Standard Nine 

FINANCIAL RESOURCES

Description

University Financial Resources Facts. The University of Rhode Island's total budget for the 1996-1997 Fiscal Year is $276M as compared with $156M ten years ago. When adjusted for CPI for inflation this equates to a 23.6% increase with Scholarships and Fellowships accounting for 67% of this increase. Twenty-four percent of the FY97 resources were derived from appropriations made by the State of Rhode Island through the Board of Governors for Higher Education. The remaining 76% of these budget resources were obtained as income from tuition and fees charged to students, grants and contracts from federal and other sources, federal and private scholarship and loan support, and other miscellaneous income including interest revenues and land rental revenue.

Budget resources are separated into two expenditure categories: Unrestricted and Restricted budgets. The Unrestricted budget is funded by state appropriations, student tuition and general fund fees, recovery of indirect cost, and other income which supports expenditures related to the basic academic and administrative activities of the institution. The 1996-1997 Unrestricted budget totals $156M or 57% of the expenditure base. The Restricted budget is funded from fees and sales paid to the auxiliary and proprietary enterprise operations, federal and sponsored research grants and contracts, federal and private sources for student scholarships and loans, and other federal and private sources. The 1996-1997 Restricted budget totals $120M or 43% of the institution's expenditure base. State support has decreased from 39% of the University's total budget in 1986-1987 to 24% in 1996-1997. Tuition and fees now comprise 26% of the budget compared to 20% in 1986-1987.

Since 1994-1995, the state has allocated $15.6M to higher education for the purposes of asset protection. The University's share of this was $3.6M in 1994-1995, $1.8M in 1995-1996, and $3.6M in 1996-1997. URI also has received significant funding through the Delaware Capital Account and the Rhode Island Health and Educational Building Corporation (RIHEBC) bond funds. These funds have improved URI's ability to address deferred maintenance, a major problem noted ten years ago, as they have been utilized to repair and replace roofs, upgrade major building systems, repair paving and curbing, perform asbestos abatement projects, and undertake major renovation, expansion and new construction projects for auxiliary enterprise and campus facilities.

Within the total 1996-1997 budget for unrestricted expenditures, commitments to Personnel Services represent 67.6% of the total, Operating represents 14.7%, Capital represents 2.8%, Student Aid represents 12.3%, and Debt Service represents 2.6%.

Within the total 1996-1997 budget for restricted expenditures, 33.4% is committed to Personnel Services, 25.9% is committed to Operating expenditures (including Workers Compensation and Auxiliary Indirect Costs), 36.1% is committed to Student Aid, 3.3% is committed to Capital, and 1.3% is committed to Debt Service on Auxiliary Enterprise facilities. Effective in 1995-1996, the Direct Student and Parent Loan Program was implemented. In 1995-1996, this program provided the institution with over $33M in loans to distribute directly to student accounts.

An overview of the 1997-1998 University Unrestricted and Restricted budget allocations authorized by the Board of Governors in June is available in the workroom. The official financial statement for all University funds in FY 1996-1997 is expected to be available in October 1997.

During the ten-year period from fiscal 1986-1987 through fiscal 1995-1996, the total assets of the University increased from $215,628,611 to $387,962,117. Total revenues and other financial resources have grown by over 53% from $152,365,212 to $234,066,128. An accounting change in 1988-1989 required that State Appropriations be reported as "Other Financial Resources" rather than Revenues. During this time, the University experienced significant growth in the General Education (Unrestricted) Fund (+114%), the Special Revenue (Restricted) Fund (+58.3%), the Capital Projects Fund (+411%), and in General Fixed Assets (+57%).

