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Kentucky State University

Board of Regents Meeting

Finance and Business Committee

July 26, 2013

Regent Lavaughn Henry, Chairperson

Regent David Guarnieri

Regent Syamala Reddy

Regent Charles Whitehead

Ms. Anita Lockridge, Staff

KENTUCKY STATE UNIVERSITY Regular Meeting of the Board of Regents Finance and Business Committee July 26, 2013 10:00 a.m. Board Room – Academic Services Building Frankfort, Kentucky

FINANCE AND BUSINESS MEETING INDEX

B1 Minutes of April 26, 2013 Meeting 4 B2 Executive Summary Information 7 B3 Action Item: Approval of Policy Update 11 B4 Action Item: Approval of FY2014 Budget Tuition & Mandatory Fee Increase 12 B5 Action Item: Approval of Tuition Rate Chart for Rosenwald Center for Families and Children 13 B6 Fiscal Year 2013 Budget vs. Actual 15 B7 Fiscal Year 2013 Financials (unaudited) 18 B8 Human Resource Service Report 26

Finance and Business Committee July 26, 2013 10:00 a.m. Board Room – Academic Services Building Frankfort, Kentucky

AGENDA

• I.Call to Order Regent Lavaughn Henry, Chairperson
• II.Roll Call Ms. Lillian Graham
• III.Opening Remarks Regent Lavaughn Henry
• IV.Approval of Minutes Regent Lavaughn Henry April 26, 2013 Meeting
• Executive Summary Report Ms. Anita Lockridge, Vice President Finance Administration
• VI.Action Item:
• Approval of Personnel Policy Update
• Approval of FY 2014 Budget Tuition and Fee Increase
• Approval of Tuition Rates for Rosenwald Ctr. For Families and Children

VII. Informational Items:

• FY 2013 Budget vs. Actual
• FY 2013 Financial Statements (unaudited)
• Human Resource Services Report
• VIII.Discussion
• IX.Adjournment

Agenda Item Background

□□

Background:

The minutes of the Finance and Business Affairs Committee meeting for April 26, 2013, require approval in order to become an official part of the committee records.

Recommendation:

It is recommended that the Finance Administration Affairs Committee approve the minutes of the April 26, 2013 meeting.

Approval

Kentucky State University Board of Regents Finance and Business Committee 10:00a.m., April 26, 2013 Frankfort, Kentucky

I. Call to Order

MINUTES

Regent Henry called the meeting to order at 10:17a.m. on April 26, 2013.

II. Roll Call

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

Regent Lavaughn Henry, present Regent Ron Banks, present Regent David Guarnieri, 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 January 25, 2013 Finance and Business Committee meeting was made by Regent Guarnieri and seconded by Regent Whitehead. The minutes stand as approved as presented.

Motion to approve the minutes from the January 25, 2013 Finance and Business Committee meeting was made by Regent Guarnieri and seconded by Regent Whitehead. The minutes stand as approved as presented.

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

IV. Vice President's Report

Financial Overview

Vice President Lockridge gave an overview of the Executive Summary Narrative and reviewed the financial statements including the Budget vs Actual for the nine months ending March 31, 2013.

The committee was informed that the external auditors from Dean|Dorton|Allen|Ford were on campus during the week of April 15th to begin the year-end audit work.

Budgeting Process-Employee Benefits

Vice President Lockridge stated that leading up to the Financial Plan there is a lot of work and conversation that goes into budget planning. A short presentation was presented which included the Employee Benefits Advisory Committee's (EBAC) role in the budget process. Lockridge made note that Neace Lukens had meet with the staff to present information on the Affordable Health Care Act and Healthcare Claims Utilization for the past year. Vice President Lockridge presented an overview of the employee

benefits for FY14. An update was given on the Pay or Play which is part of the Affordable Health Plan and it was noted that the university has an affordable plan.

Resource Services

Mrs. Candace Raglin, Human Resource Manager, gave an update on several value added services that United Healthcare is providing; Wellness Program, Biometric Screening Fall of 2013, MyHealthcare Cost Estimator and Health 4 Me (App).

FY2014 Financial Plan

Vice President Lockridge showcased the participants that assisted in the building of the budget under the leadership of President Sias. Lockridge presented the Budget proposal for Fiscal Year 2013-2014. A recommendation was made to increase tuition and mandatory fees, board plan fees and other fees.

Action: Motion to approve the F☐201☐ budget as presented was made by Regent Whitehead and seconded by Regents Banks. The motion passed.

