NEWS FROM THE DIRECTORS

Budget Office

 

Contract Services and Procurement

Financing and Risk Management

Governmental Affairs

Information Resources and Technology

Physical Planning and Development

Planning and Analysis


NEWS FROM THE DIRECTORS

 

BUDGET OFFICE

Status of the 1998/99 Budget

The Governor's May Revise included significant budget increases for CSU. Included in the Governor's Budget in January was an increase of $179.4 million. This budget included funding for 4% enrollment growth, 4% compensation pool, funds for plant maintenance, mandatory costs, special initiatives, and the conveyance of the Camarillo State Hospital. In addition to these items, the Governor's May Revise funded an additional $110.3 million in both one-time and permanent funding increases. The one-time budget increase of $90 million included $25 million for technology/computer workstations, $25 million for instructional equipment replacement, $10 million for libraries, $25 million for deferred maintenance projects and $5 million for distance learning based on the British Open University program model. A permanent increase of $20.3 million in state budget support also was included and will provide an additional one percent increase in the 1998/99 compensation pool to be negotiated for all employees and expand CSU teacher preparation and recruitment efforts.

Senate and Assembly higher education fiscal subcommittees have adopted the Governor's May Revise supplements. Both subcommittees have augmented the May Revise with specific funding proposals that would have to be resolved between the two chambers in conference committee if adopted. The Governor will then have an opportunity to veto or approve the additional legislative funding proposals prior to enactment of the final budget. As of this writing, the Senate and Assembly continue to deliberate on the state budget and no final budget decisions have been made.

1998/99 Employer Retirement Contribution Rate Decreases

CSU has been informed that Employer's Retirement contribution rates for 1998/99 will be adjusted to reflect a decrease in CSU employer-paid retirement rates. This rate decrease is significant. The CSU total estimated decrease resulting from surplus PERS investment income is $55.9 million. As the Department of Finance has increased CSU appropriations for retirement rate increases in recent years, it is expected that the Department of Finance will decrease CSU's 1998/99 appropriation by an equivalent amount resulting in a zero net impact to campuses. Savings in retirement contribution rates have typically accrued to the state and have been included in the Governor's May Revise calculations. Campuses should begin planning for this decrease as soon as possible.

1998/99 Lottery Revenue Budget

The lottery budget adopted by the Board of Trustees' for 1998/99 is $29,800,000. The 1998/99 budget remains largely the same as in 1997/98 with two exceptions. First, projected interest earnings increased by $400,000 to $1,400,000 in 1998/99. This increase is based on past budget experience. Second, the $5,000,000 allocation to support technology access and support was a permanent reduction of systemwide funds and will no longer be available in the 1998/99 fiscal year.

For 1999/2000, the Systemwide Budget Advisory Committee, which has reviewed the proposed 1998/99 budget, will review the policies governing how lottery funds are used and will formulate recommendations to advise the chancellor on the best policies for governing the use of lottery funds. The Statewide Academic Senate and Chancellor's staff will be developing a proposal for a new process for determining the best use of funding available for systemwide programs. Systemwide programs include all lottery programs with the exception of campus-based programs and implementation costs. Recommendations will be considered by the chancellor with the Executive Council during the formulation of the 1999/2000 lottery budget proposal.

FIRMS Training

A FIRMS training session was held at the Wyndham Hotel near LAX on June 10, 1998. The training was to inform campus personnel on the progress of and provide instruction for implementation in the following three areas:

1) An automated process designed to convert payroll salaries and wages from the State Controller's Payroll System to the CSU FRS (or other) accounting system. Such conversion is necessitated by the state mandated inclusion, in the Governor's Budget, of a schedule of salaries and wages. CSU currently completes this requirement by the use of four broad categories for classified positions and two categories of blanket expenditures.

2) Use of the FIRMS pre-edit/validation tables for budget and accounting submissions.

3) Accounting for Auxiliary Organizations so that the reporting fully meets both GAAP requirements and the FIRMS format.

John Richards, Director

CONTRACT SERVICES AND PROCUREMENT

CS&P Systemwide Training Initiative

Contracts & Procurement personnel systemwide are in the final phase of the National Association of Purchasing Management's (NAPM) Focus Skills Assessment. The systemwide data from the Focus Assessments will be analyzed by our PSSO Curriculum & Training Development Team, (CTDT). The CTDT will make recommendations from external and internal content providers to develop individual and systemwide training/career plans for CSU Contracts & Procurement personnel.

