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Business and Financial Policies and Procedures

Avoid a Build-Up of Excess Cash Balances

Before You Begin

The State of Illinois Legislative Audit Commission sets limits on the cash balances that may be retained by state universities' self-supporting activities. Amounts that exceed those limits are considered "excess funds." They must be transferred from your unit's self-supporting funds to the University Income Fund, and become subject to all restrictions associated with that fund.

Excess funds are calculated based on "entities," which are defined as groupings of similar self-supporting activities across each campus. The calculation required to determine excess funds is complex and must be performed and monitored by University Accounting and Financial Reporting (UAFR). When an entity exceeds its excess funds limit, UAFR determines which specific funds contribute to the entity's excess balance and contacts the units that manage those funds. If cash balances in those funds remain excessive as of June 30, UAFR transfers amounts from those funds to the University Income Fund.

When tracking cash balances, units may consider a working capital amount equal to two months of average monthly expenditures as a general guide to estimate whether the fund may have an excess cash balance. If you have concerns about an excess balance, consult with UAFR.

Begin

To avoid a build-up of excess cash balances:

  • Regularly monitor self-supporting cash balances to determine whether the balance exceeds the normal surplus needed for two months of operating expenses.
  • When balances exceed this amount, contact UAFR to discuss whether your unit risks having excess funds.
  • If UAFR notifies you that your fund may have an excess cash balance, promptly review your balance and year-to-date transactions, looking for:
    • Expenses related to the activity that have been posted to other funds and may be transferred to this one.
    • Revenues not related to the activity that have been posted to this fund and should be transferred elsewhere.
  • At fiscal year-end:
    • If there are items that have been ordered, but not received, follow the year-end procedures to record the anticipated cost as encumbrances.
    • Report your year-end financial balances and adjustments in the Fact Sheet application.

Consult Fiscal-Year-End Closing and Opening Procedures for job aids, webinar training, and other resources. For detailed information about how the University computes excess cash balances, consult Excess Cash Balance Computation.

Related Policies and Procedures

Monitor a Self-Supporting Fund
Address a Self-Supporting Fund Surplus
Establish and Monitor Rates for Goods and Services Sold to Customers
Reconcile Encumbrance Balances
Report on Self-Supporting Activities in the Year-End Fact Sheet

Additional Resources

Year End Fact Sheet submission tool
Fiscal-Year-End Closing and Opening Procedures
Excess Cash Balance Computation
Introduction to Self-Supporting Funds (GL105)
Legislative Audit Commission University Guidelines

Last Updated: January 1, 2013 | Approved: Senior Associate Vice President for Business and Finance | Effective: January 2013

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