to provide a prudent reserve ranging from to three to six months of operating costs to sustain operations during potential recessionary cycles or state budget fluctuations.
By policy, reserves are maintained for CSU operating activities, which include student housing, campus parking, student unions, health facilities, university and educational operating activities, among others.
Total reserves for economic uncertainty fall below policy guidelines, with existing reserves in this category representing about one month of operating costs, which is much less than the three to six month policy guideline. Additional information is provided below regarding reserve levels.
One-time reserves for economic uncertainty held in the CSU Operating Fund are available to support expenses associated with the CSU's primary instructional mission. The chart below displays the number of days of operating costs the reserve could fund over the past five years. For 2022, the reserve could pay about 33 days of operations for all 23 campuses and the chancellor's office. Click through the chart below to see information about campus operating fund reserves.