1. 2009 March 8-11 2 0 0 9 Auxiliaries: P a r t o f t h e C S U T e a m

2. 2009 Auxiliary Organizations: Part of the CSU Team Presented by: Michèle Goetz SDSU Research Foundation mgoetz@foundation.sdsu.edu

3. 2009 Overview:  Auxiliary Enterprises  Auxiliary Organizations  Organizational Structure  Traditional Roles / Concerns  Fundamental Operating Principles  Types of Auxiliaries  Auxiliary Organizations Association  Current issues impacting Auxiliaries 3

4. 2009 The distinguishing characteristic of an auxiliary enterprise is that it is managed on an essentially s elf-supporting basis. 4 Auxiliary Enterprises

5. 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. 5 Auxiliary Enterprises (cont.)

6. 2009 6  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.)

7. 2009 7 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 between an auxiliary enterprise and an Auxiliary organization?

8. 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 8 Auxiliary Organizations

9. 2009 9  Incorporated as 501(c)(3) federally tax-exempt nonprofits A 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

10. 2009 Auxiliary in good standing Bylaws Articles of Incorporation Operating Agreement with CSU Scope of Authority Education Code 10 Criteria for Formation

11. 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 11

12. 2009 12  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

13. 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 ) 13 Traditional Roles of Auxiliaries

14. 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 14 Traditional Roles of Auxiliaries

15. 2009 15  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

16. 2009 16  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.)

17. 2009 17 The University President and CFO (per EO 731) are accountable for all auxiliary organization activities Need to ensure compliance with law, Trustee policy, and good business practices of the university Fundamental Operating Principle

18. 2009 18  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

19. 2009 19  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

20. 2009 Allocation of Costs to Auxiliary Enterprises EO 1000 (Previously EO 753) 20 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.

21. 2009 21  Reasonable  Consistent  Accumulation  Estimation Cost Allocation Guidelines GENERALLYSPECIFICALLY  Direct Costs  Actual  Indirect Costs  Cost Allocation Plan  Documentation  MOUs  Other written agreements

22. 2009 22 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

23. 2009 23 Administration of Grants and Contracts in Support of Sponsored Programs Executive Order 890 Sets 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.

24. 2009  Commercial Services  Faculty/Staff/Student Housing  Student Unions/Recreation Centers  Student Body Organizations (ASI)  Philanthropic/Endowment Management  Grant and Contract Administration 24 Specific Auxiliary Services

25. 2009 25 Commercial Services Provides services focused primarily on operation of bookstores, food services and agricultural projects. Campus Stores:  Bookstore vs. Campus Store concept  E-Commerce and digital books  Privatization/Partnerships Food Services:  Self-operation  Franchises or company-owned  Impact of Convenience stores  Pouring Right (Coke vs. Pepsi)  Liquor license

26. 2009 26 Housing Corporations Student Housing:  Apartments vs. Residence Halls  Meal Plans: Traditional vs. a la carte Faculty Housing :  Assists with recruitment  Sale vs. Rental  Assist with down payments Conference Services:  Business opportunity  Fills beds during seasonal lows  Brings diverse groups to campus

27. 2009 27 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

28. 2009 28 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

29. 2009 29 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.

30. 2009 30 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

31. 2009 31 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!

32. 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. 32 Auxiliary Organizations Association (AOA): Mission Statement

33. 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. 33 Auxiliary Organizations Association (AOA): Mission Statement

34. 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 34 AOA Services:

35. 2009

36.  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. 36 AOA Services (continued):

37. 2009  Leslie Davis, PresidentCSU Sacramento University Union  Michele Goetz, Past-PresidentSan Diego State Univ Research Foundation  Dave Edwards, President-ElectCSU Long Beach Associated Students  Richard Jackson, Secretary/CSU Chico TreasurerResearch Foundation 37 Current AOA Officers

38. 2009 38 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

39. 2009 Summary Random House definition: Auxiliary 1.Subsidiary; additional; supplementary 2.Used as a reserve (auxiliary engine) 3.Giving support; serving as an aide; helpful

40. 2009 40 Questions?