North Dakota State Board of Higher Education Budget and Finance Committee Meeting Notice and Agenda Friday, October 17, 2014.

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1 North Dakota State Board of Higher Education Budget and Finance Committee Meeting Notice and Agenda Friday, October 17, 2014 State Capitol 600 E Boulevard Ave Dept. 215 Bismarck ND Phone: Fax: ndus.office@ndus.edu Web: ndus.edu The State Board of Higher Education Budget and Finance Committee will meet by conference call, on Friday, October 17, 2014 at 1:30 p.m. CT. The call will originate in the NDUS Office, 10 th floor of the State Capitol, 600 E. Boulevard Ave, Bismarck, ND. 1. Approval of September 15 meeting minutes Call to Order 2. Update on development of state land under an arrangement in which BSC enters into a land lease agreement with the Gateway to Science on land which was deeded to BSC by the City of Bismarck with the restriction that the property is used to construct and operate a children s science center by Gateway to Science. Tamara Barber 3. 7Review and recommend approval ratifying Chancellor s interim approval for VCSU to proceed with the Vangstad Auditorium and Classroom Building project at an estimated cost of $3,607,929 to be funded by $3,454,643 state capital assets funds and $153,286 in SBHE capital project contingency pool funds; further authorize transfer of $153,286 from SBHE capital contingency pool to VCSU. Tonder 4. Discuss and reconsider NDUS capital budget request for the NDSCS Fargo Expansion Phase I Don Morton 5. Review and approve UND EERC deficit reduction plan (semi-annual budget plan) - UND 6. Review and approve MaSU Food Services Deficit plan (semi-annual budget plan) - MaSU 7. Review and approve WSC Athletics Deficit plan (semi-annual budget plan) - WSC 8. Review and approve financial plans from DSU, LRSC, NDSCS, VCSU and WSC in follow-up to FY13 NDUS Financial Review-campus officials Campus Personnel 9. Discuss line item transfers Glatt 10. Review and recommend changes to SBHE Policy Application Fees Glatt 11. Update on FY14 financial statement preparation Putnam Contact Terry Meyer (701) or terry.meyer@ndus.edu prior to the scheduled meeting date if auxiliary aids or services are needed. g:\agendas\sbhe budget and finance committee\2014\ meeting\sbhe budget and finance committee agenda docx The North Dakota University System is governed by the State Board of Higher Education and includes: Bismarck State College Dakota College at Bottineau Dickinson State University Lake Region State College Mayville State University Minot State University of North Dakota State College of Science North Dakota State University University of North Dakota Valley City State University Williston State College

2 2 The following draft minutes have not yet been approved by the Committee State Board of Higher Education Budget and Finance Committee September 15, 2014 The State Board of Higher Education Budget and Finance Committee met by conference call on Monday, September 15, 2014, at 9:00 a.m. CT. The call originated in the NDUS office, 10 th floor of the State Capitol, Bismarck, ND. SBHE Budget and Finance Committee members participating: Mr. Don Morton, Chairman Dr. Kirsten Diederich Mr. Grant Shaft Ms. Janice Hoffarth, non-voting Other NDUS participants: Dr. Larry C. Skogen, Interim Chancellor Tamara Barber, Interim Executive VP, BSC Steve Benson, VP, Business Affairs, MaSU Vivian Bernotas, Executive Assistant to President Richman, NDSCS Alice Brekke, VP, Finance and Operations, UND Doug Dawes, VP, Business Affairs, VCSU Brian Foisy, VP, Administration and Finance, MiSU Laura Glatt, Vice Chancellor for Administrative Affairs, NDUS Mark Lowe, VP, Finance and Administration, DSU Larry Robinson, Executive Director Advancement, VCSU Cathy McDonald, Director of Finance, NDUS Terry Meyer, Administrative Support Manager, NDUS Murray Sagsveen, Chief of Staff, NDUS Rick Tonder, Director, Facility Planning, NDUS Mr. Morton convened the meeting at 9:02 a.m. August 19, 2014 Minutes Mr. Shaft moved, seconded by Dr. Diederich, to approve the August 19, 2014, minutes. Shaft, Diederich and Morton voted aye. The motion carried Deficiency Appropriation Ms. Glatt reviewed the Deficiency Appropriation Requests noted below. She explained that deficiency appropriation requests are for additional funding in the current biennium. In the past, these requests typically addressed costs associated with catastrophic events such as flooding or building or infrastructure emergencies. If the requests are approved by the SBHE at their Oct. meeting, they will be submitted to the Office of Management and Budget by October 3, WSC Boiler Roof Repair and Employee Turnover: $50,000 for boiler roof repair to protect recently repaired boiler system. $30,000 to address costs associated with employee 1

