NEWS FROM THE DIRECTORS


NEWS FROM THE DIRECTORS

 

ACCOUNTING OFFICE

Unrelated Business Income Tax Seminar

A one day seminar on Unrelated Business Income Tax is scheduled at the Chancellor's Office in the Trustees Auditorium on April 28. The seminar is being conducted by KPMG Peat Marwick's Exempt Organizations Tax Practice. Issues that have regularly surfaced at the CSU such as corporate sponsorships, rents, and advertising will be among those topics covered. KPMG will also discuss methods of cost allocation. Additional information is available at http://www.calstate.edu/co/

If you are interested in registering or have questions, please contact Shirene Miller at KPMG Peat Marwick at (213) 955-8464 or Bill Musselman at (562) 985-2900.

1996/97 GAAP Audit Management Letters

As discussed at the CABO meeting on March 30, 1998, all campuses will be sent copies of any final campus management letters by the end of April. This information should be helpful for those campuses that have not yet had a full scope audit. Campuses with similar issues will have an opportunity to work together on remedies to their findings and identify campuses that are handling the processes appropriately.

1996/97 GAAP Audit

Though we are just finishing the 1996/97 GAAP audit, it is already time to start the planning process for the 1997/98 audit. As a reminder, we are required to issue a systemwide audit report every year, with each campus being required to issue a stand alone audit report at least every other year. The campuses that will be required to issue a stand alone audit for 1997/98 are: Bakersfield, Chico, Dominguez Hills, Fullerton, Hayward, Maritime Academy, Northridge, Pomona, San Bernardino, San Marcos, and Stanislaus. Copies of the audited financial statements of each auxiliary organization included in the combined audited financial statements must be received in the Chancellor's Office Accounting Department by November 2, 1998.

FIRMS 4th Quarter Submission/Auxiliary Organizations

As a reminder, Auxiliary Organization information is required as part of the 4th quarter submission of the FIRMS data. The data should be submitted by auxiliary organization combined for all funds with detail at the object code level for revenue and program level for expenditures.

George Pardon, Director

BUDGET OFFICE

1998/99 Legislative Analyst's Report

As was reported in the February 1998 B&F Newsletter, the Governor's Budget provides $2.1 billion in General Fund support to CSU for the 1998/99 fiscal year. This funding level is $4.1 million over the CSU support budget request and includes $6 million in new initiatives proposed by the Governor for Teacher's Preparation and CSU participation in the development of a California Virtual University.

The 1998/99 Analysis of the Governor's Budget prepared by The Office of the Legislative Analyst contains three CSU specific issues:

Enrollment and Enrollment Funding
The LAO suggests that the funding provided in the Governor's Budget for the 3% enrollment growth over the compact is unnecessary because the students are already being served and the funds to serve them are "demonstrably" within the base budget. The LAO recommends the $39.6 million provided for this purpose be redirected to (1) an "extra-teaching" incentive fund ($17.1 million); and (2) facilities maintenance ($22.5 million).

CSU, Channel Islands (Ventura Off-Campus Center)
The LAO recommends deleting the $5.2 million for support costs (and the $11.3 million for capital outlay) contained in the Governor's Budget for the transition of the vacated Camarillo State Hospital. The CSU plan is to reuse the hospital facility initially as the site of the Ventura off-campus center.

Teacher Preparation - "A Market-Driven Solution to Train More Teachers"
The LAO recommends that $3.3 million of the teacher preparation initiative that was added by the Governor to the CSU budget be redirected to the Student Aid Commission to provide scholarships for students wishing to pursue a multiple subject teaching credential.

In addition, a "Crosscutting Support Issue" entitled Federal Tax Credits and State Financial Aid is contained in the Analysis. A response to each of these items has been prepared which raises objections to the recommendations. These responses are included in a booklet entitled "Responses to the Legislative Analyst's Report - 1998/99." This booklet will be the basis for CSU staff discussion before legislative committees which began hearings on March 25, 1998, and will continue throughout the spring. Copies of the booklet were sent to campus presidents and CABO representatives on March 13, 1998. It will be on the Budget Office web page soon.

Financial Officer's Association Conference

A briefing of all the issues noted above and their current legislative status was presented at the FOA Spring Conference in San Luis Obispo on April 6 & 7, 1998. In addition, Budget staff discussed the Governor's Budget campus allocation letter (currently available at the Budget office web site), long range budget planning and analysis, and FIRMS budgeting.

