BUSINESS AND FINANCE NEWS
December 19, 1996
The California State University
Business and Finance Division
Richard P. West, Vice Chancellor
The four-year budget compact provides a comprehensive approach to strategic planning which has allowed the California State University to develop and implement meaningful plans to fulfill the State's commitment to higher education. The recovery of California State University, Northridge from the devastating earthquake and the successful conversion of Fort Ord to California State University, Monterey Bay exemplify the creative and innovative responses to dramatically changing regional, State, and national needs that flow from flexible longer term state policies.
Further opportunities exist to make better use of current limited resources. For example, streamlining the State capital outlay process (a proposal discussed later in this newsletter) can provide substantial savings for the State by eliminating redundant steps, reducing the construction cycle, and holding managers more accountable for completing projects on time and on budget.
The investment in information technology by industry has transformed and reshaped business and the economy of California. Results of the parallel investment in technology for higher education should be no less dramatic. Long term investment in technology infrastructure will bring about systemic productivity gains and help maintain broad access to higher education in California.
The transformation of the Stockton State Hospital and Development Center into the Regional Center for Education and Human Services serves as another potential future model for innovation and responsiveness to the needs of the community and the State. Similarly, Conversion of the Camarillo State Hospital into a site for the twenty-third CSU campus, California State University, Channel Islands, presents an opportunity to provide regional access to higher education at a relatively low cost to the State.
Through a combination of productivity gains achieved by greater managerial flexibility and accountability and creative entrepreneurial and collaborative approaches to delivering quality education, higher education in California will continue to play a central role in preparing California's 21st century workforce which will drive continued economic growth for the State.
Richard West, Senior Vice Chancellor, Business and Finance
NEWS FROM THE DIRECTORS
Reversion of Cash Balances for 1994/95 Fiscal Year Appropriation
Pursuant to Executive Order 648, 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. As such, the Chancellor's Office Accounting Department will take the action necessary to deallocate all campus cash balances that remain as of January 1, 1997, from 1994/95 General Fund appropriations.
Audited Financial Statements
KPMG Peat Marwick has been selected as the independent audit firm that will conduct the audits of the CSU financial statements for the three years beginning with 1996/97. KPMG is in the process of scheduling the readiness assessments for the campuses that were not audited as part of the previous 5 and 10 campus pilot programs. As a reminder, the law now requires every campus to have a separate audit opinion at least every other year. Additionally, it is required that at least 10 campus-specific audits be conducted each year. Twelve campuses have requested a separate audit opinion for 1996/97. The twelve campuses are Chico, Fresno, Humboldt, Long Beach, Los Angeles, Monterey Bay, Sacramento, San Diego, San Francisco, San Jose, San Luis Obispo, and Sonoma. If a separate opinion is not received for your campus in 1996/97, it will be required for 1997/98. If your campus is interested in receiving a separate audit opinion for 1996/97, please contact George Pardon as soon as possible. The cost for a separate audit opinion is $10,000 per campus per year.
FIRMS/GAAP Audit Workshop
A schedule is being developed for a FIRMS/GAAP Audit Workshop that will tentatively occur on January 22, 23, and 24, 1997 at the Westin (Doubletree) Hotel in Los Angeles at LAX. The tentative agenda for the workshop is:
- Wednesday, January 22, 1:00 PM - 6:00 PM: FIRMS Implementation
The cost for the workshop has not been finalized but we expect it to be in the range of $100 to $150 per attendee. A reduced cost will be available for those interested in attending portions of the workshop. A formal agenda and registration was mailed on December 17. Please contact Ruth Stipp or Joni Shimotsu in Accounting at 310-985-2900 if you have any questions regarding the proposed workshop.
Direct Vendor Payment Implementation
A friendly reminder: No more claim schedules should be sent to the State Controller's Office for vendor payments after December 31, 1996.
George Pardon, Director
AUXILIARIES PLANNING AND BONDS
Auxiliary Tax Exempt Financing Limits
On October 29, 1996, campuses were requested to provide information on tax-exempt financings completed by an auxiliary organization where the transaction was classified as a financing on behalf of the Board of Trustees, or a third party entity such as California Statewide Communities Development Authority participating with an auxiliary organization to issue debt on behalf of the Board of Trustees (coded memo APB 96-13). This information was requested to track status of such debt on a systemwide basis for tax law compliance. Responses were due in Auxiliaries Planning and Bonds by November 28, 1996. Contact Ben Figueroa at 310-985-2790 regarding any questions concerning the details of this request.
