President's Budget Advisory Committee

Minutes December 3, 1998

Approved by PBAC, December 10, 1998

Members Present:

Staff Present:

Members Absent:

Guests Present:

Meeting Agenda

APPROVAL OF THE AGENDA

Bernie Goldstein brought the meeting to order at 8:10 AM and asked for a motion to approve the Agenda. A motion was made by Gloria Ogg. A second was obtained from Bill Barnier. Barnier asked when a discussion of the Marginal Cost Formula would take place. Schlereth noted that this item would be discussed at the first meeting of the Spring semester. The Agenda was approved unanimously.

APPROVAL OF THE MINUTES: 11-5-98

Goldstein then asked for a motion to approve the Minutes of the November 5, 1998 meeting. A motion was made by Harris. A second was obtained from Ogg. Sue Parker asked that in the future, the content of the minutes be expanded to include the nature of the conversation that took place during meetings related to various topics. Schlereth noted that he was following generally accepted principles regarding minutes and only recording significant formal action items taken by the Members. He did indicate that he would do his best to incorporate the tone and nature of the discussion. A vote was then take on the Harris motion and the Minutes were approved unanimously.

Consultation on the Budget - Goldstein/Schlereth Proposal

Refraining materials contained with the Agenda Packet (Packet) Schlereth then outlined for the Members the nature of the campus Parking Budget and how it would be utilized to finance the land acquisition initiative. Several questions were raised including:

REVIEW OF THE HOUSING BUDGET - EMT

Again, referencing materials contained in the Packet, Schlereth outlined the campus Housing budget and its relationship to the Educational Mentoring Team (EMT). Specifically, he pointed out that $200,000 of Housing revenue was used to finance the EMT Program largely to fund release time for faculty who teach in the Program. He also explained that staff resources associated with EMT were generated from the redesign of those position descriptions and no funds from the instructional program were utilized in this regard. Finally, he noted that a variety of administrators taught in the EMT program and no additional compensation was provided to them for their efforts in EMT. Schlereth noted that the EMT program was a significant generator of FTE and because the instructional costs of the Program were financed largely by the Housing Program, the revenue associated with EMT enrollment accrued to the General Fund budget. Cara Puccio asked how the Peer Mentors who work in EMT were funded. Schlereth responded that he believed the Mentors were financed with Housing Revenue. Puccio then expressed concern about projected reductions to Student Peer Mentors in EMT. Schlereth encouraged Puccio to discuss this item with Vice-President Calandrella.

Several questions were then raised including:

(Resources allocated for EMT in Housing would remain in the Housing Program to conform with bond covenants and CSU policy. They could not be reallocated for other campus purposes unless they directly related to the residential experience).

Questions were then raised about the rationale for using the Housing Program to fund the Faculty Workstation program. Schlereth indicated that it was appropriate for Housing to reimburse the Information Technology unit for technology services provided to the Residential Community. IT then used a portion of these resources to finance the Faculty Workstation Program. The item was specifically highlighted in the Housing Budget in accordance with recommendations made by the PBAC that specific funding sources for various campus initiatives be clearly identified.

ANALYSIS OF BUDGET VARIANCE 1998-1999

Again, referencing materials contained in the Agenda Packet, Schlereth explained how the final campus budget for fiscal 1998-1999 was developed. In Spring, 1998, the President's Budget Advisory Committee (PBAC) analyzed projected new revenue sources to the campus and identified several University-Wide priorities that it believed warranted "off the top" funding. These new revenue and University-Wide expense items are outlined below:

New Revenue and University-Wide Expenses
  Item Amount
New Revenue New Enrollment Money $1,073,000
New Revenue, Deferred Maintenance $ 88,000
New Reimbursed Revenue $ 308,000

New Revenue Workers Compensation

$ 120,000
New Revenue, Space Management $ 200,000
New Revenue, Base Technology $ 100,000
TOTAL $1,889,000
New Univerisity-Wide Expense Common Management Systems $ 236,000
Land Acquisition $ 380,000
Executive Compensation $ 20,000
Off-The Top Maintenance $ 88,000
Off-The-Top Technology $ 100,000
TOTAL $ 824,000
Available for Allocation   $1,065,000

The PBAC also agreed that the most appropriate method to allocate the resulting new revenue was the marginal cost formula developed by the CSU Trustees. This formula is used by the CSU to determine how much marginal revenue in each area of campus operations is needed when target enrollment is increased. For Sonoma State University, the marginal cost formula produces the following percentage distributions among the four operating Divisions.

Distributions
Division Amount
Executive Office 2.18% $ 23,217
Academic Affairs 86.22% $ 918,243
Student Affairs 2.14% $ 22,791
Admin/Finance 9.46% $ 100,749
TOTAL $ 1,065,000

In concert with the PBAC's discussions, the Vice-President for Academic Affairs Budget Advisory Committee (VPBAC) was also developing recommendations regarding how new resources allocated to Academic Affairs should be allocated. In this regard, the following allocation recommendations were established:

Allocation Recommendations
Area Amount
Direct Instruction $450,000
Disability Resource Center $120,000
Information Technology $100,000
Admissions and Records $210,000
EMT Summer Stipends $ 10,000
Provost's Administrative Discretion $ 28,243
TOTAL $918,243

Both the PBAC and VPBAC recommendations were finalized in May, 1998 even though the final budget from the State was not approved until early in the Fall, 1998 semester. As is almost always the case, the final budget approved by the Governor contained certain differences from what was expected earlier in the budget process. These items are summarized below:

