Similarities & Differences       in Financial Management              Between a Small Private and               A Large Pu...
Overview• Introducing  – University of South Carolina  – Wake Forest and ZSR Library• Financial Services Organizational St...
Source of Funds•   “State Funds”•   Revenue Funds•   Endowments/Gifts•   Grants•   Other
Transparency• FOIA/State Records• Salaries• Purchase Card Transactions
Budget Development•   Annual Budget Calendar•   Capital Budget•   Operating Budget•   Other Budget Activities
Budget Management• Monthly updates• Managing the Materials Budget• Online Tools
Internal Accounting Controls•   Monthly/Mid Year/ Annual Closing Procedures•   Approval Procedures•   Budget Reviews and H...
Negotiation of Vendor Contracts• Materials/Acquisitions & Collection  Development• Office of Legal Counsel• Purchasing Off...
Financial Record Management• Purchase Card Procedures• PO, Contracts, Facilities and Printing Bills  Filing• Internal/Exte...
Similarities/Differences?•   Sources of Revenue•   Transparency•   End-of-Year Carryover•   Contract Process
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Similarities & Differences in Financial Management Between a Small Private and A Large Public University

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Presentation at the Inaugural Conference of the Association of Library Financial Management Officers

Susan Sharpless Smith, Z. Smith Reynolds Library, Wake Forest University
Mary C. Horton, University Libraries, University of South Carolina

Arcadia University, Glenside, PA
March 10, 2013

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  • Similarities & Differencesin Financial Management Between a Small Private andA Large Public UniversitySusan Sharpless Smith, Z. Smith Reynolds Library, Wake Forest UniversityMary C. Horton, University Libraries, University of South CarolinaALFMO Conference, March 10, 2013
  • OverviewUSCUSCFlagship university of SCCarnegie 1 Research UniversityGovernor/Board of Trustees8 CampusesUSC ColumbiaEnrollment: 31,000In-state tuition: : $10,488Urban campusMission: to establish and maintain excellence in its student population, faculty, academic programs, living and learning environment, technological infrastructure, library resources, research and scholarship, public and private support and endowment; and to enhance the industrial, economic and cultural potential of the state. University LibrariesThomas Cooper Library – 290, 000 sq. feet. 45 miles of shelvingBusinessMusicHollings Special Collections Library – RBSC & SCPCMIRCSCL – oldest free-standing academic libraryAnnex“To provide the best collections, facilities, services, and faculty/staff”Financial Services Organizational StructureState/Governor, Budget & Control BoardChief Financial OfficerDivision of Business and FinanceBusiness AffairsPurchasing OfficeFinance & Accounting ServicesBudget OfficeBursarControllerContract & Grant AccountingPayrollProvostLibraryMeBusiness ManagerAdministrative AssistantBudget sizeFY 12 -- $16,019515$7.8M – salary, wages, and FB$6.5M – materials$1.7M – everything elseWFUIntroductionsIntroducing Wake Forest and ZSR LibraryWho we areprivate, coeducational, not-for-profit liberal arts institution of higher education and research located in Winston-Salem, North Carolina.Describe ourselves as a “collegiate university”Mid-size, under 5,000 undergraduates, total including graduate and medical school: under 7,000Traditional school with a primarily residential student population Tuition and fees for 2013-14: (tuition $40,750 +250 technology fee), room board, utilities $11,700, est for books, personal expenses, transportation, insurance: another $20,205 = $61,205ZSR Library is the 2011 ACRL Excellence in Libraries winner in the university categoryMission: “to help our faculty, students, and staff succeed”Financial Services Organizational Structure@ University levelBoard of TrusteesPresidentVP Finance and Administration (reports to President), AssocVP finance and Controller (reports to VP); BFP (Budget and Financial Planning)Asst. VP for Budget and Financial Planning (reports to VP)This dept’s focus is on budget development and reporting, as well as forecasting (for current and future years) and trend analysis. BFP handles all questions/issues regarding current and future budgets, costing/sizing of new programs, as well as requests for additional funding (i.e. for strategic initiatives). Budget adjustments are also handled through the Budget Office.FASFinancial Accounting Services (FAS)(general accounting, endowment & gifts); Questions regarding posted revenues and expenses, corrections/JEs, and account code issues need to be directed to FAS.@ Library levelDean reports to Provost’s Office; Vice Provost for Budget and PlanningSmall staff, so we don’t have a person dedicated to doing budgeting and financial management. Until a year ago, was managed by the Library Dean. Division of Labor (Resources Services handles the collection budget development and expenditure in consultation with Library Administration)Budget SizeFY14: operating will be approximately $ 8M; personnel $3M+; $4.3M; remainder to other operating costs.