In July 1990, the W. Alton Jones Campus was moved from the Unrestricted budget to the auxiliary enterprise budget in order to relieve the Unrestricted budget of the net expenses at that campus. The plan was for the campus to become self-supporting within five years. A new 14-bedroom lodge was part of the plan to help enable W. Alton Jones to meet its goal to be self-supporting within 5 years, but the building was delayed until October 1992 impacting its ability to achieve this goal. Although cost-cutting measures were instituted and revenue grew by 200% from 1986-1987 to 1995-1996, the W. Alton Jones campus was not able to become self-sufficient and its increasing negative fund balance was preventing the other auxiliary enterprises from utilizing their fund balances. Effective June 30, 1996, the W. Alton Jones Campus was moved to a proprietary enterprise fund and this is shown in Note 16 found on page 25 of the 1995-1996 financial statements.

The University has continued to meet its bonded indebtedness obligations over the past ten years. The product of this indebtedness during the ten-year period has been the construction and acquisition of 591,600 square feet of new facilities at a cost of $83.6M. The University's debt service payments for the last year audited, FY 1995-1996, are displayed on Page 4 of the audit report for that year. The $1,931,595 amount labeled as University obligations was paid in that year against bonded indebtedness totaling $24,741,589 associated with the construction and renovation of auxiliary and proprietary enterprise facilities, defeasance of certain University obligations, and acquisition of library capital. This obligation is budgeted annually as a priority commitment from student fee and conference income from the respective auxiliary and proprietary enterprises. The $3,285,510 amount, identified as state obligations, was paid as a priority commitment of the University's general revenue state appropriation for that year. This amount is for the retirement of state general obligation bonds for University building construction approved by voter referendum in past years. Details of the University's long-term obligations are shown in footnote #11 to the 1995-1996 financial statement which is available in the workroom.

Budget Development Process. The budget request process is initiated approximately eleven months before the fiscal year begins. (The University's fiscal year coincides with the State of Rhode Island's, beginning on July 1 and ending on June 30.) In August, the University Budget Office forwards a line item budget to the President, Provost and vice presidents for review, modification and final approval. The approved budget request and the Table of Organization, the complete listing of personnel positions supported by the budget, are then reviewed and approved by the Board of Governors for Higher Education in September and forwarded to the state for final actions at the Executive and Legislative levels of state government during the period of October to June.

Concurrent with this, the URI Budget Office prepares a tentative allocation by division, college and department. This process begins with the existing expenditure year budget and is adjusted by specific items (i.e., salary increases, new programs or initiatives, changes in activity or program, scholarship investment, etc.). Revenue is estimated based on the latest available data. This budget information is presented to the President, Provost and vice presidents in February. If a gap remains, reduction targets are developed for each area by the President, Provost and vice presidents. The Program Contribution Analysis is one of the tools utilized to help determine academic targets and results in non-incremental budgeting. The resulting decisions and assumptions are integrated into the budgetary details and then the budgets are disseminated to the deans and directors. They, in turn, confer with their departments/teams and then submit a budget for their area to their Provost or vice president and to the URI Budget Office. Meetings are held between the Provost or vice president and the deans/directors. If the Provost or vice president approves of the decisions made by the deans/directors, the URI Budget Office enters these budgets on the budget system and converts the budget returns into the allocation. Once a final allocation is authorized, it is entered into the Financial Record System (FRS), and serves as the basic expenditure control for the institution. The FRS system is the base of the University's accounting system in which transactions involving payroll, procurement, travel, capital and various operating (telephone, postage, etc.) costs are reflected. Changes may be necessary and will occur later as the legislature must still approve a budget and submit it to the Governor for final approval.

The budget is allocated, with formal approval of the Board of Governors, following the passage of legislation in June. Each University department receives an allocation by object code at the beginning of the fiscal year. Every department receives computerized accounting reports on a monthly basis, showing its budget by object code and all expenditures and commitments and the balance available for the year. Budget and expenditure status information is also available on an up-to-the-minute level through computer terminal access to the University's mainframe computer.

