Management and Use of Unrestricted Net Position (UNP) – 309.11

Back to Business

University of Arkansas at Little Rock
Policy Name: Management and Use of Unrestricted Net Position (UNP)
Policy Number: 309.11
Effective Date: April 1, 2020
Revised Dates: Initial Policy
Most Recent Review Date: April 1, 2020


I. Purpose
The purpose of this document is to provide policy and guidance for the University of Arkansas at Little Rock in managing its financial resources (reserves). This campus policy broadens communications, reinforces prudent business practices to ensure stable financial health, and aids in the development of spending plans that support the campus mission and goals.

II. Policy Statement
The University must properly manage its Unrestricted Net Position (formerly net assets or fund balance) to ensure the financial health of the university and its ability to support its mission and goals in the future. The Vice Chancellor for Finance & Administration must annually provide a report to the Chancellor and Cabinet detailing the prior ten-year trend of the UNP from audited financial statements and a projection for the next three years at a minimum based on calculated enrollment projections approved by the Cabinet. Any planned use of UNP should be documented and expressed within the Narrative accompanying the Annual Budget presented to the Board of Trustees.

III. Financial Management Goals
Fiscal health can be measured by a variety of means that include robust net position management as conducted through policy, practice, and transparent reporting. Though this area may be expanded in the future, the university will currently focus on two primary indicators, the Primary Reserve Ratio (PRR) and the Days of Cash on Hand to monitor its financial success. It is the university’s goal to maintain a PRR of at least .25 and retain at least 60 days of cash on hand including all short-term investments.

IV. Uncommitted Unrestricted Net Position
UNP is defined as those resources that have no externally imposed restriction on use. These assets must be classified as unrestricted under generally accepted accounting principles. However, unrestricted net position may have internal restrictions/commitments, such as capital projects, academic and research startup initiatives, financial aid, or other University business. Upon completion of the University’s annual financial statements, the Director of Financial Services will provide the Vice Chancellor for Finance and Administration (VCFA) with a detail listing of all accounts included in the year-end UNP, then they will jointly separate these funds into categories for “committed” and “uncommitted” using a guidance for committed fund to include all funds currently obligated under contract, include all start-up amounts. The VCFA will then present this list to the Chancellor for review and signature of approval. Once approved, all planning will be based strictly on the amounts of uncommitted UNP.

V. General and Designated Fund Carry-forwards
Carry-forward represents resources remaining at fiscal year-end that are allowed to be carried forward into the next fiscal year. Since these balances are included in the uncommitted UNP, only the Chancellor can authorize carrying forward these prior-year balances.

Status: Active
Approved By: Chancellor Christina Drale
Originator: Vice Chancellor for Finance & Administration
Custodian: Vice Chancellor for Finance & Administration