"Whenever there is a gain in our operating budget, we transfer it into our capital budget," Peterson said. "It's kind of like putting a down payment on a new car or computer."
Hospital officials said $2 million of the $55 million total net gain were added to the capital budget to collect interest and save for future capital projects.
The other $53 million will be used to fund capital expenses during the next fiscal year, with $16 million going toward the purchase of new equipment, $18 million going toward renovations and $19 million going toward construction projects.
Peterson said UNC Hospitals does not always make a net gain in its operating budget, but because it is a non-profit hospital system, it can use reserve savings to cover the financial loss.
"If we have an operating loss -- and that does happen from time to time -- we have to draw from our capital reserves," Peterson said. "The capital budget is a source for funding capital improvements or can be used as a rainy day fund."
Hospital officials said the capital reserve fund is invested primarily in government bonds and should not be hurt by recent drops in the stock market.
But officials said they are pessimistic about making a net gain for the next fiscal year because of a higher payroll after filling a number of positions that were vacant last year.
Many of those positions are in the recently opened UNC Children's Hospital, a medical complex Peterson says will hurt UNC Hospitals financially in the short term, but will be beneficial in the long term.
"Most of the positive changes this year came from our expenses not going up as rapidly as we expected," Peterson said.
"There were expenses we did not take in this year but will receive in the coming year."
The University Editor can be reached at udesk@unc.edu
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