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Kentucky State

University

Board of Regents Meeting

Finance Administration Committee

April 25, 2014

Regent Lavaughn Henry, Chairperson

Regent David Guarnieri

Regent Syamala Reddy

Regent Chuck Whitehead

Ms. Anita Lockridge, Staff

KENTUCKY STATE UNIVERSITY Regular Meeting of the Board of Regents Academic Affairs Committee April 25, 2014 10:00 am to 10:45 am Board Room – Academic Services Building Frankfort, Kentucky

MEETING INDEX

Section Page B1 Minutes of January 24, 2014 B2 Executive Summary B3 Unaudited Comparative Financial Statements Budget vs. Actual B4 Human Resource Services Report

Section

KENTUCKY STATE UNIVERSITY Regular Meeting of the Board of Regents Academic Affairs Committee April 25, 2014 10:00 am to 10:45 am Board Room – Academic Services Building Frankfort, Kentucky

AGENDA

1. Call to Order
2. II.Roll Call
3. III.Opening Remarks
4. IV.Approval of Minutes
5. V.Executive Summary Report
6. VI.Action Items
1. None
2. VII Informational Items:
1. FY2013 Unaudited Comparative Financial Statements
2. Budget vs. Actual
3. Human Resource Services Report
4. VIII.Discussion Ms. Anita Lockridge, Vice President for Finance Administration
5. IX.Adjournment

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Regent Lavaughn Henry, Chairperson

Ms. Anita Lockridge, Vice President for Finance Administration

Regent Lavaughn Henry, Chairperson

Regent Lavaughn Henry, Chairperson

Ms. Anita Lockridge, Vice President for Finance Administration

Ms. Anita Lockridge, Vice President for Finance Administration

Ms. Anita Lockridge, Vice President for Finance Administration

Ms. Anita Lockridge, Vice President for Finance Administration

B1

Agenda Item Background

Background:

The minutes of the Finance and Business Committee meeting for January 24, 2014 requires approval in order to become an official part of the committee records.

Recommendation:

It is recommended that the Finance and Business Committee approve the minutes of the January 24, 2014 meeting.

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KENTUCKY STATE UNIVERSITY Regular Meeting of the Board of Regents Academic Affairs Committee April 25, 2014 10:00 am to 10:45 am Board Room – Academic Services Building Frankfort, Kentucky

MINUTES

I. Call to Order

The meeting was called to order at 10:00 a.m. on January 24, 2014 by Board of Regents Chair Karen Bearden in the absence of Committee Chair Lavaughn Henry.

II. Roll Call

Regent Bearden asked for the roll call, which was recorded as follows:

Regent Karen Bearden, present

Regent Jeter-Davis, present

Regent Lavaughn Henry, absent

Regent David Guarnieri, present

Regent Travis Haskins, present

Regent Syamala Reddy, absent

Regent Chuck Whitehead, present

Mrs. Lockridge, present

A quorum was declared.

III. Approval of Minutes

Action: Motion to approve the minutes from the July 26, 2013 and October 25, 2013 Finance and Business Committee meeting was made by Regent Jeter-Davis and seconded by Regent Haskins. The minutes stand as approved as presented.

Motion to approve the minutes from the July 26, 2013 and October 25, 2013 Finance and Business Committee meeting was made by Regent Jeter-Davis and seconded by Regent Haskins. The minutes stand as approved as presented.

Regent Bearden recognized Mrs. Lockridge to carry the discussion forward.

IV. Vice President's Report

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Executive Summary

Vice President Lockridge gave an overview of the executive summary. She reported on budget vs actual and the financials for the five month period ending November 30, 2013.

Tronconi Segarra and Associates

Vice President Lockridge reported that the internal auditors were on campus during the week of December 9th performing work in Land Grant.

