BUSINESS AND FINANCE NEWS
December 18, 1995
The California State University
Business and Finance Division
Richard P. West, Vice Chancellor
THE VICE CHANCELLOR'S DESK....................
This will be the last newsletter of 1995. We have seen many changes in the way we do business in the CSU over the past year. Perhaps one of the most significant changes is the implementation of the pilot project to allow some campuses to pay all vendor invoices without the need to submit claims audit forms to the State Controller's Office. This process improvement has the potential to create substantial savings by eliminating redundant and multiple levels of review, reducing the cost of processing invoices, and improving the timelines of vendor payments resulting in additional payment discounts. As we pursue next year the expansion of the pilot project to all campuses, we must be vigilant in our efforts, as a system, to exercise the utmost care and attention to detail to ensure that our accounting processes and practices meet the most stringent tests. They will be watching...
On behalf of the division, I would like to wish you all happy holidays and a prosperous new year!
Richard West, Vice Chancellor, Business and Finance
A Request for Proposal (RFP) is scheduled to be released by the end of January 1996, that will solicit bids for a firm to perform an audit which will result in the issuance of consolidated financial statements for the CSU. These financial statements will include all CSU campuses. The financial statements will also include the campus auxiliary organizations in a discreet presentation in accordance with GASB 14. The scope of work in the RFP will also include an A-128 audit as well as the revenue bond audits required for campus housing and student unions.
Campuses need to decide if they want an individual financial statement with the audit firms' opinion. The RFP will request a specific cost breakdown for the additional costs incurred for the individual campus opined statements. These costs will be charged to the campus receiving the individual statements.
Campuses may also want to have this RFP include any campus specific audit services that may be required such as NCAA, separate auxiliary organization audits, etc. Again, the individual campus will fund these additional costs.
A reporting framework for financial information is being finalized that will allow CSU to fulfill its systemwide financial reporting requirements. The framework being developed is referred to as FIRMS which stands for Financial Information Records Management System. This reporting framework has been designed to communicate the data elements needed to meet the systemwide financial reporting requirements that are currently met through FAS (Financial Accounting Software) and BDS (Budget Data System). This framework is intended to support the efforts of campuses who are implementing new financial systems. The FIRMS framework will be distributed to campuses during December 1995, and will be a topic of several systemwide discussions over the coming months. Reversion of Cash Balances for 1993/94 Fiscal Year Appropriation
An Executive Order is being finalized which addresses certain delegation of fiscal authority and responsibility to CSU Presidents. Included in the Executive Order is a section dealing with accountability measures. One of the items in this section states that the campus president is responsible for ensuring prior-year balances are reviewed regularly and eliminated as soon as possible after the close of the fiscal year in which the funds were appropriated. The Executive Order also states that unexpended cash balances in funds subject to reversion will be transferred from the campus six months prior to the date that the funds are no longer available for encumbrance.
An example is that campus cash balances remaining in the 1993/94 fiscal year appropriation as of December 31, 1995 would revert back to the system. Since this Executive Order is still in process, the reversion of the cash balances remaining in the 1993/94 fiscal year appropriation will occur as March 31, 1996. In the future, reversion will occur as of the December 31, timeframe.
Management Memo 95-22 which substantially modifies the capitalization threshold for tangible and intangible assets, has been issued by the Department of Finance. The new capitalization threshold is: a unit acquisition cost of at least $5,000 and a normal useful life of at least one year (12 months). The CSU will be adopting this new threshold. Campuses will still be required to have a campus policy which maintains an asset inventory system at a reasonable dollar level for sensitive equipment below the $5,000 threshold. An Executive Order is being developed on this issue.
As stated in the previous newsletter, we are in the process of developing the report on the results of the pilot project due to the Legislature on January 1, 1996. Our current plan is to submit a proposal to pursue legislation during the 1996 legislative session to gain the authority for all CSU entities to implement a program to pay vendors directly. Unfortunately, our success is far from assured since we can expect active opposition from the State Controller's Office (SCO). In an effort to bolster our case that both the SCO and the CSU can benefit from this project, campuses should make sure that complete documentation is prepared for claim schedules. The SCO is keeping a watchful eye on both pilot and non-pilot campuses.
More than sixty people attended the UBIT workshop held in San Diego on November 30, 1995. The CSU will file a 990-T for fiscal year 1995/96. UBI worksheets will be distributed by the end of March for fiscal year 1995/96. Campuses will need to submit their UBI worksheets to the Chancellor's Office during August 1996 for the filing of a consolidated return. It is critical that campuses begin a review as soon as possible of campus programs that will likely qualify as Unrelated Business Income. Once the worksheets are distributed to the campuses, it is our intent to offer another workshop on UBI.
AD 95-14, dated November 29, 1995, has been sent to each campus delineating the quarterly reporting criteria for campus investments. This report is necessary to comply with the established CSU Investment Policy. The first report is January 30, 1996 for the quarter ending December 31, 1995.
