Project Description Summary

The Provost has commissioned the Funds Management Project (FMP) to consider the increasing fund balances in academic units, why balances are growing, and how these funds might be better managed for the benefit of the units and the academy.

A committee representing key stakeholder groups (see FMP website for membership) was appointed by the Provost in late June (see FMP website for charge letter).

Description of Issue
FY16 university year-end cash balances are projected at $1.9B (all funds); balances in units reporting to the Provost total an estimated $651M (excluding sponsored projects). These balances are spread across all funds including general funds, gifts, state and county lines, federal appropriated, auxiliary, income producing, plant, regulatory and student aid. Note that balances in Provost units have increased from $367M in FY11 to $651M in FY16.

It is important to understand that much of this $651 million is committed in one way or another to multi-year uses such as faculty start-up, endowed professor support, facility projects, etc. – a relatively modest portion is uncommitted. For example, of the $651M FY16 balance in the academic areas, $247M was in the general funds with an estimated 80% in multi-year commitments supporting the academic enterprise.

Fund balances and cash balances both refer to revenue less expenditures at any point in time. Carry-forward balances are the same as year-end balances.

There are many reasons for accumulating cash (the committee needs to understand all reasons). A few examples include building reserves for large expenditures, funding multi-year commitments, uncertainty over future budget decisions, and conservative spending due to limited new resources. At the most fundamental level, cash is on hand because of differences in when the University receives cash and when it is used.

The cash balance at a point in time may not be a good indicator of a unit’s financial health or the unit’s effectiveness at using funds – the commitments against that cash must be considered (as described above). Other factors that may affect cash balances include fund restrictions which may limit how funds can be used; the impact of alternative fiscal years on the timing of fund receipt and disbursement; and accounting/reporting events that affect cash balances on any particular date (ex., summer expansion transfers or federal appropriations).

Project Objectives The Project Charter outlines the project objectives (see FMP website for Project Charter). In summary, they include:

  • Fully understand the underlying factors and influenc/es for the accumulation of cash
  • Develop a broad plan that includes multiple strategies to address current fund balances
    • That meet unit resource needs, immediate and longer term
    • That provide overarching opportunities for investment in the academy
  • Develop a plan for ongoing management of future cash balances during the fiscal year and longer term
  • Establish accepted and documented cash balance tolerances that can guide units
  • Align all strategies to a set of Key Values established by the committee (see FMP website for Key Values)

The FMP Committee will draw on Purdue resources outside its membership to join the committee’s work on specific strategies or provide specialized information. The committee will likely use interest groups for feedback and input. In addition, the FMP website has been developed and includes a provision to submit feedback to

A robust Communication Plan has been developed (see FMP website for Communication Plan) that includes regular updates to Deans, Department Heads, University Senate, Es regular updates to Deans, Department Heads, University Senate,PRP, DFAs, and Treasurer.

Current Strategies Six subgroups have been launched to date and include Student Aid, Professorships, Faculty Start-up, Central Bank Concept, Fellowships, Appropriated Funds (see FMP website for description of these Strategies).

FMP Website
The FMP website can be accessed at and selecting Funds Management Project under Provost Initiatives. The FMP website is restricted to West Lafayette faculty and staff so a User Name and Password will be required.

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