Accounting & Financial Reporting

Self-Supporting Activities - Reserve for Improvement

What are Reserve for Improvement (RFI) funds?

Reserve for Improvement (RFI) funds are self-supporting activity funds that are set aside for future use. They can be used to fund capital projects, repay working capital loans, purchase additional equipment, buy upgraded or enhanced equipment, and pay for major maintenance and repairs (not annual). They can also be used to cover a deficit in your operating account.

How do I know if I can include RFI in my rate?

RFI can be included in the rate as long as the amount of recharges to federal (including federal flow-thru) funds is less than 15% of your total customer revenue. It's important to note that this only applies to recharges. In other words, if you recharge an NIH grant, RFI is disallowed; however, if you invoice NIH (meaning NIH is an external customer), RFI is allowed.

If you are within 15%, you can include RFI in your rate. However, any recharges to federal customers are rebated monthly by General Accounting to that fund source.

What happens after my rate with RFI is approved?

The entity that approves your rate (i.e., your dean's / vice chancellor's office or the rate committee) forwards the approved rate package to General Accounting. General Accounting creates an operating fund (i.e., 6xxxx) for the activity and a separate RFI fund (i.e., 75xxx). Next, you create accounts in each of those funds and provide the account numbers to General Accounting. Every month, General Accounting transfers the RFI from your operating account to your reserve account. To use RFI funds, charge expenses directly to your RFI account.

In addition, you complete a KFS Budget Adjustment (BA) document to create a base budget and a current budget for the operating account (fund 6xxxx) and include Object Consolidation SB74 for the RFI amount. Establish income objects as debit appropriations and expense objects as credit appropriations.

How does RFI appear on the ledgers?

In your operating account, you should see a debit to Object Consolidation SB74 - IMPROVEMENTS. In your reserve account, you should see a credit to Object Consolidation SUB8 - UNALLOCATED.

Can my department share of NUD be moved to RFI reserve?

Yes, if it is the full NUD. This can be done quarterly, yearly, or in between. Provide General Accounting with the operating account, RFI account, and the amount to be transferred.

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