3 3 turnover. The $30,000 is largely limited to filling some recent faculty positions, including advertising interview, moving, and other recruitment costs, along with higher salaries. MiSU s Rain and Flood Related Events: $1,806,108 for the local share of FEMA eligible and remaining FEMA-ineligible expenses associated with a 2010 rain event and the 2011 flood (Mouse River). This request is the second deficiency request, and there may be more as projects are closed out in the future. VCSU s requests, totaling $3,452,000, are for the following: $3.3 million for the campus share of the City of Valley City s local cost share of $3.75 million for Permanent Flood Protection Phase 1. This request is different from what the board approved for other campus projects for flood related requests in the past. Those other campus projects were to restore on-campus facilities and infrastructure that had been damaged in flood events. This request is different in that this is to assist the City of Valley City with flood protection activities, including a permanent flood dike that will run throughout the city. A portion of the cost is allocated to VCSU based upon replacement value of facilities. The other portion of the cost to help with that permanent flood protection would come through the Water Commission budget as well as local funds from the City of Valley City. $152,000 for costs (above the $275,000 deferred maintenance funding allocated by the SBHE) related to the demolition of the retired science building, due to failing structural integrity. The $152,000 request is to fund the uncovered costs of the balance of the project and the demolition of the facility. Mr. Larry Robinson said over the course of the last 18 months, the City has been in negotiation with the State Water Commission to come up with a model to finance permanent flood protection for Valley City. Phase 1 of the permanent flood protection, in a significant way, protects VCSU. The bulk of the project that is currently underway will commence Spring/Summer 2015 and at the conclusion of that project, Valley City will have a dike and a permanent flood wall protecting both the City and VCSU from the Sheyenne River. In negotiations with the Water Commission, it was determined that the majority of the cost of Phase I of permanent flood protection, based on an analysis done by the University and City engineers, is 87% of the local share cost, or $3,275,316 of the $3,750,000 needed. The City has been challenged in their efforts to come up with local cost share, and as a result of those discussions with the City and the Water Commission, Governor Dalrymple has suggested that VCSU pursue a funding source through this means to offset the University s share of permanent flood protection. Subsequent phases will be financed by the City and the State Water Commission, but because the inability of the City to come up with the local cost share, it was the Governor s suggestion and advice that we pursue this route. Valley City has been through a number of flood events (2009, 2010 and 2011) and the City has exhausted their local resources. If additional information is requested regarding this approach to the Valley City flood protection, Mr. Sagsveen said he would have a conversation with the State Water Commission and the Governor s Office on how this request fits into the overall plan. Dr. Diederich moved, seconded by Mr. Shaft to approve and recommend to the State Board of Higher Education approval, as recommended, of the deficiency 2

