Standard 9: Financial Resources
Description
The management of financial resources is driven by the university's mission to provide students with a quality education and to facilitate their success. Despite the State's current economic conditions, SCSU continues to operate on a fairly financially stable basis. The university is serious about its responsibility to be a careful steward of the public's money. As a result of its prudent fiscal management, at a minimum, the institution maintains its capacity to continue program activities at quality levels consistent with the past.
Evidence of the university's financial stability can be found in the most recent statement of revenue, expense and changes in net assets for the fiscal year ending June 30, 2010, where the increase in net assets within the Current Unrestricted Fund between FY2010 and FY2009 was $12.4 million dollars. This fund balance growth will allow some flexibility in dealing with the next two to three years of predicted economic distress. Decisions to allocate or reallocate institutional resources to meet existing demands or planned new initiatives are made by senior administrators at the university after consultation with constituents and consideration of alignment with the USP and guiding principles.
Between FY2002 and FY2010, tuition and fees increased from 27.67% to 39.25% of operating revenue, while state appropriations decreased from 47.45% to 38.08%. The university completed an extrapolation of FY2011 tuition and fees and state appropriation estimates into FY2012-2015 and compared those resources to anticipated operating expenditures. Based on trends and the current information available (i.e., state appropriations will continue to decline), the university will need to continue to look for creative ways to maintain academic and programmatic support.
The annual budget planning process typically begins in February/March with budget guidelines and policies for budget development issued to each CSUS institution by the Chancellor following consultation with the BOT. Based on these guidelines, the USP strategic initiatives, and ongoing operational needs, a proposed spending plan is developed in consultation with division heads and senior staff. The proposed plan is communicated to the university community and feedback is collected, primarily through USPaRC and the University Budget and Planning Committee. In May, the university presents the spending plan to the BOT for review. Typically, the BOT formally approves the plan at its July meeting, and a mid-year review takes place at the February BOT meeting. At this writing, however, due to the delay in the approval of union concessions and the state budget, the university has not received final approval of its budget for FY 2012. It is anticipated that the spending plan will be approved at the September BOT meeting. With the changes in the state level organization of higher education, there may be changes forthcoming with respect to the budget approval process.
The university's senior administration has regular Cabinet meetings where overarching planning ideas are formed and tailored into priorities for the institution's operational and educational objectives. Joint meetings of USPaRC and the University Budget and Planning Committee ensures that issues related to the advancement of the overall educational mission are identified and discussed, and strategies formulated to achieve desired outcomes. Approximately 65-70% of the university's operational expenditures are directly related to academic programs and purpose. This percentage allocation has remained consistent for more than 10 years. This is illustrated in the Summary of Fiscal Years 1999-2010 document.
The university's Enrollment Management Council (EMC) reviews financial aid policies and procedures to assist in attracting and retaining a diverse student population. At the CSUS and BOT level, a board committee is involved in suggesting changes and consistent policies for financial aid throughout all four universities. Since the committee's work has not been fully completed and implemented, testing the effectiveness will be based initially on comparisons to peer institutions and their assessments of success.
The SCSU Foundation was established in 1972 to solicit, receive, and administer gifts and financial resources from private sources for the benefit of all programs at SCSU. The Division of Institutional Advancement (IA) handles the frontline aspects of friend-raising (Alumni Relations), fundraising (Development) and donor stewardship (Advancement Services). The IA staff is kept apprised of university priorities and initiatives. It is the role of the development officer to ascertain the interests of potential donors and match those with the university's needs when soliciting gifts. It is the responsibility of the Foundation Board to manage those gifts once received. IA operates under policies and procedures established by the SCSU Foundation. In addition, staff members adhere to CASE (Council for Advancement and Support of Education) reporting standards and management guidelines in accepting, receipting, and reporting gifts. A Donor Bill of Rights ensures that donor intentions are understood and adhered to. A yearly personal endowment report informs the donor of the fund's status and any distributions from it.
As a state agency, the university is subject to multiple audits. State auditors conduct an extensive internal control audit every two years. The state auditors also perform audits of grant funding and financial aid from the U.S. Government. The State and the BOT require the university to comply with generally accepted auditing standards and to implement any conclusions resulting from the audits. In addition, the university employs PriceWaterhouseCoopers (PWC) to perform annual external financial and information technology audits. SCSU adopts the recommendations from all auditing entities regarding improvements in budgeting and financial reporting. During the last two fiscal years, no new management letter comments related to the financial aspect of the university's annual external audit have resulted.
Appraisal
Considering the state's bleak financial outlook and its impact on the state appropriation provided, the university community has engaged in candid conversations on how to continue to support our academic and/or programmatic services with as little negative impact on students as possible. One of the outcomes from FY09 was a series of university town hall meetings in which it was agreed by the university community that budget decisions would adhere to a set of guiding principles. By making budget decisions that are driven by facts, data and reasonable projections and considering the core values as identified in the USP, the university seeks to maintain high-quality academic and student service programming.
The table below illustrates the university's continuous commitment to academic programs and direct student support (highlighted).
