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Business and Financial Policies and Procedures

1.1.2 How the Unit Financial Report Calculates Unit Flexible and Inflexible Fund Cash

Each unit is expected to have sufficient and appropriate cash to pay salaries and operating expenses. The Unit Annual Financial Report prepared for each unit measures solvency utilizing the "net flexible cash" amount at the end of the fiscal year. A net flexible cash balance indicates the unit is solvent. A net flexible cash deficit indicates the unit is insolvent.

Flexible Funds - Cash in flexible fund sources is available to pay unit program costs.

Inflexible Funds - Cash in inflexible fund sources is available to pay specific project or program costs.

Net Flexible Funds - Positive cash balances in the unit's flexible fund sources, less cash deficits in the unit's flexible fund sources, less cash deficits in the unit's inflexible fund sources.

The following table lists inflexible funds, the method for calculating the amount of cash, and restrictions on the use of these funds:

Flexible Funds Source Method for Calculating the Amount of Cash
State Funds Budget less Expenses Less Obligations

Institutional Funds:

  • Facilities and Administrative (F&A, also known as ICR - indirect costs recovered)
  • Administrative and Educational Allowances
  • Patent, Copyright, and Royalty
Budget less Expenses
Unrestricted Gift and Endowment Funds General Ledger Cash Balance

Service Plan Funds:

  • Medical Service Plan (MSP)
  • Nursing Service Plan (NSP)
  • Dental Service Plan (DSP)
  • Occupational Health Service Plan (OHSP)
General Ledger Cash Balance
Storeroom, Service, Auxiliary Enterprise, and Departmental Activity Funds, which are part of a single purpose unit (Student Auxiliary Operations, Athletics, and University Hospital) General Ledger Cash Balance

The following table lists inflexible funds, the method for calculating the amount of cash, and restrictions on the use of these funds:

Source of Inflexible Funds Method for Calculating the Amount of Cash Restrictions on the Use of Funds
Restricted Gift and Endowment Funds General Ledger Cash Balance As specified by the donor
Other Storeroom, Service, Auxiliary Enterprise, and Departmental Activity Funds General Ledger Cash Balance The State Finance Act restricts the use of these funds to the support, maintenance, and development of the activity generating the revenue
Plant Funds General Ledger Cash Balance Based upon the source of funding and intended purpose

Last Updated: July 5, 2016 | Approved: Senior Associate Vice President for Business and Finance | Effective: July 5, 2016

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