4 4 appropriation requests for Williston State College, Minot State University and Valley City State College as presented. Diederich, Shaft and Morton voted aye. The motion carried. Review and Recommend System wide Facility Master Plan Study Implementation Plan Mr. Tonder said the SBHE at their June meeting approved the System-wide Campus Master Plan and subsequently directed the NDUS Office to proceed with an implementation plan, which he presented to the committee. The implementation plan ties back to the various findings of the System-wide Campus Master Plan and hinges on the initiation of the SBHE s Strategic Plan and campus alignment planning processes. He said that the plan was reviewed by the Administrative Affairs Council (Sept. 2) and Chancellor s Cabinet (Sept. 10). Mr. Tonder said that the next phase of the space utilization study recommended by the consultants, Paulien & Associates, Inc. is in process with an expected completion date of December 31, 2014 for use for the upcoming 64 th Legislative Assembly. In response to a question on who is employed in the NDUS Facility Planning and being able to handle what is expected, Mr. Tonder said that currently it is only he and his associate. And, and at this time he said they will be able to handle what is expected of them. However, if additional expectations are required or accelerated timeframes for completion, there could possibly be a need for additional staff. Dr. Diederich moved, seconded by Mr. Shaft to approve and recommend the System wide Facility Master Plan Study Implementation Plan to the State Board of Higher Education. Shaft, Diederich, and Morton voted aye. The motion carried. Review and accept June 30, 2014 semi-annual budget report Ms. Glatt reviewed the June 30, 2014, Semi-Annual Budget and the schedule of campus leases. She said the report is produced twice a year, at calendar year-end and fiscal yearend. It identifies variances or irregularities in several areas including revenues, deficit fund balances, capital projects, and lawsuits. She highlighted particular areas of the report with the committee. She noted a correction to WSC s entry under category one, it should read a negative - $101,596/-5.6%... Since this wasn t reported previously, Ms. Glatt went into detail about the classification of Athletics, which is the first entry under category two. She said, in response to a State Auditor Office s audit recommendation, each school in the NDUS reviewed its classification of Athletics. It was recommended that some of the athletic expenditures should not have been reflected in the auxiliary enterprise function because they aren t solely selfsupporting. NDUS following that recommendation engaged in a review, in consultation with the auditor s office, and developed criteria for that review. Each campus has now gone through that review process and as a result, most institutions have reclassified some or all of their athletic expenditures from the auxiliary enterprise function to other functions, primarily student services. She reported that the revenue re-classifications ranged from approximately $275,000 to $12 million at various campuses. 3

5 5 Three campuses will be asked to prepare deficit plans and present them at the Oct. meeting: MaSU Fund Food Services UND EERC WSC Athletics Mr. Shaft moved, seconded by Dr. Diederich to accept the June 30, 2014 Semi-Annual Budget Report. Diederich, Shaft, and Morton voted aye. The motion carried. Facility Projects Mr. Tonder reviewed VCSU s Hillside Slope Failure project, UND s School of Medicine and Health Sciences (SMHS) new construction project, and UND s Law School renovation and addition project, which are similar in that the institutions are asking for allocation of contingency pool funds. The contingency pool was set aside for board distribution, and board approval is needed on disbursement of the funds. All three projects are projects that were funded during the 63 rd Legislative Assembly, and without the contingency appropriation, would not have reached their full scope of work. The Chancellor s interim authorization was requested since there is usually a timing issue on these projects. Mr. Shaft questioned whether the SOMHS will need some or all of the $62 million in additional funds yet in the biennium, and whether it makes sense to include that $62 million in the deficiency bill instead of the overall NDUS budget. Ms. Glatt said she would follow up with the SOMHS on their cash flow needs. Dr. Diederich moved, seconded by Mr. Shaft to: 1. Recommend the board ratify Chancellor s interim authorization for VCSU to proceed with the Hillside Slope Failure project at an estimated cost of $601,831 to be funded up to $480,510 appropriated funds, $100, biennium capital repair and replacement funds, and $21,321 SBHE capital projects contingency pool funds. 2. Recommend the board ratify Chancellor s interim authorization increasing spending authority for the UND School of Medicine and Health Sciences (SMHS) new construction project from $122,450,000 to $123,757,957, to be funded from the SBHE capital project contingency fund; and, further authorize transfer of $1,307,957 from the SBHE capital project contingency funds to UND. 3. Recommend the board ratifying Chancellor s interim authorization increasing the UND Law School renovation and addition project from $13,907,488 to $14,413,316, an increase of $505,828 to be funded by the SBHE capital project contingency fund; and, further authorize transfer of $505,828 from the SBHE capital project contingency funds to UND. Shaft, Diederich, and Morton voted aye. The motion carried. Meeting adjourned at 10:15 a.m. g:\agendas\sbhe budget and finance committee\2014\ meeting\ sbhe budget and finance committee draft minutes.docx 4