Over the last few years, as a result of many changes to the operation of the university to increase efficiencies, significant budgetary savings have been achieved. Budgetary realignment will continue to occur resulting in many difficult decisions. As a result of open university-wide discussions, the SCSU community has a better understanding of why these changes are needed. Also, through various monthly/semi-annual reports for internal and external constituents, the university's senior management is apprised of the current financial situation as well as strategies developed to discuss and implement new policies and procedures required to address financial decisions, risk assessment, and/or internal control issues.
The university continues to advance its mission and to achieve strategic goals in spite of significant statewide budget reduction measures. The State's Retirement Incentive Program (RIP) resulted in the largest number of retires in the CSUS with 85 faculty, staff, and administrators leaving SCSU in 2009. Despite this decrease, the university accepted more students and the FTE increased by 2.9%. The dramatic number of vacancies required the institution to create a refill plan that addressed the most severe needs while maintaining a significant vacancy cushion to guard against mid-year or year-end rescissions. The outcome of this plan was to focus on mitigating the effect on the academic side by filling faculty vacancies and leaving more administrative vacancies open, only filling those administrative positions that had an impact on health and safety, such as police officers and counselors. By reallocating faculty and staff resources as well as taking other cost-saving measures such as revising job descriptions and organizational units in student life, information technology, School of Education, computer science and facilities operations, the university has been able to shift and rebalance dwindling resources to accommodate the academic programs and services provided.
Rather than impacting academic programs, the university has focused on reducing expenditures by looking at areas such as accounts receivable management, in-house student payment plan, travel expenditures, energy conservation, and creation of an online "swap shop" for departments to exchange supplies prior to purchasing them from our third party vendor. All of these cost savings are reviewed by senior management to ascertain that the impact of these changes attain the desired effect of utilizing our limited resources.
The State and/or CSUS determine many of the university's fiscal policies. The university enforces all existing financial policies. Although many fiscal policies are available either online through the university's Website or within the area responsible for oversight, a comprehensive compendium of all fiscal policies is still in process. The internal controls adhered to and maintained by the finance area departments are noted in the Finance module of the Banner System through strict delineation of roles and access as well as policies and procedures. Annual/semi-annual and monthly reporting to senior management is accomplished through a variety of reports; among these are monthly budget to actual comparisons, periodic spending plan reviews, and ongoing review of cash and reserve requirements. Through training, proper segregation of duties within each area, and sufficient oversight by area managers, exemplary fiduciary responsibility is maintained and fostered.
As part of the annual financial audit conducted by PWC and the State Auditors, questionnaires and interviews regarding ethics and other areas of concern are required for various key financial managers and senior management. Since 2006-07, the university has also required all employees to participate in online training exercises, of which one pertains to ethical behavior standards.
Auditing procedures have become more rigorous over time. This increased scrutiny and the university's interest in adopting sound financial practices have introduced greater fiscal discipline. These improvements are a significant advantage both in daily operation and in long-term financial planning for the university.
Over the last ten years, fundraising has become increasingly crucial to supplementing the financial resources of the university. Programmatic support has had a significant impact on the university, with major contributions earmarked for music, marine studies, and athletics, to name a few, and most recently through the establishment of the university's first endowed chair. Each year many gifts are designated to endowed scholarships, providing direct financial assistance to SCSU students. An annual report is published and provides relevant details. Over the past ten years, annual fundraising results have varied with an average of $ 1.7 million per year and a range from $1.45 million (FY 2008) to $2.74 million (FY 2010).
Projection
As part of ongoing enhancements to financial resources management, SCSU is looking to increase use of workflow for administrative department processes. This shift would reduce paper usage and staff time and increase efficiency; however, implementing it requires sufficient staff time to complete an analysis and to work through the logistics, along with IT support. Given limitations of staff and other resources, such a process currently presents a challenge. Another project is moving the entire university to electronic timesheets, replacing our current paper-intensive system, to be completed by 2013.
Considering the ongoing fiscal crises within the state, the university continues to plan and address budget constraints through continued discussions and feedback from the university community. One means of achieving transparency and discussion is the continued use of town hall meetings. The first meeting for FY 2012 is expected to occur in September/October 2011, with a second meeting scheduled for March/April 2012. The President will use his blog as a venue for this type of information as well. Information will also be presented to smaller groups (e.g., union leaders, faculty leadership) as a way to provide a platform for discussion and economic status updates.
The university is committed to developing a compendium of fiscal policies into a comprehensive database. The establishment of a comprehensive project plan to address a complete "encyclopedia" of fiscal policies will be undertaken in the upcoming year.
The fundraising goal for FY 2012 is $1.1 million. The annual fund's focus is unrestricted dollars for university priorities and new initiatives. The development staff will continue to steward existing donors to maintain/increase their support and will utilized its enhanced resources to identify and begin the cultivation process with new prospects. The staff will focus its efforts on fundraising for the new School of Business, needs related to the science programs in the School of Arts and Sciences, and the Southern Academy.
Institutional Effectiveness
Through the various auditing entities - internal audit, the State Auditors of Public Accounts, PWC - along with solid policies and procedures, the fiscal condition and fiscal integrity of the university is maintained and enhanced throughout each fiscal year. In the past five years, major audit comments have diminished. In order to sustain this, the university will continue to review diligently its financial processes for efficiencies and effectiveness.