  • Source of FundsUSC“State” FundsCome from ProvostState money, tuition, fees, etc.90% of budgetPre-2008 VCM model; post-2008 centralizedHave not had any cuts since economic collapseHave had periodicals increase every year3% raise last yearGrants6%Only receive IDC for ‘library grants’Revenue FundsMostly copier & UniprintHollings Room RentFines & lost books2%Endowments and Donations2%Educational FoundationCurrent spending rate set at 4.5%Development Officer – split 50/50 with Univ. Dev.Over 100 funds; only 10 ‘at Dean’s discretion’WFURevenue Funds (Reynolda Campus)Student tuition and fees (less student aid) (45.1%)Planned enrollment growth for 4 years ending in 2011-12Allowed funding for strategic initiativesFY14 second year without significant incremental revenue from enrollment growthGovernment grants and contracts (Federal: 2.8%; State: .4%))Private grants and contracts (27.7%)ContributionsInvestment return designated for current operations (4%)Sales and services of auxiliary enterprises (18%)Endowments and DonationsWhen an endowment is established, the asset funding the endowment (i.e. the gift) will purchase units in an investment pool.A pool is the collection of gifts and their associated appreciation that has been gathered together (“pooled”) for the purpose of investing.At Wake Forest University, the pool is managed by the Office of Investments and holds the pooled endowments for Reynolda Campus, Reynolda House, and the Medical School as well as several funds invested alongside the endowment.The University’s pooled endowment consists of approximately 1,500 individual funds established for a variety of purposes including both donor-restricted endowment funds and funds designated by the Board of Trustees to function as endowmentsThe endowment spending rate for the years ended June 30, 2012 and 2011 was 5.3%, calculated as a percentage of the average of the previous three-year semiannual moving market value per unit and subject to a 10% maximum annual growth or decline in per-unit spending. An average per unit market value is calculated using data points from the previous three June and December closesZSR Library has 17 endowment restricted funds (ranging in annual spendable revenue from a few hundred dollars to over $500K). The largest one of these feeds into the operating budget and is used to purchase materials.13 Restricted contributions (accounts that can only be spent in certain ways) Restricted funds where the donor has designated that 100% of the gift may be used for a specific purpose or over a specific period of time.D FundOne major “designated fund” is the “D Fund” where we receive 10% from all indirect costs for grants on the Reynolda campus “when allowed.” The Dean negotiated for this in 2008, had not existed prior to that. It is now a major source of funding for expanding our collection and to support a variety of other initiatives that are unfunded in the capital/operating budgets.Major benefit of these funds is that they carry over from year to year.GrantsHistorically, this has been a very small source of revenue for ZSR.Mostly digitization grants thus farOtherCapital CampaignIn silent phase until this summerFirst time library is includedFirst time library has had a development officerMany future projects hinge on the success of this (5 year building plan)DonationsWake Forest Fund
  • TransparencyUSCTransparency at high levelFOIA/State Records“Big Budget” BookBudget & Control Transparency Hubhttp://transparency.sc.gov/BCB/transparency/BCB-transparency-hub.phtmhttp://spend.admin.sc.eduBudget development processNot a lot of overt transparency across departmentsBut can find itSalariesOver $50K – individuals available on B&CB and newspaper databaseUnder $50K – individuals by pay grade listed in “Salary Roster”Generally $4k rangeRaises State legislature mandates (or not) across the board raisesBoT can mandate across the board raises for institutionPfPs – for merit, if money is in budget alreadySome years are given a pot of money for thisWFUTransparency at a high level: annual audited financial statements (http://finance.wfu.edu/audited-financial-statements)Annual Fact Book: http://www.wfu.edu/ir/factbook-2011-2012/index.htmlEffort by FAS to electronically publish more budget financial information on newly designed website http://finance.wfu.edu/Annual Campus Financial Briefing by CFO, Hof Milam (explains budget for the Reynolda Campus for the upcoming fiscal year)Budget development process (no transparency across departments)Salaries (no transparencies)Used to be an announcement of average salary percentage of increase. That is no longer done, there is a merit pool and it is only known by Administration. Not shared publicly.Faculty salaries by group rank shared in Fact Book.Look at the Chronicle of HE to find President’s salary!At Library level, salary is determined by Administration and only shared to the Director level.
