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BUSINESS AND FINANCE NEWS

April 30, 1996

The California State University

Business and Finance Division

Richard P. West, Vice Chancellor


MESSAGE FROM THE VICE CHANCELLOR'S DESK

NEW FROM THE DIRECTORS


MESSAGE FROM

THE VICE CHANCELLOR'S DESK....................

In the past two months, we have issued several memoranda concerning financial policies and processes that require campuses, in some cases, to devote significant time and effort to revise existing campus financial processes. These memoranda have been issued in response to specific findings contained in the campus GAAP audits conducted.

There are both state and federal statutes that require the California State University to conduct audits. Equally important, however, is the role these audits play in our efforts to gain increased management flexibility from the state in the areas of direct vendor payment, debt financing, and investments. For the first time in the history of the California State University, we will have prepared systemwide audited financial statements for the 1995/96 fiscal year - something no other state supported entity in California has done.

To ensure our continued success in gaining additional management flexibility and to assist in developing the systemwide policies and processes described in the audit findings, a committee has been formed comprised of representatives from the ten campuses that were audited, the chancellor's office accounting director, and the university auditor. The committee will help support those campuses that have not yet conducted a GAAP audit to assist them in the full conversion to reporting under GAAP.

Staff from the campuses have been extraordinarily helpful in assuming the extra workload associated with these changes in financial standards, auditing, and reporting. On behalf of the entire division of Business and Finance, I want to thank you for your assistance and look forward to your continued cooperation.

Richard West, Vice Chancellor, Business and Finance

NEWS FROM THE DIRECTORS

ACCOUNTING

Audited Financial Statements

A Request for Proposal has been issued seeking audit services. The services requested include: 1) conduct a systemwide independent audit of the twenty-two campuses of the California State University and the Chancellor's Office for the express purpose of rendering an opinion on the CSU's general purpose financial statements, 2) conduct a systemwide independent audit of the twenty-two campuses of the California State University and the Chancellor's Office in accordance with OMB Circular A-128, 3) perform an audit of the CSU Revenue Bond programs encompassing all CSU bonds sold for Housing, Student Unions, and the Headquarters building authority, and 4) perform a readiness assessment on 12 CSU campuses that will be undergoing first-year audits. In addition, several campuses have requested the auditors render an opinion specific to their financial statements as well as conduct their NCAA audit. The financial statements for the CSU will include all recognized auxiliary organizations in a discrete presentation. The contract with the audit firm will be for three years. We intend to issue a contract to the selected audit firm by the middle of May.

Direct Vendor Pay

I am pleased to announce that on April 23, AB 2613 was heard by the Assembly Committee on Higher Education and was passed by the subcommittee on a bipartisan 11-2 vote. We have received an opinion from Legislative Counsel that our bill is constitutional. We have received some positive feedback from an initial analysis prepared by the Department of Finance. The State Controller's Office is still in opposition to the bill. Many thanks to those campuses that sent letters to their vendors pursuing their support for AB 2613. On to the Senate!

Correspondence File

A number of coded memos have been issued to campuses addressing accounting and reporting issues.

BF 96-01/Financial Information Records Management System (FIRMS): addresses the new corporate information management system that has been designed to allow the Chancellor's Office to fulfill its systemwide financial reporting requirements.

BF 96-02/Financial Reporting of Campus Auxiliary Organizations: replaces the Audit Guide for Auxiliary Organizations.

AD 96-04/Cooper's & Lybrand GAAP Audit - Capitalization Records: provides campuses with information that was designed to assist the campuses in reviewing the accuracy of their fixed asset records. Reporting of fixed assets has been very problematic during our financial statement audit.

AD 96-05/Asset Capitalization Memo & Management Memo 95-22: informs campuses that tangible and intangible assets intended for use to conduct state business must meet the following requirements in order to be capitalized: 1) a normal useful life of at least one year (12 months), and 2) a unit acquisition cost of at least $5,000.

