Business and Finance

NEWS FROM THE DEPARTMENTS

November 2000

NEWS FROM THE DEPARTMENTS

BUDGET OFFICE, 
John Richards, Director

2000/01 Trustees' Budget
On October 26, 2000, the CSU Trustees approved a budget request and expenditure plan for 2001/02 of $380.9 million. The state general fund would support $354 million of the expenditure increase with the remainder funded by student fee revenue associated with enrollment growth. The general fund request represents an 11.7% increase over gross general fund support received in 2000/01. After adjustments for one-time funding received in 2000/01, the 2001/02 CSU budget request represents a 14.5% increase over CSU's 2000/01 state-funded budget level.

The CSU budget request for 2001/02 includes increases for enrollment growth ($93.9 million, including $20.9 million for YRO implementation funding); compensation ($122 million, including a 2% compensation supplement for faculty and staff); K-12 academic preparation ($8 million); and technology ($15 million). It also includes funding for libraries, deferred maintenance, workforce preparation and economic development, and for state investments above the partnership.

The budget is currently being reviewed for amendments based on actual fall enrollment figures. The budget will be considered by the Governor for inclusion in his budget proposal to be submitted for legislative review in January 2001. The legislature will hold hearings and modify the Governor's Budget as appropriate for final passage by July 1, 2001, the beginning of the new fiscal year. Based on the Governor's Budget proposal, preliminary campus allocations will be made by March 1, 2001.

The Board of Trustees also approved the 2001/02 Lottery Budget at its October 2000 meeting. The total budget approved for allocation is $37.7 million, with $32.5 million designated for campus based programs.

To see the 2001/02 Trustees Budget (book 1), visit the Budget Office website @ http://www.calstate.edu/budget/

BUSINESS PLANNING & INFORMATION MANAGEMENT
Lenore Rozner, Assistant Vice Chancellor 

YRO Update

Support Budget - The Support Budget approved by the Trustees includes supplemental YRO implementation funding to convert self-support summer course offerings to state-supported programs funded at full marginal cost. The request approved by the Trustees would accomplish the YRO conversion over a two-year period. The actual rate of conversion will be dictated by the state's budget plan once it is adopted. In the meantime, planning is proceeding under the assumption that a limited number of campuses will be funded to convert to year-round state-supported operations in summer 2001. For those campuses not converting to state-supported summer operations this coming summer, the legislature has provided funding to ensure that matriculated students taking self-support courses on those campuses will pay no more for those courses than they would under the applicable State University Fee structure. A Q&A document addressing many of the most-frequently-asked YRO conversion questions has been prepared. The draft document entitled, "Expansion of State-Supported Summer Terms," has been distributed to campus senior management groups.

Quality Improvement (QI) Programs

3rd Annual QI Symposium - Over 270 Registered! Registration for The 3rd Annual Quality Improvement Symposium, "Leading the Engaged and Accountable University," November 16 at the Sheraton Gateway, San Francisco Airport, has reached over 270 attendees. President Bob Caret (San Jose) will introduce Chancellor Reed, followed by presentations from Dr. Mo Qayoumi (Northridge) and keynote speaker, Tom Champoux (The Effectiveness Institute). The Quality Improvement Expo, taking place during the symposium, will host over 30 booths, highlighting campus activities, system-wide QI initiatives and vendor offerings. For additional information about the November QI Symposium and Expo, visit the QI website at http://www.calstate.edu/qi/

Quality Improvement Reports: The Quality Improvement Programs office is distributing the first of three binders that will serve to house reports summarizing the results of QI activities in the CSU. Included in the first binder to be mailed in November is the Parking Services Final Survey Report. The University Police Survey report will be distributed in early December. The second and third binders will contain reports from the Performance Measurement 2000 initiative and results of Process Mapping efforts. The binders are being distributed to campus presidents, vice presidents, and campus Quality Improvement Facilitators. The contents will also be available on the systemwide QI web page for general access.