6 6 For Information Only 1. Issue: Update on development of state land anticipated to occur in 2015 in compliance with Policy Background: In 2015, BSC intends to seek SBHE approval for development of state land under an arrangement in which Bismarck State College (BSC), Owner and Lessor, enters into a ground lease agreement, anticipated to occur in 2015, with the Gateway to Science (GTS), Lessee, on land which was deeded to BSC by the City of Bismarck by a Warranty Deed in August, 2014, with the restriction that the property is used to construct and operate a children s science center by GTS. GTS is a private non-profit 501(c)(3) entity established in 1994 in response to a need for informal science learning opportunities in our community and region. They are currently located adjacent to Bismarck State College at the Frances leach High Prairie Arts & Science Complex, 1810 Schafer Street, Bismarck, ND. The proposed GTS children s science center will be located west of the MDU Resources Community Bowl on the campus of BSC, on seven acres of land that the City of Bismarck deeded to the College in August of The warranty deed transferring the subject property to BSC includes a reversionary clause whereby if Gateway to Science has not commenced with construction by August of 2016, the land reverts to the City of Bismarck. It is the intent of BSC to provide a long term land lease to GTS for the development and operation of the children s science center at the time that construction plans are confirmed. This project is consistent with the April 2014 campus master plan. This project has not been addressed by the State Board of Higher Education. The 2013 Legislative Assembly approved a contingent appropriation of $5 million to the Department of Public Instruction (DPI) for the purpose of awarding a grant to a state agency or nonprofit organization to construct a children s science center in the city where the state capitol is located for providing informal science education to children and others. (Senate Bill no. 2003, section 3 (2013)). The contingent requirement of the

7 7 appropriation, which is based on general fund revenue collections, has been met. DPI has approved and disbursed the grant funds for use by GTS. 3 Estimated Project Timeline and Completion Date: GTS is currently in the planning phase of this project. Fundraising consultants, American City Bureau, completed a feasibility study that indicates the ability of GTS to raise additional funds to complete the proposed 65,000 sq. ft. (gross) facility. The architectural team of JLG Architects and HGA Architects are currently working with GTS Building Committee and staff members to develop the scope and design of the project. It is anticipated that construction will begin in the Summer of 2015, with completion by Spring Financial implications: The science center as currently planned will consist of 65,000 sq. ft. with space for interactive exhibits and educational programs. The estimated cost is $40 million which includes an endowment for sustainability. The project as proposed by GTS was approved in December, 2013 by DPI for the $5,000,000 grant funds as appropriated in section 3 of Senate Bill no by the 2013 Legislative Assembly. It is anticipated that the remaining funds will be generated through a fund raising campaign conducted by GTS. No BSC funds will be used for the construction or operation of the children s science center; all such expenses are the responsibility of GTS. Part of GTS s capital campaign fundraising effort will be to establish an endowment which can be used to sustain the facility. 5. Academic implications: GTS will be a key player statewide in attracting and expanding awareness of STEM careers and opportunities in North Dakota for students of all ages, but especially in primary and secondary education. Therefore, academic benefits to BSC of placing the GTS on the BSC Campus are anticipated to include: 1. Opportunities for BSC STEM students, including those interested in pursuing teaching degrees, to: a. Develop, maintain and expand exhibits and activities for GTS b. Do community service activities guiding younger students in explorations of STEM related fields c. Do internships or co-ops with GTS 2. Potential to share faculty/employees between GTS and BSC, especially as GTS grows, BSC faculty in STEM fields will find opportunities to use their professional

