Business and Finance

 

May 2002

NEWS FROM THE DEPARTMENTS

 

NEWS FROM THE DEPARTMENTS

BUDGET OFFICE, 
Rodney Rideau, Acting Budget Director

The Governor's May Revise provides the CSU with a general fund support budget of $2.685 billion. Enrollment funding levels were increased by $19.5 million, or an additional 1 percent beyond the 4 percent enrollment increase the Governor called for in his original January budget proposal. This increase will allow CSU to serve a total of more than 20,000 new students in 2002/03 - a number that more accurately reflects the demand that campuses continue to face. The May Revise, however, also reduced our base budget support by $43 million through one-time cuts in long-term needs such as technology, libraries, maintenance and equipment. Altogether, one-time and permanent cuts in the May Revise total $70 million, or 2.5 percent of our budget.

This revised budget document now heads to various legislative committees, which will take action on the proposal over the next few months. The legislature, in consultation with the governor, is supposed to complete work on the budget bill so that the governor can sign it by

July 1, the first day of the fiscal year. The Senate has completed its initial hearings as of this writing and the Assembly is in the midst of its discussions. The items that are not consistent between the two houses will be referred to the joint conference committee. This year, with state policymakers battling over how to cover the state's projected $23.6 billion deficit, the process may stretch out through the summer.

Campuses will be provided updates as they are known. The full text of the May Revise can be accessed at http://www.dof.ca.gov/HTML/BUD_DOCS/MayRevise02w.pdf.

BUSINESS PLANNING & INFORMATION MANAGEMENT
Lenore Rozner, Assistant Vice Chancellor 

Quality Improvement (QI) Programs

New CSU QI Council

In an effort to enhance communication, engagement and education among QI practitioners within the CSU, a new QI Council has been created. All campus QI Facilitators have been invited to participate. The first QI Council meeting was held via videoconference on May 9th.

Topics of discussion included:

  • Review of ongoing initiatives,:
    • Performance measurement efforts,
    • Customer satisfaction surveys, etc.,
  • Announcements of new programs/training offerings,
  • Sharing of strategies to build QI involvement on campus, and
  • Input from campuses on the direction of the QI Programs.

2002 QI Symposium and Expo - November 8, 2002

The 5th Annual CSU QI Symposium and Expo will take place on Friday, November 8, 2002 at the Crowne Plaza Hotel in Foster City, minutes away from San Francisco International Airport. The theme of this year's event will be: Bringing ACTION to your Planning.

The agenda includes a keynote speaker addressing the steps necessary to take campus QI efforts from the data gathering and planning stages to implementation and assessment of improvements. In addition, breakout sessions on a variety of topics have been scheduled to assist QI practitioners in learning how to drive meaningful change on their campuses.

Annual QI awards, recognizing individuals who have demonstrated leadership in the advancement of quality initiatives, as well as the Quality Improvement Team of the Year, will be presented.

Pre-conference events planned for November 7th include a meeting of the QI Council and a pbViews user's meeting. For more information on the 5th Annual CSU QI Symposium and Expo, please visit the QI website at www.calstate.edu/qi.

National Consortium for Continuous Improvement in Higher Education (NCCI)

NCCI, a national organization of which CSU is a charter member - is holding its 3rd Annual Conference in conjunction with the NACUBO conference in Vancouver, July 20-21, 2002.

For more information and registration, please visit the NCCI website at www.ncci-cu.org .

CAPITAL PLANNING, DESIGN AND CONSTRUCTION
J. Patrick Drohan, Assistant Vice Chancellor

CONSTRUCTION MANAGEMENT

SUAM, Section XII-Construction Management for Public Works Contracts

In April, CPDC updated the State University Administrative Manual (SUAM), Section XII-Construction Management for Public Works Contracts, primarily in response to the 2001 construction audit recommendations. A listing of the specific changes follows:

Section 9701, Categories of Public Works Projects, has been modified to include language regarding contractors and/or consultants who donate construction work or consulting services. It requires that donated work not diminish attention required to be given to non-donated contract work and that the contractor or consultant not monitor or inspect the donated construction work or service.