Customer Satisfaction Surveys: Career Services, Facilities Services, Financial Aid, Human Resources, Libraries, Mail Services, Parking, Procurement, Student Accounts Receivable, Student Health, and University Police are in the final stages of developing surveys to be conducted in Spring 2001. Pilot tests will be conducted during November.

Performance Measurement 2000: :Function groups are meeting to finalize data definitions and begin data collection. The Performance Measurement website data collection instrument is currently being piloted by the University Police function with other areas expected to be live by mid-November.

If you wish to participate in any of the QI initiatives or would like additional information, please contact Ron Ashcroft, (562) 951-4556.

CAPITAL PLANNING, DESIGN AND CONSTRUCTION

J. Patrick Drohan, Assistant Vice Chancellor

Update on "Summer 2000 Energy Efficiency Initiative"

As previously reported, under the CPUC Summer Initiative program the UC/CSU received a total of $8 million spread over three utility service territories and further split between the two systems as follows:

CPUC
CSU
UC

PG&E

$2.5 million
$1.375
$1.125

SCE

$3.5 million
$3.500

SDG&E

$2.0 million
$0.875
$1.125

Total

$8.0 million
$5.750
$2.250

As the result of aggressive negotiations with the utility companies regarding contract language, the following five CSU campuses signed contracts on October 25, 2000. Each campus is proceeding with projects that will reduce demand on the electric grid by 5,011 kW by June 1, 2001:

kW Savings

Project Allocation

PG&E

Hayward
473

$  438,258

PG&E

San Luis Obispo
1,011

$   936,742

SCE

Long Beach
1,647

$1,843,460

SDG&E

Pomona
1,480

$1,656,540

Total

San Marcos
400

$  875,000

AB 970

Following right behind the Summer Initiative Program was Assembly Bill 970, which was signed into law on September 6, 2000. Under this bill, the California Energy Commission (CEC) has $50 million available to implement energy conservation projects and demand-side energy programs. The program goal is to reduce electrical grid demand by 200 MW by June 1, 2001.

The CSU is again joining with the UC to submit proposals in both program areas. The first proposal will request $750,000 to develop and implement a program that would allow campuses to participate in the Independent System Operator's (ISO) Demand Relief Program. Once the program is implemented, campuses choosing to participate will have the ability to reduce their loads during stage alerts and receive financial benefit directly from the ISO (rather than sharing the savings with the power service provider). The two segments are working with Dian Grueneich of Grueneich Resource Advocates to develop this proposal.

The second proposal consists of submitting a list of projects that fall into the following categories. As with the summer initiative program, all projects must be completed by June 1, 2001:

Price responsive HVAC/Lighting
Cool roofs
LED traffic signals
Water/wastewater
Renewables
Load curtailing program and other projects

To date we have submitted a draft list to the CEC totaling $27.7 million ($19.1 for CSU and $8.6 for UC). Grants will be awarded among the CSU proposals on a lowest cost per Kw reduction basis, possibly with separate evaluations made for project types especially desired by the CEC, e.g., Cool Roofs.

We will be working with the CEC to refine the list as well as the guidelines under which the UC/CSU can participate. The CEC's goal is to award grants by December 2000.

Robert C. Schulz, Chief

 

CONSTRUCTION MANAGEMENT

Construction Manager at Risk

A unique version of the contract general conditions has been produced for a "Construction Manager at Risk with a Guaranteed Maximum Price" (CM at Risk with GMP) project administered by a "Foundation." This was developed for use at the CSU San Bernardino off?campus center at Coachella Valley, but is available for use at any other CSU campus. Normal procedures have been retained, but references to the Trustees have been deleted. CM at Risk with GMP, also known as "CM/GC," is a contracting process which involves the future construction contractor during the design phase for the benefit of construct ability review and value engineering, and requires that they ultimately build the project within a guaranteed maximum price.

