President's Budget Advisory Committee

Minutes February 27, 1996

Approved as Corrected by PBAC, 12 March 1996

MEMBERS PRESENT

STAFF PRESENT

The meeting was called to order by Don Farish at 3:10 PM who asked for a motion to approve the minutes of November 28, 1995 which were approved unanimously. Farish then turned to the agenda and asked Larry Furukakwa-Schlereth present the Mutli-Year Financial Plan (The Plan ) for Sonoma State University, 1996-2000 which was attached to the agenda packet.

Schlereth began the presentation stating the objective of the Plan was to create a financial strategy that would permit the University to realize its vision of becoming the public university of choice for undergraduate higher education. He indicated that the plan was based on a variety of parameters established by the PBAC during the Fall Semester including the fact that the PBAC believed that any plan adopted should include the following provisions:

Schlereth also indicated that the plan incorporated several assumptions including the belief that material new resources from the CSU were not likely over the next four years and that if SSU wished to achieve its vision, differentiation from other CSU campuses would be required. He explained that the Plan's authors (Farish and Schlereth) believed that an important aspect of differentiation would be the ability of SSU to improve its rates of graduation and retention and enhance its reputation in the area of student satisfaction. In this regard, he stated that he and Farish believed five variables were important including the need for the University to:

  1. Maintain a distinctive nature characterized by small class size,
  2. Develop state-of-the art technology to support instruction,
  3. Procure modern instructional equipment,
  4. Create curricular and co-curricular spaces and opportunities that are appropriate and contribute to faculty-student interaction,
  5. Increase the number of students who reside on campus.

Schlereth also explained that any financial strategy for the next four years needed to address a variety of legal and operational realities including the mandate for gender equity in intercollegiate athletics and the need to respond to a variety of new operational realities brought about by decentralization and the adoption of generally accepted accounting principles.

Schlereth then presented a variety of one-time and on-going needs (outlined below) that had been identified by the PBAC during the Fall, 1995 semester as critical financial needs.

ONE-TIME FINANCIAL NEEDS
(not in priority order)

ON-GOING NEEDS
(not in priority order)

Schlereth then outlined actions he and Farish were recommending with respect to the first year of the multi-year financial plan, fiscal year 1996-1997. 10 specific items were presented and are presented below:

  1. A VARIETY OF ON-GOING EXPENSES ARE CURRENTLY BEING FUNDED WITH ONE-TIME MONEY. TO RESOLVE THIS ISSUE, IT IS RECOMMENDED THAT THE UNIVERSITY RESERVE BE REDUCED FROM $300,000 TO $200,000 AND THAT FUNDING FOR INSTRUCTIONAL EQUIPMENT BE TRANSFERRED TO ANOTHER FUND SOURCE -- SEE ITEM 4 BELOW.

    RESULTING RESOURCES OF $300,000 CAN THEN BE MADE AVAILABLE TO FINANCE THE FOLLOWING ITEMS:

    Gender Equity, Athletics $30,000
    Executive Office OEE $35,000
    Salary Increases, IO $30,000
    Admissions Director $90,000
    Employee Assistance Program $25,000
    Academic Affairs Clericals $90,000
    TOTAL $300,000

  2. THE UNIVERSITY BELIEVES THAT WILL RECEIVE CERTAIN NEW MONEYS FROM THE CALIFORNIA STATE UNIVERSITY SHOULD GOVERNOR WILSON'S BUDGET BE ADOPTED. THESE INCLUDE FUNDS RESTRICTED FOR THE 4% SALARY INCREASE, RESTRICTED MONEYS FOR PHYSICAL PLANT AND DEFERRED MAINTENANCE, RESTRICTED FUNDS FOR ACADEMIC INNOVATION, DISCRETIONARY RESOURCES TO ACCOMMODATE INFLATION AND DISCRETION FUNDS TO HELP SUPPORT THE ACADEMIC PROGRAM. DISCRETIONARY RESOURCES ARE PROJECTED TO TOTAL $105,000. IT IS RECOMMENDED THAT THESE RESOURCES BE USED TO FINANCE THE FOLLOWING ON-GOING PRIORITIES:

    SAS Operating Expense $40,000
    FRS Maintenance $65,000

  3. IN FISCAL 1995-1996, ONE-TIME RESOURCES WERE UTILIZED TO FINANCE ENROLLMENT GROWTH AND OPERATING SUPPORT FOR INFORMATION TECHNOLOGY. TO FINANCE THESE ITEMS IN FISCAL 1996-1997, IT IS RECOMMENDED THAT THE UNIVERSITY INITIATE AN INTERFUND LOAN FROM THE PARKING PROGRAM AS INDICATED BELOW:

    Parking Reserves $450,000
    Parking Operations 96-97 $100,000
    TOTAL $550,000

    FINANCES

    Enhance the Quality of Instruction

    $

    450,000

    OEE, Information Technology

    $

    100,000

    TOTAL

    $

    550,000


    TO REPAY THE INTER-FUND LOAN TO PARKING, IT IS RECOMMENDED THAT THE UNIVERSITY RESERVE BE REDUCED FROM $200,000 TO $100,000 EFFECTIVE JULY 1, 1996, FOR THE LENGTH OF THE LOAN PERIOD.
  4. TO PROVIDE INTERIM SUPPORT FOR INSTRUCTIONAL EQUIPMENT IT IS RECOMMENDED THAT THE UNIVERSITY INITIATE AN INTER-FUND LOAN FROM THE SONOMA STATE ENTERPRISES IN FISCAL 1996-1997 AS INDICATED BELOW:

    Enterprise Operations, 96-97 $200,000
    FINANCES  
    Instructional Equipment, 96-97 $200,000

    TO REPAY THE INTER-FUND LOAN TO SSE, IT IS RECOMMENDED THAT THE UNIVERSITY RESERVE BE REDUCED FROM $100,000 TO $0 EFFECTIVE JULY 1, 1996, FOR THE LENGTH OF THE LOAN PERIOD.
  5. ENGAGING IN INTER-FUND BORROWING AND UTILIZING THE CAMPUS RESERVE FOR ITS REPAYMENT LEAVES THE UNIVERSITY VULNERABLE TO UNFORESEEN CONTINGENCIES. CONSEQUENTLY, TO REPLACE THE RESERVE, IT IS RECOMMENDED THAT THE UNIVERSITY:
    1. Divert any residual resources to the Campus Reserve that are likely to occur in a given fiscal year
  6. TO COMPLY WITH GENERALLY ACCEPTED ACCOUNTING PRINCIPLES THE INCREASED COMPLEXITY OF THE PRESENT CSU FINANCIAL ENVIRONMENT, AND GROWTH OF THE CASH ENDOWMENT OF THE UNIVERSITY FOUNDATION, A COMPREHENSIVE REENGINEERING OF THE CAMPUS FINANCIAL SERVICES CLUSTER IS BEING DISCUSSED BY THE CAMPUS REENGINEERING COMMITTEE. THIS EFFORT IS PROJECTED TO COST APPROXIMATELY BETWEEN $230,000 AND $300,000. CERTAIN RESOURCES HAVE BEEN IDENTIFIED TO MEET THIS NEED INCLUDING REALLOCATION WITHIN AFD ($100,000) AND RESOURCES ALLOCATED BY THE FOUNDATION BOARD OF DIRECTORS TO SUPPORT AUDIT COMPLIANCE ISSUES RELATED TO THE ENDOWMENT GROWTH ($65,000).

    UNFUNDED IS A FINANCIAL SYSTEMS ANALYST IN AFD.