AD 96-08/Unrelated Business Income Information Package and Worksheets: provides campuses with information and worksheets that will assist in determining any taxable activities that are occurring on the campus. This is the first year that the CSU will file a tax return (990T). Each campus should have already named a campus person that will serve as their tax coordinator.

George Pardon, Director

AUXILIARIES, PLANNING AND BONDS

Dormitory Revenue Fund Refinancing

Interest rate volatility has been creating havoc with our plans to refinance certain Dormitory Revenue Fund bond issues. As approved by the Trustees at their March 1995 meeting, we have been authorized to refinance approximately $1.75 million in bonds. At the time of the Trustees approval, the savings on these bonds would have been approximately $26.5 million over the remaining life of the bonds. Because of the recent interest rate increases, in just a few weeks the gross savings has dropped to approximately $17.5 million as we move closer to completing the documents and advertising the sales. We will report the results of this effort as our sales proceed to completion.

Auxiliaries, Planning and Bonds World Wide Web Site

Don't forget to visit the Auxiliaries, Planning and Bonds World Wide Web site at http://www.co.calstate.edu/BusinessFinance/APB/APBHome.html for interesting information through links to the Education Code for sections related to Auxiliaries, Planning and Bonds, pertinent Trustee resolutions, text of the Manual of Policies and Procedures for Auxiliary Organizations in the CSU, APB coded memoranda, links to Environmental Resources, as well as information about the department.

RISK MANAGEMENT

Teleconference Series on Health and Safety

California State University's Teleconference Series on Health and Safety presents an interactive teleconference via satellite entitled, "Ergonomics: Fitting Your Job to You," on May 14, 1996, 10:00 a.m. to 12:00 p.m. PST. Environmental Resources, as primary sponsor of this biannual telecast, partners with state agencies and academic institutions to supplement health and safety training for higher education. Educational materials will be provided to teleconference participants, including a hazard identification checklist developed by the Environmental Management, Health and Safety office at CSU, Chico, and ergonomic information from the California State Compensation Insurance Fund. For information, including satellite hook-up and reservations, please call Monique in Environmental Resources at 310- 985-9039.

Richard Leffingwell, Director

BUDGET

1996/97 Governor's Budget Allocation Memorandum

The 1996/97 Governor's Budget Allocation memorandum (B 96-02) issued on April 3, 1996, details campus and system office budget allocations based on the Governor's 1996/97 budget transmitted to the legislature, CSU revenue projections, and base budget adjustments in current expenditure levels. The allocations provided in this memorandum should be used for campus planning purposes only. These initial allocations may change as a result of the level of appropriations contained in the 1996/97 Budget Act. Subject to the passage of the Budget Act, it will be requested that campus 1996/97 Final Budget submissions be returned to the system Budget Office no later than August 15, 1996.

Please contact me at 310-985-2712 if you have any general questions regarding the 1996/97 Governor's Budget. Questions pertaining to specific allocations should be directed to the appropriate budget analyst as specified in B 96-02.

Campus Budget Submissions for 1996/97

By May 1, 1996, campuses will have their preliminary 1996/97 budget allocations available in PC "flat file" format. The file will contain their adjusted base budget pre-formatted in the Financial Information Record Management System (FIRMS) database record structure. This file, updated for campus program allocations, will be the type of file used for 1996/97 Final Budget submissions from the campuses. Campuses may use any local spreadsheet or database application to modify this file.

To assist with the transition to this simplified budget submittal process, the Chancellor's Office Budget Office will meet with each campus budget office between April and June to address implementation issues. Campuses will have the opportunity to develop local allocation methodologies and update the FIRMS record during this period. Campuses may opt to use the BDS module or any other local management system to develop their campus budgets; however, the final budget submittal must be returned in the FIRMS format. No BDS file will be required. For additional information, please contact Sean Boylan at 310-985-2712.

