President's Budget Advisory Committee

Minutes October 22, 1999

Members Present

• Bernie Goldstein, Provost, Co-Chair
• Larry Furukawa-Schlereth, Vice-President, Administration and Finance, Co-Chair
• Joe Latulippe, Associated Students
• Jim Meyer, Vice-President, Development
• Rand Link, Vice-President, Student Affairs
• Crystal Shrouf, President, Associated Students
• Bill Barnier, Faculty Representative at Large
• Pat Seda, Staff Representative
• Gloria Ogg, CRC
• Andy Merrifield, Chair of the Faculty
• Letitia Coate, University Controller
• Dennis Harris, CRC
• Phyllis Fernlund, AARCC
• Steve Wilson, Associate Vice-President, Administration and Finance

Staff Present

• Bill Ingles, University Treasurer
• Katie Pierce, Academic Affairs Budget Officer
• Neil Markley, Administrative Manager

Members Absent

• Victor Garlin, CFA Representative
• Marty Ruddell, AARCC
• Les Adler, AARCC
• Steve Orlick, Past Chair of the Faculty
• Sam Scalise, CRC (Proxy for Melinda Barnard, on sabbatical Fall 1999)
• Katharyn Crabbe, AARCC

Staff Absent

• Letitia Coate, University Controller
• Bill Ingles, University Treasurer
• Neil Markley, Administrative Manager

Guests Present

• None

Meeting Agenda

• APPROVAL OF THE AGENDA
• APPROVAL OF THE MINUTES: 9-17-99
• ROLES OF THE CAO AND CFO
• CAMPUS FINANCIAL POLICIES AND PRACTICES
• COUNSEL PROVIDED TO THE PRESIDENT REGARDING BUDGET MATTERS
• CAMPUS FINANCIAL PLANNING
• ITEMS FOR THE GOOD OF THE ORDER

APPROVAL OF THE AGENDA

Bernie Goldstein brought the meeting to order at 8:11AM and asked for a motion to approve the Agenda. A motion was made by Dennis Harris. A second was obtained by Andy Merrifield. The Agenda was approved unanimously.

APPROVAL OF THE MINUTES

Goldstein asked for a motion to approve the minutes of the September 17, 1999 meeting. A motion was made by Steve Wilson. A second was obtained by Bill Barnier. No changes were made to the minutes. The minutes passed with no dissenting votes. Merrifield abstained.

ROLES OF THE CAO AND CFO

Larry Schlereth noted that these roles had already been distributed to the Members and gave a brief presentation. Merrifield noted that "Compact 2" may have an impact on these job descriptions.

CAMPUS FINANCIAL POLICIES AND PRACTICES

At the request of Victor Garlin and the Students, Schlereth presented this item:

CAMPUS FINANCIAL POLICIES AND PRACTICES

• Employee lay-off is not used as a budget reduction strategy.
• Reallocation of base budgets is not a budget reduction strategy unless voluntary agreement is among the Vice-Presidents in question.
• Adherence to all appropriate financial management policies as defined by the California State University, the State Controller’s Office and the California Department of Finance.
• Adherence to all applicable bond covenants associated with debt financing.
• Adherence to Generally Accepted Accounting Principles as defined by the Governmental Accounting Standards Board.
• Adherence to the CSU Trustee’s Student Fee policy as it relates to the creation or change in student fees.
• Adherence to the CABO Auxiliary Organizations Report at it relates to standards for appropriate auxiliary operation on a CSU Campus.
• Compliance with recommendations received from the CSU Trustees’ Audit staff.
• Utilization of the CSU marginal cost formula for the distribution of new discretionary revenue and new University-Wide expense to the operating Divisions of the University.
• Allocation of year-end savings to those budget units that generated the savings in question.
• Timely posting of the budget &emdash; October 1
• Procurement encumbrances and on-going verification of availability of funds.
• Verification of fund availability for credit card payments.
• Verification of fund availability for employment transactions.
• Immediate transfer of funds for campus and auxiliary based receivables.
• Approval of CFO when funds are moved from operating expense to personnel services.
• Approval of CFO when multi-year debt service and lease purchase arrangements are contemplated.
• Review by CFO prior to the initiation of any new on-going campus program.
• Verification of fund availability and transfer of all necessary funds prior to the initiation of any renovation or construction project.

