President's Budget Advisory Committee

Minutes May 21, 1998

Members Present:

Staff Present:

Members Absent:

Guests Present:

Meeting Agenda

APPROVAL OF THE AGENDA

Don Farish brought the meeting to order at 8:10 AM and asked for a motion to approve the Agenda A motion was made by Dennis Harris. A second was obtained from Bill Barnier. The Agenda was approved unanimously.

APPROVAL OF THE MINUTES 5-14-98

Farish then asked to a motion to approve the minutes of 5-14-98. A motion was made by Les Alder. A second was obtained from Dennis Harris. Aaron Pava asked that the Minutes be amended to reflect the fact that some campuses were "unaware of or unconcerned about the CMS project". Members agreed unanimously to amend the minutes in this regard. The Minutes, as amended, were then approved unanimously.

UNIVERSITY FOUNDATION

Schlereth briefed the Committee on a recent decision by the President regarding the University Foundation. He noted that, based on feedback from the Academic Senate, the President had decided to follow historical practice and maintain the grants and contract function in the same auxiliary corporation (Foundation) as the University endowment. In this fashion, the issue of overhead expense associated with the Endowment would be addressed as it always had been, thus eliminating this item from the University-Wide unfunded list.

Katharyn Crabbe then introduced the following motion:

"PBAC recommends to the President that the University develop and issue an RFP for the management of the Endowment with the intent of determining whether it is possible to realize savings by outsourcing the task or some portion of the task, e.g. the trust accounts. Any savings realized through the RFP process should be returned to the PBAC for reallocation".

A second to Crabbe's motion was obtained from Parker. Discussion then ensued, with questions being raised regarding the impact of outsourcing all our permanent employees and whether the RFP was to deal with all aspects of endowment management or just certain portions.

Garlin then moved to table the motion. A second was obtained from Harris. The motion to table Crabbe's motion passed with 8 Yes votes and 4 No votes.

Crabbe then introduced the following motion:

"PBAC recommends to the President that he instruct the appropriate Cabinet Officers to develop a plan for phasing in Endowment support for the costs associated with managing the Endowment. A second to Crabbe's motion was obtained from Garlin. Discussion then ensued. Garlin asked that the words "during 1998-1999" be inserted following the phrase "develop a plan". By unanimous consent, the Members agreed to Garlin's request. Adler asked that the words "University" be substituted for the words "that he instruct the appropriate Cabinet Officers to". By unanimous consent, Members agreed to Adler's request. Crabbe's motion now read as follows:

"PBAC recommends to the President that he instruct the University to develop a plan in 1998-1999 for phasing in Endowment support for the costs associated with managing the Endowment."

Discussion on the motion continued with the following points or questions raised:

Sue Parker then moved to amend Crabbe's motion to specify "that no more than 50% of Grants and Contracts indirect be applied to Endowment costs." The motion was seconded by Garlin. After discussion, the motion was withdrawn.

A vote was then taken on the original motion, which passed unanimously.

Parker then moved that the PBAC recommend to the President that the current levels of indirect cost recovery returned to Academic Affairs from grants and contracts be maintained. A second to Parker's motion was obtained from Garlin. Discussion then ensued on the motion. Harris argued that the motion was not necessary given the motion just approved by the PBAC. Barnier argued against the motion, noting that it did not account for normal cycles of grant and contract activity. Harris then called the question on Parker's motion. By unanimous consent, Members agreed to vote on the Parker motion. A vote was taken; the motion failed with 2 Votes in support and 14 against.

RECOMMENDATIONS REGARDING THE ALLOCATION OF NEW EXPENSE.

Referencing materials contained with the Agenda Packet (reproduced below) Farish and Schlereth made comments regarding un-funded University-Wide items.


POTENTIAL METHOD TO ALLOCATE NEW UNIVERSITY-WIDE EXPENSE

Assumes Presidential Scholars program will be funded, at least on a temporary basis, via prior year adjustment revenue.