Section 9721.08, Allowances, has been modified to include a definition of allowances and a brief explanation of the process for using them. Also samples of allowances are provided, along with the requirement that all allowances be submitted to the CPDC construction engineer for review and approval prior to bid is included. The revision further includes the requirement that allowances shall not exceed ten percent of the project's construction value.

Section 9721.07, Alternatives, has been modified to clarify when Department of Finance does not need to approve alternatives. Additionally, language has been added identifying the methods for adding alternative work back into the project after the contract has been awarded. A caution is added that if alternatives are added back into the project after the time limit has expired for doing so, the cost for this scope of work shall be priced according to change order procedures.

Section 9722. Contract General Conditions, has been modified to include the suggestion that if there is any question on the interpretation of the Contract General Conditions, the construction administrator shall contact the Chief of Construction Management in CPDC.

Section 9780.03, Contract Documents, has language suggesting that the construction administrator use the agreement form in Appendix D for both major and minor capital outlay projects. This section also has been divided into three sections to better identify specific issues:

9780.03.01

Contract Documents-Official Set

9780.03.02

Review of Contract Documents

9780.03.03

Distribution of Contract Documents. A sentence has been added clarifying that CPDC does not sign contracts for campus-delegated projects.

Section 9820.01, Subcontractor Mark-ups, has been modified to clarify that when adding or deducting scope that was identified as alternatives in the bid, but not awarded within the time period defined in the bid proposal, the contractor is not bound to prices submitted with his/her bid, unless he/she voluntarily agrees to extend the time period. Costs for these added/deleted scopes will be priced per the change order procedure.

9820.02, Scope Changes (New Project), has been modified to caution campuses that adding in scope that is outside the program is a violation of the bidding process. It also addresses completion of streamlined projects without any change to its scope.

New forms: the Service Agreement boilerplate was amended to include the requirement for errors and omissions insurance for all services related to the construction project. The Pre-qualification forms have also been modified. Both have been added to Appendix D as well as being posted on the CPDC website.

Staff may download a copy of the newly updated SUAM, Section XII, and the new forms in Appendix D, from the CPDC website: www.calstate.edu/cpdc, under "Executive."

Design/Build Contract General Conditions and Model

The Design/Build Contract General Conditions have recently been updated and are available on CPDC's website. Staff is working on an update to the Design/Build Model & Guidelines for presentation in CPDC's training coming up in October.

Construction Manager at Risk with Guaranteed Maximum Price

Staff is also working on a new model and guidelines for Construction Manager at Risk with Guaranteed Maximum Price (CM at Risk) for presentation in CPDC's October training.

James R. Corsar, Chief of Construction Management

CPDC EXECUTIVE

CSU Capital Training Program 2002

  • The Law of Design and Construction - July 25
  • Job Order Contracting - July 26
  • Construction Claims Mitigation - October 24
  • Design-Build Process - October 25
  • Construction Management at Risk with Guaranteed Maximum Price - October 25

Interested parties may register for the upcoming capital training sessions on "The Law of Design and Construction" and "Job Order Contracting" as well as other 2002 programs by visiting the CPDC website at http://www.calstate.edu/CPDC/Trg2002.shtml. Participant feedback from training sessions that have already been held in 2002 has been very positive.

CPDC Due Dates for CPB&G Agenda Items
Listed below are the dates that CPB&G agenda items are due to CPDC. These dates are provided to assist campuses in planning projects.

BOT Meeting Date

Master Plan Revisions

All Other Items

2002

July 16-17, 2002
September 17-18, 2002
October 31, 2002
November 12-13, 2002

May 14, 2002
July 16, 2002
N/A
September 10, 2002

May 28, 2002
July 30. 2002
N/A
September 24, 2002


2003

January 28-29, 2003
March 11-12, 2003
May 13-14, 2003
July 15-16, 2003
September 16-17, 2003
October 31, 2003
November 18-19, 2003

November 26, 2002
January 14, 2003
March 11, 2003
May 13, 2003
July 15, 2003
N/A
September 16, 2003

December 10, 2002
January 28, 2003
March 25, 2003
May 27, 2003
July 29, 2003
N/A
September 30, 2003

State University Administrative Manual (SUAM) Please visit the CPDC website at http://www.calstate.edu/CPDC/SUAM.shtml for recent updates to the State University Administrative Manual related to capital planning, design and construction. The revisions address changes in trustee policy and state agency requirements, audit recommendations, plus organizational, administrative and general updates to sections last revised in 1998.

