1. Lottery Funds Audit & Changes to Lottery Policies/Guidelines Chris Canfield, Assoc. Budget Dir., CSU System Budget Office, CO Bradley D. Olin, Dir. of Budget Planning & Risk Management, CSUSJ April 23, 2015

2. Learning Objectives Gain further knowledge of outcomes and impacts of 2014 systemwide and campus lottery audits and resulting changes in lottery policy and reporting Understand why and how the guidelines have changed Interpret the CSU lottery guidelines appropriately Serve as a resource for others who have lottery questions April 2015Year-End Legal Training2

3. Scope Office of Audit and Advisory Services (OAAS) received BOT approval on lottery funds audit -- January 2014 Overall audit objective Effective policies and procedures? Adequate controls that ensure compliance to laws, policies, and procedures? OAAS visited five campuses and C.O. from January to June 2014 April 2015Year-End Legal Training3 Lottery Funds Audit

4. SW / CO Recommendations & Responses / Actions Recommendation on Policies and Procedures: Clarify and develop guidance documents on lottery allocations and uses Management Response / Action: Completed. Revised lottery policies and procedures located on System Budget Office CSYou site: https://csyou.calstate.edu/Divisions-Orgs/bus-fin/budget/lottery/Pages/default.aspx April 2015Year-End Legal Training4 Lottery Funds Audit

5. SW / CO Recommendations & Responses / Actions Recommendation on Carry-forward Policy: Require campus submittal of expenditure plans for excess lottery reserves and complete approval campus FY 2012/13 expenditure plans Management Response / Action: Campus submittal of carry-forward reports on excess expenditures back in effect. Completed 2012/13; WIP: 2013/14 w/threshold change April 2015Year-End Legal Training5 Lottery Funds Audit

6. SW / CO Recommendations & Responses / Actions Recommendation on Reporting: Expand on annual lottery funds budget report to BOT Management Response / Action: Currently evaluating annual lottery reports to legislature (May) and BOT (September) April 2015Year-End Legal Training6 Lottery Funds Audit

7. Campus Recommendations & Responses / Actions Recommendation on reserve balances: Reduce lottery fund reserve balances in accordance with policy Management Response: Concur. Monitor and eliminate reserve balances that exceed thresholds as identified in policy April 2015Year-End Legal Training7 Lottery Funds Audit

8. Campus Recommendations & Responses / Actions Recommendation on faculty / staff expenditures: Discontinue use of lottery funds: Faculty pay for classroom instruction Faculty overload and honoraria Management Response: Concur. Provide guidelines and training by [date] April 2015Year-End Legal Training8 Lottery Funds Audit

9. Reports Complete 2014 lottery fund audits available on OAAS public website: http://www.calstate.edu/audit/Audit_Reports/LotteryFunds/index.shtml Questions / comments Next – lottery policy and guideline updates April 2015Year-End Legal Training9 Lottery Funds Audit

10. Defining “Instructional” Lottery Education Act is Vague by Design Instructional Purpose Aligned with Program Categories Instruction (01) Academic Support (04) Student Services (05) Institutional Support (06) Physical Plant (07) Scholarships (08) – on a limited basis April 2015Year-End Legal Training10 Lottery Policy / Guidelines

11. Scenario # 1 - Student Outreach Your campus wants to buy software to enhance HS outreach to disadvantaged student populations and improve access. April 2015Year-End Legal Training11 Lottery Policy / Guidelines

12. Supplemental Supplement v. Supplant “In addition to” rather than “replace” April 2015Year-End Legal Training12 Lottery Policy / Guidelines

13. No Construction or Research No expenses supporting building/renovating facilities Clarifies financing research definition April 2015Year-End Legal Training13 Lottery Policy / Guidelines

14. Exceptions May be used to furnish instructional equipment & supplies in new / renovated facilities May also “pledge” lottery funds when financing construction. Travel to or attendance to research related activities may be allowable if related to student education. April 2015Year-End Legal Training14 Lottery Policy / Guidelines

15. Scenario # 2 – Facilities Enhancement Your campus has just completed construction of a new science building and facilities wants to know if there are any lottery funds available to furnish the building. How might lottery funds be used in support of the new facility? April 2015Year-End Legal Training15 Lottery Policy / Guidelines

16. BONUS What about the new Extended Ed. Building? April 2015Year-End Legal Training16 Lottery Policy / Guidelines

17. Compensation with Lottery Funds No increases in state-funded compensation paid through CSU Operating Fund No merit-based increases (honoraria, etc.) for state funded service April 2015Year-End Legal Training17 Lottery Policy / Guidelines

18. Exceptions (funded via CSU FUND 481) Development or enhancement of instruction and educational programs Supplemental pay for work beyond state supported responsibilities When in doubt, confirm with HR to ensure compliance with CBAs. April 2015Year-End Legal Training18 Lottery Policy / Guidelines

19. Scenario #3 Student life wants to host a series of guest speakers on campus, including light refreshments and travel/hotel accommodation for visiting speakers. How might lottery funds be used to support this request? April 2015Year-End Legal Training19 Lottery Policy / Guidelines

20. Additional Considerations No endowment accounts Campuses may keep lottery carryforward balances Systemwide carryforward balance may be used at chancellor’s discretion to supplement priority programming. April 2015Year-End Legal Training20 Lottery Policy / Guidelines

21. Scenario #4 Your VP Student Affairs requests lottery funds for the Accessible Technology Center to pay for faculty release time to advocate for accessible technologies at upcoming conferences. How might lottery funds be used in this case? April 2015Year-End Legal Training21 Lottery Policy / Guidelines

22. Contact Information Bradley D. Olin Director of Budget Planning & Risk Management San José State bradley.olin@sjsu.edu (408) 924-1663 Chris Canfield Associate Budget Director CSU System Budget Office ccanfield@calstate.edu (562) 951-4558 April 2015Year-End Legal Training22

23. www.calstate.edu April 2015Year-End Legal Training23