Overview of College and University Finance Presented by: John Griffith and David Proulx
Purposes FINANCIAL MANAGEMENT ACCOUNTING CONTROL PLANNING BUDGETING REPORTING
How does this relate to me? • Does your unit have diverse revenue sources? • Are you over dependent upon one revenue source? • What steps if any is your unit taking to diversify your revenue?
Reviewing the Tuition Mix • What does this mean? • What are the risks? • What are the opportunities ?
Fund Accounting Overview • We use fund accounting • Funds established based on purpose of fund • Major fund groups are: • Current Funds • Plant Funds • Endowment Funds
Current Unrestricted Funds • Educational and General Fund • Instructional operating funds of the University • Tuition, indirect cost recovery and state appropriation revenue • Internally Designated Funds • Funds - designated for a specific program - example: study away programs, PI funds • Auxiliary Enterprise Funds • Supported through separate revenue streams (fees) • Examples include: MUB, Campus Rec, Housing, Dining
Current Restricted Funds • Restricted Gifts • Donations from alumni, corporations and others • Funds can only be used in accordance with donor’s restrictions • Grants/Contracts • Federal, State and private grants to perform research or public service. • Expenditures must be in compliance with Federal and State regulations as well as Grant Proposal/Awards.
How does this relate to me? • Do you understand all the external restrictions on your funds? • This is a large area of exposure.
Plant Funds • Includes fixed assets and long-term debt • Capital construction and Repair & Renovation fund • Capital Replacement
How does this relate to me? • Is your unit saving funds in a plant fund to replace a capital asset (car, equipment, computers, future renovations)? • Should you be?
Endowment Funds • Gifts from an external donor that can not be expended. • A portion of the investment income (4%) is paid out to be expended according to donor’s restrictions. • Quasi endowments are designated by Trustees.
How does this relate to me? • Does your unit have a quasi-endowment fund? • What are the advantages and disadvantages of establishing a quasi endowment fund?
How does this relate to me? • What is an appropriate level of reserves? • What factors impact appropriate reserve levels?