Reserves are unrestricted net assets, excluding tangible property.
ACPE shall maintain a reserve equal to an average six months of ACPE’s annual unrestricted operating expenses.
Reserve levels shall not drop below an average six months of ACPE’s annual unrestricted operating expense. If the budget process or financial projections show that this threshold shall be crossed, the Board of Directors shall devise a plan for corrective action and implement it.
Sixty-five percent of the 6-month reserve fund must be maintained in cash instruments such as money- market funds, short-term U.S. Treasury Bills, or certificates of deposit, timed to mature throughout the year. The remaining 35 percent may be invested by a balanced formula in stock, bond, and/or real estate mutual funds. Investment in any individual stocks or bonds is prohibited as this would establish a much greater risk.
Until the reserve is sufficient to provide for six (6) months of operating expenses, the annual expense budget shall be built to include a 2 – 5 percent contribution of total revenues to reserves.
Reserves might be used in the following situations:
- For maintaining operations during times of financial or other stress, given a solid plan of action, approved by Treasurer and Finance and Audit Committee;
- To implement new programs and services necessary for organizational growth and for appropriate multi-year programs and services., to be repaid to the reserve fund, regardless of program success, based on a payment plan approved by the Board of Directors;
- To fund necessary multi-year research, such as needs assessments, market research, or other research with multi-year benefit that cannot be funded within one fiscal year;
- To fund infrastructure requirements that cross several years in service or use and therefore shall notbe charged to the yearly operating budget, such as technology with multi-year impact.
- To provided funding for any reason as determined necessary by the Finance Committee and Board of Directors.