    FUNDS CURRENTLY EXIST IN THE UNIVERSITY-WIDE BUDGET CATEGORY TO FINANCE CONSULTANTS NEEDS TO ASSIST WITH THE FINANCING OF THE UNIVERSITY CENTER AND THE HOUSING GROWTH INITIATIVE. IT IS RECOMMENDED THAT RESPONSIBILITY FOR MANAGEMENT CONSULTANTS BE TRANSFERRED TO THE SONOMA STATE ENTERPRISES AND HOUSING AND THAT FUNDS HELD IN THE GENERAL FUND FOR CONSULTANTS BE ALLOCATED TO AFD TO SUPPORT THE FINANCIAL SYSTEMS ANALYST.
  7. THE SONOMA STATE ENTERPRISES AND THE STUDENT UNION CORPORATION HAVE DEVELOPED A PLAN TO FINANCE THE RENOVATION OF THE PUB. THE RENOVATION, PROJECTED TO COST $200,000, WILL BE FINANCED WITH $100,000 FROM THE ENTERPRISE FUND BALANCE AND THE ELIMINATION OF RENT PAID BY THE ENTERPRISES TO UNION FOR A PERIOD OF FIVE YEARS.
  8. HOUSING DEFERRED MAINTENANCE RESERVES TOTALING $2,400,000 ARE CURRENTLY BEING EXPENDED TO FINANCE IDENTIFIED DEFERRED MAINTENANCE NEEDS IN THE RESIDENCE COMMUNITY. IT IS ANTICIPATED THAT THIS PROJECT WILL BE COMPLETE BY JUNE 30, 1997.
  9. THE SSU PARKING PROGRAM IS EXPECTED TO GENERATE A $150,000 SURPLUS FROM OPERATIONS DURING FISCAL 1995-1996. IT IS RECOMMENDED THAT THESE RESOURCES BE UTILIZED IN 1996-1997 TO FINANCE THE RESURFACING OF CAMPUS PARKING LOTS.
  10. BEGINNING IN 1996-1997, IT IS RECOMMENDED THAT THE PARKING OPERATIONS SURPLUS BE USED TO FINANCE THE FOLLOWING ITEMS:
    Annual Parking Maintenance $100,000
    Landscape Support, Athletics $50000
    TOTAL $150,000

Schlereth then discussed recommendations related to financing other campus priorities, unfunded in 1996-1997, in fiscal years 1997-1998 through 1999-2000. Specifically he indicated that he and Don Farish believed that:

  1. Any new funds from the CSU to SSU in fiscal periods 1997-1998 through 2000, up to $200,000 should be used to financed the remaining portions of gender equity in athletics;
  2. financing for an academic budget officer should come from administrative attrition in Academic Affairs;
  3. the CRC should resolve issues related to administrative equipment, housekeeping support, and decentralized employee relations via additional efforts in administrative reengineering.

Schlereth then presented a plan to utilize new resources from the CSU for Physical Plant, anticipated in 96-97 and beyond. He indicated that he and Farish believed these resources would most effectively be utilized if they were leveraged to finance a line of credit to address a number of priorities including:

Classroom Renovations $500,000
Large Lecture Hall Renovations $500,000
Fire Alarms $200,000
Athletic Facilities $400,000
Darwin Lobby Renovation $150,000
Redwood Lounge Renovation $150,000
Koda Replacement $250,000
Signage, Roads, Lots $500,000
Point of Sale $150,000
Project Management, Issuance Costs $200,000
TOTAL $3,000,000

Schlereth then indicated that he and Farish believed that in order to provide permanent resources for instructional equipment, class section availability and appropriate operating expense for Information Technology, it was wise for SSU consider the possibility of instituting a differential State University Fee (SUF) of $150 semester. Proceeds totaling just under $2,000,000 would then be available to finance the following priorities:

A: 33% of the fee would be augment financial aid $650,000
B: Course fees would be eliminated $70,000
C: Class sections and Student Faculty Ratios $500,000
D: Operating support for Information Technology $100,000
E: Annual Support for Instructional equipment $500,000
F: Debt Service -- Line of Credit $130,000
TOTAL $1,950,000

Schlereth clarified that the debt service outlined in F above would provide the University the ability to increase the proposed line of credit from $3,000,000 to $4,000,000 thereby permitting the campus to eliminate the current backlog in instructional equipment purchases.