The Accounting Department has a Senior Accountant, Administrator II position opening. Priority will be given to resumes received by January 3, 1996. If you know of anyone that might be interested in this position, please ask them to contact Personnel Services, Office of the Chancellor, at 310-985-2600 for the position announcement, general job description, and an application. This information is also available by contacting Joni Shimotsu in the Accounting Department at 310-985- 2900. Please have them reference Recruitment #AD-3.
George Pardon, Director
AUXILIARIES, PLANNING AND BONDS
On November 14, 1995, the Office of Auxiliaries, Planning and Bonds distributed the Health Center Facilities Reserves that remained after the retirement of the outstanding program bonds (Please see coded memorandum APB 95-12). This action was consistent with the decentralization of the Health Center Facilities Program on July 1, 1995. The distribution was based on the percentage contribution of each individual campus to the fund over the last ten years. Each campus is now responsible for all costs related to their health center facilities.
These surplus funds will supplement the Health Center Facilities Fee revenues that campuses began collecting directly on July 1, 1995. Together these funds are restricted under Education Code Section 89702 to the acquisition, construction, and improvement of student health centers. However, the retirement of the program bonds now allow the CSU, under Education Code Section 89726, to borrow from this special fund provided that the transferred moneys are returned in time to fulfill their intended purpose together with any interest earnings.
Our Accounting Office has been asked to prepare Plans for Financial Adjustments (PFA) to transfer the identified reserves to your local fund 581-282. Please contact Mr. Benjamin Figueroa, Auxiliaries Planning and Bonds, at 310-985-2790, if you or a member of your staff have any questions related to the distribution of these funds or any related issues.
As a reminder, Executive Order 381 requires each campus to conduct a review of campus auxiliary organization policies and procedures to ensure compliance with existing CSU policies. For additional information, you may refer to the Manual of Policies and Procedures for Auxiliary Organizations of the California State University in Section 11.2 and Appendix E.4, M.1 (excluding section F) and M.2. or you may contact Mr. Benjamin Figueroa, Auxiliaries Planning and Bonds, at 310- 985-2790.
The 1995/96 deferred maintenance project financing of $24 million approved in this year's budget is proceeding on a schedule that will most likely provide funds for the campus projects in March 1996. The CSU Institute will again be the third party financing entity in this transaction, however, unlike the previous issue, a competitive financing is contemplated. Because this financing is to be unique, there may be some unknown steps or issues that could affect the schedule. However, for planning purposes, the month of March, 1996 is the target for the availability of the much needed funds. Questions on the financing can be directed to Richard K. Leffingwell, Auxiliaries Planning and Bonds, at 310-985-2790.
The Environmental Resources Committee (ERC) has forwarded the systemwide Environmental Protection, Health & Safety (EPH&S) Policy to CSU senior administrators for final review and submittal to the Chancellor for approval. The ERC accepted the recommendation that the policy be released as an executive order by the Chancellor. For more information or a copy of the proposed policy contact Elizabeth Stowe in Environmental Resources.
The CSU/EPA asbestos consent decree was lodged with the court on February 10, 1994. The consent decree language states, for defendant CSU, the consent decree automatically expires two years from the date of entry, assuming all required actions have taken place. The position of Environmental Resources is, essentially, that all required actions have been completed and therefore the consent decree will expire on February 10, 1996. Of course, CSU will still be bound by NESHAPS, but purchasing and contracting officers will no longer have to attach the consent decree documents to contracts after the expiration date.
The first startup/planning meeting of the Environmental Resources' Campus Advisory Committee (CAC) is scheduled on Tuesday, December 12, 1995. In part to continue activities of the ad hoc ER/Campus Task Force, the formation of CAC was supported by the campus representatives on the Task Force. CAC's charter is: to facilitate the sharing of Environmental, Safety, and Health (EH&S) information among Environmental Resources (ER) at the CSU Chancellor's Office and CSU campus EH&S staff; to review audits of hazardous waste treatment, storage, and disposal facilities; to make recommendations related to EH&S elements of ER's strategic plan and the CSU capital program; to identify issues which lend themselves to solution through systemwide efforts; and other matters as deemed appropriate for such an advisory body.
OSHA has released the latest edition of its booklet, "How to Prepare for Workplace Emergencies." The book gives an overview of the basic steps institutions can take to handle emergencies such as accidental releases of toxic gases, chemical spills, fires, explosion, and trauma caused by workplace violence. It provides information on training, communications, setting up a chain of command, emergency response teams, accounting for personnel after an emergency, medical assistance, security, and personal protection. For more information or a copy, contact Diane Leduc in Environmental Resources.
Richard Leffingwell, Director
The Budget Office is planning a discussion group on the 1995/96 budget allocation process and changes that may be appropriate for the 1996/97 allocation process. This group discussion with campus budget officers is currently planned for early next year following the Governor's Budget submission. Further details will be provided at a later date. For additional information, please call Rodney Rideau at 310-985- 2712.
John Richards, Director
Currently nine CSU campuses and the Chancellor's Office have implemented a procurement card program, and recently a number of additional campuses have expressed serious interest in implementing such a program. Statewide use of the card continues to grow. In October 1995, there were 11,980 purchases, 2,673 cardholders, and total dollars expended was $1,728,528. CSU campuses participating include: Chico, Dominguez Hills, Long Beach, Monterey Bay, San Bernardino, San Francisco, San Jose, San Luis Obispo, and Sonoma.