Contract General Conditions for Minor Capital Outlay Projects, Revised March 1998

The Contract General Conditions for Minor Capital 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. Procurement departments are to use the Contract General Conditions for the Minor Cap contracts (projects that are estimated to cost $250,000 or less). Special attention should be given to changes required to the old Minor Cap project Bid Documents, Supplementary General Conditions, and Agreement Forms.

Contract General Conditions for Major Capital Outlay Projects, Revised May 1998

The revised Contract General Conditions for Major Capital Outlay Projects have been approved by General Counsel and should be used for any upcoming Major Cap projects. It should be noted the Disabled Veteran Business Enterprise Participation Requirement is now included in the Contract General Conditions for Major Capital Outlay Projects. The Contract General Conditions for Major and Minor Capital Outlay Projects are available on the Construction Management Webpage at .

Public Works Policy Update

Sections 2600 and 9000 of the old State University Administrative Manual (SUAM) have been successfully consolidated. The revision is undergoing its final review by General Counsel and is expected to be approved and become effective within the next month. Questions regarding public works contracting issues may be directed to: Haaziq Muhammad at (562) 985-9581, E-mail: haaziq_muhammad@calstate.edu.

Electronic Commerce

On April 30th, over 100 RFQ solicitations were mailed to firms identified as potential providers of electronic commerce services. Twenty-four qualification submittals were received on May 21. The Electronic Commerce Project team will be evaluating the submittals in June. After the review of the qualification submittals, the team will down-select to the top firms to enter into confidential discussions and demonstrations. The next phase, which is the release of an RFP, will select firms for participation in electronic commerce pilots at selected campuses.

Pat Dayneko, Director

FINANCING AND RISK MANAGEMENT

Student Union Program

On June 5, 1998, the student union operating budgets were due to Financing and Risk Management for review and approval. The focus of the review will be on compliance with key bond covenant requirements. It is important for the campus administration along with the student union staff to discuss the bond covenants in order to assure that both the program needs and the bond requirements are considered. Budgets will be reviewed in the order submitted. Should you have any questions, please feel free to contact Rosa H. Renaud at (562) 985-2790.

Revenue Bond Issues

On June 2, 1998, Dormitory Revenue Fund housing bonds in the amount of $33,675,000 were sold for housing projects at CSU, Chico and Sonoma State. Escrow on these sales will close on June 23, 1998. Series AW bonds in the amount of $4,580,000 relate to the acquisition and renovation of an existing apartment complex by CSU, Chico. Series AX bonds in the amount of $29,095,000 relate to the construction of new apartments at Sonoma State University. The issues were sold concurrently to minimize some of the issuance costs. The successful bidder was BancAmerica Robertson Stephens with a TIC rate of 5.0536 for both issues. A Financial Highlight summary for these sales will be added to our web pages.

Centrally Paid Housing Costs for 1998/99

A summary of individual campus housing costs for fiscal year 1998/99 that are coordinated and paid centrally by the system office went to campuses the first week in June. There are no major changes from prior year, except an increase in state prorata charges. State prorata charges relate to state administrative costs expended by a number of state agencies, including the Legislature, Controller, Treasurer, the state Personnel Board, and many others for the supervision or administration of the state government or for services to the various state agencies. Please contact Ben Figueroa at (562) 985-2790 for any questions related to the overall centrally paid housing costs.

Campus Housing Programs - Request for Information

Consistent with prior years and the decentralized approach to housing, a request will be going to campuses at the beginning of the fiscal year for an informational copy of their five-year housing budget plan. The purpose of this budget plan is for the campus to anticipate and plan for any potentially large expenditures in operations, maintenance requirements, and/or new capital construction. In addition, campuses will be also asked for a summary of their 1998/99 housing fees, to update occupancy summaries for 1997/98, and for occupancy projections for 1998/99.

Revenue Bond Programs - Arbitrage Monitoring

Consistent with prior years and the decentralized approach to housing, a request will be going to campuses at the beginning of the fiscal year for an informational copy of their five-year housing budget plan. The purpose of this budget plan is for the campus to anticipate and plan for any potentially large expenditures in operations, maintenance requirements, and/or new capital construction. In addition, campuses will be also asked for a summary of their 1998/99 housing fees, to update occupancy summaries for 1997/98, and for occupancy projections for 1998/99.