New Revenues and Expenses
Item Amount Note
Projected New Revenue - Enrollment Growth $1,073,000  
Projected New Marginal Revenue - Reimbursements $308,000  
TOTAL $1,381,000  
Less:    
Land Acquisition $-60,000  
Collaborative Management Systems $-236,000 *
Direct Instruction $-450,000  
Disability Resources $-120,000  
Risk Management $- 75,000  
President's Operating Expense $- 50,000  
Executive Compensation $- 20,000  
Scholarship Coordinator $-45,000  
AVAILABLE FOR ALLOCATION $325,000  

Distribution of Expense
Item Percentage Amount
Executive Office 2.18% $7,085
Academic Affairs 86.22% $280,215
Student Affairs 2.14% $6,955
Administration/Finance 9.46% $30,745
TOTAL   $325,000

* Actual costs for Collaborative Management Systems in fiscal year 98-99 are uncertain but are estimated between $200,000 and $250,000.


Since CMS and Land Acquisition were determined to be appropriate items to include in the un-funded University-Wide items list, Members moved to a discussion of direct instruction.

Harris argued that direct instruction was not a University-Wide item but rather a clear responsibility of Academic Affairs. Crabbe argued that the list of University-Wide items was really a list of University priorities and not a list of un-funded University-Wide items. In this sense, including direct instruction was appropriate. According to Crabbe, the VPBAC developed its list for inclusion in University-Wide based upon the inclusion of other division-specific projects.

Harris disagreed with the Crabbe, pointing out that the marginal cost formula adopted by the PBAC incorporated direct instruction needs associated with enrollment growth. He noted that if the item was removed from the list and the marginal cost formula applied, Academic Affairs would still receive sufficient resources to handle direct instruction needs associated with 180 new full-time students.

Melinda Barnard agreed with Harris, suggesting that to do otherwise would confuse the concept of revenue distribution via the marginal cost formula for all items other than those clearly seen as University-Wide.

Aaron Pava recommended that only CMS and Land Acquisition should be taken from the top since these items were CSU-mandated or campus-wide items. Pava noted that he believed all remaining resources should be allocated to the Divisions and via the marginal cost formula.

Barnard agreed with Pava but recommended adding Executive Compensation since this item was also mandated by the Trustees.

PBAC staff then illustrated how Pava and Barnard's thoughts would translate into an allocation model reflected below:

New Revenues and Expenses
Item Amount Note
Projected New Revenue - Enrollment Growth $1,073,000  
Projected New Marginal Revenue - Reimbursements $308,000  
TOTAL $1,381,000  
Less:    
Land Acquisition $-60,000  
Collaborative Management Systems $-236,000 *
Executive Compensation $- 20,000  
AVAILABLE FOR ALLOCATION $1,065,000  

Distribution of Expense
Item Percentage Amount
Executive Office 2.18% $23,217
Academic Affairs 86.22% $918,243
Student Affairs 2.14% $22,791
Administration/Finance 9.46% $100,749
TOTAL   $1,065,000

Parker then moved that the above allocation model be recommended to the President. A second was obtained from Pava.

Barnier asked that the items taken "off-the-top" be reflected in the University-Wide budget category. However, he noted that this would not be possible for Executive Compensation.

A vote was then taken on the motion which passed unanimously.

GOOD OF THE ORDER

Several comments were made for the Good of the Order. Barnard noted that she was aware that there were some concerns about the structure of the PBAC. She urged that the structure not be changed. She also recommended that the Cabinet, PBAC, CRC and VPBAC devote the Fall, 1998, semester to a discussion of what items should be viewed as new University-Wide items.

Pava thanked the PBAC for their openness to student input and noted that he felt his concerns were heard and addressed by the PBAC membership.

Crabbe complimented the Members for their work and thanked Pava, Harris and Barnard in particular for urging the PBAC to make recommendations based on sound principles.

Garlin acknowledged the leadership of Farish and Schlereth as co-chairs and expressed, on behalf of the Members, the fact that Farish's presence on the PBAC would be missed.

ADJOURNMENT

Farish then thanked the Members for their hard work over the course of the year andadjourned the meeting at 9:50 AM.

Minutes prepared by Larry Furukawa-Schlereth.


PBAC minutes 1997-1998
Updated 2007-12-14
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