Crystal Shrouf expressed her concern regarding the CABO practice. Schlereth responded that this is embodied in the Educational Code and noted if business officers choose not to follow it , they will need to change the Education Code. Barnier asked how the list became policies and practices. Schlereth responded that we have generally been following these and we could discuss them if the Members wish. Joe Latulippe asked if this list consisted of laws and asked why we were getting this list. Schlereth responded, we don’t need this list, however many auxiliaries are not following them, so they are broken down into salient points. Merrifield asked if all campuses are following this or just us. Schlereth said Dr. Arminana is choosing to follow this, which is consistent with the Education Code. Merrifield expressed his belief that the CSU lawyers interpret the Education Code consistent to what the CSU would like and is not always black and white. Shrouf agrees. Schlereth noted that many of the Education Codes are very clear without interpretation. Further, we could delete the CABO bullet, because if we follow the Education Code, this is already covered. Barnier argued that there was no policy recommendation at the PBAC level regarding utilization of the marginal cost formula for distribution of both new discretionary revenue and new University-Wide expense, but only the latter. Harris noted that the President’s action followed a formal recommendation by PBAC to accept the marginal cost formula for both and that the marginal cost formula accounted for the additional cost of both direct instruction and other expenditures added with each new FTES, which is why we are able to use the FRMS database to determine the percentage of these new revenues which should accrue to each of the five divisions as a result of enrollment growth. He continued, although University-Wide items seldom result from a decline in enrollment, the marginal cost formula has already been utilized for distributing these costs to the five divisions, since their ability to contribute is, to a significant extent, related to the funds they receive under the formula. Barnier responded that his recollection of the discussion and outcome of the PBAC’s deliberations on the marginal cost formula differed from that of Harris; however, he was not proposing that PBAC revisit the issue. Phyllis Fernlund noted if unit money is scooped in the division, the units may not be motivated to save. Schlereth said that is a VPBAC and CRC issue. Merrifield indicated that items such as the scoop, which may cause an issue, may be more of a PBAC issue to discuss. Schlereth responded that the CFO and PBAC should not get into telling the divisions how to operate.

CAMPUS FINANCIAL AFFAIRS

As requested by Garlin, Schlereth presented this topic.

COUNSEL PROVIDED TO THE PRESIDENT FROM THE PBAC/VPBAC/CRC AND PROVOST SEARCH COMMITTEE
Late Spring, 1999

• No employee lay-off
• Protect resources allocated for faculty positions
• Reduce administrative costs
• Reduce the number of MPP employees on campus
• Seek additional funds from the CSU
• Seek additional external support
• Create a University Reserve
• Establish permanent budgets for permanent expense categories
• Modify the marginal cost formula for 99-00 only
• Reduce Expenditures in the Office of the Provost
• Redefine the roles of the Vice-President for Academic Affairs and the Vice-President for Administration and Finance
• Ask the Vice-President for Academic Affairs and the Vice-President for Administration and Finance to develop an appropriate budget reduction plan for fiscal 1999-2000.

THE MARGINAL COST FORMULA

• The marginal cost formula is a CSU calculation by which the System allocates new discretionary revenue to the campuses. The CSU Budget Re-Design Process allocates new discretionary revenue only when enrollment targets increase. The marginal cost formula recognizes that enrollment growth creates new expenses in the direct instruction, academic support, student services and institutional support categories of a campus budget. Facilities Services and Financial Aid are excluded from the marginal cost formula calculation.
• Sonoma State University uses the CSU marginal cost formula to allocate new discretionary General Fund revenue to the five operating Divisions of the University
• Utilizing the CSU Financial Information Reporting System, (FIRMS) SSU has been able to calculate what percentage of each Division's budget is composed of the instructional, academic support, student services and institutional support categories of the overall campus budget. Using this data in tandem with the CSU marginal cost formula, SSU calculates the percentage share of each new discretionary dollar as indicated below:

ITEMS FOR THE GOOD OF THE ORDER

PBAC minutes 1999-2000
Updated 2007-12-14
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