President's Budget Advisory Committee

Minutes December 3, 1998

Approved by PBAC, December 10, 1998

Members Present:

• Bernie Goldstein, Interim Provost, Co-Chair
• Larry Furukawa Schlereth, Vice-President, Administration and Finance, Co-Chair
• Jim Meyer, Vice-President, Development
• Rand Link, Vice-President, Student Affairs
• Sue Parker, Past Chair of the Faculty
• Steve Orlick, Chair of the Faculty
• Tom Cooke, CFA Representative
• Bill Barnier, Faculty Representative at Large
• Pat Seda, Staff Representative
• Cara Puccio, President, Associated Students
• Phyllis Fernlund, AARCC
• Katharyn Crabbe, AARCC
• Dennis Harris, CRC
• Gloria Ogg, CRC
• Steve Wilson, CRC

Staff Present:

• Letitia Coate, University Controller
• Bill Ingels, University Treasurer
• Katie Pierce, Academic Affairs Budget Officer

Members Absent:

• Les Adler, AARCC
• Joe Latulippe, Associated Students
• Melinda Barnard, CRC
• Marty Ruddell, AARCC

Guests Present:

• Diane Brown

Meeting Agenda

• APPROVAL OF THE AGENDA
• APPROVAL OF THE MINUTES 11-5-98
• REVIEW OF PARKING BUDGET
• REVIEW OF HOUSING BUDGET
• ANALYSIS OF BUDGET VARIANCE 1998-1999

APPROVAL OF THE AGENDA

Bernie Goldstein brought the meeting to order at 8:10 AM and asked for a motion to approve the Agenda. A motion was made by Gloria Ogg. A second was obtained from Bill Barnier. Barnier asked when a discussion of the Marginal Cost Formula would take place. Schlereth noted that this item would be discussed at the first meeting of the Spring semester. The Agenda was approved unanimously.

APPROVAL OF THE MINUTES: 11-5-98

Goldstein then asked for a motion to approve the Minutes of the November 5, 1998 meeting. A motion was made by Harris. A second was obtained from Ogg. Sue Parker asked that in the future, the content of the minutes be expanded to include the nature of the conversation that took place during meetings related to various topics. Schlereth noted that he was following generally accepted principles regarding minutes and only recording significant formal action items taken by the Members. He did indicate that he would do his best to incorporate the tone and nature of the discussion. A vote was then take on the Harris motion and the Minutes were approved unanimously.

Consultation on the Budget - Goldstein/Schlereth Proposal

Refraining materials contained with the Agenda Packet (Packet) Schlereth then outlined for the Members the nature of the campus Parking Budget and how it would be utilized to finance the land acquisition initiative. Several questions were raised including:

• How long was the term of the debt associated with land acquisition? (30 Years)
• Would the item be reflected in the University Wide Budget category? (Yes)
• Why was the Parking Budget being used to finance land acquisition? (Trustee policy required the use of either the Housing, Parking or one of the auxiliary budgets).
• Why was a debt service reserve needed? (To protect the bond holders in case parking revenue dropped below projected levels)
• Would the Reserve requirement ever disappear? (Possibly, once it reached a level that the campus believed was prudent).
• How would parking lot repairs and road resurfacing be financed? (A fund source for these items was not yet identified but could require a change in the Parking Fee structure which had not been changed since 1985.
• Schlereth also explained the nature of the Parking Decentralization initiative which returned resources to the campus previously held by the CSU. He noted that this decentralization step made it possible for the campus to transfer certain expenses from the General Fund to the Parking program in 1995-1996, creating a mechanism to assist with balancing the General Fund during a budget cutting year in order that cuts to the instructional program would not be necessary. He acknowledged the President's leadership in this regard. Schlereth also reviewed where the $485,000 allocated for land acquisition had come from including:
  
  

  Land Acquisiton Sources

  Source	Amount
  University-Wide Space Management	$200,000
  New General Fund from the CSU - Workers Comp	$120,000
  PBAC Recommendation - 1997-1998	$ 60,000
  Reallocation of the administrative budget	$105,000
  TOTAL	$485,000

  
  
• Steve Orlick then asked what the opportunity cost was related to the land acquisition initiative. Schlereth indicated that had the PBAC not recommended the initiative as a key campus priority, the following actions would like have materialized:
  1. University-Wide Space Management resources would have been used to finance the interfund loan to Parking.
  2. Workers Compensation resources would have been used to address growing concerns in this area.
  3. Administrative resources not have been reallocated.
  4. A $60,000 "off-the-top" allocation would not have been necessary.
     