TouchNet

Vice President Lockridge stated that KSU purchased a software package through TouchNet that allows students to pay their balances online by ACH or credit card. Students can access TouchNet's website on-line at the One Stop Shop. Students were made aware of this service at the time the University was communicating with them about the financial requirements to return for the Spring semester.

Budget

Vice President Lockridge stated that the budget planning process is underway for FY 2014-2015. The budget will be presented at the April Board meeting.

Human Resource Services

Vice President Lockridge stated that on January 15th, the Employee Benefits Advisory Committee (EBAC) met with representatives from United Healthcare to receive the annual update on the plan performance. She also mentioned that Neace Lukens, our insurance broker, will assist us with the health care renewal negotiations.

Vice President Lockridge stated that The Classification and Compensation Project began with a formal kick-off on January 7th. Per Vice President Lockridge, Dr. Fox provided a project overview with faculty and staff and also provided an explanation of the position description questionnaire (PDQ) that every non-faculty employee is to complete. She gave an overview of the project timeline. Regent Guarniere inquired as to the goal for this project and if there were generic job descriptions. Mr. Meiseles, Director of Human Resource Services responded stating the project goal is for internal equity, review of job descriptions for exempt and non-exempt and that there were some generic job descriptions.

Vice President Lockridge stated that the salary increase of 2% with an effective date of January 1, 2014 will be reflected on the January 31st paycheck.

Other

Vice President Lockridge reported that year-end tax form 1099 and 1098T have been issued and W2's will be mailed today and are also available online.

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Vice President Lockridge gave an overview of the FY 2014-2015 Governor's Executive Budget Recommendation. The Governor's recommendation includes a 2.5% reduction in all Public universities state appropriation and schools who contribute to KERS will receive 50% of their expected increase in cost for FY 14-15. Included is also a general fund capital project to replace KSU's boiler and the repair of aging distribution lines and an agency bond project to construct an athletics sports complex. Regent Davis-Jeter inquired if the reduction was for multiple years. President Sias stated that the reduction would be for year one of the biennium and will carry forth in year two. Regent Guarniere inquired if there were requests we were advocating but had been left out of the Governor's budget. President Sias responded nine million dollars for the Batty White Health Center and equitable funding for the Land Grant program were not in the Governor's budget for these requests.

V. Adjournment

Motion to adjourn the Finance and Business committee meeting was made by Regent Haskins and seconded by Regent Whitehead. The Finance and Business committee meeting adjourned at 10:24am.

Submitted by:

Approved by:

Anita Lockridge

Lavaughn Henry, Chairperson

Vice President for Finance

Finance and Business Committee

Administration Board of Regents

Kentucky State University Kentucky State University

___Minutes approved with no corrections

__Minutes approved with corrections

B2

Agenda Item Background

Background:

Please see attached.

Recommendation:

B2

KENTUCKY STATE UNIVERSITY Regular Meeting of the Board of Regents Academic Affairs Committee April 25, 2014 10:00 am to 10:45 am Board Room – Academic Services Building Frankfort, Kentucky

Fiscal 2013 Budget vs. Actual and Financial Statements (unaudited)

For Fiscal 2013, planned budget results and unaudited comparative financials are presented in item B3 as of February 28, 2014.

Audit Update

Tronconi Segarra & Associates was on-site March 24-27 to review Accounts Payable, Purchasing, Travel and Investments.

A pre-planning meeting with Dean|Dorton|Allen|Ford was conducted. They will return on the following dates:

• April 23rd for A/R reserve review
• Week of April 28th for Fall 2013 Financial Aid testing and walkthrough
• June 23rd for Spring 2014 Financial Aid testing and Grants testing (through 3/31/14) and to discuss other testing that can be done in advance of year-end.

Budget Planning

A preliminary budget will be presented.

Kentucky Council on Postsecondary Education

On November 7, 2013, the Council adopted a resolution directing the council President to establish a working group for the purpose of developing a comprehensive model for the allocation of state General Fund appropriations for institutional operations that incorporated element of campus performance, mission, and enrollment for implementation in the 2016-18 biennial budget recommendation.