  • Budget DevelopmentUSCAnnual Budget CalendarFall Review -- NovemberSingle spreadsheet from budget analystBlueprint Announcement & instructions December/JanuaryGenerally due late FebruaryBudget frozen February 28thBudget Hearing late March – April5-year spreadsheet due mid-MarchSpring Review responses due late March“A” fund web-based budget due mid-AprilCarryforward estimates due late AprilBoT approves budget in JuneDean hears about special requestsLimbo July/AugustBudget posted in August/SeptemberBudget HearingAttendeesProvost, Senior Vice-Provost, Budget Analyst, Faculty Senate Rep., others from Provost’s officeDean and meReview BlueprintHow Library fits into University’s mission/goalsDashboard Goals 1-yr and 5-yrAdditional resources needed to meet goalsStrengths and weaknessesAdditional resources neededCapital projectsAdditional staffPurchasing CollectionsPeriodicals Inflation5-year spreadsheetWeb-based budgetCan move money around based on February 28th budgetUpload mid-AprilI do this, usually not much changesMoney for special projects is transferred to budget in the FallDeposited into our general fund an then I move it around to appropriate fund and object codeCarryforward estimateEstimate of year end budgetUsed to see if tax will be appliedThe “Dean’s Deals”WFUAnnual Budget CalendarBudget process for next fiscal year begins in Fall (for FY14, Fall 2013)Request for Capital Equipment, construction, Renovation and/or Renewal Services (early November submission) (to Provost Office)One-time funds for capital equipment valued at $5,000 or more, or to construct, renovate, or upgrade campus facilities.October BOT meeting reviews past fiscal year resultsNovember: Preliminary budget assumptions to Reynolda Cabinet (University Senior Administration)Nov-Dec: reviews of construction/renovation requests, tuition/fee budget, and other recommendationsDec-Jan: leadership finalized FY14 in preparation for presentation to BOT in Feb. BOT approves tuition and fees at February meeting. Preliminary budget guidelines presented.Feb: Operating budgets out to departments for completionMarch: Depts submit budgets; Review meetings held with dept heads/deansApril 2: FY14 capital and operating budget presented to Reynolda CabinetApproval for funding for personnel and non-personnel budgets, strategic initiatives, and capital not finalized until April meetingCapital Budgetrefers to goods/equipment that cost $5,000 or more per item and have a useful life more than one year; the cost of the capital asset includes the purchase of the item and all costs associated with putting the asset in place and making it operational (freight, installation, training).Additionally, projects/renovations are capitalized if construction costs and purchases in support of that project cost $50,000 or more, and have a useful life of more than one year; cost of these projects includes labor and materials.Process:Instructions and forms (for capital budgeting) are distributed to VPs and Deans each fall. Depending on the internal structure and resources within their school/unit, that VP/Dean determines the process and team that will review needs and coordinate submissions. WFU leadership then prioritizes the requests and approves based on available funding. All approved capital funding (to be funded centrally by the General University) is held at the central level and released for transfer to a project (p#) by each as deemed appropriate.All approved capital projects for Facilities are then budgeted in a special Facilities Capital Department (overseen by Facilities); all approved capital projects for Academics are budgeted in a special Academic Capital Department (overseen by the Provost);all approved IS capital projects are budgeted in a special IS Capital Department (overseen by IS). Operating BudgetIncludes funding for both salaries (personnel) and supplies, equipment, furniture, printing, travel, memberships, services, utilities, etc (non-personnel) that are required to conduct daily ongoing operations and which are funded from unrestricted operating revenues i.e. tuition, fees, interest income, unrestricted gifts, unrestricted