February 5-6, 2003 Meeting Minutes In attendance (for part or all of the meeting): Albany - Kathryn K. Lowery & Leo F. Neveu; Alfred - UTC - Daniel J. Neverett; Alfred - Ceramics - Brice M. Weigman; Binghamton - Anthony A. Ferrara & James Van Voorst; Brockport - Greig W. Mitchell; Buffalo Center - Kevin R. Seitz; Buffalo College - Stanley Kardonsky; Canton - Carson E. Smith; Cobleskill - Carol A. Young & Gary Miller; Cornell Statutory Colleges - Nathan Fawcett & John A. Lambert; Cortland - William E. Shaut; Empire State - Dennis C. Belt; Environmental Science & Forestry - Connie S. Webb; Farmingdale - George P. LaRosa & Richard J. Hume; Fredonia - Tracy S. Bennett; Geneseo - Kenneth H. Levison; SUNY Downstate Medical University - Ivan M. Lisnitzer; SUNY Upstate Medical University - Steven C. Brady; Maritime - Kimberly R. Cline; Morrisville - John Angerosa; New Paltz - Johanna D'Aleo; Old Westbury - Len L. Davis; Optometry - David A. Bowers; Oswego - Nicholas A. Lyons; Plattsburgh - John R. Homburger; Potsdam - Michael D. Lewis; Purchase - Judy Nolan; Stony Brook - Richard L. Mann; Utica/IT - Stewart W. Richards & Bruce E. Reichel; Construction Fund - Jim Biggane, Elliot Easton, Joe Fox, & Bob Haelen; DASNY - Mike Corigan; Research Foundation - Bonnie Boice & Jerry Drahos; System Administration - Debbie Hayes, Gary Moore, David Richter & Brian Stenson. Wednesday, February 5, 2003 Presidents Report - David Bowers We started at 1:00 p.m. sharp with David welcoming everyone and announcing that we had a busy agenda ahead of us. David began by introducing Mr. Gary Miller as the new Interim Vice President at Cobleskill. David announced that dinner would be at the Barnsider and reaffirmed the directions. Dick Mann was called on to brief the group on the Research Foundation meeting held in the morning. Dick indicated that Kevin Seitz and John O'Hara also attended. The issues are obviously acute in a number of areas: performance, labor distribution, accuracy, etc. Jerry Drahos put out a series of decision points for consideration: 1) dump the new system and go back to legacy; 2) buy new proven functionality from other Research campuses; 3) total rewrite and; 4) rewrite just those parts/sections that are problematic ( i.e. encumbering, reporting to PI 's, labor distribution, and grants operations modules, etc.). RF's preference is to replace parts (modules) incrementally (i.e., A/R module needs to be replaced). David Bowers expressed concern that credibility will take a long time to rebuild. David finished his report by asking who planned to stay over to attend Joyce Villa's retirement party. Due to scheduling, most of the members were unable to attend. David offered to send a letter on SUBOA'S behalf, and everyone felt that was a good gesture in light of everything that Joyce has done over the years for every business officer in attendance at one time or another. Secretary's Report - John R. Homburger John Homburger called for a motion to accept the minutes and Ivan Lisnitzer moved to approve the minutes; seconded by George LaRosa. The motion was unanimously approved. Treasurer's Report - Brice M. Weigman Brice reported that we had $2,834.00 in the savings account and $5,344.73 in the checking account. Before a motion to approve the minutes was called, Ken Levison questioned the overall reported balance. He felt that there should be a substantial amount more, based on the success of the annual meeting and vendor support. Brice indicated he would reconcile the vendor payments with Tracy Bennett to ensure everything was collected and deposited accurately. Brice will give a full report on the annual meeting revenue and related deposits at the next meeting. Sector Meetings - Comprehensive Colleges and Colleges of Technology - The BAP methodology is a major concern as it relates to the proposed tuition increase. BAP has not had to respond to an across-the-board tuition increase, coupled with such a significant reduction in State support. The general concern of the group revolved around establishing a position on how the BAP will be changed. The potential disparity between campuses that are more State-support dependent vs. tuition dependent remains problematic. Concerns were expressed regarding the lack of communication from the APC on the backlog in December and January. The lack of consistent processing also destroys the integrity of planning at the campus level. The 33% increase in the application fee seems to have been done with no consultation at the campus level to justify and account for the increase at a time when campus requests for fee increases are either being denied, cut back, or capped. The reporting from SUCF should include expenditure reporting by account so each campus has a sense of project cash balances as well as budgeted and committed balances. The issue was raised again of how much support we can expect from the Fund when the EPA audits begin to identify violations. The area of Risk Management needs to be clarified, as it tends to have very broad implications involving disasters, internal control, security control, mail processing, succession planning, etc. The question of training and support related to both risk management and internal control needs were discussed as an area where the Business Officers need to become more informed by System Administration. We need more guidance and direction as how to best approach the issues and process. Kim Cline brought up an idea that has a lot of merit. Compile a comprehensive list of all compliance issues we have with a corresponding contact at System Administration (do we really want to see that list?). The next 5-Year Capital Plan was discussed, particularly how the matching program would be allocated and how leveraging with campus funds (non-State) would be apportioned. HIPAA was discussed as to the pro rata charges to all campuses for consultant services and that the training being provided was very