Staff Policy D-504.01
Institutional Effectiveness Criterion: Operations

Financial Reserves

Financial reserves are the net assets, or accumulated liquid savings, of Northwestern Michigan College. Reserves are a non-recurring source of funding. The Board of Trustees and administration recognize reserves as a key component of stewardship and critical resources supporting the College’s growth and sustainability. Further, external stakeholders such as accreditors, auditors, lenders, grantors, and donors will measure reserves when assessing the College’s overall financial health.

Financial reserves are generally held for one of the following purposes:

• To offset unexpected changes in revenue or expenses
• To fuel growth initiatives, emerging opportunities, and transformational projects
• To support and reinvest in auxiliary or business-type operations
• To meet the College’s future capital and debt service needs
• To comply with external requirements such as generally accepted accounting principles or requirements imposed by the State, Federal agencies, donors, or grantors.

Reserve planning plays a significant role in budgeting and operations. To guide annual budget planning, Resource Guidelines shall be established by Planning and Budget Council and approved by the Board of Trustees during the annual budgeting cycle. The guidelines should align with the College’s strategic plan and will identify the various components of the annual budget. The guidelines also identify each specific reserve, its purpose, calculation, and target balance.

The Board of Trustees shall authorize all expenditures or transfers to and from its reserves.

The Vice President of Finance and Administration will analyze reserve balances at least annually and address any needs or deficiencies through the budgeting process. They will also be responsible, in conjunction with the appropriate faculty and staff, for the development and publication of any procedures or guidelines that may be necessary to administer this policy effectively.

If any provision(s) of this policy or set of bylaws conflicts with laws applicable to Northwestern Michigan College, including the Community College Act of 1966, the Freedom of Information Act, or the Open Meetings Act, as each may be amended from time to time, such laws shall control and supersede such provision(s).