CMU reserves increase by $37.8 million; administrators plan to use 1/4 in next two years

• Tweet
• 

The university’s rainy-day fund has increased by $37.8 million since last year, and administrators plan to utilize more of it in the next two years.

Nearly a quarter of the available university reserves will be used on construction projects until the 2012-13 academic year, according to the capital budget,

David Burdette, vice president of Finance and Administrative Services, said restricted expendable and unrestricted net assets make up the university reserves.

“If we had a major disaster, we have access to (reserves) of $258.3 million,” Burdette said.

According to the university’s audited financial statements, CMU has $30 million in restricted expendable net assets and $228.3 million in unrestricted net assets as of June 30.

The most recent example of a construction project needing additional contingency dollars than originally allocated is the Events Center.

Carol Haas, director of financial planning and budgets, said money is allocated into the reserve account at the end of the year after all revenue and expenses have been accounted for.

The board of trustees taps into university reserves when more contingency funds are needed for unplanned capital infrastructure needs, she said.

“If you were to have a boiler go down,” Haas said, “that’s not a planned expenditure and that could cost hundreds of thousands of dollars and that’s when you would use your reserves.”

An estimated $62,440,816 was allocated from university reserves to finance restricted projects, including the Events Center, College of Medicine, Ronan Hall and Bovee University Center renovations.

Steve Lawrence, associate vice president of Facilities Management, said an additional $750,000 was needed to repair unforeseen conditions, design errors and omissions in the Events Center because of alleged inaccurate design plans provided by Smith Group.

He said the number of repairs and the cost to fix them exceeded the original amount of contingency dollars available.

“I’m baffled by it actually, to be honest with you,” he said.

CMU will seek to recoup these funds from Smith Group, he said.

Reserve funds are also used to front the cost of construction projects in some scenarios. As was the case with the College of Medicine, Haas said incoming donations will offset the amount used by the reserves to start construction.