The protests logged as a result of the DGS award to Rocky Mountain Bank have been dismissed and the contract with RCMB for a three year term and two one-year extensions will stand. Under the new agreement, the maximum card cost will be $25/year. Current agencies participating are guaranteed a minimum of another 10 months of no cost procurement card service. Now that the award has been upheld, RCMB and DGS will work in earnest on many of the additional features, including M/W/DVBE reporting for future implementation.
The CSU Procurement Modeling Project initiated by the CIMIT is underway. The project team had their first meeting with the contractor (John Brandon and Associates) on November 3. The contractor's team is currently preparing initial alternative procurement models for presentation to the project team in early December. Site visits at the following campuses will take place in the next two months: San Jose, Sacramento, Dominguez Hills, Chico, and Pomona.
Work on SUAM revisions for both Public Works minor capital outlay (Section 2600) and Procurement & Contract policies (Sections 2400 & 2500) are currently in progress. There are many changes to be made in all three of these sections that reflect chaptered legislation over the past few years (including the full CSU procurement authority established on January 1, 1994), the contents of recent coded memos, and the work of various policy task force groups. The target date for release of the new manual governing CSU acquisition policy is March 1995.
SB 910 (Polanco) amends sections 10290.1 and 12101.5 and adds 10300 to the Public Contract Code. In addition to creating a Customer and Vendor Advocate within the DGS, the statute repeals limitations on use of Federal contracts under multiple award schedules (CMAS). The previous limitation of $20,000 per order for supplies and services, and $250,000 per order for information technology has been removed. DGS is now responsible for determining limitations for CMAS orders.
Pat Dayneko, Director
PHYSICAL PLANNING AND DEVELOPMENT
The annual campus scope visits involving the Department of Finance, Legislative Analyst's Office and legislative consultants have successfully been concluded during the months of October and November. The DOF selected Chico, Humboldt, and Sonoma to visit in October. The LAO selected Dominquez Hills, Long Beach, San Jose, Monterey Bay, and San Luis Obispo to visit in the month of November. The new assignment of Ms. Veronica Chung-Ng, as our Budget Analyst for Finance, made these visits doubly important in helping her to understand some of the critical issues faced systemwide and by the specific campuses. Overall, these visits were a big success that helped answer a lot of questions related to the physical planning process and clarify specific questions related to program issues. The Legislative Analyst seems to be more focused on the systemwide issues of deferred maintenance, telecommunications and enrollment trends, and retention and graduation rates. The scope visits are an essential component in addressing questions and concerns raised by Sacramento. Thanks to all of the campuses' staff members who worked so hard to make these visits a success.
In case you are not aware, the Department of Finance has experienced a major change in their capital budget staff; the following are the changes in the budget assignments affecting the CSU:
A Request for Proposals has been prepared to hire a consultant qualified and experienced in regulatory, legislative, and market issues related to the restructuring of the electrical power industry in California. A short list has been established as a result of Requests for Qualifications previously submitted and screened to determine those most qualified in this particular area. Proposals are expected late in December and will be reviewed by the Energy and Utilities Advisory Group for recommendations to the Energy Cost Reduction Task Force of CABO.
Master Plan Revisions: January 16, 1996
All Other Items: January 30, 1996
Jon H. Regnier, Senior Director
The 1995 CSU Benchmarking project is up and running. From November 6 through November 9, representatives from the sixteen participating campuses met in individual workshops at the Crowne Plaza near LAX. Function Chairs for each of the nine functions being benchmarked this year facilitated individual function workshops with assistance from Coopers & Lybrand. Major issues were discussed, data requirements agreed upon, and new benchmarks were developed in the workshops.
Five campuses (Fresno, Hayward, Long Beach, Sacramento, and San Marcos) have committed to participate in this project. The committee (comprised of campus and Chancellor's office representatives) reviewed all submitted proposals from vendors in mid-November and a Notice of Intent to Award the contract to Sedgwick James of California was issued on November 21. A kick-off meeting for the project is scheduled for early January.
We received a total of 47 proposals from our campuses for the 1995/96 Productivity and Investment Program (PIP), including 23 proposals from multi-campus consortiums. Every CSU campus is participating in at least one or more multi- campus proposal. On December 13, 1995, the PIP Committee will meet to discuss their initial evaluations of the proposals and develop a finalist list. Funding will be made by February 29, 1996. Lawrence Lin (310-985-2705 or firstname.lastname@example.org) is providing staff support on this program.
During the month of November, the first report on the CSU's implementation of productivity improvements was issued to the Joint Legislative Budget Committee and the California Postsecondary Education Commission as requested in the supplemental language to the Budget Act of 1995. The report details the more than $17 million in cost savings achieved by the CSU through cost-avoidance, cost reductions/reallocations, and improvements in service and quality. Copies have been sent to all campus presidents and administrative vice presidents. A second report will be issued in the Spring of 1996.
Lenore Rozner, Senior Director
The Business and Finance Newsletter is now accessible from the Chancellor's Office