On April 2, 2014, the first meeting of the Funding Model Steering Committee was held by CPE. Coordinating and governing board staff from three states presented to the meeting participants their experience with adopting a new funding approach in their state, the components of the approach, and the observed or anticipated impacts of the model on institutional behavior. These meetings will be the first of many to come over the next year.

Enrolled Students

On March 28th, the Bursar's Office made contact with the current enrolled student who has an outstanding balance on their account to remind them of the financial requirements to return to the University in the Fall. A letter, personal statement of account and the KSU Student Balance Required Payment Schedule brochure was sent to the student address on file and a message was sent to their KYSU email account.

Travel Policy

The Accounting Department has reviewed the University travel policy and recommended changes to the Cabinet that was approved with an effective date of July 1, 2014.

Kentucky Department of Revenue

On March 5, 2014, the Kentucky Department of Revenue (KDOR) sent a formal acknowledgement letter to KSU, to assist KSU in the collection of outstanding debts.

Prior to sending past due student accounts to KDOR for collection, each student account is reviewed by KSU staff, for accuracy and correctness; which is currently underway.

On April 4, 2014, a selection of approximately 50 students were sent 30-day letters, informing them of KSU's intent to send their past due student account, to KDOR for collections. The student has 30 days to pay in full, or their account will be sent to KDOR.

KDOR has requested only 50 accounts be sent at a time. After they have evaluated and processed these first 50 accounts, they will inform us when we can send any additional accounts, and how many to send at a time. This process will continue until all past due accounts have been submitted to collections.

KDOR will accept past due accounts that are less than 10 years old, and have a past due balance of over $100.

Student Accounts Receivable Project

In conjunction with the KDUK student account review, KSU is also reviewing all past due student accounts to verify the balances and make determinations as to whether we need to write off the past due amount, or to send the balance due to collections.

In the previous couple of years, KSU has recorded a “reserve” for uncollectible accounts, but has not recorded these entries down to the individual student accounts. Accounting and Bursar are working to review each student account, and analyze whether we need to write off the amount, or send to collections. When either of these is performed, a hold will be placed on the student’s account in order to prevent them from obtaining a transcript or enrolling in future classes without first paying the balance owed to KSU.

Any past due amount over 10 years old, or a balance that cannot be verified with the old AR system, will be written off.

KSU staff is in the first phase of this project. We are currently reviewing student accounts that have a balance brought forward in 2011 from the old A/R system to Banner. We are verifying the balance between Banner and the old system. If they match, we have support for that balance and can forward to KDOR for collections.

KSU staff is also reviewing accounts for correctness and accuracy during this evaluation. If any inconsistencies are found, corrections will be made.

The next step will be to review more recent accounts (activity from fiscal year 2012 and forward.) We will methodically review and if past due, will send to KDOR for collections.

Other Items

Refer to the Human Resources Update contained within.

B3

Agenda Item Background

Background:

The comparative Interim Statement of Revenues, Expenses and Changes in Net Position (SRECNP) are included as of February 28, 2014 and March 31, 2013. Finance is using March 31, 2013 as comparison due to lack of documentation from February 28, 2013.

The Statement of Net Position (SNP) is as of February 28, 2014 and June 30, 2013. The SNP is a summary of the financial balances at a given point in time, whereas the SRECNP shows the university's revenues and expenses during a particular period of time. A brief summary explanation of certain current assets and plant items follows:

1. Cash and cash equivalents total $30.1 million and $21.1 million for February 2014 and June 2013, respectively. The amount for February 2014 includes $18.7 million that is restricted for Land Grant and Action Agenda programs and $1.3 million that is restricted for plant purposes. The remainder is current operating cash that will be available for current operations during the year.
2. Accounts receivable totaling $12.8 million and $10.9 million for February 2014 and June 2013, respectively, includes the receivables from students, grants and loans. As of February 2014, this amount includes $8.4 million in student accounts receivables, and $4.1 million that is grants and other accounts receivables. Student accounts receivable has increased $2.8 million since June 30, 2013, from $5.6 million to $8.4 million. Grants receivable has decreased $1.2 million due to recovered receivables since June 2013. The KSU Student Balance Required Payment Schedule was implemented in November 2013 to address the issue of

students not making required payments on their accounts. January 2014 collections were just under $1 million.