Auxiliary Organizations Association Annual Conference
The Auxiliary Organizations Association (AOA), a body of professional auxiliary organization managers in the California State University, is scheduled to have its annual conference on January 12-15, at the Holiday Inn Plaza in Sacramento, California. The theme of the conference is "Creating Change Through Collaboration." Ken Gibson, AOA President remarks, "Never in recent history has there been the motivation and initiative which exists today that encourages us to seek out new opportunities to collaborate and build those partnerships which are critical to the future well-being of our university communities." Contact Marti Gray the conference director at 619-750-4700 for additional details.
Student Union Program
As we urged last spring, it is important for the student union operations to have a plan for their future maintenance and repair needs and the funding to meet these needs. Early next year, we will incorporate into the student union budget cycle some information that will focus further attention on this matter. Additionally, we will be forwarding information to campuses on bond covenant requirements. Even though we recently completed this year's budget cycle, it is not too early to think ahead to the coming year. Questions and comments can be forwarded to Rosa H. Renaud at 310-985-2790.
CSURMA and Risk Management in the CSU
The CSU, through a final approval by the Board of Trustees in November, 1996, has determined that a joint powers authority (JPA) is the best vehicle to organize its risk management activities. The CSURMA (California State University Risk Management Authority) will be officially formed on January 1, 1997, as permitted under a new law that allows the CSU to form a joint powers authority with its auxiliary organizations.
The CSURMA will offer two types of programs, one for CSU operations and the other for auxiliary organization JPA members. The CSU Risk Pool will be transferred to the new organization (auxiliaries will not participate in the risk sharing of the campus liability and workers' compensation programs). Auxiliary organization members will participate in a group purchase program for normal business package insurance policy coverages. Auxiliary organizations gain pricing advantages due to economies of scale and greater clout in the insurance marketplace by approaching the marketplace together.
This is another major step in creating a comprehensive risk management program that serves the needs of the CSU and its related organizations. Questions concerning this new program should be addressed to Charlene Minnick, Systemwide Risk Manager at 310-985- 2080 or Dennis Mulqueeney from Sedgwick at 415-983-9634
Richard Leffingwell, Director
1997/98 Trustees' Support Budget Request
On November 12, 1996, the Board of Trustees approved for submission to the state the CSU's 1997/98 Support Budget Request totaling $2,641,795,000, $119,488,000 above the adjusted 1996/97 Final Budget of $2,522,307,000.
The support budget plan is based on a $68,693,000 increase provided by the 4% growth rate in state General Fund support pledged in the Governor's compact, $1,135,000 in state support to finance increases in state-mandated fee waivers, $3,667,000 in student fee revenue resulting from projected enrollment growth of 2,499 full-time equivalent students (FTES) - total enrollment for 1997/98 is targeted at 258,000 FTES, and $30,366,000 in discretionary revenue from either a 10% increase in the State University Fee rates or the General Fund. The budget compact provides for annual increases in State University Fee rates of ten percent, with one-third of the revenue set aside to increase the pool of funds available for student financial aid grants. The 1997/98 budget plan is premised on the state providing General Fund appropriations to eliminate the need for a ten percent student fee increase, as it has done in the first two years of the compact.
Also, in accordance with the compact agreement, the state will provide $15,627,000 for increased Lease Revenue Bond Payments; funding for lease bond payments is not included in the annual four percent base budget revenue adjustment.
A priority focus for the 1997/98 expenditure plan centers on the CSU investment in an integrated technology strategy. A total of $13,500,000 (including $1,037,000 in technological support funded from enrollment increases) will be allocated for critical technological infrastructure needed to equip campuses for the instructional requirements of the 21st century.
A total of $6,196,000 provides for growth in CSU mandatory costs obligations - inflation, new space and State University Grants (based on student fee revenue increases resulting from targeted enrollment growth of 2,499 FTES in 1997/98). Planned enrollment will be funded at the marginal cost rate of $5,755 per FTES totaling $14,382,000 (does not include $1,037,000 in enrollment funding earmarked for technological support - $415 per FTES). Budget allocations for on-going maintenance will increase by $8,500,000. Funds required for a 3.4% compensation pool and to maintain current employee benefits are included in the 1997/98 expenditure plan in the amount of $57,790,000. Finally, $3,493,000 has been set aside for special start-up costs at CSU, Monterey Bay and CSU, San Marcos.