Transfers of funds between object codes to accommodate changing program needs are effected upon request by the department provided such transfers comply with the Board of Governors Fiscal Accountability Policy. A copy of the Fiscal Accountability Policy is available in the workroom. In the event that a department cannot meet its need within its allocated budget, resolution is sought at the dean's level, or, if necessary, the vice president's level.

The University accounting system has a provision which flags any procurement transaction which would result in an overexpenditure of operating or capital funds. The University Budget Office undertakes extensive detailed projections throughout the budget year of University accounts and monitors personnel, operating, travel, workers' compensation, capital, student aid and debt service expenditures and commitments as well as enrollment projections and all other revenue categories. The Board of Governors' Fiscal Accountability Policy requires a mid-year review to be completed each year. The review considers any adjustments to the overall budget based on year-to-date revenues and expenditures and a year-end projection is reported.

The University Controller's Office is responsible for closing the financial books of the University at the end of the fiscal year. The final accounting status of the institution is subject to audit by a qualified external accounting firm and the resulting fiscal year-end audit report is provided to the institution and the Board of Governors for acceptance. Year-end financial statements for the past ten fiscal years are available in the workroom. Copies of the year-end audit reports are made available to the general public, as they are on file with the state, at the Board of Governors for Higher Education, and in the URI's Controller's Office.

Fiscal Policies, Procedures and Controls. Basically, the University of Rhode Island operates under the premise as noted by the current Board of Governors independent audit firm, KPMG Peat Marwick, in their audit opinion:

The management of the University is responsible for establishing and maintaining an internal control structure. In fulfilling this responsibility estimates and judgments by management are required to assess the expected benefits and related costs of internal control structure policies and procedures. The objectives of an internal control structure are to provide management with reasonable, but not absolute, assurance that assets are safeguarded against loss from unauthorized use or disposition, and that transactions are executed in accordance with management's authorization and recorded properly to permit the preparation of general purpose financial statements in accordance with generally accepted accounting principles.   Because of inherent limitations in any internal control structure, errors or irregularities may nevertheless occur and not be detected. Also, projection of any evaluation of the structure to future periods is subject to the risk that procedures may become inadequate because of changes in conditions or that the effectiveness of the design and operation of policies and procedures may deteriorate.

The University operates firmly under the Board of Governors' Investment Policy. Fiscal policies guiding the activities on contracts and grants are numerous. Contracts and grants are subject to all University policies including state and federal laws and regulations. The vast majority of grants and contracts are federal and are, therefore, subject to the provisions of OMB Circular A-21 which is the standard for contracts and grants at colleges and universities.

The University follows the standards for risk management established by the Office of Higher Education (OHE) which are based on past practices. These practices are to coordinate insurance and risk management needs through the Rhode Island Association of Insurance Agents. In conjunction with the Department of Facilities and Operations, Safety and Risk Management make inspections and recommendations for improvements which reduce the University's overall liability exposure. When completed, these improvements are recorded and used to negotiate lower insurance premiums at policy renewal time.

The University development program solicits, acknowledges and uses gifts in accordance with standard fund-raising practices utilized by colleges and universities nationwide found in the CASE (Council for Advancement and Support of Education) Campaign Standards manual. The Advancement Office maintains and manages its own data base of donors including alumni, parents and friends, along with those corporations, foundations and organizations which have provided support to the University. All gifts made to URI are processed centrally in the Advancement Division's Information Services Unit and then acknowledged by a formal receipt.

The Board of Governors engages an independent accounting firm to perform annual audits which include "management letters." Engagements are awarded to firms having the capacity to deal with the issues of a major research institution. The appointment process must comply with State of Rhode Island procurement regulations, including review and acceptance of the final specifications by the Rhode Island Auditor General and the Department of Administration.

Audits are performed in accordance with generally accepted auditing standards for colleges and universities as adopted by the AICPA. Such standards require audit firms to issue "management letters" regarding observations for improvements in controls/procedures.