V. Adournment

The Finance and Business committee meeting was adjourned at 10:58am.

Submitted by:

Approved by:

Anita Lockridge, Vice President for Finance and Business Affairs

Lavaughn Henry, Chairperson Finance and Business Affairs Committee

___ Approved with no corrections

_____ Approved with corrections

B2

Finance and Business Committee July 26, 2013 10:00 a.m. Board Room – Academic Services Building Frankfort, Kentucky Agenda Item Background

Background:

Recommendation:

Informational

Kentucky State University Finance and Business Committee Meeting July 26, 2013

Fiscal 2013 Budget vs. Actual

For Fiscal 2013, planned budget results are presented in item B5 as of May 31, 2013.

Fiscal 2013 Financial Statements (unaudited)

For Fiscal 2013, unaudited comparative financials are presented in item B6 as of May 31, 2013.

Fiscal 2013 Audit

Dean|Dorton|Allen|Ford began the interim audit work the week of April 15th; returned June 17th for additional testing and will return August 5th to complete the field work.

NCAA Report

Dean|Dorton|Allen|Ford issued the final report for the agreed upon procedures.

Internal Audit

Tronconi Segarra & Associates was on-site the week of June 10th to perform general controls reviews in the areas of Purchasing, Accounts Payable Human Resources and Student Financial Aid.

Perkins Loan Program

As of June 30, 2013, the cohort default rate is 13.5%. The rate is below the 15% threshold.

Insurance Renewal

The renewal of insurance coverage for the university with an effective date of July 1 was completed. In addition, a policy was secured for the newly acquired research vessel referred to as Kentucky River Thorbred.

TouchNet Project

The university acquired additional use of rights from TouchNet for the Payment Gateway Suite and Payment Plan. Implementation is currently underway.

Other

Ellucian was engaged to provide training for the Finance team. The Vice-President of Finance Administration has partnered with the School of Business to implement an Accounting internship program.

Agenda Item Background

B3

Background:

• Background: Human Resource Services has initiated and continued several significant projects for the University as described below:
• A revision to the Grievance Policy and Procedure is presented for consideration of the Board of Regents. The following changes are proposed: remove Section 6.2.4.1.1 which provides an employee the opportunity to request a formal hearing before a Grievance Hearing Committee based upon “A charge of unfair employment termination.” While this is the only substantive change, if approved the removal of section 6.2.4.1.1 will necessitate the renumbering of items currently numbered 6.2.4.1.2 and 6.2.4.1.3. The policy is provided as an attachment with the proposed changes indicated.

Recommendation:

Approval of revision to Staff Personnel Policy and Procedure Number 6.0

Approval

Page

B4

Agenda Item Background

Background:

Technical Correction – At the Board of Regents April 26, 2013 meeting, the stated increase in tuition and mandatory fees was noted as 2.9% instead of 2.95%.

Recommendation:

Amend the motion for the Board of Regents to approve the FY2014 budget with a 2.95% increase in tuition and mandatory fees.

Informational

Page

B5

Agenda Item Background

Background:

Tuition Rate Chart for Rosenwald Center for Families and Children

Recommendation:

Approval of the FY2014 Tuition Rate Chart for Rosenwald Center for Families and Children.

Informational

Page _____

Kentucky State University Tuition Rate Chart - Rosenwald Center for Families and Children FY 2014

Full Tuition Price

Student Rate

Page

Agenda Item Background

B6

Background:

The Budget vs. Actual Report presents the revenue and expenses for the Educational and General Fund (E&G), Auxiliary Fund, as well as Land Grant and Action Agenda Funds. Grants and contract revenue and expenses are excluded from this report.

Overview:

After the student enrollment count was obtained for the Fall and Spring semesters, management adjusted the E&G budget to reflect the decline in enrollment.

Overall all budgeted revenue was decreased by 7.9% for anticipated revenue of $56.9 million, and budgeted expenses were decreased by 9% for projected expenses of $53.1 million. For the eleven months ending May 31, 2013, actual results are within acceptable parameters.

Revenue:

There was a decline in Auxiliary actual revenues due to less than expected occupancy.

Expenses:

Salaries and associated expenses are in line with the reduction in student enrollment. When vacancies have occurred, positions have been evaluated to determine if the position should be filled.

Costs for all but two categories are below budget for the eleven month period ending May 31st. The two areas that exceeded budget are Fixed Costs, which are not driven by student enrollment, and Student Aid, which is a result of the current overall economic environment.