Linda Burke, Director of Trustees/Legislative/Capital Training Programs

FACILITIES PLANNING

The Capital Outlay Program

The November 6, 2002 ballot will include the School Facilities: Kindergarten-University Public Facilities Education Bond Act of 2002 and 2004. CSU projects that are funded in this initiative will include the projects approved by the legislature for inclusion in the Governor's Budget for 2002/03, the Economic Stimulus Package, as well as the 2003/04 Capital Outlay Program.

The final CSU 2003/04 Capital Outlay Program will be presented to the Trustees for approval in September 2002. The program will contain the campuses' maps, histories, and the five-year capital improvement program, as well as the Presidents' statements regarding what the projects will accomplish and their importance to the campuses.

A change to the 2004/05 Categories and Criteria was proposed to the Executive Deans in March. CPDC has suggested returning to the one-project-per-campus limitation in the action year (exceptions will be retained).

Schedule of Submissions and Calendar of Capital Outlay Process

May 20, 2002

Campuses submit updated maps and histories for the 2003/04 Capital Program.

June 7, 2002

Campuses submit 2003/04 Minor Capital Outlay Program.

July 5, 2002

Campuses submit Draft Capital Improvement Program for 2004/05 (CPDC 1-1).

July 5, 2002

Campuses submit Annual Custodial Space Changes for the 2003/04 Support Budget.

July 16-17, 2002

Board of Trustees approves the 2004/05 Categories and Criteria.

August 2002

Campuses submit Annual Updates to the Space and Facilities Data Base.

Executive Deans and Plant Directors Subcommittee Meeting, May 30, 2002

The first subcommittee meeting of the CSU Executive Deans and Plant Directors is scheduled for Thursday, May 30, 2002, at the Chancellor's Office. The committee is comprised of Executive Deans-Jay Bond (Fullerton), Scott Charmack (Long Beach), Carl Coffey (Stanislaus), Robert Kitamura (San Luis Obispo), William Shum (San Bernardino), Beverly Wood (Monterey Bay); Physical Plant Directors-Bob Brown (Bakersfield), Scott Burns (San Diego), Robert Hutson (San Francisco), Ed Naretto (San Luis Obispo), Robert Quirk (Long Beach); CABO Liaison Dan Johnson (Monterey Bay); Patrick Drohan and CPDC Senior Managers. These joint meetings will minimize the number of trips for systemwide meetings and promote discussion of issues impacting facilities management, planning, design and construction. One identified agenda item will be a review of the proposed changes to Executive Order 757: Planned Maintenance and Capital Renewal Program.

Elvyra San Juan, Chief of Facilities Planning

PLANT, ENERGY AND UTILITIES

On April 1, 2002, the CSU and its energy partner, the University of California, entered into a new Direct Access (DA) Service Agreement with Arizona Public Service Energy Services (APSES) to supply power for 19 CSU and 9 UC campuses (and the segments' headquarters offices). The agreement replaces the 4-year DA arrangement the CSU/UC had with Enron Energy Services. While the initial strategy was to extend the existing contract with Enron, the California Public Utility Commission made the decision to allow existing DA customers to enter into new agreements with new DA providers. Considering the Enron debacle and the rapidly changing energy regulatory and political environment, the move to APSES came at a very good time for the CSU. It will allow the campuses to enjoy savings compared to what they would have paid for comparable service from their local utility (PG&E, SCE, or SDG&E) and receive a variety of services to enable enhanced management of campus electrical loads.

As a part of the final closeout of the Enron contract, a third party auditing firm secured by the CSU, will be visiting each campus to reconcile Enron and utility billing records for the past 14 months. This process will assure accurate final payments/credits to Enron for any outstanding billings and/or services. The process is expected to take 4-6 months.

Natural gas unit prices are presently at very low levels. In an effort to take advantage of this window of opportunity, CPDC is working with the Department of General Services to structure agreements for securing long-term fixed price gas with contract periods of up to 5 years. This approach to natural gas purchasing offers stability and cost savings for the campuses over time, and provides protection from price spikes such as those experienced in 2001. Campuses will have the opportunity to elect varying percentages of fixed price gas to match their anticipated usage over the contract period.