John Richards, Director

CONTRACT SERVICES AND PROCUREMENT

CSU Planned Purchasing Initiatives

As reported in the last newsletter, the Chief Administrators/Business Officers (CABO) group has initiated an effort to encourage and promote multi-campus procurement activities to maximize savings and improve processing efficiencies.

CABO representatives met with the campus Procurement Officers on March 20th to discuss the mechanism for communication and facilitation of the procurement efforts. The meeting was very successful in garnering support and participation by all campuses. Initial task groups formed to pursue pilot projects on the targeted areas include:

- Hazardous Waste Material/Products Disposal Services - Chair Jim Hill, SJSU
- Express Mail/Courier Services - Chair, Ray Macias, Cal Poly, SLO
- Personal Computers/Workstations - Chair Don Smalley, SFSU
- General Office and Health Center Supply Contracts - Chair, Don Green, Cal Poly, Pomona

The systemwide PSSO council will be meeting regularly to identify and develop additional contracts in addition to monitoring active projects. The next meeting is scheduled for May 15th at CSU, Los Angeles.

Procurement Modeling Project

This project is sponsored by the Commission on Institutional Management and Information Technology (CIMIT) and is one of the designated Integrated Strategic Planning Initiatives. The procurement modeling project team, chaired by Dr. Mernoy Harrison and composed of campus and Chancellor's Office purchasing, payables, and information technology professionals engaged a consultant to assist the CSU in investigating the feasibility of a multi-campus and/or systemwide procurement model to improve operational effectiveness and leverage CSU purchasing power.

The consultant has delivered a draft report, currently under consideration by the project team, which presents over 50 discrete action steps to implement a new improved environment for CSU procurement operations. The report will be presented to CABO in early May and will go to CIMIT in late May for adoption if recommended by CABO. Stay tuned for more detailed activities concerning implementation of the project.

Consent Decree - Asbestos Abatement

This is to advise you that the two-year consent decree language imposed by the federal government beginning February 10, 1994, has expired. Campus contracts for public works projects involving demolition or renovation no longer need incorporate the lengthy printed attestation regarding due diligence and care to be taken to assure public safety whenever hazardous materials such as asbestos are present during project work. The removal of this contractual requirement does NOT mean that safety precaution measures are to be relaxed, of course, but only that the printed attestation is no longer required.

Current Master Contracting Activity

Academic Systems Association - The multi-campus agreement for a site license from Academic Systems Association for Interactive Mathematics (Algebra for College Students I and Algebra for College Students II) provides additional cost- reduction incentives based on participation by additional campuses. Currently 6 campuses are "full participants" and 2 campuses are "partial participants."

Claris Site License - Negotiations continue with Claris for a 2-year site license for the Apple Operating System 7.5. In addition, a comprehensive pricing agreement is being negotiated with Claris for the full range of their software products. The systemwide educational Program Purchase Agreement with Hewlett-Packard, expiring shortly, is being negotiated for extension with more favorable terms.

Master Lease/Financing RFP - The Master Equipment Lease Financing RFP closed on March 22nd with 12 firms proposing. The proposals were evaluated April 2nd by a team consisting of Campus and Chancellor's Office finance staff. It is anticipated that contracts will be issued to several firms by the end of April. Once contracts are executed, campuses will be able to secure equipment financing by requesting quotes from appropriate firms and utilize pre-negotiated terms and conditions. Contact Tom Roberts at 310-985-2786 with questions.

Electronic Application Services RFP - An RFP for an Electronic University Application and Information Service was issued March 15th. Proposals are due May 3rd. The RFP process will identify a firm to develop and operate an electronic application, transcript housing, and information service for potential CSU-bound students. Contact Tom Roberts 310-985-2786 with questions.

Be sure to check out the Contract Services and Procurement webpage (http://www.calstate. edu/BusinessFinance/CSP/) for information and a description of all current CSU master contracting.