endowment distribution.Bottom-Up vs. Top Down Budgeting. The term “bottom-up” implies that each year budgeting starts from zero and units must justify every dollar requested; “top-down” implies that central leadership sets budgets for all units.At WFU we use a combined approach. In the fall of each year, deans and VPs review salary and program needs (existing and new). These needs are reviewed with WFU leadership to prioritize alignment with the strategic plan and funding availability. Due to funding limitations, multiple iterations of these proposals are required, and final recommendations to the WFU Board of Trustees (BOT) are not completed until spring when the BOT votes on the budget.Professional Schools, Graduate School, Student Health Services, Global Affairs, and Athletics are self-funded (as opposed to the College and central units which are funded via allocations from the General University).Budget Development RolesProxy – access is restricted to the authorization that your Department Head/BO/VP has assigned for you. A proxy can only assist the Department Head/BO/VP in completing the budget.Department Head – Department Head role allows you to access the operating accounts and employee salaries for all departments that you have been authorized to access.Budget Officer – The Budget Officer role allows you to access the operating accounts and employee salaries for all departments that you have been authorized to access. You ‘receive’ budgets, by department, from Department Heads and must adhere to the guidelines in total. You have the ability to exceed guidelines by department and shift funding between departments, but the total budget for all of your departments combined cannot exceed the established guideline.Vice President - The Vice President role (typically senior leadership) allows you to access the operating accounts and employee salaries for all departments that you have been authorized to access. You ‘receive’ budgets, by department, from Budget Officers and must adhere to the established guidelines in total. You have the ability to exceed guidelines by department and/or Budget Officers, by shifting funding between departments, but the total budget for all of your departments combined cannot exceed the set guideline.Internal AllocationsFees charge within WFU (by one department to another) for goods/services provided.Not intended to provide full cost recovery for service unitsPurpose is solely to encourage thoughtful/moderated use of services by department (not sure I agree)TypesVariable allocations (telecom, copy center, stores, auto, maintenance e, mail services, police special, conference center (internal rates set each fall for following year)Utility allocations: this funding resides in Facilities. Allocations made based on usage. Steam and chilled water based on algorithm/modelFixed allocation general: pre-set allocation agreed in advance by service unit and other organization to cover general services.Other Budgeting Activities this year:Five Year Budget Projection: Fall FY13, deans submitted an estimation of needs so that it could be presented to BOT (only figures for FY14 were taken as official recommendation for BOT approval Financial Restructuring (for merger of departments, or other activities requiring re-allocation of budgets). ZSR Library is merging library operations with the School of Business in FY 14Developed Service Level Agreement to cover expenses (personnel, collections, and to ensure a shared understanding of the library services t0 be provided (acquisitions, contract negotiation, circulation, copyright compliance, systems support, etc.)Latitude Budget officers for each unit have complete latitude in establishing budget as long as it stays within the total amount approved by the University Leadership Group. Fine to move funds between salary and operations.May utilize restricted funds (as allowed). Example: we’ve moved all of our offsite storage expenses (operating and personnel) to an endowed fund that is not restricted as far as purpose, and will operate off of the annual revenue. This frees up additional $$ in the operating budget.
