2009

March 8-11

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Auxiliaries:

P a r t o f t h e C S U T e a m

2009

Auxiliary Organizations: Part of the CSU Team

Presented by:Michèle Goetz

SDSU Research Foundation

mgoetz@foundation.sdsu.edu

2009

Overview:

Auxiliary Enterprises Auxiliary Organizations Organizational Structure Traditional Roles / Concerns Fundamental Operating Principles Types of Auxiliaries Auxiliary Organizations Association Current issues impacting Auxiliaries

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2009

The distinguishing characteristic of an auxiliaryenterprise is that it is managed on an essentially self-supporting basis.

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Auxiliary Enterprises

2009

A program, activity, or fund source used to furnish facilities, goods or services to faculty, staff, students, or incidentally to the public.

Typically charges a fee directly related to, although not necessarily equal to, the cost of the facilities, goods or services.

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Auxiliary Enterprises (cont.)

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Auxiliary Enterprises managed by campuses:

Also known as Enterprise or Special Funds Funds deposited in a trust Can be invested Governed by state rules related to program funds Can be very restrictive

Examples: Housing Parking Continuing Education Recreation Center Facilities Student Health Centers

Auxiliary Enterprises (cont.)

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CSU Auxiliary Organizations are included in the definition of an auxiliary enterprise along with other self-supporting activities.

Auxiliary Organizations are self-supporting entities while auxiliary enterprises are self-supporting activities.

What’s the difference betweenan auxiliary enterprise and anAuxiliary organization?

2009

Over 90 Auxiliaries within the CSU

Primarily 501(c)(3) non-profit corporations

First Auxiliary established in 1922

(Fresno State College Association)

Major functions: Commercial Services Faculty/Staff/Student Housing Student Unions/Recreation Centers Student Body Organizations (ASI) Philanthropic/Endowment Management Grant and Contract Administration

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Auxiliary Organizations

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Incorporated as 501(c)(3) federally tax-exempt nonprofitsA 501(c)(3) organization provides charitable, religious, scientific, literary, or educational services to the public, and is

an organization which qualifies for tax-deductible donations.

Special legislation within the Education Code spell out the parameters under which auxiliaries are authorized to operate within the CSU.

Organizational Structure

2009

Auxiliary in good standing Bylaws Articles of Incorporation Operating Agreement with CSU Scope of Authority Education Code

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Criteria for Formation

2009

Private entities nestled within a public framework

Separate but related

Subject to California corporate law, the Education Code,

and CSU policies and procedures

Operational Framework

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Provides essential services that fit within and complement CSU’s core academic mission

Serve at the will of the institution

Institutional control thru board appointment

Assets revert to Trustees / institution

Operational Framework

2009

Established to facilitate essential services and activities not easily performed through existing state

Shield CSU against liability by managing risk and exposure for certain activities

Different spending restrictions

Enhanced budgetary flexibility

Accumulate reserves*

Invest in equities to maximize returns*

(*Campuses previously couldn’t do this)

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Traditional Roles of Auxiliaries

2009

Facilitate certain types of financing

Ability to purchase and sell real estate

Ease of construction management particularly in public/private partnerships

“At-will” employment of personnel

Focused service orientation

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Traditional Roles of Auxiliaries

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Possible duplication of functions

Competition with state-based efforts, e.g. student housing, copy centers

Auxiliary activities extending beyond the scope of operating agreements.

Potential Issues

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Additional risk of audit exposure for the university based on auxiliary activities

Public relations exposure – public sees auxiliaries and campus as one entity.

Potential Issues (cont.)

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The University President and CFO(per EO 731) are accountable for allauxiliary organization activities

Need to ensure compliance with law,Trustee policy, and good business practicesof the university

Fundamental Operating Principle

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For contractual services between campus and auxiliaries, auxiliaries should be viewed as an external entity

Need a written agreement (MOU) to establish scope of operations and address other contractual issues

Operating agreement with the CSU defines approved activities for each auxiliary

Contracting with Auxiliaries

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Most auxiliary employees are not state employees, even though salary and benefits are to be “comparable”

Auxiliaries may donate an employee’s time to the state (the reverse is not true.)

Contracting with Auxiliaries

2009

Allocation of Costs to Auxiliary Enterprises

EO 1000 (Previously EO 753)

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Auxiliary enterprises shall be charged the allowable direct costs plus an allocable portion of indirect costs associated with facilities, goods, and services provided by the University funded from the General Fund.

Costs allocations shall be determined in accordance with a written cost allocation plan approved annually by the campus chief financial officer.