Pat Dayneko, Director

PHYSICAL PLANNING AND DEVELOPMENT

Capital Outlay Budget Hearings

The Budget hearings are now in full swing. We need legislative support for telecommunications and growth issues. Primary issues on the capital side were telecommunications involving 13 campus projects, two new buildings at Stanislaus and San Marcos to meet existing capacity deficits, and three seismic projects at Chico, Dominguez Hills, and Los Angeles. The Assembly hearing was held April 16 and the Senate hearing was held on April 24. We received strong support in both hearings.

Stockton Developmental Center

CSU, Stanislaus is currently working on an innovative project which, if successful, will culminate in the 102-acre Stockton Development Center (SDC) being conveyed to Stanislaus as the new home for their off-campus center at no additional cost to the capital budget. The current off-campus center, located at Delta College, will have to be relocated in the near future to accommodate growth at the community college. The SDC has 55 buildings containing over one million gross square feet of space. The project provides a unique opportunity to acquire a major land holding and improvements at no cost. This will allow for future growth of the off-campus center and provide the opportunity to develop both public and private/public partnerships that can cover capital development and hopefully, operating costs. Additional partners in this venture will be other educational entities and the local community.

Energy Service Contract

The Energy and Utilities staff of Physical Planning and Development have been working with the facilities, purchasing, and administrative staffs at Cal Poly Pomona to select and negotiate with an Energy Service Company (known as ESCo's) for the first project of this type to be undertaken by the CSU since the passage of enabling legislation in 1995. The campus hopes to complete their agreement with the successful contractor and receive Chancellor's Office approval within two or three weeks. This project will have the contractor design, construct, and finance energy-conservation measures such as lighting retrofits, variable speed drives, and recommissioning in four major campus buildings. Financing will be generated from energy savings.

Video Conference on Technology and Practice Standards in Public Works

On March 13, 1996, PP&D hosted a video conference to discuss the implications of computing technology on project management and professional practices involving public works projects. Thirty-three participants representing the CSU, UC, GSA's Office of Project Development and Management, the Division of the State Architect, and the American Institute of Architects (AIA) discussed possible improvements in the design process, construction documents, and project management made possible by a fuller use of current communications, CAD, and other computing technologies. The appropriate scope of a CSU pilot project intended to leverage the use of these technologies was a central part of the discussion. The technological, statutory, and practical hurdles facing such on-line project management were also considered. The group discussed the possibility of some level of coordination of CAD and submittal standards by the owners of larger state facilities and what issues those standards might address.

The UC Office of the President and representatives of the AIA have agreed to cooperate with the CSU in a comparison of their respective architects and engineers submittal requirements as the next step in exploring a coordinated standard. The participation of OPDM, DSA, and other agencies is also anticipated. You may visit http://www.co.calstate.edu/AEC/ for a summary of the video conference and other technology in public works information available on the World Wide Web.

PPD Due Dates for CPB&G Agenda Items (July 9-10, 1996 Trustees' Meeting)

Master Plan Revisions May 14, 1996
All Other Items: May 28, 1996

Jon H. Regnier, Senior Director

PLANNING AND ANALYSIS

Joint Business and Academic Vice Presidents Meeting

On February 23, a meeting of the Chief Administrative/Business Officers (CABO) and the Academic Affairs Vice Presidents was convened - the first joint meeting of these two groups in many years. Executive Vice Chancellor Molly Broad opened the session by challenging the academic and administrative vice presidents to spend the day concentrating on two issues facing the CSU: 1) How do you balance quality, growth, and cost? 2) What strategies and incentives might help to build strong quality while serving more students and achieving reductions in cost per student?

Many ideas were generated from the joint discussion including re-focusing the basis for academic credit and faculty incentives, implementing cooperative learning and more effective use of technology, streamlining administrative functions, and improving tracking of information on CSU students as well as students enrolled in competing institutions. Overall, the joint meeting was viewed as a successful first step and it is anticipated that further joint meetings will be held.