  • Budget ManagementUSCMonthly updatesUse online tools to compare to my spreadsheetLook at object code level, not individual purchases unless something seems offCheck to make sure big categories: telephone, supplies, repairs, etc. are staying in lineMaterials budget managed separatelyAcquisitions and Collection ManagementUse online tools for University Side and III for materials sideOnline ToolsAccounting IntranetData Warehouse (Cognos)IMS/OnDemandMoving to Banner (One Carolina)WFUMonthly updatesOne of my monthly responsibilities. Check expenditures to make sure they have been correctly charged to right accounts. Assistant to Dean actually keeps item-by-item spreadsheet, so checks each and every purchase, while I focus more on the big picture.Materials budget managed separately. Resources Services has staff that manages collection purchases, including an accountant who reconciles invoices between Banner and Voyager (our ILS). These two systems not tied in, so it’s a manual processOnline ToolsCognosEnd of Year Spend-Out process
  • Internal Accounting ControlsUSCMonthly report from Budget OfficeFall ReviewSpring ReviewBudget hearingBudget Analyst5-year spreadsheetPrevious 5-yearsCurrent spending vs. budgetProject 5 years to the futureCarryforward/bottom lineCarry forward estimateApproval ProceduresPurchasesAll come through meState procurement proceduresUp to $2,500 I can decideCan use Purchase Card$2,500 to $10,000Can provide 3 quotes and indicate preferred vendor to Purchasing Office“No quote” countsAnything over $10,000 (1 item or group) must go through bid processBid, RFQ, RFI, etc.Handled through Purchasing OfficePosted on SCBOSole SourceState ContractsIT Equipment Requires Additional approveUTSState Budget and Control BoardFacilities runs their own bid processWFUMonthly/Mid Year/Annual Closing ProceduresMonthly closing: All subsystems are to close their month by the second business day of the following month. This is also the date when journal entries are due to financial reporting. All journal entries received from campus departments are reviewed by Financial & Accounting Services (FAS) before they are entered.Mid-Year Close:New this yearEnables timelier accurate reporting to BOT for Budget Review in FebruaryProvides a snapshot of the University's financial position, activities, and cash flows on a GAAP basis for the first half of a fiscal year. (generally accepted accounting principles)Unaudited financial statements are prepared and presented to the Board of Trustees at the February meeting reflecting the University's financial performance ahead of the fiscal year-end close at June 30th.Downside: May have to start splitting invoices that have traditionally spanned fiscal years (ie large subscription packages paid a year in advance, not going to be allowed in future)Year-End CloseImportanceAnnual evaluation of financial performance at University and Departmental levelsClose of operating budgetsEvaluation of effectiveness of internal control systems in place and fiduciary responsibilitiesNeeded in preparation of financial statements in accordance with US GAAPSpend Down. Use it or lose it. Process starts in March to project what gap exists in budget and to plan purchases to spend down.Escalates to weekly meetings by June. Usually is salary savings from open positions. Last year, almost $190K to spend.Approval ProceduresLibrary personnel are authorized to approve to a certain level:Dean: $1MAssoc. Dean: $500KDirector of Resource Services: $50K on acquisitions and electronic resource subscriptionsAssistant to Dean: $1KOver $2500 requires a PO. Must have approval for sole source (which many of our things are)ProcurementUnder 5K – no quote needed$5-10K – two informal quotes$10-75K – three formal quotesOver $75K – detailed formal RFPBudget Reviews and Hearings In April before the BOT meeting, we meet with Provost and CFO, Asst. VP of Finance and Budget to review our submitted budget. Purpose: to assist the Administration in understanding our budgets as they will be presented to the Board of TrusteesIssues to cover include:Significant budget assumptions including: enrollment targets, tuition rate increases, discount rate, personnel increases (not person by person, general overall merit & market increases)New Initiatives or expansion of current programs.  This could be enrollment growth, personnel growth, etc.Year over Year changes i.e. FY14 budget vs. FY13 budget Review of long term projection (5 year projection)Challenges and/or opportunities to the SchoolProcurementNew Procurement System: DeaconDepot (technology behind it: SciQuest, Cary, NC). deacondepot.wfu.eduStill bringing vendors on board. Focus has been on cross-campus vendors (ie Office Depot, CDW-G).Library collections vendors will not go through this systemDon’t use it for p-card purchasesBenefits (stated by Procurement):Better customer service through a powerful and user-friendly online shopping platform Centralized catalog of supplier products and pricesPaperless procurement environmentImproved price negotiation abilityImproved utilization of sustainable and diverse suppliers
  • Negotiation of vendor contractsUSCMaterials/Acquisitions & Collection DevelopmentHandle negotiationsGet sent to LegalOffice of Legal CounselReviews all ContractsBOTOnly the BoT Secretary can sign contracts for the UniversityProjects over $250,000 - $750,000 have to get majority Exec. Board BoT approvalOver $750,000 need majority of Exec. Board and majority of BoT approvalProjects over $5m have to get approval by State Budget and Control BoardPurchasing OfficeWFUMaterials/Acquisitions & Collection DevelopmentCollection and subscription negotiations are handled by Resource Services (Director, Head of Collection Management, & Electronic Resources Librarian)Other contracts handled by Administration OfficeOffice of Legal Counsel: does not get involved in our contract negotiation.Purchasing Office: Procurement will assist with negotiations upon request. We used them to negotiate a better lease on one of our microfilm scan units.Contracts over $1M have to be signed by the University President.
