If an accumulated deficit has been recorded, a realistic plan to eliminate the deficit is approved by the governing board. The institution demonstrates the adequacy of financial resources for the support of all of its offerings including specialized occupational, technical, and professional programs. The institution identifies the sources of its student financial aid for current enrollments and provides evidence of planning for future financial aid in light of projected enrollments. It monitors and controls the relationship between unfunded student financial aid and tuition revenues. The institution maintains adequate financial reserves to meet fluctuations in operating revenue, expenses, and debt service.
Income is measured per full-time equivalent student and in terms of gross amounts of income.
Income is also measured by type with the source collectively reflecting adequacy and stability. The institution demonstrates an understanding of the financial relationship between its education and general operations and its auxiliary enterprises and their respective contributions to the overall operations of the institution. This includes the institution's recognition of whether it is dependent on auxiliary enterprise income to balance education and general operations or whether the institution has to use education and general operations income to balance auxiliary enterprises. The financial organization and management, as well as the system of reporting, ensure the integrity of institutional finances, create appropriate control mechanisms, and provide a basis for sound financial decision-making. The president reports regularly to the governing board about the financial adequacy and stability of the institution.