1998/99 Lottery Revenue Budget

At its March 17-18, 1998 meeting, the Board of Trustees were provided an information item on the 1998/99 Lottery Revenue Budget. The budget level of $29.8 million is consistent with the 1997/98 budget levels except that the one-time technology allocation is removed. Also, campus interest earnings for 1998/99 are increased to reflect past budget experience. Except for the technology allocations, campus base 1998/99 budgets will be the same as in 1997/98. Look for possible changes to the Lottery Budget when it comes before the Board in May.

John Richards, Director

CONTRACT SERVICES AND PROCUREMENT

Public Works Policy Update

The Contract General Conditions for Minor Cap Outlay Projects were distributed to campuses by mail on March 10, and then again at the Procurement and Support Services Officers Association Conference on March 18. For Major Cap projects (those that are estimated to cost $250,000 or more), the Contract General Conditions revised and dated March 1997 remain in effect. They will be revised and updated later this year. This document is now available on PP&D's website at . Or you may request a printed copy by e-mailing Barbara Nicholson at barbara_nicholson@calstate.edu. Be sure to include your mailing address in that e-mail message.

Public Works Policy Manual

The new and revised Public Works Policy Manual (formerly part of SUAM) is undergoing its final review and is expected to be approved and become effective within the next month. It will be distributed to campuses at that time. Questions about these documents may be directed to Cliff Johnson at (562) 985- 9177.

Master Agreements

Recently the CSU has executed master enabling pricing agreements for the purchase of a broad range of laboratory products and supplies with Fischer Scientific expiring 9/30/99, and wood, steel, and modular furniture from Steelcase, expiring 12/31/2000. In both instances, existing pricing agreements between these vendors and the University of California offered extremely competitive pricing and, after lengthy negotiations between CSU and UC, consensus was reached to amend these agreements in order to extend the discount pricing to the CSU. CSU procurement staff continues to look for opportunities to leverage the combined requirements of both these systems to achieve maximum discounts from vendors.

Additionally, the CSU has just executed a master pricing agreement with Office Depot (M970052), which will afford CSU participating campuses, as well as UC and the community colleges, with very attractive pricing for office supplies, etc. The agreement provides firm unit pricing for 260 high volume brand- specific items (Category A) and a 50% discount off list price for all other product lines except computer supplies and office machines and equipment which carry a 38% discount (Category B - Catalog Pricing). Campuses may elect either desktop or centralized delivery under this agreement and Office Depot offers ordering and product inquiry via the web. The initial term of this agreement runs through March 2001 and may be extended for two additional two-year term extensions through March 2005.

Small Business & Target Preference Programs

In compliance with the 9th Circuit Court of Appeals decision in Monterey Bay Mechanical vs. State of California, and the subsequent Executive Order, W-172-98 issued by Governor Wilson on March 9, 1998, which declared that contracting preferences based upon ethnicity and gender are unconstitutional, the CS&P department in conjunction with the CSU Office of the General Counsel has revised our Target Preference Programs to reflect the 9th Circuit Court of Appeals ruling and Governor Wilson's Executive Order W-172-98.

CSU Target Preference Programs recognize goals of 3% for State of California Office of Small and Minority Business (OSMB), certified Disabled Veteran Business Enterprises (DVBE's), and a Small Business Preference of 5% for OSMB certified small businesses.

NAPM Focus Assessment

The CSU Contracts and Procurement personnel on twenty-two campuses and the Chancellor's Office will be administered the National Association of Purchasing Management's (NAPM) Focus Skills Assessment to help determine systemwide training initiatives and personal development career paths for Foundation, Journey and Senior Level contracts and procurement personnel. The Focus Assessment represents the implementation phase of the Procurement Professional Development Training Plan recommendations.

Electronic Commerce

The Electronic Commerce project received support from CABO in February to move forward with an RFP for electronic commerce pilot programs on several CSU campuses. The RFP will be released in April. It is believed that about a dozen vendors are now capable of providing most or all of the leading edge technology envisioned. Functional specifications for the electronic commerce environment will be posted on the Procurement Technology Projects web site http://www.calstate.edu/ptp. Project background and team member information are also available on the site.