3. Current liabilities for February 2014 and June 2013 amounts to $7.3 million and $7.3 million, respectively, consisting of accounts payable and accrued payroll liabilities. Accrued compensated absences total $2.0 million and Deferred Revenue totals $1.2 million as of February 2014.
4. As of February 28, 2014, net assets reflect a $10.7 million increase over June 2013, primarily due to $11.1 million increase in current assets. This increase is primarily due to an increase in cash and cash equivalents, which is attributable to Fall 2013 and Spring 2014 student grants money and State Appropriations received.
5. Tuition and fee revenue comparison for February 2014 and March 2013 represents a $1.1 million decrease. Net Student Tuition & Fees totals $15.5 million and $16.6 million as of February 2014 and March 2013, respectively.
6. Auxiliary revenue comparison for February 2014 and March 2013 represents a $230 thousand increase.
7. Operating expenses as of February 2014 decreased $5.5 million compared to March 2013. Expense reduction was across the board, with the exception of Student Aid, which is $426 thousand over last year.
8. The Statement of Cash Flows reflects a net increase of $8.9 million at February 2014. Operations consumed $14.5 million and $19.4 million as of February 2014 and March 2013, respectively.
9. As of February 28, 2014, we are through 66.67% of the annual fiscal budget period. Total expenditures were 62.76%, which is 3.91% under budget. Total revenue was 84.95% of total budget, due to receipt of state appropriations, tuition and auxiliary charges recognized in the fall and spring terms. The result is a $10.7 million surplus, of which $9.2 million is E & G, $2.3 million Auxiliary, and $385 thousand Land Grant.

Informational Item

Kentucky State University

Statement of Net Position

Kentucky State University Statement of Revenues, Expenses and Changes in Net Position (By Function) Periods Ending February 28, 2014 and March 31, 2013

(Unaudited)

Kentucky State University

Statement of Revenues, Expenses and Changes in Net Position (By Function)

Periods Ending February 28, 2014 and March 31, 2013

(Unaudited)

Kentucky State University

Statement of Cash Flows Periods Ending February 28, 2014 and March 31, 2013 (Unaudited)

Kentucky State University

Statement of Cash Flows Periods Ending February 28, 2014 and March 31, 2013

(Unaudited)

t

19

YTD ACTUAL BY FUND GROUP

Kentucky State University Budget vs. Actual Eight months ending February 28, 2014 (Amounts shown in dollars)

B4

Agenda Item Background

Background:

Human Resource Services has initiated and continued several significant projects for the University as described below:

Recommendation:

1. The faculty and staff Classification and Compensation systems review project (C&C) is proceeding with the collection position description questionnaires (PDQ) completed by non-faculty employees. All PDQs will be provided to the project consultant, Dr. James Fox, of Fox Lawson & Associates.
2. The university's employee benefits broker, Neace Lukens, obtained renewal quotes for employee health, dental and vision insurances. Quotes were received from the incumbent providers as well as multiple alternate carriers and the results were presented to the Employee Benefits Advisory Committee. A recommendation to retain all incumbent providers was made to the Cabinet. The Cabinet approved the recommendation so planning for the annual open enrollment to take place in the spring has commenced.
3. Through retirement vendor Valic, Human Resources participated in the Kentucky State Extension Conference. The Valic representative provided the KSU Extension employees with retirement planning guidance.
4. By review of existing information as well as addition of updated information, Human Resources participated in the conversion of the university's website.

Informational Item