PRESIDENT’S BUDGET ADVISORY COMMITTEE
October 1st, 2020
MEMBERS PRESENT:
Karen Moranski Interim Provost, Vice President of Academic Affairs; Chair Joyce Lopes Vice President of Administration and Finance; Vice-Chair Jerlena Griffin-Desta Chief of Staff and AVP for Strategic Initiatives and Diversity Troi Carleton Dean, School of Social Sciences
Jeffrey Reeder Chair of the Faculty; Modern Languages & Literature
Laura Krier Vice-Chair of the Faculty; University Library
Elita Virmani Chair of APARC; Early Childhood Studies
Laura Lupei Senior Director for University Budget and Planning, A&F
Audra Verrier Staff Representative, Career Services
Melissa Kadar President, Associated Students
Jonathan Dominguez Vice President of Finance, Associated Students
STAFF PRESENT:
Elias Lopez AVP for Academic Resources, Academic Affairs
Hayley Avery Budget Manager, Administration and Finance
GUESTS PRESENT:
Gregory Sawyer Vice President of Student Affairs
Ian Hannah Assistant Vice President for Advancement Operations
Natalie Sanchez Budget Director, Administration and Finance
MEMBERS ABSENT:
Erma Jean Sims CFA Representative; Literacy Studies & Elementary Ed.
AGENDA
- CALL TO ORDER AND WELCOME
- APPROVAL OF THE AGENDA AND MINUTES: September 3rd, 2020
- ANNOUNCEMENT’S FOR THE GOOD OF THE ORDER
- 19/20 YE BALANCES
- RESERVE POLICY UPDATE
- CAMPUS PARTNERS BUDGET REVIEW
- CALL TO ORDER AND WELCOME
Interim Provost and Vice President of Academic Affairs, Karen Moranski, welcomed the committee and began the meeting at 8:32 am.
- APPROVAL OF THE AGENDA AND MINUTES
Moranski introduced the agenda and asked if there were any additions. Hearing none, Moranski requested a motion to approve the minutes of the September 3rd meeting. Minutes were approved unanimously.
- ANNOUNCEMENTS FOR THE GOOD OF THE ORDER
Moranski informed the committee that Academic Affairs is starting to think about the budget shortfall and ways forward concerning Academic Programs. The department will want to coordinate with APARC and Senate to begin to collaborate on where reductions can come from and where programs can find efficiencies.
The Division is preparing to bring in a consultant who will focus on organizational structure and integration to aid in these efficiency and reduction conversations as well.
- 9/20 YE BALANCES
(Please see the October 1st agenda packet for related documents)
Laura Lupei presented the 19/20 Year End (YE) Balances and Reserves to the committee. This information is annually reported to the committee per the University Operating Fund Reserve Policy. To begin, the committee reviewed the YE balances for each division. The YE balances graph shows the starting base budget and revised budget for each division, as well as expenses for the year.
The year-end balance amount is the sum of the revised budget less expenses. No division ended the year in deficit and all rolled balances into the 20/21 year.
The committee then reviewed the 19/20 YE distribution to the Operating Fund Reserve. The total 19/20 campus budget YE balance was $21.8M. Of the $21.8M, $14.9 was kept within the divisions, leaving
$6.9M in University-Wide. Of the $6.9M in University-Wide, $4.5M is the current 19/20 Operating Fund Reserve Balance and $415K is funding designated for expenditures within University-Wide for 20/21, leaving $1.9M to be allocated to the Operating Fund Reserve to end 19/20.
The $1.9M was allocated according to the Operating Fund Reserve Policy and the four categories within the policy. Including the 19/20 Reserve Balance and the 19/20 YE distribution to the Reserve, the 20/21 opening reserve balances are as follows; Operating Reserve $2.2M, Maintenance Reserve $726K, Capital Reserve $3.4M, and Equipment Reserve $218K.