Information requests on the program should be directed to Tom Roberts (562) 985-9159 or Dick Metz at CSU Hayward (510) 885-3803. If you think your campus is a candidate for a pilot implementation, please contact your campus CABO vice president.

Pat Dayneko, Director

FINANCING AND RISK MANAGEMENT

Student Union Program

In the next six months we have scheduled bond sales for student unions at Chico, San Francisco, and San Luis Obispo. We have been working with the universities and student unions to assure that both the technical aspect of the project and the financing area are coordinated and synchronized to achieve the desired project timelines. It is important to note that student union auxiliary organizations are chartered to operate student union programs in the leased facility. Because the Trustees are ultimately responsible for the building, funding and management of capital projects are the responsibility of the campus and the DRF bond program. If your campus is considering a renovation/expansion or other capital project involving student union program funds, please contact Rosa H. Renaud, at (562) 985-2790, in order to discuss the timeline and financing requirements.

Financing Activities

With March 1998 authorization from the Board of Trustees, on Monday, April 8, 1998, Financing and Risk Management priced two student union refunding bond sales for specific maturities of the San Diego State University Student Union, Series B Bonds and the California State University, Northridge, Series B Bonds. Both sales, closing escrow on April 23, will result in significant savings in future debt service for the students and student union programs at these campuses. Preliminary numbers indicate a dollar savings of approximately $1,260,000 with a net present value savings of $704,000 for San Diego, and a dollar savings of approximately $770,000 with a net present value savings of $520,000 for CSU, Northridge. A summary of these sales will be posted on the Financing and Risk Management world wide web pages.

Richard Leffingwell, Director

GOVERNMENTAL AFFAIRS

For copies of CSU Legislative Reports or other legislative information pertaining to the CSU, please visit our website at http://www.calstate.edu/oga/.

Karen Yelverton, Chief Professional Officer

INFORMATION RESOURCES AND TECHNOLOGY

For information related to technology projects within the CSU, please visit our website at http://www.calstate.edu/infotech/.

Tom West, Assistant Vice Chancellor

PHYSICAL PLANNING AND DEVELOPMENT

Electricity Procurement Contract

Following receipt of proposals in December and analysis by the team of consultants, campus representatives from both UC and CSU, as well as Chancellor's Office staff from PP&D and Contract Services & Procurement, negotiations started with the low bidder at basis of selection, Enron Energy Services. After many negotiation sessions, a unified UC/CSU contract (first one ever) with Enron was signed on February 20, 1998. All campuses receiving electricity provided by investor-owned utilities will participate and receive lower cost electricity. The CSU campuses will save in the aggregate approximately $1.5 million dollars per year for the next four years. Other benefits include strategic energy plan preparation for all campuses (including municipal utility customers) and opportunities for various energy conservation and equipment replacement projects.

Status Report on the 1998/99 State Funded Capital Outlay Program

The Governor's Budget provides $161.3 million for life safety, seismic upgrades, equipment, infrastructure upgrades, building renovation and one growth project. This funding level is $11.3 million above the CSU capital outlay request of $150 million in support of the CSU, Northridge Ventura Off- Campus Center.

In February, the Legislative Analyst's Office published the Analysis of the 1998/99 Budget Bill and recommended the potential deletion of or withhold recommendation on six projects pending additional information and/or reevaluation. This year the LAO recommended priorities for funding Higher Education Capital Outlay projects in place of allocating equal amounts to the three segments. While the LAO's approval of 18 of our projects indicates the relatively close alignment of the Trustees' Categories and Criteria for prioritizing projects with the LAO's proposed priority ranking; we disagree with the recommendation. We believe the governing board of each segment is better able to determine priorities.

Discussions and the submittal of information are ongoing with the LAO. We have gained their approval of our minor capital outlay program, request for systemwide seismic studies, and are close to gaining approval on the seismic upgrade projects at Fullerton and the Maritime Academy. We continue to provide additional study information on the conversion of the Camarillo State Hospital to the Ventura Off-Campus Center, and have scheduled a scope meeting to review the San Jose Business Building renovation project.

A Joint Senate and Assembly Legislative subcommittee pre-hearing was held on March 26, 1998. At the meeting, the staff to the new Speaker of the Assembly noted there is an increased level of interest in the allocation to the segments. The subcommittee consultant requested the segments to provide a two-year list of capital outlay projects totaling $250 million. Such a list has been transmitted to campus vice presidents for administration and legislative liaisons. It is currently anticipated that a bond measure will be before the voters in November. We appreciate the significant efforts by the CSU campus presidents and staff to promote a June bond, and expect we will again need local support to successfully move a bond bill through both houses.