Mark Gutheinz - Chief of Plant, Energy and Utilities

FINANCIAL SERVICES
Dennis Hordyk, Assistant Vice Chancellor

FINANCING AND TREASURY

The First Systemwide Revenue Bonds

On April 30, 2002, the CSU received the proceeds from a $174,750,000 revenue bond sale. The bonds were sold pursuant to a new indenture authorized in the California State University 1947 Revenue Bond Act. A significant feature of this supplemental housing system indenture is the combined revenue pledge of all housing fees, parking fees, health center facility fees, student union fees, and continuing education program fees as a pledge for the repayment of all of the bonds. Also, at a point in time when supplementary debt issued under the indenture equates to 2/3 of all of the outstanding bonds, many of the older more restrictive covenants of these housing system bonds will change into the more modern less restrictive covenants of this new Systemwide Revenue Bond Program. Because the new program consists of a much larger revenue pledge, the cost of financing in this program will significantly decrease for non-state revenue bond projects and for projects that have here-to-fore been financed with debt issued by auxiliary organizations.

The proceeds of the April revenue bond sale were used to refinance seven projects that were being initially financed through the CSU's commercial paper program, two new-money projects, and six refinancings of previous bond issues. The bond sale's True Interest Cost (TIC) of 5.05% reflects the effect of good credit ratings and rating reports. The small spread from the TIC to the All-In Total Interest Cost (All-In TIC) of 5.12% reflects the economies of scale and spreading of costs for bond insurance, surety reserve, and issuance over the large issue size. The savings from the first phase of the commercial paper program have also been realized in that fewer long-term bonds had to be issued because of arbitrage earnings and lower interest costs during the commercial paper period.

FINANCIAL SYSTEMS STANDARDS AND REPORTING

Year-End Reporting Workshop

A two-day, systemwide, year-end reporting workshop has been scheduled for June 4 - 5, 2002 at the LAX Crowne Plaza.

The June 4th (year-end reporting/legal basis) workshop is designed to provide information related to: 1) year-end reporting to the State Controller's Office, 2) FIRMS year-end reporting to the Chancellor's Office and, 3) year-end close/reporting process in CMS PeopleSoft.

Attendance at the June 4 training is strongly suggested for all financial accounting and budget representatives who will have responsibility for FIRMS submissions and year-end reporting to the State Controller's Office.

The June 5th GAAP training session has been scheduled to review the new GAAP manual, the conversion process for: 1) converting legal basis data to GAAP, 2) GAAP adjustments and reclassifications, 3) auxiliary organizations and, 4) management discussion and analysis (MD&A), in preparation for June 30, 2002 GAAP financial statements, and as a follow-up to the March 12-13, 2002, GASB 34/35 implementation training.

Interested parties may register for the training sessions via the Financial Systems, Standards & Reporting website at the Chancellor's Office at http://www.calstate.edu/sfr/. The deadline to register for the workshop is May 24, 2002. All hotel reservations must be made separately with the LAX Crowne Plaza by calling (310) 642-7500.

Questions related to the training registration process should be directed to Jill Peden at jpeden@calstate.edu.

GASB 34/35 Implementation
The Capital Assets Inventory and Valuation contract (RFP M010232) was awarded on April 23, 2002 to Deloitte & Touche LLP.

This contract was issued for outsourcing the capital assets inventory, infrastructure valuation, componentization, and calculation of depreciation in compliance with GASB 34/35. A formal project announcement memo will be sent out to all campuses announcing the scope, deliverables, timelines, and information needed from the campuses for this project. For more information, contact Laleh Graylee at lgraylee@calstate.edu .

GAAP Manual
The GAAP manual has been revised to incorporate the GASB 34/35 requirements. The revised GAAP manual will be provided at the June 5th GAAP Year-End Reporting Workshop and will be used as the basis for the training.

Electronic Interfaces with the State Controller's Office SCO
Starting July 1, 2002, the Teale Data Center will no longer support the use of round reel tapes for exchanging State Controller's Office data with state agencies.

