2019-2020 Campus Budget Plan

Letter from the

Chief Financial Officer, Joyce Lopes

October 1, 2019

Members of the Seawolf Community:

I am pleased to share with you the 2019-2020 University budget plan for Sonoma State University and its auxiliary organizations.  This year, we are presenting the budget plan via the new Questica OpenBook budget transparency portal, which allows the campus easy and user-friendly access to budget information.  OpenBook is linked at the bottom of this letter as well as on the University Budget and Planning website along with a user guide and FAQs.  I hope that you find it to be clear and informative.   

Campus Budget

The Campus Budget represents the largest source of funding available to the campus and includes resources from the state allocation, cost recovery, and revenues generated primarily from student fees.  The final CSU budget outlined almost $6.7 million of new base state allocation funding to the campus. This represents an increase of 4.7 percent over the prior year’s budget.

Changes in the campus budget between 2018-2019 and 2019-2020 are outlined below:

Campus Budget by Category
Category Budget
Prior Year Campus Budget $ 141,506,551
Restricted Funds: Employee Salary Increases and Benefits     $     4,568,000
Graduation Initiative 2025       $     1,047,000
State Funded Enrollment Growth for 185 FTES $     1,249,000
CO Funding Allocation for Average Unit Load Increase         $        326,000
Reduction in Distribution of Financial Aid State University Grants       $      (506,000)
Campus Budget Realignments            $        858,222
Total 2019/2020 Campus Budget        $ 149,048,773

 

The new state allocation funds mandatory cost increases which are comprised of employee compensation and benefits costs.  The campus received $1,047,000 in base funding for the Graduation Initiative 2025.  This is the third year we have received funding for this initiative.  These funds will continue to be incredibly helpful in meeting campus objectives to increase student pathways towards graduation.   These funds will be used to add tenure track positions, support student services in the area of advising  and enrollment management and to invest in academic technology.  The CSU received enrollment growth funding this year to help serve more students across the state.  Sonoma received state-funded enrollment growth for 185 new Full Time Equivalent Students (FTES).  The marginal cost funding rate for a new FTES for 2019-2020 is $11,322 per FTES, however, due to a projected drop in headcount this year, only the state-funded portion is being added to the budget.  When enrollment recovers, the tuition revenue portion for these new FTES will also be added as a funding source.  The campus also received a slight reduction to financial aid distributions which are provided by the system to be allocated directly to student aid recipients based on campus share of need within the CSU.  Finally, several campus budget realignments were necessary this year to update revenue line items or to add permanent lines to the budget that had been treated as one-time items in the past.  These adjustments can be seen in the detailed pages that follow and will contribute to a more holistic, clear approach to campus budgeting.

The campus also received the following one-time allocations in the 2019-2020 fiscal year:

Campus One Time Allocations By Category
Category Budget
Graduation Initiative 2025 One Time Funds     $    669,000
Enrollment Growth One Time Funding $    796,000
Enrollment Growth One Time Funding in Support of the MSTI Program $      95,000
Total One-Time Allocations $ 1,560,000

 

Graduation Initiative 2025 one-time funds were received to support continuous development of newly designed courses and support for high-quality instruction. Enrollment growth one-time funds were provided and will be used to manage our strategic enrollment planning. Lastly, enrollment growth one-time funding was provided specifically for the Mathematics and Science Teacher Initiative program.

Selected Funds and Self-Sustaining Funds

Sonoma State University has nine self-sustaining funds, including: Housing, Parking, Extended and International Education, GMC Performing, Campus Life, Office of Research and Sponsored Programs, Instructionally Related Activities, the Student Health Center, and Counseling and Psychological Services. These funds receive no taxpayer support and are expected to reimburse the Operating Fund for provided services. The campus also receives additional support from the state in the form of the annual lottery allocation. 

The self-sustaining funds are integral to the campus, often supplementing other activities within the University or providing services not otherwise offered. In the 2019-20 year, the self-supports will be implementing strategic budgeting through the creation of Business Plans and Five Year Financial Plans. Multi-year planning allows the self-supports to approach strategic budgeting more holistically, ensuring that all activities support student success, academic excellence and innovation, leadership cultivation, and transformative impact.

Overall, revenue from the various self-supporting programs, outside of grants and contracts, has decreased slightly since the previous fiscal year, projected at more than $69.4 million in 2019-2020 vs. $69.5 million in 2018-2019. This decrease can be mainly attributed to a dip in enrollment, although it was largely offset by a 3.9 percent CPI increase applied to the fees collected to support Campus Life, Instructionally Related Activities, the Health Center and Counseling and Psychological Services.

Sonoma State University's Office of Research and Sponsored Programs activity is divided between two areas including (1) grants directly related to faculty research and (2) grants related to public service and outreach. Total grant volume of $9.3 million, with corresponding indirect cost recovery revenue of $1.2 million (12.4 percent) is expected from activities in the Schools of Social Sciences, Science and Technology, Business and Economics and Education as well as the work of University Support and Preparation Services. Indirect cost recovery revenue is allocated in accordance with an established agreement with the Anthropological Studies Center which receives 50 percent of the IDC it generates, and to a CSU recommended centralized post-award monitoring system housed in Academic Affairs. 

Auxiliary Corporations

Sonoma State University has three auxiliary corporations: the Associated Students, Sonoma State Enterprises and the SSU Foundation. Auxiliaries are separately incorporated, non-profit corporations, receive no taxpayer support and are expected to reimburse the Operating Fund for any provided services. The auxiliaries form a partnership with the University in order to perform essential functions, which might be otherwise difficult or burdensome to the campus.
Revenue in Associated Students (AS) is generated primarily by a mandatory student body fee. AS includes several programs such as Associated Students Productions, which puts on programs including Big Nite, a haunted house, late night art, and skate nights. Additionally, through the Join Us Making Progress Program, more than 1,000 students will likely spend almost 10,000 hours volunteering within the community.