New Revenue and University-Wide Expenses
    Spring Expectation Fall Actual
New Revenue New Enrollment Money $1,073,600 $1,073,600
New Revenue, Deferred Maintenance $ 88,000 $ 88,000
New Reimbursed Revenue $ 259,615 $ 259,615
New Revenue Workers Compensation $ 116,000 $ 116,000
New Revenue, Space Management $ 194,000 $ 194,000
New Revenue, Base Technology $ 111,920 $ 111,920
TOTAL $1,843,135 $1,843,135
New Univerisity-Wide Expense Common Management Systems $ 236,000 $ 236,000
Land Acquisition $ 380,000 $ 380,000
Executive Compensation $ 20,000 $ 23,920
Off-The Top Maintenance $ 88,000 $ 88,000
Off-The-Top Technology $ 100,000 $ 111,920
Risk Pool Increase $ 0 $ 63,000
CSU Audit Assessment $ 0 $ 17,500
CSU Placement Assessment $ 0 $ 12,500
TOTAL $ 824,000 $ 932,840
Available for Allocation   $1,065,000 $ 910,295

The marginal cost allocation model recommended by the PBAC would have produced the following set of Division specific appropriations:

PBAC Model Division Appropriations
Division PBAC Model Spring '98 PBAC Model Fall '98
Executive Office 2.18% $ 23,217 $ 19,845
Academic Affairs 86.22% $ 918,243 $ 784,856
Student Affairs 2.14% $ 22,791 $ 19,480
Admin/Finance 9.46% $ 100,749 $ 86,114
TOTAL $ 1,065,000 $ 910,295

In a similar fashion, the PBAC model, had it been applied to the final budget approved by the Governor, would have produced a deficit in the allocation model developed by the VPBAC:

VPBAC Model Appropriations
Division VPBAC Model Spring '98 VPBAC Model Fall '98
Direct Instruction $450,000 $ 450,000
Disability Resource Center $120,000 $ 120,000
Information Technology $100,000 $ 100,000
Admissions and Records $210,000 $ 210,000
EMT Summer Stipends $ 10,000 $ 10,000
Provost's Administrative Discretion $ 28,243 $ 28,243
Unallocated Reduction $ 0 $ -133,387
TOTAL $918,243 $ 784,856

Because the budget model recommended by the PBAC, when taken in concert with the final budget figures received from the Governor, would have produced a shortfall, in Academic Affairs, the President and the Cabinet met to devise a method to minimize the impact of externally driven changes on the instructional program. Specifically, the Cabinet recommended that while the marginal cost formula was a good method to distribute new revenue in most years, it urged the President to modify the formula to the advantage of Academic Affairs in 1998-1999. The President agreed and the following budget allocations were approved for 1998-1999:

PBAC Model Division Appropriations - Final
Division PBAC Model Spring '98 PBAC Model Fall '98 Final 98-99
Executive Office 2.18% $ 23,217 $ 19,845 $ 11,386
Academic Affairs 86.22% $ 918,243 $ 784,856 $838,323
Student Affairs 2.14% $ 22,791 $ 19,480 $ 11,177
Admin/Finance 9.46% $ 100,749 $ 86,114 $ 49,409
TOTAL $ 1,065,000 $ 910,295 $910,295

Modifying the marginal cost formula for the current fiscal year had the impact of lessening the impact of externally driven changes to the budget on the instructional program as reflected below:

VPBAC Model Appropriations - Final
Division VPBAC Model
Spring '98
VPBAC Model
Fall '98
Final Budget
98-99
Direct Instruction $450,000 $ 450,000 $450,000
Disability Resource Center $120,000 $ 120,000 $120,000
Information Technology $100,000 $ 100,000 $100,000
Admissions and Records $210,000 $ 210,000 $210,000
EMT Summer Stipends $ 10,000 $ 10,000 $ 10,000
Provost's Administrative Discretion $ 28,243 $ 28,243 $ 28,243
Unallocated Reduction $ 0 $ -133,387 $ -79,920
TOTAL $918,243 $ 784,856 $838,323

The Cabinet then turned to additional administrative strategies that would serve to eliminate not only the unallocated reduction remaining in Academic Affairs but also fund a variety of newly identified administrative budget priorities that had emerged over the Summer. These included:

Newly Identified Priorities
Priority Amount
the residual need in Academic Affairs $ 79,920
a need for operating expense in the President's Office $ 40,000
the need for fund the already employed Scholarship Coordinator $ 55,000
additional costs associated with land acquisition $105,000
operating deficit - Athletics $ 60,000
renovations costs associated with the temporary high school site $400,000
annual debt service - Academic Affairs interfund loan to Parking $100,000
TOTAL $839,920

To finance these items, the Cabinet agreed it was appropriate to take the following administrative actions:

Administrative Actions
Action Amount
Administrative reengineering in Administration and Finance $510,000
Administrative reengineering in Enrollment and Student Academic $130,000
Administrative reengineering in Information Technology $100,000
Administrative reengineering in the Provost's Office $ 71,677
Reduction in the Provost's Discretionary Resources $ 28,243
TOTAL 839,920

Administrative reengineering areas identified in the Provost's Office include the elimination of Provost discretionary resources and efficiencies realized between the Office of Sponsored Programs and the California Institute for Human Services.

ADJOURNMENT

Given the time, Goldstein then adjourned the meeting at approximately 9:55 AM. He indicated that continued discussion of the development of the 1998-1999 budget and its impact on Academic Affairs would continue at the next PBAC meeting.

Minutes prepared by Larry Furukawa-Schlereth.


PBAC minutes 1998-1999
Updated 2007-12-14
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