PPD Due Dates for CPB&G Agenda Items (July 14-15, 1998 Trustees' Meeting)


Master Plan Revisions:
All Other Items:

May 12, 1998
May 26, 1998

Jon H. Regnier, Senior Director

PLANNING AND ANALYSIS

PICOSAS

The "Partnerships for the Improvement of Campus Operations, Student Services, and Academic Services Program" (PICOSAS) Committee met on March 16 to review the results of the member's evaluations of the 59 proposals submitted on February 12. After much discussion, the committee agreed to fund five proposals for a total of $610,000. The funded project summaries will be posted to the web page. Reporting criteria and funding schedules have been agreed to with each of the five proposal sponsors. Those who submitted unfunded proposals have also been notified. The response to this incentive program was high, and the Committee appreciated the efforts of all involved.

If you have any questions about PICOSAS, please contact Lawrence Lin at the Chancellor's Office at (562) 985-2705 or e-mail: lawrence_lin@calstate.edu for additional information.

Collaborative Management Systems (CMS) Project

The three prequalified vendors, Oracle, PeopleSoft, and SCT submitted their final and best offers on March 13, 1998, and the CMS Task Force is working to establish master services agreements with the vendors for set CMS services as well as price schedules allowing for voluntary campus participation. The Task Force is also preparing a series of documents in preparation for a collaborative effort on implementation of a software suite, including principles for collaboration, a readiness assessment tool, and cost information. Discussions regarding central office funding for a collaborative maintenance support function are also proceeding.

The CMS Task Force has contracted with Watson Wyatt Worldwide to work with the CSU campuses, Chancellors Office, State Controller's Office (SCO), and other agencies such as the Public Employees' Retirement System (PERS), to review and define the existing CSU payroll and benefit administration system under the SCO, and recommend to the CSU interface strategies for these areas with the implementation of the SCO 21st Century project. Work began in March and the preliminary report is expected by the Task Force by the end of May. If you have any questions concerning CMS, please contact Lawrence Lin at (562) 985-2705 or Project Director John Miller at (562) 985-9607.

Benchmarking Project

The CSU Benchmarking Post Data Collection workshops were held March 18-20, 1998 to provide a forum for review, analysis, and discussion of the data. In addition, customer satisfaction survey results for accounts payable, admissions and records, facilities, financial aid, human resources, procurement, and student accounts receivable were available for the first time to assist the function representatives in their analysis of the data. Several first year functions - parking, mail services, libraries, and student health centers - are considering collecting data for the fiscal year 1997/98, to correct inconsistencies and provide additional longitudinal information.

Further analysis is now in progress. Each function is in the process of drafting their portion of the final report and process improvement recommendations. Final drafts are due May 15.

Customer Satisfaction Survey

The first round of the customer satisfaction survey for benchmarking has been completed. Generally, the survey has been well received. A new development and administration committee has been formed and will be chaired by Don Coan of CSU Long Beach. The committee members are campus IR directors, campus coordinators, and function chairs. The first meeting of the committee was held on April 2. Survey objectives and schedules were formulated at the meeting.

Process Mapping

The Human Resources Process Mapping is proceeding with review of the report drafts by the team members. A final draft report will be mailed to the committee and to the Task Force for review and comment on April 30.

Four campuses (Chico, Long Beach, Pomona, and San Jose) have elected to participate in the 1998 Delivery/Distribution Services process mapping project. The team of campus representatives had their first meeting on March 26 with Don Sleeper of Chico serving as Chair. The basic goals and objectives of the project were discussed and a preliminary scope was developed. An RFP for consulting services will be issued by May 1 with contract award anticipated in early July. The project will be completed by December 1998.

If you have any questions concerning benchmarking, customer satisfaction survey, and process mapping please contact Ron Ashcroft e-mail ron_ashcroft@qmbridge.calstate.edu, phone (562) 985-2706, fax (562) 985-2710).

Lenore Rozner, Senior Director

The Business and Finance Newsletter is now accessible from the Chancellor's Office website: http://www.calstate.edu/BF/Newsletters/Newslet.shtml.

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.