TARGET RESERVE POLICY
Most readers will be aware that the Canada & Bermuda Territory has formally adopted a policy requiring each ministry unit to have unrestricted and uncommitted reserves equal to at least three months’ operations. In other words, they should maintain reserves equal to 25% of their annual operating expenditures. Ministry units have until March 31, 2017 to achieve the target reserve level in some fashion.
In some instances, ministry units will achieve the reserve level by generating surpluses in their annual operations. In other cases, divisions are supplementing the ministry units’ efforts by making one-time grants. Some ministry units have difficulty generating surpluses due to claw-back provisions in funding agreements. In these cases, the division may be able to set up a reserve on its books to meet the three-month reserve requirement.
As of September 30, 2013, 52% of ministry units (239) had achieved the target reserve level, 36% had some reserve, but not yet at the target level while 12% (52 units) had no reserve. If you have already achieved the target reserve level, congratulations and thanks for your efforts! If you are not there yet, make sure you have a plan to get there by March 31, 2017.