New Support Budget
In a departure from previous support budget presentations, the 1997/98 Support Budget consists of two published reports: the 1997/98 Support Budget and the 1997/98 Support Budget Documentation. The Support Budget Documentation provides the technical details that support the Board of Trustees' formal budget request. The budget details are important to staff for the Department of Finance, the Legislative Analyst's Office, consultants and aides to the state legislature and legislative committees, and CSU constituency groups. The 1997/98 Support Budget Documentation is also designed to provide budget information that assists campus planning efforts and is utilized by campus chief administrative officers and their staff. A Web page is under construction and will provide on-line budget detail similar to that contained in the Support Budget Documentation publication. Further information will be provided regarding Web page completion in the February issue of the Business and Finance Newsletter.
A Look Ahead to the 1997/98 Budget Process
In January, the Governor's 1997/98 State Budget Request will be finalized and submitted to the Legislature for review. Modifications will be made to the CSU's budget proposal based on any funding changes made by the Governor and transmitted to the campuses for planning purposes. According to the current budget calendar, campuses should receive the 1997/98 campus budget allocation information by the first week in March, 1997. The Budget Office is planning pre-allocation workshops for early February to explain the campus budget allocation process. For additional information, please call John Richards at 310-985-2712.
John Richards, Director
CONTRACT SERVICES AND PROCUREMENT
Procurement Modeling Project - The Road to Purchasing Excellence
This project, sponsored by the Commission on Information Technology and Institutional Management (CIMIT), consisted of a major study to recommend CSU directions for procurement reform. The intent of the effort was to identify the future-state best business practices, maximize use of information technology, and improve operational effectiveness and efficiencies.
In October of this year, the Procurement Modeling Team presented the recommended implementation plan to both the Chief Administrators/Business Officers (CABO) and CIMIT for approval. Many campuses are already proceeding with local procurement reform efforts directed at improved internal procedures and practices.
The activities recommended for systemwide initiation are:
Information Technology Initiatives Project: To position the CSU to maximize the powerful and rapidly evolving ability to conduct business in an automated, electronic environment, three specific actions plans were recommended:
CSU Procurement Training Plan: The retention of a consultant to develop standardized levels of knowledge, skills, and expertise for CSU purchasing professionals; to identify a curriculum plan, proposed educational resources, and estimated costs for campus use as a staff development plan.
New Policy Manual and Guide: This activity is currently underway at the campus level though identification and implementation of streamlined campus practices, and is also in progress on a systemwide level through the complete redesign and development of a new policy manual which will replace current SUAM provisions governing CSU procurement and contracting practices. The target date for release of the new manual is the first quarter of 1997.
These projects will be implemented under the oversight and guidance of CABO and will include specific initiatives associated with ongoing management, measurement, and reporting mechanisms to monitor progress and success. Should you have any questions concerning this effort please contact Pat Dayneko 310-985-9157 or e-mail: firstname.lastname@example.org.
Pat Dayneko, Director
PHYSICAL PLANNING AND DEVELOPMENT
Construction Management reports recent successes in construction bids over the past four months. Congratulations to those campuses who have pushed their projects to take advantage of the current good bidding climate. Recent bids include:
These six successful bids resulted in a combined bid savings of $8,008,000. We urge other campuses with construction funds to follow suit.
Energy Markets Restructuring
HMH Resources, PPD's consulting team studying the impact of the ongoing deregulation of the natural gas market and the imminent restructuring of electrical generation and procurement, made a presentation on November 22, 1996, to the CABO Energy Advisory Committee. The presentation covered ongoing decision processes by various agencies taking place over the next 12 months in the implementation of the California Public Utilities Commission's and Legislative decisions of 1995 and 1996. Even though not all these processes are complete, there are choices to be made and recommended actions to be taken by the CSU and the individual campuses over the next several months. David DeMauro, chair of the committee, will be reporting committee findings to CABO and has scheduled a series of ongoing meetings of the committee for the next few months for further deliberations.
PPD Due Dates for CPB&G Agenda Items (March 18-19, 1997 Trustees' Meeting)
Jon H. Regnier, Senior Director
PLANNING AND ANALYSIS
Collaborative Management Systems (CMS) Project
Over the last six months, the CMS Task Force, chaired by SLO Vice President Frank Lebens, completed development and articulation of the vision and principles that CSU will employ in moving forward to evaluate administrative systems for potential multi-campus collaborations. This information was shared with CIMIT on October 29. The task force plans to issue an RFQ in January 1997 to generate industry responses as to how their software packages will fulfill the CSU vision. Concurrently, an industry scan is being commissioned to support the evaluation team in determining viable vendors. Campus presidents have nominated staff to participate in function teams - Human Resources, Student Systems, Financial - which will be evaluating proposals, software capabilities, and developing recommendations for vendor options. The task force plans to convene the function groups in early February to review the results of the industry scan and again late February and early March for proposal review and software demonstrations. Contact Lenore Rozner (310-985-2704) if you have questions.