Productivity and Investment Program (PIP)

The PIP Committee awarded approximately $880,000 to 7 multi-campus proposals for the 1995/96 cycle. Two of these proposals received 50% PIP funding with the participating campuses contributing matching funds to supplement the total cost of their proposals. Awarded funds will be allocated in installments to the campus(s) based on their progress in completing their project and submission of periodic reports to the PIP Committee. Total PIP award allocations to date is approximately $3 million for 25 campus proposals, 40% of which are multi-campus collaborative consortia.

The result of a recently completed PIP financed project was showcased at Cal Poly, San Luis Obispo on March 8th. Edna Chun, Manager of Personnel Services, demonstrated the newly developed Workers' Compensation tracking system to approximately 40 appreciative observers. Several other campuses are now considering using this system.

Questions on the overall PIP program can be directed to Lawrence Lin (310/985-2705, e-mail: lawrence_lin@calstate.edu).

Imaging Conferences

As a follow-up to interest shown on this topic in PIP proposals by a variety of functions and campuses, the Chancellor's Office Business & Finance and IRT divisions co-sponsored two Imaging Seminars during March 1996; one at CSU, Sacramento and one at the SWRL facility. Approximately 150 CSU employees attended the 2-day seminars which featured a full day of basic imaging training by Xerox consultants and one day of shared campus experiences with this technology. Representatives from Admissions & Records, Financial Aid, Human Resources, Information Technology, Accounting and Accounts Payable, PP&D, and the Libraries were in attendance. Russ Utterberg from IRT made the speaker arrangements and will be compiling a list of "who is doing what in imaging at the CSU."

One-Card Task Force

A task force has been formed to develop a systemwide One-Card as proposed under the Information Technology Strategic Initiative. The term "One-Card" (also referred to as a universal, all-campus, and multipurpose school ID card) can support a wide variety of uses through a single card medium. The One-Card Task Force, chaired by CSULB's Bill Griffith, will be developing a systemwide Request For Proposals (RFP) to deliver campus, banking, and telephone services via the One-Card.

Eight self-nominated campuses (Long Beach, Los Angeles, Monterey Bay, Sacramento, San Bernardino, San Francisco, San Jose, San Luis Obispo) have been selected to become members of the One-Card Task Force. The first meeting was held in April 1996. For more detailed information, contact Lawrence Lin (310/985-2705, e-mail: lawrence_lin@calstate.edu).

CSU Benchmarking

The data collection portion of this year's benchmarking project has been completed and the data has been submitted to NACUBO's technical vendors for compilation of the data. Kim DeHart of CSU, Stanislaus finalized the CSU cohort data for distribution to the function representatives for data analysis prior to our June 3-5 CSU workshops. NACUBO will return to the CSU by May 16th the completed NACUBO study for final data analysis and the national comparative review.

Process Mapping-Workers' Compensation

On February 29 the Process Mapping Project Team met with consultants Sedgwick James and received the first progress report of the project. Sedgwick has completed its first round of campus visits and is now in the process of identifying "best practice" examples. A high level of excitement exists for the completion of the project and the resulting recommendations.

Corporate Information Management Project

After months of planning and defining specific functional responsibilities and data principles, the Chancellor's Office is ready to begin the data analysis phase of the Corporate Information Management Project. As introduced to all Chancellor's Office employees in presentations given April 2 & 3, this cross-functional review of Chancellor's Office data needs will result in more focused, accurate, timely, shared data. Lenore Rozner is chairing this effort and Cheryl Kwiatkowski of IRT is supplying the staff support.

Lenore Rozner, Senior Director


The Business and Finance Newsletter is now accessible from the Chancellor's Office website http://www.calstate.edu/BF/Newsletters/Newslet95.html. If you have a question or comment on a technical issue related to receiving the B&F newsletter or want to add, delete, or modify an e-mail address, please contact Suzanne Wallace at voice: 310-985-2075, fax: 310-985-2710, or e-mail: suzanne@calstate.edu.