On July 1, 1989, the University was given the authority to pay all of its own bills. Effective in 1996-1997, the state, through the Legislature, increased the purchasing authority granted to the University for a two-year period. Under this upgraded authority, URI is allowed to do all the bidding for auxiliaries, enterprise funds and sponsored research. URI also has special delegated authority to bid on certain commodities and commodity groups regardless of the source of funds. As a general rule, everything else above $2,500 and using Unrestricted funds continues to be sent to the state for processing. This change is a significant improvement over the situation which lead to the criticism received ten years ago when the state insisted on time-consuming bidding procedures for amounts as low as $50. At the end of the second year, a review will be completed to determine if URI has complied with all rules and regulations and a determination will be made whether to extend the process.

The institution's resources are reviewed annually and reallocated as necessary. The institution also has the ability to capture funds from savings produced during a fiscal year or from various cancellations in order to address urgent needs and emergencies. The Provost does not disburse the Academic Affairs capital budget until projections are completed as of December 30; thus, reallocation from this source is available. An example of this is the establishment of the Professional Development, Leadership and Organization Training (PDLOT) program in the summer of 1996. Ten years ago it was noted that "the training function has remained almost non-existent." This new program is now the URI community resource for enhancing the professional and interpersonal development of the University's workforce. The University, with the Board of Governors' approval, established the URI Research Corporation which provides an ability to borrow research working capital funds if the need arises. The University has not had to utilize this in the last 10 years. Plans for addressing any operating deficits are instituted by senior management via the University Budget Office and the existing management structure.

The Financial Structure Team was appointed by the President in the summer of 1992 and given the charge to consolidate financial functions and streamline processes to promote increased efficiency and personnel savings. In 1993, several recommendations were implemented and recently Human Resources Administration reviewed the proposed Business Manager positions. A copy of the final report and recommendations of the team are available in the workroom. One area that has benefited from the streamlining process is the employment area, as the procedures required to fill or extend a position are now much more efficient. Ten years ago, it was noted that it could take between two weeks and four months just to get permission to fill a clerical vacancy. A recommendation was made to create a campus-wide clerical pool to help provide temporary personnel during the time it takes to recruit permanent replacements. Today, the approval time takes a maximum of two to three weeks and in 1992 the University created two "float" positions to provide much needed clerical assistance throughout the institution. There are currently a total of 5 clerical "float" positions authorized of which 3 are presently filled and the others are in the process of being filled.

The University's academic colleges and departments maintain and staff a business management function within their units to assist their various departments or subunits in executing fiscal transactions and interfacing with University business systems.

Institutional Financial Profile. A complete University financial profile, covering the period from Fiscal Year 1993-1994 to the current budget request for 1997-1998 as well as financial, tuition and fee projections through Fiscal Year 2000, are included in the Institutional Data Forms section of this report

Fund-Raising and Development. In 1992, the University of Rhode Island embarked on its first comprehensive capital campaign. This five-year effort to raise $50M in gifts included supporting permanent endowments in five targeted areas -- undergraduate scholarships, graduate fellowships, faculty endowments, the University Library, and the Opportunity Fund.

Gifts are solicited by the University for a variety of purposes for both current use and capital purposes, including gifts for equipment, buildings and permanent endowments which create funds for future use. These gifts are always directed to those purposes for which they are given by each donor.

By the end of June 1996, the fourth fiscal year of the campaign, the University had exceeded the original goal and raised $51.4M. As of February 1997, total commitments exceeded $57.1M with 43% or $24.5M designated for permanent endowment, and the balance being utilized for current operations and capital projects. It is anticipated that the campaign will surpass $60M by the official closure date on June 30, 1997.

From the outset, the primary focus of the capital campaign (total private support program) has been to build the University's endowment which totaled just over $12M in 1992. As of January 1997, $24,553,839 in new commitments had been generated for endowment purposes in outright and planned gifts. A detailed report of the capital campaign is available in the workroom. The market value of the University's endowment on January 31, 1997 exceeded $30M. This market value excluded outstanding campaign pledges of $2,644,637 and outstanding deferred gift commitments of $9,940,106.