Housing Proposal Review Committee

Part of Financing and Risk Management's responsibilities involve the monitoring of tax exempt financings to account for the potential for arbitrage on bonds issued by the trustees. This is an area that may come to your attention given the new delegation approach to the management of construction projects and our need to track and report on the expenditure of the funds. In addition, the oversight of this area becomes more critical as we begin to face the real potential for arbitrage and the rebate of interest earnings to the federal government. This is due to the interest yield on the earnings of the State Money Investment Fund (SMIF) beginning to creep and surpass on occasion the bond yield of recent bond issues. The need to spend proceeds within the prescribed period is given added urgency to avoid the arbitrage rebate requirements. We are currently in the process of finalizing an annual report to the State Treasurer's Office pending a positive review by bond counsel.

Web Page Update

We encourage you to visit our web site and check out some of our new information, including:

- A Board of Trustees Calendar for the 1998/99 fiscal year with corresponding dates when agenda items are due in our office.

- A sample timeline for bond related projects and the specific time requirements for board of trustee approval.

http://www.co.calstate.edu/BusinessFinance/frm/FRMHMPG.HTML

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

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

The 1998 legislative budget hearings were very successful. The trustees' priorities were honored and the Governor's Budget was adopted by both houses. This included a "May Revise" change in fund source to general fund for a utility project at Fresno and the central plant project at Pomona. Both houses also adopted a $250 million proposed capital outlay program that added projects for Bakersfield, Chico, San Bernardino, San Marcos, and Stanislaus, and brought the total CSU minor capital outlay budget to $15,251,000. These actions are dependent upon the passage of a higher education bond measure. Thanks to a lot of help from the campuses with their legislative delegations, the Senate and the Assembly rejected the Legislative Analyst's priority category proposal. CSU testimony took less than 10 minutes during the hearings of both subcommittees on project-specific issues, while the other two segments took approximately two hours each. The CSU campuses were very helpful in resolving project-specific issues, particularly SJSU. The Assembly also proposed funding the minor capital outlay program from the general fund rather than using bonds-this will be a conference committee item. The governor supported a $25 million one-time deferred maintenance budget augmentation in his May Revise that was adopted by both houses. A special repairs base of $20 million from compact funds, with hopefully a $17.8 million legislative match, and the Governor's one-time $25 million deferred maintenance support is a long way from the 1991 $3.5 million for this purpose.

Streamlining Capital Outlay - Management Notes

A recent California Court of Appeal ruling regarding award of contract with additive or deductive alternates has prompted PPD and General Counsel to revisit existing bid procedures found in SUAM to assure that the bid and award of contract conforms to a process demonstrating integrity. SUAM Section 9724, which describes the bid procedures related to alternates and the bid proposal form model contained in the recently distributed Construction Phase Manual are currently being improved. It will be essential that the campuses who are administering projects follow this new model to avoid or minimize bid protests and legal action.

In another matter related to construction claims activity, a binding arbitration hearing was avoided a lawsuit involving a health center project at CSU Chico due to the diligent pursuit of facts related to the suit by the contracted law firm and all CSU participants. PPD construction engineers are heavily involved with many campuses in providing training and consultation relating to construction management procedures and contractor claims. All campuses are encouraged to take advantage of these professional resources to assist in dealing with procedural issues and other contract matters to facilitate your construction management efforts.

CPMWeb Version 1.0 Release Date July 1, 1998

Physical Planning and Development and Business Management Systems are pleased to report that the Capital Project Management System (CPM) will be released in its Web version on July 1, 1998. PP&D, Chico, and San Diego, the beta sites for the initial desktop-based product, have been running CPM for several months in its older version. Several other campuses have expressed interest in using CPM to manage their major capital budget once the Web version is released.

Those campuses that wish to review the data for its projects which PP&D is managing may login to PP&D's CPMWeb application. Login information is being mailed to campus executive deans, but you may also contact Business Management Systems for your campus userid and password. Please e-mail your request to: businesssystems@calstate.edu and include 'CPM' in the subject line.