disappointing. There has been a lot of confusion surrounding the aggressive implementation of this major compliance requirement. The Early Retirement reporting requirements (information) need to be clarified as it has some confusing issues. The tuition increase for Summer Session would probably not be effective until Summer '04. This has been the historical practice. Concerns regarding SUTRA and IFR cash reserves vs. allocation may become an issue as each campus spends down reserves in addition to operating cash as we get closer to the end of the fiscal year. The local entities agreement status was reviewed by Mike Lewis - he sent out a summary of changes and concerns to all Business Officers before the meeting. The frequency of audit bids still remains a serious concern. The status on the agreements seems to be coming to an end with the expectation that the Board of Trustees may be acting on it in May or June. The Research Foundation approach to Operations Managers' evaluations still needs some work and clarification. Some folks have a tender spot in their heart for this issue! It was felt we need clarification on SA guidelines as they relate to fiscal/fiduciary responsibility. University Centers - The BAP concerns were reiterated similar to what was discussed in Ken Levinson's Report. Differential tuition was discussed as to how the proposal would work for graduate and professional programs by sector (i.e., 2 different tuition rates for an MBA Program - Comprehensive Colleges vs. University Centers). SUBOA Committee Reports - Tracy Bennett Jim VanVoorst gave a summary from the Accounting/Budget/Bursar Committee. The Fee Committee has made a recommendation to buy out the DIFR overhead assessment and fee revenue imbedded in the Campus revenue targets. The March cash ceilings are going to be very important! Monitoring of financial indicators will continue to be reviewed and monitored. Jim indicated he had information on the rationale that is used to build the rates/budgets for SICAS, ITEC and HIPAA if anyone is interested in the detail. Tracy reported that DASNY will report on main issues tomorrow - allocation of overhead and follow-up. We still have $5 million in loan reserve funds that need clarification. Tracy indicated that we should look into establishing financial guidelines for DIFR that clarify reasonableness for reserve levels and help explain the Financial Statements that System develops for each residential campus. In addition, Tracy addressed the need to change the restrictive language pertaining to Residence Hall revenue and establish criteria and structure for refinancing Bonds. Leif Hartmark reported the Fee Committee has not met. The SUNY policy meeting has not happened yet. The SICAS governing board approved a 4 - 5% increase in their budget for next year. Utilities - Joe Fox will report tomorrow. The Construction Advisory Committee should be used instead of Construction Fund Committee. The future of BAP was discussed briefly and it was decided that Dick Mann could act as liaison to SUBOA from the SUNY-Wide BAP Committee. It was proposed that we should reconstitute the old SUBOA BAP Committee. Thursday morning - February 6, 2003 David Richter - Office of the Vice Chancellor & Chief Financial Officer Core operating budget intact; reduced tax support offset by tuition. Hospital operating subsidy intact. EOP cut in half, from $8.2 to $4.1 million. TAP recommendations have been a throwaway proposal for years, so who knows? SUNY's point of view: aid is eventually paid upon graduation. SUNY's stance: funding must remain at level recommended in the Governor's budget. If tuition is reduced from plus $1,200, tax support must increase. 3 Basic issues Will we get the $1,200 tuition increase? Will we get it in time? What will the Capital Plan look like? Public advocacy: SUNY absorbed $270 million in cuts since 1999 … plus lost revenues, salary improvement, enrollment growth, inflation, and mid-year recession. Next year, salary improvement fully annualized will be another $80 million. In private: State budget tenuously balanced with one-time actions … likelihood of restoration is nil … out-year gaps could improve or worsen … we do face another reduction next year. We need tuition increases and differential tuition … we will not see indexing until some time in future because of $1,200 increase this year. The state budget will not be approved for an April 1 start; it could be delayed for months. Ability to set tuition in advance of an approved budget could be repealed during emergency bills … may not have authorization in time for fall semester. Viewed by others, SUNY has not done enough … we can be more efficient … and yet other agencies will see that we walked out of this budget whole (because of increased tuition). There were 1,142 retirements but the workforce has dropped only several hundred … a primary concern that SUNY is not making the same self-help effort to drop jobs as the rest of state agencies which are in a hard freeze with no out-of-state travel without approval from the Governor's Office. SUNY has to show it is doing something. Going forward, all possibilities (for budget relief) are negative. Task force formed to further evaluate Systems operations. Need to identify and save whatever we can, wherever possible. There is tremendous speculation on the next wave for early retirement. It does not seem to be in the cards unless there is a massive layoff strategy. Capital improvements came at the expense of transportation … incremental growth will not happen. Funding came with a very strong message to take care of the hospitals and critical maintenance. Bob Haelen (SUCF) State educational facilities program weighted toward critical maintenance. Bill copy structured very differently from last year … with very few basic categories and dollars at the campus level … named projects are just examples, emphasizing campus flexibility. Allocations to campuses done on