Some revolving funds for colleges and universities are flush with cash as higher education leaders warn of impending tuition increases from budget cuts.
The University of Oklahoma Health Sciences Center’s three revolving funds had a combined balance of $93.4 million at the end of March, according to a list of balances provided by the Office of State Finance. That’s up from $75.5 million at the end of December.
Meanwhile, the University of Central Oklahoma saw a 35 percent increase in its combined revolving funds in the first quarter. It went from $31 million in December to $41 million in March.
In March 2010, UCO’s revolving funds had a combined balance of $27 million, according the Office of State Finance.
Some higher education officials said their revolving funds are often targeted by state budget writers to make up shortfalls in other areas.
Steve Kreidler, UCO’s executive vice president, said part of its revolving fund increase came from tuition revenue from higher enrollment. The university’s enrollment grew by 1,000 students this year to more than 17,000.
“We would have collected a whole ton of tuition in January and February from students enrolling for the spring semester,” Kreidler said. “We then pay it out over the next several months because we still have salaries and overhead.”
At the other end of the scale, several colleges and universities had large drops in their revolving fund balances. Oklahoma State University’s revolving funds for its Stillwater campus fell to $6.5 million in March, down from $12.6 million in March 2010.
The state Regents for Higher Education also saw large decreases in its revolving fund balances. Its combined balance was $12.7 million in March, down from $22.2 million a year ago.
Northeastern Oklahoma A&M College saw its combined revolving fund balance drop to $1.62 million in March. That’s down from $7.38 million a year ago. Much of that decrease was from its capital expenditures fund.
Revolving funds are snapshot
Higher education budget officials said the revolving fund balances are a snapshot in time and may fluctuate during the year from tuition and fee revenue. Some of the balances are cash reserves, too.
In UCO’s case, Kreidler said the university’s governing board likes to keep about one-twelfth of its annual operating budget in reserves. That’s about $12 million, he said.
“We’ve been holding off on capital expenditures to make sure we had good reserve funds to go into next year,” Kreidler said. “But that meant we haven’t fixed up as many classrooms; we haven’t fixed sidewalks that needed to be fixed.”
Kreidler said some deans are also saving money from academic course fees over a period of several years to make classroom improvements without borrowing through the state.
“Some of the colleges are in very aggressive forms of setting money aside to be able to do that stuff for students, like building out labs,” Kreidler said.
The increases in the OU Health Sciences Center balances came mostly from a $33 million repayment from the Office of State Finance, said Catherine F. Bishop, OU’s vice president of public affairs.
“In (fiscal year) 2010, the state borrowed funds from a number of agencies and schools to cover statewide cash-flow requirements,” Bishop said in an email. “Additionally, there were increases in cash receipts realized from tobacco tax, tuition and fees, and indirect cost (overhead) reimbursements between years.”
Jonathan Small, fiscal policy director for the Oklahoma Council of Public Affairs, said the size and growth of some higher education revolving funds deserves more scrutiny. He said higher education should be treated like any other state agency.
The $6.5 billion budget agreement for the 2012 fiscal year includes more than $93.7 million in transfers from various revolving funds. That includes $25 million from the unclaimed property fund and $5 million from a revolving fund at the Insurance Department.
Another $219 million to balance the budget came from leftover federal stimulus funds and cash reserves.
The remainder of the entire $500 million budget shortfall came from appropriations cuts. Higher education, which receives about 14 percent of the state’s appropriations, received total cuts of $58 million. That’s a 5.8 percent decrease from fiscal year 2011.