  • Financial Record ManagementUSCPurchase card proceduresLiaisonsI sign off on paper and WorksPO, contracts, facilities and printing bills filingKept in Admin. OfficeContractsOfficial copy is with LegalAuditInternalInternal Audit is separate unit that reports to the BoTExternal auditWFUPurchase card proceduresThe University Purchasing Card (P-Card) is a corporate liability card that is used for travel and entertainment of any dollar amount, as well as purchasing goods and services under $2500.Every FT Library staff/faculty has a pcard and is instructed to use it for all professional purchases (unless available through DeaconDepot)University policy requires each user to reconcile monthly charges, sign and submit, but ZSR asst to dean prefers to handle it. So receipts are turned into her and she reconciles and makes sure all is charged to the correct account codes.PO, contracts, facilities and printing bills filingPurchase Orders are now generated through DeaconDepot, receipt is entered into the system and invoices are issued from the system to vendors.New Contract Project: Procurement is finally getting departments to scan all signed contracts that commit the University to goods and/or services and building a database so that they are maintained centrally. Until now, each department handled its own contracts internally. Internal/external auditWFU has an Internal Audit and Compliance OfficeProvides independent oversight on both campusesAdministratively reports to Drs. Hatch (pres) and McConnell(CIO at Medical campus)Area of focusInternal auditI.T audit, financial audit, operational auditExternal auditPurpose: present fairly the financial position of WFU as of the end of the fiscal year and show it is in accordance with GAAP.KPMG, LLP did the audit last yearDoes preliminary assessment of internal controls in MayReturned mid-August to audit financial statementsAudited materials about internal controls that would be presented to BOT at October meeting
  • Wrap Up and Questions
  • Similarities & Differences in Financial Management Between a Small Private and A Large Public University

    1. 1. Similarities & Differences in Financial Management Between a Small Private and A Large Public UniversitySusan Sharpless Smith, Z. Smith Reynolds Library, Wake Forest UniversityMary C. Horton, University Libraries, University of South Carolina ALFMO Conference, March 10, 2013
    2. 2. Overview• Introducing – University of South Carolina – Wake Forest and ZSR Library• Financial Services Organizational Structure – @ University level – @ Library level• Division of Labor
    3. 3. Source of Funds• “State Funds”• Revenue Funds• Endowments/Gifts• Grants• Other
    4. 4. Transparency• FOIA/State Records• Salaries• Purchase Card Transactions
    5. 5. Budget Development• Annual Budget Calendar• Capital Budget• Operating Budget• Other Budget Activities
    6. 6. Budget Management• Monthly updates• Managing the Materials Budget• Online Tools
    7. 7. Internal Accounting Controls• Monthly/Mid Year/ Annual Closing Procedures• Approval Procedures• Budget Reviews and Hearings• Procurement
    8. 8. Negotiation of Vendor Contracts• Materials/Acquisitions & Collection Development• Office of Legal Counsel• Purchasing Office
    9. 9. Financial Record Management• Purchase Card Procedures• PO, Contracts, Facilities and Printing Bills Filing• Internal/External Audit
    10. 10. Similarities/Differences?• Sources of Revenue• Transparency• End-of-Year Carryover• Contract Process

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