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Reasonable

Consistent Accumulation Estimation

Cost Allocation Guidelines

GENERALLY SPECIFICALLY Direct Costs

Actual

Indirect Costs Cost Allocation Plan

Documentation MOUs Other written agreements

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Policy Governing Non-General Fund Receipts

EO 1000 (previously EO 919)Provides guidance to campuses on the administration of non-general fund receipts to ensure funds are held in appropriate accounts and administered in accordance with the applicable laws and regulations.

Continuing Education:– Non-credit courses only– Cannot use campus name or image

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Administration of Grants and Contracts in Support of Sponsored Programs

Executive Order 890Sets policy to be followed by campuses and auxiliaries administering sponsored programs to ensure the entity maximizes the benefits of sponsored programs and supports faculty, students and administrators in effectively securing and carrying out sponsored programs.

2009

Commercial Services

Faculty/Staff/Student Housing

Student Unions/Recreation Centers

Student Body Organizations (ASI)

Philanthropic/Endowment Management

Grant and Contract Administration

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Specific Auxiliary Services

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Commercial ServicesProvides services focused primarily on operation of bookstores, food services and agricultural projects.

Campus Stores:Bookstore vs. Campus Store conceptE-Commerce and digital booksPrivatization/Partnerships

Food Services:Self-operationFranchises or company-ownedImpact of Convenience storesPouring Right (Coke vs. Pepsi)Liquor license

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Housing Corporations

Student Housing:Apartments vs. Residence Halls Meal Plans: Traditional vs. a la carte

Faculty Housing :Assists with recruitmentSale vs. RentalAssist with down payments

Conference Services:Business opportunityFills beds during seasonal lowsBrings diverse groups to campus

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Student Centers/Unions

Funded by student union fees

Operate and manage student union facilities

Campus destination point: not just for students

Facilities to create and celebrate community

Service anchors which drive foot traffic

Food a valued component

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Associated Student Body Organizations

Student run organizations

Funded through student approved fees

Manages extra-curricular student activities:

• Student Government• Student newspapers• Intra-mural athletics• Cultural programs• Student clubs

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Philanthropic Foundations

Provide focus for fund-raising activities

Diversified investment strategies for endowment management

High-profile donor involvement on boards

Typical model – contract with other auxiliaries for fiscal infrastructure.

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Research Foundations

Administer externally funded research, instruction and other sponsored project which have a direct relationship to the educational purpose of the campus.

Wide variety of models across CSU campuses

Specialized expertise needed in research administration

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Research Foundations

Flexibility in processes required for grants management:

• Project to date vs. fiscal year • Temporary/part-time employees• Billing flexibility and cash flow management• Financial and programmatic reporting• Compliance issues • Liaison between sponsors and faculty • Wide variety of additional federal, state, and

other sponsor rules and regulations• Audits, audits, audits!

2009

We are a consortium of diverse, entrepreneurial,

service-oriented California State University

auxiliary organizations whose purpose is to

assist in exemplary services, programs, and

facilities that further the educational mission

of each campus.

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Auxiliary Organizations Association (AOA):

Mission Statement

2009

AOA is a separate 501©3 organization: however, it is

not an auxiliary of the CSU.

AOA’s mission is to facilitate the role of individual

auxiliaries on their respective campuses by providing

the resources and services that enable them to be

more effective.

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Auxiliary Organizations Association (AOA):

Mission Statement

2009

Professional website:• Information sharing• Membership directory• Networking bulletin board• Legislative and legal updates• Library of resource materials• Job postings• Sample policies, procedures and forms

www.csuaoa.org

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AOA Services:

2009

2009

AOA Annual conference Access to legal counsel Group Insurance and Pooled Benefit Programs Professional Development Programs Biennial Salary Survey Special Research Projects and Monographs Resolution of common issues affecting members Representation of collective interests of auxiliaries to

policy-making groups of the CSU and State of

California.

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AOA Services (continued):

2009

Leslie Davis, President CSU Sacramento

University Union Michele Goetz, Past-President San Diego State Univ

Research

Foundation Dave Edwards, President-Elect CSU Long Beach

Associated

Students Richard Jackson, Secretary/ CSU Chico

Treasurer Research

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Current AOA Officers

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Current Issues

Strengthening liaisons and partnerships Supporting the CSU during the economic crisis Viability of business in changing times Union challenges to auxiliary employment Increased compliance issues Endowment management in declining markets Integrated CSU Administration Manual (ICSUAM) Enhancing group insurance/benefit programs VEBA Trusts – unfunded liabilities

2009

Summary

Random House definition:

Auxiliary

1. Subsidiary; additional; supplementary2. Used as a reserve (auxiliary engine)3. Giving support; serving as an aide; helpful

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Questions?