President's Budget Advisory Committee

Minutes October 4, 1995

Approved by PBAC, October 10, 1995



The meeting was called to order by Don Farish at 12:10 PM who asked for a motion to approve the minutes of August 17, 1995 which were approved unanimously.

Farish indicated that the primary agenda item for the meeting was a presentation of the University's financial condition and asked Furukawa-Schlereth to take the Committee through the handout which had been distributed to Committee members and staff.

Schlereth indicated that he had asked University Treasurer Ingels and the University Controller Coate to serve as staff to the PBAC. He said that Both Ingels and Coate had assisted he and Steve Wilson in the development of the financial data which had been distributed. He then asked Wilson to discuss new funds available to SSU in 1995-1996.

Wilson explained that $1,414,864 was available as new money to SSU. This sum was augmented by a decrease in the State University Grant Authorization, $221,148, a decrease in the University benefit budget, $200,000, and the elimination of the general fund subsidy to the Health Center, $100,000. Total new funds available for allocation were thus equal to $1,936,012. Wilson also explained that new CSU mandated costs totaling $1,474,549 along with new campus based fixed costs, $149,000, and expenses already committed, $312,000, were obligations on these new funds bringing total new money available for allocation to $463. In summary, Wilson indicated that the general fund budget was in balance for 1995-1996 but that no funds existed to finance any new initiatives.

Schlereth, assisted by Provost Farish and Vice-President Link then outlined $1,674,000 of general fund needs that existed on including a $50,000 in the Executive Office, $1,070,000 in Academic Affairs, $519,000 in Administration and Finance and $35,000 in Student Affairs. Furukawa-Schlereth also indicated that the Housing, Parking, and Enterprise budget programs had additional budget needs totaling $3,010,000 which were assumed to be the responsibility of those budget units.

Letitia Coate then outlined realistic funds available to finance the identified needs including one-time revenues from the lottery reserve, $170,000 and profits from the Foundation in 1994-1995 which had been allocated to Academic Affairs $225,000. She did indicate that money would likely be available from 94-95 Division Budget roll-forward but that these resources were likely already committed by the Division Vice-Presidents. She also commented that it was probably not realistic to consider reducing the operating expense allocations to the Divisions without damaging campus operations and that campus policy prohibited the lay-off of permanent employees. Coate and Furukawa-Schlereth outlined projected expenditures in the University-wide budget category and indicated that for 199596, these resources were legally or operationally committed. Furukawa-Schlereth specifically reflected on the University Reserve of $300,000 indicating that the Reserve for 95-96 had already been reduced by $242,000 as a result of a 94-95 deficit in the University-Wide budget category that had been rolled to 95-96. Coate then indicated that inter-fund borrowing might be possible from the Health Center Maintenance Reserve and/or the Continuing Education Reserve but did inform the PBAC that any inter-fund loan would have to be repaid with interest. Furukawa-Schlereth explained that inter-fund borrowing was permitted by the CSU but the mechanism was intended for short-term cash flow problems between funds with any loans reconciled and repaid within the same fiscal year. Furukawa-Schlereth then explained other funds potentially available for inter-fund borrowing including the Housing Program, the Student Union Corporation, the IRA Program, the Associated Students Incorporated, the Foundation and Sonoma State Enterprises, the Parking Program and the Minor Capital/Special Repairs Program. In each of these areas, Furukawa-Schlereth indicated that inter-fund borrowing was not viable either because it was not permitted by the CSU or various bond covenants or that the resources in the funds were needed by those budget programs. He also indicated that inter-fund borrowing from Continuing Education was probably not prudent since these resources were very likely needed by Continuing Education.

Turning to the 96-97 budget projection, Furukawa-Schlereth indicated that CSU data suggested that new funds to SSU would be restricted to compensation increases, any enrollment growth and plant maintenance and repair. Moreover, he indicated that un-funded University general fund needs would grow from approximately $1,600,000 in 95-96 to just over $2,000,000 in 96-97 largely as a result of anticipated growth in University Development as well as the need to comply with the CAL NOW legal settlement in intercollegiate athletics.

Furukawa-Schlereth concluded the presentation by indicating that one-time money in 95-96 (Lottery and Foundation Profit) was sufficient to finance enrollment growth for the Fall Semester, Telephone and Postage needs in SAS, the Residence Life shortfall, clerical support in Academic Affairs, operating expense in the Executive Office and sick leave expenses for the Fall semester in Academic Affairs. He indicated that expenditures in each of these categories had been initiated. He remarked that no funds had been identified to finance these same items in 96-97 and that resources would need to be found to address any additional new expenditures from the University Needs list since it was not possible to permit the campus to deficit spend.

Throughout the presentation, Furukawa-Schlereth reminded the Committee of financial and human resource policy that had been established by SSU including a no lay-off policy for employees, the idea that funds saved by the Divisions in one fiscal year would accrue to those Divisions in the next fiscal year, that fees earned in excess of budget accrue to the unit earning those fees and that Foundation profit was to be allocated for the Provost's discretion in the area of support for scholarly and creative activity. The PBAC reaffirmed the no lay-off policy and the policy of Division roll-forwards. Discussion of the excess fee policy and the Foundation profit policy will likely take place at a future meeting.

The PBAC agreed that it was essential to develop a plan to finance the remainder of 95-96 as quickly as possible and then turn to a discussion of financial strategies for 1996-1997. Bill Barnier asked the financial staff to present financial data in a historical summary fashion which Furukawa-Schlereth indicated would be done. Farish indicated that he would prepare a recommendation related to 95-96 financing for discussion at the next meeting and Furukawa-Schlereth informed the Committee that the 94-95 Year-End Financial Report would be ready at that time.

The Committee also agreed that it would be advisable to include Vice-President Jim Meyer and David Walls in the PBAC discussions. Furukawa-Schlereth promised to take care of this issue.

The meeting was adjourned at approximately 2:20 PM.

Minutes prepared by Larry Furukakwa-Schlereth

PBAC minutes 1995-1996
Updated 2007-12-14