Schlereth concluded the presentation by indicating that he and Farish believed that to further differentiate SSU, the expansion of the Residence Community was appropriate (projected to be self-financing) as well the creation of a University center, projected to funded by additional reengineering efforts in Administration and Finance and revenue from Sonoma State Enterprises.

Schlereth closed the presentation by stressing the importance of a differential SUF indicating that should the campus conclude that such a new fee be inappropriate, then the ability to differentiate would, in effect, be eliminated. Under such a scenario, SSU would continue along a similar path as other CSU campuses with certain important implications including:

In addition, he indicted that,

Efforts to improve the campus infrastructure through the issuance of debt would be unnecessary, housing growth would not be needed and plans for University would be reduced to include only a replacement for the campus bookstore.

Don Farish then commented that it was important to keep in mind that the campus had really two options as it looked to the upcoming fiscal years. One option was to take a dramatic step forward via the adoption of the multi-year financial plan. The other was to take a dramatic step backward since failure to adopt the plan would leave the campus without a way to finance a variety of important initiatives currently funded with one-time resources. He noted that it was not possible to SSU to maintain the status quo.,

Discussion then ensued. Dennis Harris stated the importance of having wide discussion of the plan particularly with the CRC, the VPBAC, the Academic Senate and the Associated Students. Farish and Schlereth agreed and promised to work with the appropriate personnel to schedule the presentations.

Victor Garlin commented on items the Plan did not finance including investment in the faculty via sabbaticals, faculty development etc. He also stated that he believed that SSU was, in many ways, already differentiated from other CSU campus and hoped that the President would offer specific additional features that he believed would enhance the campus's differentiation. Farish indicated that as a result of PBAC efforts in the Fall, 1995 semester, for the first time in SSU history, $200,000 had been found to finance faculty development on a permanent basis. He also indicated that it was important to identify those items that the students perceived to have value. Farish finally indicated that the key factor of differentiation iwas the ability to maintain SSU has a small campus. In addition, without considerable differences in retention and graduation rates between SSU and other CSU campuses, it would be difficult for the campus to resist pressures for growth from the Trustees.

Steve Wilson commented that he believed perception was a key variable and that it was important for students to perceive SSU was a high quality institution.

Victor Garlin commented that it while he believed that physical appearance of the campus was important, it was also important that it not be an illusion of a high quality campus. He again stressed the importance of investments in the instructional program of the University. Garlin continued by commenting that the issue of chair-time support and curricular innovation were unfunded by the Plan. Farish responded by indicating that curricular innovation had been addressed during the Fall, 1995 semester and again reminded the PBAC that in discussions of a differential SUF, it was important to keep my mind the students' perception of what was important.

Dennis Harris indicated that he believed students came to SSU for a variety or reasons including the landscape, the pastoral setting and importantly the distinctiveness of certain academic programs including the Hutchins School as an example.

Carol Cinquini indicated that she was concerned about the ability of staff to maintain its technical expertise given the changes in technology etc. She urged the campus to keep in mind the importance of staff training and development. She also reflected her belief that if SSU was to be successful, it would be up to the local campus community to make its own salvation.

Melinda Barnard stated that she believed that in planning for the future, it was not always wise to consider the past since the students of the 21st century and the environment of the present was decidedly different from the past.

Rand Link, commented that he believed student input and involvement with the Plan was important to its success.

The Committee then considered appropriate next steps and agreed that it at its next meeting, it would continue discussion on the Plan. It also urged Farish and Schlereth to make presentations regarding the plan to the Associated Students, the Staff Council, the Academic Senate, and the VPBAC.

Farish adjourned the meeting at 5:05 PM.,

Minutes prepared by Larry Furukawa-Schlereth


PBAC minutes 1995-1996
Updated 2007-12-14
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