by Tyler Hale
The Arkansas State University System Board of Trustees has established a new financial reserves policy that is designed to protect the financial health of all the institutions under the ASU System banner.
According to Arkansas State University System President Chuck Welch, the policy is part of the system’s effort to be fiscally responsible. Through this policy, member institutions will build and maintain sufficient levels of cash and unrestricted net assets to operate on a day-to-day basis should unforeseen events arise.
Member institutions will be required to maintain at least 60 days of cash on hand or a certain primary reserve ratio to be in good financial standing. The policy holds that institutions that do not meet this criteria will be considered in “financial distress.”
Welch says that none of the institutions in the ASU System are currently in financial distress. However, Henderson State University, which recently became a part of the ASU System, has been in the news for budgetary issues. In an audit, the university was revealed to have a $5 million shortfall.
“The financial situation at Henderson and other institutions around the country is eye-opening for all of higher education,” Welch said in a statement. “This policy, in addition to our long-standing financial reporting and budgeting practices, will help provide assurance to our board, campus constituencies, legislators and taxpayers that we are being responsible stewards of campus financial resources. Our financial reserves are also critical to strong ratings for our bond debt, which results in lower interest rates and debt service expense.”
There are currently seven ASU System institutions. Of that total, one is a four-year institution and five are two-year institutions. The four-year institution is Arkansas State University in Jonesboro , and the two-year institutions are Arkansas State University-Beebe, Arkansas State University-Mountain Home, Arkansas State University-Newport, Arkansas State University Mid-South in West Memphis, and Arkansas State University Three Rivers in Malvern, Sheridan and Benton. Henderson State University and the ASU System have a Memorandum of Understanding which requires approval from the Higher Learning Commission and the state legislature.
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