REVIEW OF THE HOUSING BUDGET - EMT

Again, referencing materials contained in the Packet, Schlereth outlined the campus Housing budget and its relationship to the Educational Mentoring Team (EMT). Specifically, he pointed out that $200,000 of Housing revenue was used to finance the EMT Program largely to fund release time for faculty who teach in the Program. He also explained that staff resources associated with EMT were generated from the redesign of those position descriptions and no funds from the instructional program were utilized in this regard. Finally, he noted that a variety of administrators taught in the EMT program and no additional compensation was provided to them for their efforts in EMT. Schlereth noted that the EMT program was a significant generator of FTE and because the instructional costs of the Program were financed largely by the Housing Program, the revenue associated with EMT enrollment accrued to the General Fund budget. Cara Puccio asked how the Peer Mentors who work in EMT were funded. Schlereth responded that he believed the Mentors were financed with Housing Revenue. Puccio then expressed concern about projected reductions to Student Peer Mentors in EMT. Schlereth encouraged Puccio to discuss this item with Vice-President Calandrella.

Several questions were then raised including:

• Why was the Housing Program used to finance EMT? (EMT is a program designed primarily for freshmen students, the majority of whom live in residence).
• What would happen to resources allocated for EMT if the Program were discontinued?

(Resources allocated for EMT in Housing would remain in the Housing Program to conform with bond covenants and CSU policy. They could not be reallocated for other campus purposes unless they directly related to the residential experience).

Questions were then raised about the rationale for using the Housing Program to fund the Faculty Workstation program. Schlereth indicated that it was appropriate for Housing to reimburse the Information Technology unit for technology services provided to the Residential Community. IT then used a portion of these resources to finance the Faculty Workstation Program. The item was specifically highlighted in the Housing Budget in accordance with recommendations made by the PBAC that specific funding sources for various campus initiatives be clearly identified.

ANALYSIS OF BUDGET VARIANCE 1998-1999

Again, referencing materials contained in the Agenda Packet, Schlereth explained how the final campus budget for fiscal 1998-1999 was developed. In Spring, 1998, the President's Budget Advisory Committee (PBAC) analyzed projected new revenue sources to the campus and identified several University-Wide priorities that it believed warranted "off the top" funding. These new revenue and University-Wide expense items are outlined below:

The PBAC also agreed that the most appropriate method to allocate the resulting new revenue was the marginal cost formula developed by the CSU Trustees. This formula is used by the CSU to determine how much marginal revenue in each area of campus operations is needed when target enrollment is increased. For Sonoma State University, the marginal cost formula produces the following percentage distributions among the four operating Divisions.

In concert with the PBAC's discussions, the Vice-President for Academic Affairs Budget Advisory Committee (VPBAC) was also developing recommendations regarding how new resources allocated to Academic Affairs should be allocated. In this regard, the following allocation recommendations were established:

Both the PBAC and VPBAC recommendations were finalized in May, 1998 even though the final budget from the State was not approved until early in the Fall, 1998 semester. As is almost always the case, the final budget approved by the Governor contained certain differences from what was expected earlier in the budget process. These items are summarized below:

The marginal cost allocation model recommended by the PBAC would have produced the following set of Division specific appropriations:

In a similar fashion, the PBAC model, had it been applied to the final budget approved by the Governor, would have produced a deficit in the allocation model developed by the VPBAC:

Because the budget model recommended by the PBAC, when taken in concert with the final budget figures received from the Governor, would have produced a shortfall, in Academic Affairs, the President and the Cabinet met to devise a method to minimize the impact of externally driven changes on the instructional program. Specifically, the Cabinet recommended that while the marginal cost formula was a good method to distribute new revenue in most years, it urged the President to modify the formula to the advantage of Academic Affairs in 1998-1999. The President agreed and the following budget allocations were approved for 1998-1999:

Modifying the marginal cost formula for the current fiscal year had the impact of lessening the impact of externally driven changes to the budget on the instructional program as reflected below:

The Cabinet then turned to additional administrative strategies that would serve to eliminate not only the unallocated reduction remaining in Academic Affairs but also fund a variety of newly identified administrative budget priorities that had emerged over the Summer. These included:

To finance these items, the Cabinet agreed it was appropriate to take the following administrative actions:

Administrative reengineering areas identified in the Provost's Office include the elimination of Provost discretionary resources and efficiencies realized between the Office of Sponsored Programs and the California Institute for Human Services.

ADJOURNMENT

Given the time, Goldstein then adjourned the meeting at approximately 9:55 AM. He indicated that continued discussion of the development of the 1998-1999 budget and its impact on Academic Affairs would continue at the next PBAC meeting.

Minutes prepared by Larry Furukawa-Schlereth.

PBAC minutes 1998-1999
Updated 2007-12-14
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