175 CSU employees attended the November 1 "Encouraging Improvement Symposium" in San Jose. Richard West, Senior Vice Chancellor, was the keynote speaker. CSU, Stanislaus and Dr. Jim Blackburn of CSU, Fullerton gave presentations concerning campus use of benchmarking data. Potential uses of the benchmarking data, encouraging change, cross functional interaction, and customer satisfaction surveys were all topics of discussion in the function break-out groups.
The CSU Benchmarking Task Force has appointed a Customer Satisfaction Survey Committee to develop or select a survey instrument that would be used during the next benchmarking cycle. The purpose of the survey is to help function representatives, managers, and other users of the benchmarking tool obtain qualitative measures relating to the benchmarking data. An RFP for survey development will be issued by early January.
Process Mapping Projects
The CSU Benchmarking Task Force has chosen Human Resources as the process mapping project for the 1996/97 fiscal year. Five campuses - Long Beach, Monterey Bay, Northridge (lead campus), San Diego and Stanislaus - will be the primary participants. Team members from those campuses will develop the RFP for consulting services and work with the consultants to perform the process mapping activities. This effort continues to be subsidized from systemwide funds and the results of the study will be made available to all campuses next summer.
If you have any questions concerning benchmarking or process mapping, please contact Ron Ashcroft at 310-985-2706, by fax: 310-985-2710, or e-mail: email@example.com.).
CSU One-Card Initiative
During the past three months, the One-Card Task Force, which now comprises 16 campuses and the Chancellor's Office, received "One-Card" (also commonly referred to as universal, all-campus and multi-purpose school ID cards) conceptual design proposals for student ID card, banking, personal and campus long distance telephone, and system integration services and initial price schedules on all areas except integration. The One- Card service vendors also completed visits to 13 campuses to address the campus-specific equipment and infrastructure questions related to "Student Card Production."
A computerized financial workbook was developed and used to complete individual campus financial analyses for One-Card implementation. On December 13, 1996, campuses declared their commitments to the proposed master contracts. Ten campuses and the Chancellor's office will be participating in one or more parts of the overall service offerings. Based on the somewhat disappointing proposals from the banking vendors, and a desire to possibly pursue some alternate services, the Technology Steering Committee has asked that the banking component of this effort be terminated.
The IBM Consulting Group is completing the implementation plans for each participating campus. These plans provide the basis of a generalized plan for the other CSU campuses who may wish to opt-in to the contract and implement campus cards in the future. Contact Lawrence Lin at 310-985-2705, or e-mail: firstname.lastname@example.org) . is for further information.
Productivity and Investment Program (PIP)
The Productivity and Investment Program (PIP) Committee has awarded grants/loans to 25 proposals since the Spring of 1995. Some of the completed PIP projects include: Barcode Inventory, One-Stop Student Service Model, Multimedia Employee Benefits/Retirement Information, and "Response" Direct Mail Communication systems.
To share the productivity knowledge and experiences gained through the various PIP projects, CSU productivity fairs and workshops (PIP Fair) are being planned for March 1997. Project coordinators will be invited to make presentations on their completed PIP projects to the CSU community. To ensure maximum accessibility and attendance, the project results will be presented at two different times at locations in Northern and Southern California. CSU, Fullerton will be hosting the Southern California PIP Fair scheduled for March 19-20, 1997, and CSU, Sacramento will be hosting the Northern California PIP Fair March 26-27, 1997.
Status reports on all awarded projects (including past cycles) are available on the Chancellor's Office web page under the Business and Finance section and will be updated in January 1997. Lawrence Lin (310-985-2705, e-mail: email@example.com) . is providing staff support on this program.
Productivity Report 1996
Based on input from the campuses and Chancellor's Office, the 1996 CSU Productivity report describes over $17 million in productivity enhancements, well over the $10 million commitment that is part of the Governor's funding compact. A final version of the report will be available in early January. Many thanks to all campuses for your substantial input to this document!
Lenore Rozner, Senior Director
The Business and Finance Newsletter is now accessible from the Chancellor's Office