8 8 expertise to aid in developing and presenting outreach and awareness programs at GTS, bringing a level of expertise to GTS that it might not otherwise be able to afford or attract. 3. Potential for synergistic faculty development activities that would keep BSC faculty at the forefront of educational and pedagogical techniques and technology, as well as keeping GTS exhibits and activities fresh and attractive to P-12 students 6. Legal/policy issues: N/A 7. Review Process: NDUS legal counsel has reviewed all the documentation associated with this project. 8. Enclosures: Map of area 9. Contact person: Dave Clark, Interim President, Bismarck State College, ; david.clark@bismarckstate.edu 10. Chancellor s Recommendation: None required at this time.

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10 VALLEY CITY STATE UNIVERSITY, October 30, 2014 Ratify Chancellor s interim approval for VCSU to proceed with the Vangstad Auditorium and Classroom Building project at an estimated cost of $3,607,929 to be funded by $3,454,643 state capital assets funds and $153,286 in SBHE capital project contingency pool funds; further authorize transfer of $153,286 from SBHE capital contingency pool to VCSU. 10 Project Description The Vangstad Auditorium building is located at the south side of the historic campus mall and was constructed in It includes the Circle Hall connecting link which extends from the south end of the building, east to McFarland Hall. The north entrance faces towards the campus mall and the river beyond. The lower level and first floor of the building is currently used for general classrooms, an IVN Classroom, offices, mechanical space, campus IT space, and storage. The auditorium s main seating floor is located on the second floor and includes a balcony, historic organ and stage with a seating capacity of 818. The auditorium has historically been used for commencement as well as musical, theatrical and speaking performances. The program for the remodeling project will provide a new home for the Department of Business as well as a campus Learning Center to serve the educational goals of the students on campus. The creation of a new Learning Center in the lower level will consolidate student support programs that are currently spread across campus. The current facilities and locations represent a lost opportunity due to its impact on the student learning environment. This project will consolidate these services into one convenient location that is in the heart of campus near the library, classroom buildings, campus administration, and the student center. This program is part of an initiative to enhance and support the campus enrollment growth goals and includes programs for on-campus students, adult students, and international students with services such as tutoring, testing, and other academic support programs. The Business Department will relocate its offices from the basement of McFarland Hall to the first floor of the building in order to create a strong identity for the Department on campus, consolidate the faculty offices and administrative areas, and allow for future growth. The current facilities for this Department are not adequate due to its location, appearance, and functionality. The facilities cannot compete with those provided by other institutions and represent a lost opportunity to Valley City State University in the form of lost enrollment. The new modern facilities and amenities will allow the university to attract students to the campus of Valley City State University and increase enrollment in the Business Department. The Auditorium Space will continue to serve programs and functions for the Music and Theatre Departments, student services and the campus as a whole.

11 11 There will also be improvements to the exterior of the building that include window replacement, foundation drainage and waterproofing, masonry repair, and the repair and remodeling of the North entrance. As a result of bids-exceeding-budget, the project was re-designed with a significant reduction in scope that resulted in less extensive renovation work within the base bid. Add-alternate bids (bids for additional scope of work that can be added to the base bid if within budget) were included in the rebid efforts, which would restore portions of the original scope using contingency pool funds as per NDUS criteria for requesting the funds. The add-alternate bids that may be accepted include the following: First floor window replacement - $78,000 Lower level window replacement - $45,000 Repair EPDM gutter - $36,000 Depending upon other potential project costs resulting from unforeseen conditions, additional addalternate items may be added if within budget. Including the above add-alternate bids restores a significant amount of the original scope of work, but does not complete the project as originally planned. Consistency with Campus Facility Master Plan and Budget The project has been a part of VCSU s master plan since 2010 when VCSU had JLG Architects complete a predesign report completed for the project. SBHE and/or Legislative History May 2013 Legislature authorized $3,454,643 (SB 2003) of Capital Project funds for the Vangstad Auditorium and Classroom Building project. Estimated Total Purchased or Donated Costs (ALL costs should be included in the estimate, unless specifically noted otherwise). Requested Planning, Permits and Insurance (design costs associated with current project, OMB preplanning revolving funds, architect and engineer fees, permits, insurance) Land/Building Preparation and Purchase or Donated Costs (land acquisition and site preparation/development) Authorization $302,753 Demolition and Disposal $0 Construction (foundation and building construction or $2,915,256 renovation, including fixed equipment, landscape, infrastructure and utilities, mechanical and electrical, parking and driveways or roadways) Institutional work (value of work completed by institutional $0 $0