Page

Informational

___

Page

___

Budget vs. Actual Eleven Months Ending May 31, 2013 Amounts shown in dollars

B7

Finance and Business Committee July 26, 2013 10:00 a.m. Board Room – Academic Services Building Frankfort, Kentucky Agenda Item Background

Background:

The comparative Interim Financial Statements are included as of May 31, 2013 and June 30, 2012. A brief summary explanation of certain current assets and plant items follows:

1. Cash and cash equivalents total $26.1 million and $23.8 million for May 2013 and June 2012 respectively. This amount for May 31, 2013 includes $18.5 million that is restricted for Land Grant and Action Agenda programs and $2.7 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 $14.9 million and $13.9 million for May 2013 and June 2012, respectively, includes the receivables from students, grants and loans. As of May 31, 2013, this amount includes $6.3 million in student accounts receivables, and $8.6 million that is grants and other accounts receivables.
3. Current liabilities for May 31, 2013 and June 30, 2012 amounts to $5.5 million and $8.8 million respectively consisting of accounts payable and accrued payroll liabilities. Accrued compensated absences total $1.9 million and Deferred Revenue totals $1.3 million as of May 31, 2013.
4. As of May 2013, net assets reflect a $7.2 million increase primarily due to an increase in a gain in market value of endowment investment income, increase in net capital assets, decrease in bonds and capital lease obligations, a decrease in accounts payable and accrued liabilities.

5. Tuition and fee revenue comparison for May 2013 and June 2012 represents a $1.6 million decrease. Net student tuition and fees totals $17.3 million and $18.9 million in May 2013 and June 2012 respectively.
6. Auxiliary revenue comparison for May 2013 and June 2012 represents a decrease of $898 thousand.
7. Operating expenses for May 2013 decreased by $10.8 million compared to operating expenses in June 2012. The decrease was primarily due to decreases in salaries and benefits.
8. The Statement of Cash Flows reflects a net increase of $2.3 million at May 31, 2013. Operations consumed $24.8 million and $32.2 million in May 2013 and June 2012, respectively.

Informational

Kentucky State University Statement of Net Assets May 31, 2013 (Unaudited)

Kentucky State University Addendum to Statement of Net Assets Components of Fund Balances - Disaggregated

Kentucky State University Statement of Revenues, Expenses and Changes in Net Assets (By Function) Period Ending May 31, 2013 (Unaudited)

Kentucky State University Statement of Revenues, Expenses and Changes in Net Assets (By Function) Period Ending May 31, 2013 (Unaudited)

Kentucky State University Statement of Cash Flows Period Ending May 31, 2013 (Unaudited)

Kentucky State University Statement of Cash Flows Period Ending May 31, 2013 (Unaudited)

Finance and Business Committee July 26, 2013 10:00 a.m. Board Room – Academic Services Building Frankfort, Kentucky Agenda Item Background

Background:

• Human Resource Services has initiated and continued several significant projects for the University as described below:
• Responses to the Request for Proposal for the review of the faculty and staff compensation and classification systems have been received and a representative review committee has been formed. The committee will review the responses and recommend which bidder(s) should be invited to campus for interview/discussion/questions and answer session(s).
• The annual benefit renewal and open enrollment for fiscal year 2014 was completed in May for a July 1, 2013 effective date.
• We continue to monitor the responsibilities and deadlines with which Kentucky State University must comply regarding the Affordable Health Care Act (ACA). The next milestone will be the mandatory issuance of a Notice to Employees of Coverage Options which must be issued to all employees no later than October 13, 2013.
• Performance evaluations for the period of July 1, 2012 through June 30, 2013 are due in the Office of Human Resources by August 16, 2013.
• Two payroll ghost audits are being planned to ensure that all individuals receiving a paycheck are active Kentucky State University employees. Staff will be audited during July 2013 while faculty and students will be audited during October 2013.

6. Direction and guidance has been received from the Ellucian "Action Line" in order to proceed with the pilot program for electronic timesheet reporting for the student employees.
7. The Kentucky State University change to the Kentucky Teachers' Retirement System (KTRS) sick leave service credit program will be implemented with an effective date of September 2, 2013.
8. A simplification process for Electronic Personnel Action Forms (EPAF) was approved by the Cabinet. The necessary forms are being revised for final implementation no later than August 1, 2013.

Recommendation:

Informational