Joyce Lopes wanted to clarify that in communications from the Chancellor's Office and others when there is a discussion of billions of dollars of reserves, that those figures are referring to the system-wide level of reserves and is not specific to Sonoma State.
- RESERVE POLICY UPDATE
(Please see the October 1st agenda packet for related documents)
The Operating Fund Reserve Policy was updated in accordance with the CO’s recently updated Designated Balances and Reserves policy. The policy changes for SSU consisted of updated terminology to better align the language with the CO policy. The term "designated balances" will be added to the policy as well as the term "designated reserves" to replace the original terminology of "reserves".
This terminology change was a result of the State Audit which showed the CSU has billions of dollars of reserves which wasn’t truly representative of the purpose of all these funds. The designated reserves term is now used to describe funds that are set aside as true reserves, for things such as economic uncertainties, cash flow shortages, and unexpected expenses and losses.
The term designated balances are now used to differentiate between truly designated reserves and other funds that are set aside for more specific categories such as, capital improvements, maintenance, and equipment purchases.
One additional change that came from the State Audit is to incorporate a minimum and a maximum to the designated reserves goal. There used to only be a maximum goal of six months of base operating expenses, but the auditors recommended also include a minimum of three months of base operating expenses.
The committee had a recommendation to change some additional terminology in the University’s policy to map more clearly to the CO’s policy and those edits will be made and a second reading of the changes will take place in the next PBAC meeting on October 29th.
- CAMPUS PARTNERS BUDGET REVIEW
(Please see the October 1st agenda packet for related documents)
Lupei presented a budget update for all campus partner units as almost all of the units have been affected by the COVID19 events as well as the decline in enrollment. The campus partner units include the self- support and auxiliary entities for the University. Lupei reviewed the revenue and expense budgets for the campus partners and almost all units will be utilizing reserves in the 20/21 year to make their budgets balance.
The Housing program has budgeted a 52% drop in revenue over the prior year and will be using reserves mainly for debt service payments.
The Campus Union has projected a 15% reduction in revenue due to enrollment.
The Parking program has projected a 92% decrease in revenue due to the shift to virtual instruction and will be utilizing reserves to help cover lease agreement costs, debt service, and other operating costs.
The School of Extended and International Education has been able to adjust service delivery and costs to utilize only a small portion of their reserves compared to other campus partners.
The Green Music Center has budgeted a 53% reduction in revenue and will need to utilize most of the division’s reserves in the 20/21 year.
The Instructionally Related Activities (IRA) program has budgeted a 15% drop in revenue due to enrollment but was able to adjust cost to avoid pulling from reserves for the 20/21 year.
The Student Health Center is projecting a 14% reduction in revenue and will utilize reserves, but should be able to adjust cost next year resulting in a more balanced budget.
Sonoma State Enterprises (SSE) is anticipating an 87% revenue reduction for the year and is also expecting a cash deficit. The University is actively working with SSE to solve the cash deficit and formulate a plan for ramping up activity once operations are back on the ground.
The Associated Students is a fee-based program resulting in a 15% decline in revenue due to enrollment but have adjusted cost accordingly for the 20/21 year.
The Sonoma State University Foundation has not projected a decline in revenue and will be able to contribute to reserves in the 20/21 year.
All of the campus partners have worked to reduce costs where possible before planning to utilize reserves. The University has been working with all these programs in an ongoing effort to plan for the upcoming year and identify problem areas in advance. The Housing, Parking, and SSE programs have seen the most significant revenue decreases due to both the enrollment decline and COVID19.
The committee was concerned about the timeline to return to normal activities and if that should be delayed more how that would affect these programs moving forward. Lupei and Lopes commented that all CSU campuses are dealing with similar shortfalls for their campus partner entities and if the suspension of on-campus activities proceeds past the Spring, the CSU system would have to develop a plan to help the campuses to remain financially solvent in these programs.
Moranski adjourned the meeting at 10:00 am. Minutes prepared by Hayley Avery.