Far From Cash-Strapped, Universities & Many State Agencies Continue To Build Significant Cash Reserves

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Kansas students and families continue to face mounting tuition and fee expenses even as their state universities continue to build up significant cash reserves. This news comes according to new, FY 2016 unencumbered cash (also called carryover cash) balance data available at KansasOpenGov.org. The adjacent table shows the growth in each university’s general fee fund since FY 2003 general-fee-fund-balances-fy2003-fy2016-updated

These funds are particularly noteworthy because they represent unspent tuition and fee money that could be returned to students in the form of a one-time price reduction and/or could be partially spent down to allow for a one-time freeing up of state revenues normally allocated to higher education. We discussed these and other related budget solutions in our 5-Year Budget Plan published in 2014.

State universities are not the only participants in this phenomenon, however. Kansas’ General Fund gets the bulk of the attention when it comes to state budget discussions, but the state and its agencies actually operate around 1,400 funds without a zero balance—funds that only grow when state agencies take in more than they spend.

To be clear, these agencies do need some savings. Savings are important for sound cash management because they provide stability in light of unforeseen expenditures or economic downturns. Savings also encompass one of many metrics evaluated in bond rating scenarios. Finally, some carryover balances may be earmarked for debt service or other mandated purposes and are thus unavailable for alternative uses.

Yet, in total, statewide carryover cash has grown by more than 172% since FY2003 (from over $918.5 million in FY2003 to just over $2.5 billion in FY2016). The adjacent table shows the agencies that have experienced the greatest carryover cash balance growth by percentage over the period.highest-cash-reserve-growth-by-percentage-fy2003-fy2016

In short, carryover cash balances have come to make up much higher percentages of the state’s operating budget than historical norms might dictate.

Carryover cash balances that are not mandated for specific purposes and are growing beyond what is needed for sound savings may be funds that legislators could look to bring back into the State General Fund to meet other, more pressing fiscal priorities. Click to view the full slate of carryover cash balance records for yourself by fund or by agency.

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