Sonoma State Enterprises (SSE) derives its revenue from the sale of goods and services in campus retail and dining venues. The total projected revenue increased slightly this year, with fluctuations in Dining Operations, Commissions, and Rental Income. SSE makes an annual in-kind contribution to the campus of approximately $75,000 which is realized through donation of product for events on campus. In the 2019-2020 year SSE plans on allocating reserve funding to remodel Charlie Brown’s Café and update the Point of Sale system.

The SSU Foundation primarily exists to receive and administer endowment gifts and planned giving that enhance and promote the educational mission of SSU. Endowment funds are permanently held and invested, and earnings are used to help finance ongoing operations of the institution in accordance with donor intent. Gifts made to endowments, gifts of stock, and pledge gifts are made to the Foundation. All other donations, such as those made directly to scholarships or campus program funds, are made to the University.

The total market value of the University endowment, managed by the Foundation, stood at $52.3 million as of June 30, 2019. In a typical year, the Foundation distributes a portion of the dollars earned via the management of pooled endowment funds in accordance with the intent of the donor who created the fund. In 2019-2020, a distribution of approximately $1.5 million was made from the pooled endowment to the various University campus programs and scholarship accounts it supports. Of that $1.5 million, 36 percent was distributed to students in the form of scholarships. The remaining 64 percent supported campus programs and operations in the various Schools, and other areas, including but not limited to: the Library, the Wine Business Institute, Osher Lifelong Learning Institute and the Athletics program.

University Debt and Reserves

Several of SSU’s self-support funds have used the CSU System Wide Revenue Bond (SRB) Program to finance a variety of campus construction projects.  The campus programs with revenues pledged to the repayment of SRB Program Bonds include: Housing, Parking, Campus Life, Health Center and Extended Education.

CSU Executive Order 994 requires the campus chief financial officer to annually review overall debt service coverage ratios (DSCR) associated with the debt incurred via the System-Wide Revenue Bond program. DSCR is defined by the CSU as annual pledged gross revenue from the funds, less annual operating expenses, divided by annual debt service. CSU defines a
benchmark for overall campus DSCR to be at or above 1.35. As of June 30, 2019, Sonoma State
University’s overall DSCR stands at 1.67, above the CSU benchmark.

Debt Service Coverage Ratio Equation
Category Amount
Outstanding Debt                           $    160.5M
Annual Debt Service Payments $     13.7M
Net Income Before Debt Service $     22.8M
Debt Service Coverage Ratio $22.8M / $13.7M = 1.67

 

Maintaining a healthy campus DSCR is important, not only so that the campus meets the Chancellor’s Office requirements, but so that we can plan appropriately for future construction projects and capital opportunities.  Appropriate multi-year planning allows the self-sustaining funds and the campus to invest in the future growth and strategic priorities of the University.  The healthy DSCR of our self-sustaining programs situates the campus positively for future planning and growth. 

Audit Activity

Sonoma State University’s financial statements are consolidated into the financial statements of the California State University which are audited annually in accordance with Generally Accepted Accounting Principles (GAAP).  Sonoma State financial reports and supplementatal information are available on the Chancellor's Office website. Also in accordance with GAAP, the financial statements of Sonoma State Enterprises, Associated Students and the Foundation are audited annually and are available on the Administratoin and Finance website. Finally, the campus routinely participates in internal audits conducted by the CSU Board of Trustees Internal Audit Team which can be found on the Chancellor's Office website

As we start the 2019-2020 academic year, I look forward to all that we plan to accomplish as our campus continues to put our strategic plan into action.  Each Division has defined goals and tactics for each of the strategic plan priorities, which are available to view on the Building Our Future @ SSU Strategic Plan 2025 website. We have already illustrated our commitment to faculty and staff support under the priorities of leadership cultivation and academic excellence and innovation for the 2019-2020 year by implementing the first year of staff equity increases.  Our focus on providing world-class academic facilities for teaching and learning is a high priority as we establish and maintain classroom standards and undertake the Stevenson Hall remodel project.  Units all over campus are investing in updating technology to improve efficiency and the student experience.  And we are accomplishing all of this through thoughtful and strategic utilization of our resources through strategic budgeting. 

We have made significant progress in building our strategic budgeting framework.  Last year, the campus launched the first annual Budget Call process, which incorporated unit goals to link resource requests to the strategic plan priorities. The campus budget timeline was updated and improved to be in line with state and Chancellor’s Office planning dates with the result that, this year, the campus budget was finalized in July, the earliest it has ever been completed.

In 2019-20, we plan to continue to build on that success.  The Questica Budgeting software tool will be rolled out to the campus budget users to replace outdated and clunky excel worksheets and allow for more flexible planning and reporting.  The self-support and auxiliary organizations will begin work on five-year budget plans and align their resource planning with campus strategic priorities.  We will look at the goals and tactics that were set at the beginning of the year and begin to build a framework to measure our progress towards those goals. 

We have much to celebrate here at Sonoma State.  We are proud that we are working hard to support our strategic priorities: student success, academic excellence, leadership cultivation and transformative impact.  I sincerely hope that this University budget plan in OpenBook will be helpful to you in understanding our campus budget. I trust you will not hesitate to contact me if you have questions or need additional information.

 

Sincerely,

Joyce Lopes
Vice President for Administration and Finance
and Chief Financial Officer

OpenBook

Prior Year Campus Budget Plans

Please contact budget@sonoma.edu for Prior Year Campus Budget Plans.