CPDC Due Dates for CPB&G Agenda Items (March 20-21, 2001 Trustees' Meeting)

Master Plan Revisions:

January, 2000

All Other Items:

February 5, 2000

A complete listing of 2000 due dates for CPB&G agenda items is located at CPDC website http://www.calstate.edu/cpdc/Executive/

FINANCIAL SERVICES
Brad Wells, Assistant Vice Chancellor

ACCOUNTING

Non Resident Alien Tax (NRA) Tax Training

The NRA committee contracted with KPMG to produce a CSU specific NRA manual and to provide training on the topic. We have established a date for the NRA training. It will be December 5th and 6th, 2000 at the Renaissance Los Angeles Hotel near Los Angeles International Airport. Cost of attendance is $130.00, which includes a continental breakfast, lunch and refreshments for both days. Registration forms may be obtained from our website at: http://www.calstate.edu/acct/Tax/tax.shtml. In addition, rooms are available for December 4th and 5th, 2000 at $99 per night. To reserve a room, please call (310) 337-2800 and ask for "CSU Non-Resident Alien Tax seminar." The cutoff date to reserve a room is November 20th, 2000. Questions may be directed to Mark Osborne at mosborne@calstate.edu

Bill Musselman, Acting Director

FINANCING AND TREASURY

Rating Upgrades for Revenue Bond Programs of the Trustees: Coinciding with the sale of new revenue bonds for a parking structure at San Diego State University, and a housing project at San Bernardino ($14,095,000 and $12,810,000 respectively), Moody's Investors Service and Standard and Poor's have applied bond rating upgrades of one notch for all CSU revenue bond programs. The new ratings for the respective programs are as follows: Moodys; housing AA3, student unions A1, parking A1. Standard and Poor's; housing AA-, student unions A+, parking A+. According to the rating agencies, these upgrades reflect the improved credit strength of the state of California, the continued financial strength of the programs, and the recent agreement with the state administrative offices to provide the CSU with a 4 percent general fund increase in each of several coming years.

1996 Crossover Refunding - Final Implementation For DRF Housing Program: On November 1, 2000, approximately $110 million of the final batch of 1996 DRF housing program crossover refunding bonds will pay off and replace old housing bonds. The total refunding consisted of $138.4 million in new bonds. Each year since 1996 some of the proceeds of the refunding bonds, originally placed in an escrow account, have been used to refund old housing system bonds. This November's transaction is by far the largest component of the crossover between old and new bonds.

The transaction results in lower debt service costs due to lower interest rates on the crossover bonds. The total savings to the housing system is projected to be $18 million. Commencing this year, the savings will approximate $950,000 each year through 2016 and $500,000 for each of the following years to 2022. The new debt service costs have been incorporated in the required transfers being made for the current year.

Richard K. Leffingwell, Director

GOVERNMENTAL AFFAIRS,

Karen Yelverton, Assistant Vice Chancellor

The 1999-2000 Regular Session of the California Legislature ended on September 1. Governor Gray Davis signed two bills sponsored by the Board of Trustees which will have a positive impact on various Business and Finance operations. In addition, several bills with a potential impact on CSU operations were enacted, and go into effect on January 1, 2001.

Trustee-Sponsored Legislation

AB 2408 (Firebaugh). AB 2408 allows school districts to expend bond funds obtained under the 1998 Higher Education Bond Act to construct or modernize facilities that are located on property owned by public entities and leased to other public entities. This legislation is critical to a number of CSU campuses, and essential to the development of the CSU Stanislaus Stockton Center. Several school districts that lease property on CSU campuses, including Dominguez Hills, Northridge, Long Beach, Channel Islands, and the Stockton Center, have expressed an interest in expending bond funds to construct much-needed school facilities. AB 2408 will allow such expenditures. (Chapter 530, Statutes of 2000)

SB 1779 (Johnston). SB 1779 provides greater flexibility in how revenue from non-state funded, user fee-based programs is used to support the construction, maintenance, repair and acquisition of facilities within those programs. Specifically, the bill permits revenues of self-supporting projects funded by bonds to be pledged with other self-supporting revenue projects with debt obligations, allowing CSU to fund specific fee revenue supported projects by pledging more revenue sources to support debt. This change will improve bond ratings, and reduce borrowing costs. (Chapter 285, Statutes of 2000)