During the 1996 fiscal year, private support from more than 20,000 individuals, businesses, foundations and other organizations totaled a record $13,506,260. This represented the sixth consecutive year that private giving to the University had increased. The $13.5M included endowment, outright and gift-in-kind contributions and was a combination of actual dollars received, pledges and deferred gifts.

The URI Annual Fund surpassed $1M for the first time in 1994-1995 with a total of $1,000,946. The fund increased by 6% in 1995-1996 with contributions totaling $1,061,770. The goal for 1996-1997 has been set at $1,250,000.

The financial records of both the URI Alumni Association and the URI Foundation, the two repositories for all University private support, are audited independently on an annual basis and include gift verification and use measures.

Appraisal

Financial Stability Assessment. The University is required to manage its finances within the parameters of an annual balanced budget as well as on an appropriated fund balance basis. During the past ten fiscal years, the University has reported neither a general fund budget surplus nor a general fund budget deficit although operating deficiencies or excesses may have occurred in some years.

The University's total fund balances have reached $20,735,653, with an overall healthy fund balance for the auxiliary enterprise operations. Growth to the overall fund balances was based primarily in the Special Revenue Fund (15%) and in General Fixed Assets (57%). The institution has ended each of the last ten years with a healthy fund balance.

Although the last decade has presented many financial challenges, the educational mission remains the top priority of the institution. Total resources allocated to Academic Affairs in FY97 were $86.9 M which represents 56% of the University's general fund budget. Ten years ago, the budget for Academic Affairs accounted for 60% of the general fund. When adjusted for inflation using CPI, this represents a 1% decrease in funding from 1986-1987. Growth in scholarships has had a significant impact, especially the Centennial Scholarship Program which was started in 1994-1995. This program aimed to improve the profiles of admitted students, increase the retention of these students and enhance the attractiveness of the University to them. The increase in SATs of new freshmen and the improved yield, especially of out-of-state freshmen is well documented. Retention statistics from scholarship students has not been collected on a regular basis; however, the freshman to sophomore retention rate for this group was over 90% for the 1995 freshman class compared to approximately 76% for all freshman in that year.

Revenue Sources and Allocation Controls. The University continues to allocate the majority of its resources to instruction. Although the University is considerably dependent upon the State of Rhode Island for its funding, the Board of Governors retains autonomy in all budget and financial planning matters. The two major revenue sources of tuition and fees and state appropriation continue to provide the University with financial capacity to graduate the entering class. However, these two sources are not unlimited, and resources of the institution have not been sufficient to provide proper support for all its activities. In recent years, with projected costs rising faster than revenues, the University has implemented a number of steps to reduce spending and avoid running annual deficits that were projected to total $25M by the year 2000. These steps, which included a freeze on hiring and restricted use of operating, capital and deans' overhead funds, helped to balance the budget in FY96 and FY97, but there is no question that these measures have had an impact on the institution. To align activities with the limited resources better, the University is now doing less (i.e., offering fewer programs and services) in order to stay within budgetary guidelines.

In another effort to address the deficit issue and at the direction of the President, the University began a Program Contribution Analysis (PCA) study in FY95. The Budget Office completed the second year of the study in 1995-1996 and the third year will be completed in August 1997. The results provide senior management with a tool to evaluate the unrestricted costs and revenues associated with each academic program. As a result of the first year's study, 44 programs were suspended. The PCA does not incorporate grants and gifts nor the amount of research revenue generated by each program into the analysis but this data is included as supplemental information. A copy of the study and the summary data are available in the workroom.