gross square footage of academic space, not weighted by age of buildings (for which they did not have quality information). For planning purposes, work with the numbers in the bill. They could change. M & R allocation is within campus numbers. Support is from tax dollars, making them more susceptible to legislative processes (cuts). Funds unspent from the first five-year program are still active. The state will want a year-by-year expenditure plan … but perhaps not based on individual projects. There will be some application process for the matching program … reviewed by the Provost for academic mission. The match has not been defined. Start scoping out jobs. (One campus has already submitted job requests.) The only hurdle is appropriation language, not bond sales. Campus lets … rewriting "530" procurement procedures. Brian Stenson - Finance & Business Handout on 2003-04 Executive Budget Recommendations shows total funding growing from $1,838,527,000 available in 2002-03 (which includes the initial "haircut") to $1,857,901,000 for 2003-04. Besides the general tax reduction of $193,971,000 (replaced by a tuition increase of $196,910,000) is the assumption that state-operated campuses will eliminate fringe benefit waivers for people supported on non-state funds. Brian acknowledged the University does not need to comply, but would have to find substitute revenues to continue with the waivers. SUP is preparing a schedule of tuition by category, for sharing with campuses. Program differentials, e.g. tuition charged for an MBA at all university centers, are possible. Action on associate's degrees (currently $3,200 versus $3,400) needs to be considered in light of the $1,200 increase supported by the Governor. (Some consideration to leveling the two rates?) The tuition schedule should be out in about two weeks. The Governor's bill removes sentences from legislation, opening the door for tuition to be in place before enactment of the state budget. Party line: No staff / program reductions attributed to the budget. Increased enrollment and the match on increased sponsored program activity add to the reduction in State tax revenue as they work through the BAP. Campuses that are proportionally less reliant on tuition would be affected disproportionally from campuses that are proportionally more reliant on tuition. Need to engage SUBOA and SUP groups in the BAP. In response to a comment (from Dick Mann) to neutralize the effect by switching sources of funding, Brian (or Dave DeMarco) indicated they would consider ways to moderate the effects but could not neutralize them. Requests for revenue projections should be out in about two weeks. Given increased tuition, campuses will be hard pressed to push the envelop on fees. Everyone should use 3 to 4 percent as a planning guideline. NYS projection for out years … FY04 $9.3 billion gap met by $9.3 billion in actions. FY05 $10.2 billion projected gap with $7.3 billion in cumulative action (FY04's $9.3 billion less use of tobacco bonds and other one-time actions) … leaves a $2.9 billion gap. FY06 $11.1 billion gap before action, $4.3 billion gap after continuing action. Jim Biggane (SUCF) "Flexibility" did not show up in legislation. Refine project scopes and move them forward to design. Field order allowances are likely to be built into contracts. Expect more outsourcing and more campus lets. Energy Update - Joe Fox Mr. Elliot Easton was introduced as the new energy manager for SUNY. The energy purchasing contract was approved in December '02 and 12 campuses signed on with NIMO. They will receive their first bill in January '03 and four months later will receive any adjustments. Joe is planning on adding 12 more campuses next year. Energy prices are unbelievably volatile. Electric prices in January hit a new high. The cost this year to belong to the Multiple Intervenors Group is $80,000. Some campuses have benefited while others have not. Research Foundation Update - Gerard Drahos/Bonnie Boice Oracle System Visited 22 campuses and collected information through one-on-one interviews. The findings and documentation of shadow systems were used as a basis to compare other Research Organization business practices. Jerry presented 6 options that were developed to assess "where to go from here" with Oracle. (See Dick Mann notes under President's report) Option 6 suggests maintaining the current system and fixing inherent design problems that relate back to root cause. Propose to rewrite problem modules like Encumbering. Option 6 gives the RF the opportunity to protect investment and address problems incrementally. This approach will afford RF to evaluate what has been accomplished and what is left to be done. The Executive Advisory committee meeting held on Wednesday addressed the timing schedule, cost and priorities. The three main issues at hand are PI portal information, encumbering and performance. DASNY Presentation: Mike Corigan Mike gave an overview of the typical costs that are passed on as the Overhead Assessment: insurance, NYS cost recovery fee, banking fees, financing ($4 million of $64 million), Construction ($5.6 million of $50 million), Administrative (1/3 of $10 million). Pass through expenses are directly attributable to campus/project. The insurance cost is made up of the following: Property: $100,000 deductible and $5 million per occurrence; builders risk and general liability. A discussion ensued regarding the accountability of the overhead and labor rates. Mike also indicated that the insurance escalation is being addressed. Gary Moore and Debbie Hayes briefly discussed the quarterly reports from DASNY and when the overhead is charged to campuses. David closed the meeting with a discussion of the Annual Meeting - it needs further discussion and follow up. David will be sending an e-mail to determine interest. Meeting adjourned at 12:14 p.m. Respectfully submitted, John R. Homburger, Secretary Back to Minutes/Reports