Additional Legislation of Interest

AB 1857 (Romero): Specifies and enhances the guidelines for open meetings of California State University student body associations and their governing boards. (Chapter 330, Statutes of 2000)

AB 2323 (Ducheny): States the intent of the Legislature that the Center for International Education Synergy be established through a joint powers agreement among the Sweetwater Union High School District, the Southwestern Community College District, and San Diego State University. States that funding for the Center shall be deemed supplemental to any existing or future capital outlay funding for the CSU. Funding for this proposed project was included in the final budget. This legislation simply clarifies operational issues if and when the project is approved by the systems, local campuses and the California Postsecondary Education Commission (CPEC). (Chapter 462, Statutes of 2000)

AB 2409 (Migden/Runner): Makes a variety of findings and declarations relating to year-round operations at CSU, UC, and the Community Colleges. This legislation provides that summer session fees at all campuses of UC and CSU shall not exceed the fees charged per credit unit for any other academic term, if the state provides funding to offset any revenue losses that may occur due to the difference between the state university fee and fees charged for self-supporting academic programs. It also provides that UC and CSU retain the flexibility to implement year-round operation differently on individual campuses. This legislation is intended to confirm the Legislature's interest in year round and the use of dollars available in the 2000-01 budget. (Chapter 383, Statutes of 2000)

The 2001-02 Session of the Legislature will begin on December 4, 2000.

If you have any questions regarding these bills, please contact the Office of Governmental Affairs at (916) 445-5983. Copies of CSU Legislative Reports and other legislative information pertaining to the CSU are available on the OGA website at http://www.calstate.edu/oga/.

INFORMATION TECHNOLOGY SERVICES
David Ernst, Assistant Vice Chancellor

CMS:

Student Administration Pilot: Two campuses, Fresno and Sonoma, have been selected as the Student Administration pilot campuses to begin working with the central Software Operations Support Service (SOSS) group and an implementation consultant in early 2001 to implement the full suite of Student Administration modules. We are currently in the process of selecting an implementation partner.

FIRMS and SAM: Finance is concentrating on the testing efforts for FIRMS and SAM reporting in conjunction with the San Bernardino and Fresno campuses. HR has commenced development of the ESP (Employee Salary Projection) extract file to feed into the CSU Corporate data warehouse. Two previously delayed modifications, the positive pay reconciliation, and the work- study reports, have been approved for development. The Long Beach and San Luis Obispo campuses are piloting the leave accounting functionality and the Fresno and Northridge campuses are piloting workflow; both will be available for testing and support by year-end.

Baseline fix releases: As part of the ongoing maintenance for the delivered baseline software, the SOSS HR and Finance teams will release baseline fix releases to the campuses each month as required. The HR baseline releases will occur the third week of the month and the Finance baseline releases will occur the fourth week of the month.

IBM Operational Environment at Rochester: The Hardware Operations and Support Services (HOSS) transition team, comprised of HOSS, SOSS and campus staff and consultants, is working closely with IBM to implement and test the operational environment at the IBM Rochester data center. The team is reviewing operational requirements, hardware and software requirements, helping to design and configure the environment, and defining processes and procedures. The operational environment is scheduled for completion on December 1, 2000, and will be production ready on January 1, 2001.

CMS Second Wave Workshop: CMS will be hosting a second wave campus implementation workshop on November 17. Topics will include an overview of the planning processes with suggestions and timelines for getting started with the HR and Finance implementations. We will also provide an overview of the CMS technical architecture, the outsourced data center, and the CMS help desk services. http://cms.calstate.edu

Hilary Baker, Senior Director

The Business and Finance Newsletter is accessible from the Chancellor's Office website http://www.calstate.edu/BF/. Questions related to receiving the B&F newsletter or changes in e-mail addresses should be directed to James Francel at (562) 951-4547 or jfrancel@calstate.edu.