Fiscal Planning and Compliance with Fiscal Policies. It is the University's policy to adhere to federal and state laws, regulations and procedures. While certain regulations may be subject to interpretation, the results of University audits are very affirmative and without identification of any material weaknesses. Internal controls are designed to provide management with appropriate information on which to base decisions and ensure the integrity of such information. As a consequence, internal controls are guided by various federal and state laws, regulations and procedures as well as sound business practices.

The policies and procedures governing contracts and grants are vigorously upheld at the central administrative level. Guidance is continuously provided to various schools, colleges and investigators concerning interpretation of the regulations. The University records operating transfers in accordance with generally accepted accounting principles, and they are categorized as either mandatory or non-mandatory transfers.

URI had no policy with respect to interfund borrowing and the absence of such a policy was cited in the independent auditor's management letter for the fiscal 1996 financial audit. In response to these findings, the University has created a Cash Management Team to address cash flow projections. The team has provided oral reports to the Vice President for Business and Finance on a quarterly basis and is in the process of developing a standardized written format. Formal policies are also in the process of being developed and should be completed by November 1997. When completed they will be disseminated in an effort to reiterate the criteria and control procedures for the authorization, repayment and monitoring of such borrowings.

Although the Office of Higher Education (OHE) does not have a formal written fiscal policy for insurance or risk management, the University's Department of Safety and Risk Management has put together a progressive and effective program. In those areas where URI controls the policy, the University has realized savings each year by bidding the coverage. To further reduce costs, the University has a non-insured replacement fund that is maintained to replace items that are stolen from offices. This is a cost effective program as the total cost to replace items lost is less than the cost of purchasing this insurance coverage. The University has also taken measures to improve security provided to the students in residence which was described ten years ago as strained and limited. In 1993, the Residence Hall Security Officers became part of the Security division instead of Residential Life. This reporting change has enabled the University to coordinate security in this area more effectively as well as provide professional guidance and training for these individuals.

Financial Management and System Support. The Financial Record System (FRS) was upgraded in November 1996 to provide an expanded technical capacity and a variety of enhancements. However, the FRS historically has provided, and will continue to provide, a well-organized, computer-based financial information database for management. On demand, basic monthly and annual financial statements are produced on a timely basis. On-line access reflecting the current status of each account is available to the campus community. Annual audits of the information are performed by an independent audit firm engaged by the Board of Governors. Additionally, periodic audits are performed by internal auditors, state audit functions, and federal agencies. There have been no material weaknesses nor remarkable findings identified. A listing of computer systems supporting the financial operations is available in the workroom.

Regulatory Conformance. The University's policies and procedures effecting financial commitments and transactions reflect full conformance with applicable local, state and federal laws, rules and regulations. Commitments and transactions are reviewed and monitored through the appropriate processes to ensure conformance with University policy.

In addition to University-based oversight, the performance of the University's financial control systems are subject to regular and periodic audits by qualified external audit agencies and departments. These include the Internal Audit Department of the State Office of Higher Education, the State Auditor General's Office, the State Bureau of Audits, our assigned cognizant Federal agency, other Federal agencies, and the external audit firm engaged by the Board of Governors to oversee the annual financial statements.

The University is responsible for the provision of responses to the Board of Governors concerning management letter comments. A process to monitor the implementation of audit recommendations is in place and a responsibility of the University Controller. The University has responded officially to audit report recommendations and has used these reports in advancing fiscal controls.

Included in the financial activity of the University are sponsored grants and contracts. The volume of this federal and privately funded research activity has reached in excess of the $40M level on an annual basis. The controls and management associated with the funds are such that the University has not had any expenditures disallowed by federal auditors or agencies.

In order to strengthen oversight capacity in the interest of ensuring that local departments exercise sound fiscal practices, the University has identified the need to increase internal audit capacity with direct ties to the Office of the Vice President for Business and Finance and the University Controller. The auxiliary enterprise units, for example, will constitute a $36M business enterprise in 1997-1998. A dedicated internal audit function and staff is warranted to assist these operations in maintaining good fiscal controls. The University has hired a chief accountant so that the associate controller could be assigned to dedicate some of his time on the finances of the auxiliary enterprises.