The Financial Systems, Standards & Reporting Department has been assisting campuses wishing to establish secure electronic data file exchanges between the CSU and the State Controller's Office via File Transfer Protocol (FTP). Twenty-one campuses have now established their FTP connection. Campuses that are still receiving their data via tapes or cartridges need to establish their FTP accounts no later than June 1, 2002. This will allow sufficient time for coordination and testing of electronic data exchanges with the State Controller's Office and the Teale Data Center.

The submission of year-end financial reports and reconciliation data (SAM99) to the State Controller's Office will be via the FTP process this year. The FTP process will be covered in detail at the June 4th Systemwide Year-End Reporting Workshop.

To request an FTP account, campuses need to fill out and submit an Access Authorization form to the Financial Systems, Standards & Reporting department at sfr@calstate.edu.

For more information, contact Laleh Graylee at lgraylee@calstate.edu.

Update on the IPEDS Finance Survey
The IPEDS Spring 2002 data collection for finance data has been completed. The 2000/2001 IPEDS Finance Survey was submitted on behalf of each individual CSU Campus.

To obtain a copy of the report and for more information, contact Sedong John at sjohn@calstate.edu.

FIRMS Update
A memo dated April 26, 2002 from Richard West to all campus Chief Financial Officers was distributed last month to provide information on the new data integrity edits which will become effective with the last quarter submission of FY 2001/2002. These changes are applicable to all quarterly FIRMS submissions, including accounting data for the university and the auxiliary organizations. Please refer to the summary of changes in FIRMS reporting requirements and the revised section 2.2 of the FIRMS Manual. Please forward questions to Sedong John at sjohn@calstate.edu.

Laleh Graylee, Director

GOVERNMENTAL AFFAIRS,

Karen Yelverton, Assistant Vice Chancellor

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

TECHNOLOGY INFRASTRUCTURE INITIATIVE

COMMON MANAGEMENT SYSTEM (CMS)

Campus CMS Implementation Status
As of April 2002, eleven campuses are live with Human Resources, Financials or both. Six additional campuses are currently implementing Human Resources and Finance with plans to go live with one or both products later this year.

Three campuses (Sonoma State, CSU Fresno and California Maritime Academy) are live with the HRSA 8.0 product and are using the Student Administration functionality to process Admissions/Recruitment data and generate Financial Aid award letters for new and returning students. Three additional campuses have begun their Human Resource upgrade to 8.0 and their Student Administration implementations with their initial live dates planned for later this year.

CMS Audit
An audit of the CMS Project by the State Auditor commenced on May 1, 2002 and will be conducted over the summer. It was requested by Senator Alarcon and Assembly Member Diaz on behalf of the California Faculty Association (CFA) and the California State Employees Association (CSEA) and approved by the Joint Legislative Audit committee (JLAC) on April 8th. Mr. Larry Mandel, University Auditor, will be the main CSU contact for the audit.

Please visit the CMS web site for additional information at: http://cms.calstate.edu/

ACADEMIC TECHNOLOGY SERVICES (ATS)

The Systemwide Academic Technology (SWAT) Procurement & Dissemination project is providing a forum for cooperation between the Information Technology Advisory Committee, the Academic Technology Advisory Committee, the Council of Library Directors and CO Procurement. This SWAT project team is comprised of representatives from a number of campus constituencies. The goal of the project is to leverage the size of the system in obtaining the best possible prices for academic software.

The MERLOT project will submit two National Science Foundation grant proposals in June 2002.

Academic Technology Planning
Information Technology Services staff assisted colleagues in Academic Affairs and the Academic Technology Advisory Committee with a conference in San Jose on April 12th and 13th. A team of 3 to 12 people, including faculty and administrators, represented each campus. Participants shared knowledge and best practices for academic technology planning. President Welty of CSU Fresno addressed the conference on behalf of the Technology Steering Committee and spoke about the importance of a systemic effort in the academic technology arena. Presidents will discuss this issue further at the June Executive Council Retreat.

Planning is underway for the biennial survey of staff on information technology issues. The survey will measure staff perceptions of access to, use of and satisfaction with specific components of the campus information technology environment. Surveys are used to provide the yearly Measures of Success report to the California Legislature.

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.