The first meeting of the CPM user community will be held in early August. Those campuses that have purchased CPM for their own use will be invited to send representatives to discuss future enhancements and changes. CPMWeb includes online documentation that will be updated as these improvements are implemented.

PPD Due Dates for CPB&G Agenda Items (September 15-16, 1998 Trustees' Meeting)


Master Plan Revisions:
All Other Items:

July 14, 1998
July 28, 1998

Jon H. Regnier, Senior Director

PLANNING AND ANALYSIS

Benchmarking

Functional teams are busy completing their draft reports for the consolidated report. Following compilation by a technical writer, the preliminary final report is scheduled to be available for review in late July. The Function Chairs will also be asked to meet with the Task Force to report on the results.

A planning committee is in the process of being organized to help facilitate the benchmarking projects, search for best products in the areas of assessment and measurements, and to help in the training of functional representatives in the uses of the benchmarking data.

Customer Satisfaction Survey

The second meeting of the Customer Satisfaction Survey Subcommittee was held May 28 at San Jose. New committee members include a number of campus institutional research directors. Committee members selected functions to work with as liaisons to develop the survey questions for that function relating to the benchmarking measures.

The committee would like to meet with the function chairs at the same time as the function chairs meet with the Task Force in late July. Survey questions will be discussed and refined at that time. Testing of the new survey is scheduled for this fall with the administration of the actual survey planned for spring 1999.

Process Mapping

A final draft of the Human Resources Process Map was received the first week of June. Following team leader review, the document will be sent to the committee members and the Benchmarking Task Force for final review and comment. Absent any other problems, the final report should be ready for distribution in the middle of July.

A mandatory vendors' conference for the Distribution/Delivery Process Mapping project was held in San Jose on May 12. Nine vendors attended the meeting and toured the receiving, mail room services, and shipping operations at San Jose State. Proposals are due June 4. Notification of finalist(s) is anticipated by mid-June.

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

PICOSAS

The "Partnerships for the Improvement of Campus Operations, Student Services, and Academic Services Program" (PICOSAS) Committee evaluated 59 campus proposals and agreed to fund five proposals for a total of $610,000. Three of the funded proposals have begun implementing their projects and will be submitting periodic progress reports regarding their activities. Based on the PICOSAS Committee's recommendations, the two remaining awarded proposals are in the process of modifying their project plans to increase multi-campus collaboration and systemwide participation in their proposals.

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 CMS Task Force has issued "Letters of Intent" to establish master services agreements with Oracle, PeopleSoft, and SCT. The Task Force is working to evaluate the long-term financial stability and business plans of the qualified CMS vendors and the vendors' abilities and resources to meet future business trends, address process re-engineering, and provide product flexibility. Follow-up site visits with the vendors' existing customers will be completed during the first week of June to evaluate the quality of the vendors' products and services, and customer satisfaction. Additional demonstrations of the latest versions of the SCT and PeopleSoft student systems were held on June 8 and 9, 1998, for campus representatives. The Task Force will use the results and findings of these activities to recommend a single vendor for a systemwide target environment as requested by the Chairperson of the Commission on Institutional Management Information and Technology (CIMIT).

The Task Force's human resources (HR) consultant has met with various campuses, Chancellor's Office, and State Controller's Office (SCO) to gather data and insights in the review of the existing CSU payroll and benefit administration system. The HR consultant working closely with the Task Force work group has begun developing drafts of a conceptual HR/Payroll model and recommendations regarding the CSU HR/payroll interface strategies with the implementation of the SCO 21st Century project. The preliminary report will be presented to the Task Force by mid-June with a final report in the beginning of July. If you have any questions concerning CMS, please contact Lawrence Lin at (562) 985-2705 or Project Director John Miller at (562) 985-9607.

Year 2000 Issue - Imbedded Systems

The Chancellor's Office is researching issues and options related to the challenges of becoming Year 2000 compliant on CSU's imbedded systems (e.g., HVAC or security systems that operate with date sensitive chips or software). In addition to compiling a model for assessment and remediation and developing sources of information, a hands-on project is being explored in partnership with a campus. Results from the campuses' May 31 Year 2000 compliance reports will be used to determine the need for such an effort. Questions may be directed to Glenn Ducat at (562) 985-2721 or to Russ Utterberg at (562) 985-9404.

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.