Fund-Raising Activities. Upon his arrival at URI, President Carothers placed a high priority on establishing a capital campaign and increased the University's resources devoted to fund-raising efforts. As a result of the increased focus on fund-raising efforts, contributions from alumni have risen dramatically over the past five years. In the early 1990's, yearly alumni support totaled close to $1M. During the 1996 fiscal year, alumni gave $3,415,270 outright in support of current and capital purposes with $1,989,830 being restricted for endowment.

At the conclusion of the capital campaign, the University plans to continue with its major gifts focus, which was established at the outset of the campaign. A series of mini campaigns are being planned, including focused efforts to raise funds for brick and mortar projects: $5-$6M for Ballentine Hall and $1M each for Green and Ranger Halls.

Projection

With recent indications that the institution's enrollment picture will be leveling, signs of strength in the state's economy and state finances, increased private giving, and funding initiatives such as asset protection, the financial resource picture at the University of Rhode Island appears more encouraging than was the case in the recent past.

This circumstance does not call for complacency, however. University management must continue to explore new revenue sources and control expenditures, while at the same time reallocate funds to key areas as has been done with the new PDLOT training initiative in 1995-1996. Problem areas such as facility asset protection and deferred maintenance have been examined and highlighted in the recent past and budgetary appropriations and needed project funding opportunities are showing significant increases at the University. This past November two bond referendums related to higher education and the University were successful. These bonds were released in May 1997, and $29M will be available for a Technology Initiative, and $9.8M will be available for renovation of three buildings on campus. Along with this latter amount, private fundraising of approximately $7 to $8M will be required.

The University is looking to public-private partnerships such as the Ballentine Hall and Green Hall renovation projects as well as the renovation of the computer labs in Ballentine which was funded by both private and University funds. This type of partnership can also be found at the Graduate School of Oceanography with the Ocean Technology Center (OTC) and the Coastal Institute. The OTC is a National Science Foundation sponsored cooperative research center that focuses on performing marine related application-oriented research. Funding for research activities comes from industrial and federal members of the center who pay annual membership dues. The Coastal Institute is a unique partnership that is being created with GSO/URI, state, federal and local agencies, and private businesses to develop tools and techniques that will help identify and solve major problems affecting the Bay and coastal resources.

The Program Contribution Analysis will continue to be utilized by management as an evaluation tool relative to all academic programs. The NACUBO Benchmarking Study is expected to provide management with a tool that will assist in the evaluation of the non-academic program areas. The University began participating in this study for FY95 and has recently submitted FY96 data. With the return of the FY95 data, over 40 functional managers met and received an overview of the returned statistics for their area as well as peer institutions in the study. They are currently in the process of reviewing this information and providing a report to the Provost or Vice President. The institution also participated in a customer satisfaction survey and the functional managers are also reviewing that output. The surveys for this year were sent to the research group for compilation February 28, 1997. Functional managers have been asked to evaluate themselves both against their peers and with themselves when two or more years of data are available.

A new budget system has recently been purchased and implementation is targeted for early 1998. Once this flexible multi-year system is fully operational, departments on campus will have on-line access to review current budget information, electronically submit future budget requests and allocations as well as complete budget transfers. This new system will be integrated with the FRS system so that budget information can be uploaded and expenditure data downloaded.

Quarterly meetings with financial support staff from all areas of the University were started in March 1997 and will be used to discuss budget and financial issues and solicit ideas and feedback from these individuals.

In FY 1996-1997, the University created the President's Fund for Excellence. This endowment fund, which totals $26,756 in gifts and pledges as of January 31, 1997, is meant to provide the President with the flexibility to respond promptly to emerging needs and new opportunities. The University anticipates approximately $40,000 to be generated by the end of June 1997.