SELTZ: Administrators do not have total discretion on unrestricted net assets spending
Let's set the record straight — university officials are not hoarding $258 million in cash reserves to finance extravagant building projects.
Tuition is not increasing and faculty salaries are not being frozen because CMU is punishing the campus for cuts in state funding so it can continue to augment its reserves.
CMU does have $228.3 million in unrestricted net assets, but that money is designated for specific expenditures: $45 million for maintenance, debt stabilization and insurance reserves; $34.8 million for contractual commitments; $26.7 million for construction projects in process/reserves; $26.7 million for quasi endowment funds (scholarships); $20.3 million for department special project reserves; $54.8 million for departmental working capital (not all cash); and $20 million for academic support and research.
In total, these funds equate a component of net assets after subtracting liabilities from assets, and there are restrictions on how the funds are spent.
The notion that CMU has more than a quarter-billion dollars in cash reserves stemmed from an Oct. 18 Central Michigan Life article I wrote in which we called the reserves a “rainy day” fund. Though we did not explicitly say those funds are liquid cash reserves, that is how the article was interpreted. To mitigate confusion, we published a follow-up article Nov. 10 to further explain the reserves.
I quoted David Burdette, vice president of Finance and Administrative Services, saying “(t)here’s no unrestricted reserves just laying around for someone to make a claim for them,” and certainly not $258.3 million in hard cash available for unrestricted spending. Rather, Burdette said there is about $5 million available if there is an immediate catastrophe.
I hoped the follow-up story would expunge confusion, but campus groups have continued to falsely assert CMU has more than a quarter-billion dollars in cash reserves. That figure has been used on fliers passed out by protestors and used repeatedly to comment on budget-related stories on www.cm-life.com by disgruntled students complaining about tuition hikes.
I wholeheartedly support the rights of protesting groups to negotiate for better salaries and benefits, and of course I encourage students to voice their concerns about tuition rates, but their arguments are tainted when false information is at the crux of their logic. To make their points stronger, they must stop claiming there is a bank account with millions in cash being mishandled to the detriment of the campus — because it simply is not true.
How the university manages money must be criticized and monitored — both by this newspaper and the campus community — to hold administrators accountable, but chastising administrators with false financial pretenses affronts common sense.
