Policy Statement

This policy governs the incentive budgeting strategy in which divisions of the College are permitted to carry forward from one fiscal year to the next a portion of the remaining balances in the non-salary accounts of the units within their division. The sharing of the unexpended balances in the non-salary accounts between the Divisions and the College will be 25% to the Divisions and 75% reverting to Ramapo’s unallocated unrestricted net assets.

Reason for Policy

This policy provides guidance and parameters to help reduce or eliminate unnecessary year-end spending which in turn may increase the College’s unrestricted net asset balance; increase accountability for spending decisions at the unit level; and enable Divisions to develop reserves to meet contingencies, purchase equipment that would be too costly to acquire within a single years’ budget allocation, or provide funds for strategic initiatives.

To Whom Does the Policy Apply

President, and Division Heads, Budget Managers

Related Documents

Procedure 480: Budget Savings Incentive

Contacts

Budget Office 
(201) 684-7266

I. Timeline
The current incentive reserve addition is calculated a month after the final accounts payable check run of the fiscal year based on the unexpended non-salary account balances within each unit.

II. Availability
The incentive reserve addition is calculated on a unit level and set up as a reserve of net assets.

Each Division Head can view their portion of the reserve balance by unit via the College’s web-based budgeting and planning tool. The Incentive Reserve addition funds are allocated by Division, not by unit. It is the Division Head’s prerogative on
how to use and distribute the funds available and to provide approval of any intradivisional transfer of these funds.

The reserve is available to the Division in the current or future years. Any unit requesting additional funds during the fiscal year must make the request through their respective Division Head. The Division Head or designee makes the decision on the validity of the request and notifies the Budget Office of the amount and of the requesting unit if funds are to be distributed.

III. Uses and Limitations
Reserves set aside for this program are for use in periods of financial stability and should only be used as a last resort when other funding is not available from current sources. In addition, at the discretion of the College President and the Vice President for Administration and Finance, these funds may be expended to meet a College emergency but would be restored in full within the earliest reasonable timeframe. The Vice President for Administration and Finance is responsible for approving transfers of reserve funds in a manner that does not negatively impact the minimum reserve level required to be maintained by the College.

Accumulated reserves do not have a timeframe limitation but are limited to not exceed 10% of a unit’s non-salary budget in a single year and to not exceed 50% of a single years’ non-salary budget over the term of the reserve. Any increases to unit budgets approved during the year to address deficits caused by inadequate budget controls are deducted from the available reserve balances prior to the calculation.