It is reasonable that interest from balances created by these fees should be devoted to a greater portion of the doctors' salaries. The Legislature could require the institutions of higher education to expend balances by reducing their appropriations. These balances accumulated because the institutions spend state appropriations first rather than drawing down all revenue sources. While this could provide substantial short-term savings to the General Revenue Fund, it may not be in the best interest of the institutions or the state in the long term. Modest fund balances are required for institutions to operate on a sound financial basis.
Balances are necessary to meet institutional goals, objectives, and unexpected financial needs.
Estimates of reasonable balances range from three to eight percent of an institution's annual operating budget. Both systems included institutions with the highest percentages. Overall, unreserved fund balances comprised about 22 percent of current operations in fiscal year 1990. The Legislature could reduce appropriations by a portion of balances exceeding the eight percent limitation in the next biennium. As a result, this action is not recommended.