12 12 trade staff) Contingency $250,000 Hazardous Material Abatement $20,000 Other, including 3 rd party costs (please describe) $0 SUBTOTAL (if total exceeds $250,000, requires SBHE approval) $3,488,009 Furniture, Fixture and Equipment (FF&E) $119,920 TOTAL $3,607,929 No other work, other than that specified within this request, is required for the completion of the project nor is other work planned to supplement this project using funding or authority not included within this request. Future Operating/Improvement Costs and Funding Sources No future additional operating or improvement costs are anticipated. Source and Availability of Funds (including FF&E) Funds for this project will be from legislative appropriations ($3,454,643) and SBHE capital project contingency pool funds ($153,286.)

13 13 Project Management Oversight (consistent with 9/25/13 SBHE approved guidelines) For this authorization request, a NDUS Capital Project Management Checklist is included with this request per option #3 of the Project Management Oversight Guideline, Estimated Project Timeline and Completion Date The architect was selected in summer 2013 and designs were completed by January Bids were received February The initial bids came in significantly higher that the budget allowed, which created a need to adjust the scope of work and a rebid. The rebids were received September 30, Construction is to begin in October 2014 with completion by the end of August 2015.

14 14 NDUS CAPITAL PROJECT MANAGEMENT CHECKLIST Section 1 Pre-Planning and Authorization Task Architect has been retained for pre-planning cost estimates or estimates have been completed internally; and all contracts have had the proper legal review See SBHE policies 902.3, #5 and SBHE and/or Legislative authorization (if required) has been requested See SBHE policies 902.1, and procedure 902 Project impact on institution has been reviewed and properly communicated Project cost estimate includes all components including design costs; architect and engineer fees; permits; insurance; land acquisition, and site preparation or development; demolition and disposal; foundation and building construction or renovation including fixed or attached equipment and furnishings; landscaping; infrastructure and utilities; mechanical or electrical; parking and driveways or roadways; hazardous materials abatement; third-party costs; contingencies; and value of work completed by institution trade staff See SBHE policy 902.3, 6 Local municipality, third-party code official, or other competent licensed official has been consulted on project for code compliance, regulatory considerations, and building permits as required. Status (completed, ongoing, to be completed) Completed Completed Completed Completed Completed Individual Responsible Douglas Dawes Ron Pommerer Douglas Dawes Douglas Dawes Ron Pommerer Douglas Dawes Ron Pommerer Douglas Dawes Ron Pommerer Section 2 Project Design Task Status Individual Responsible Agency head has appointed selection committee for Completed Douglas Dawes Architect if required by estimated fee (over $25,000) See SBHE policy Architect informed of project funding requirements as it applies to scope of work and what must be included within the project budget See SBHE policy 902.3, 6 Completed Douglas Dawes Ron Pommerer Institution and architect will determine what construction delivery method is most appropriate See SBHE policy (Note: if CM selected, architect Completed Douglas Dawes Ron Pommerer

15 15 will confirm that construction delivery method(s) comply with NDCC ) If CM selected, project is automatically exempt from completion and filing of this checklist. A/E Contract reviewed by legal counsel for compliance Institution confirms that Architect s design complies with statutory regulations for code compliance including ADA Bid process is in compliance with laws and policies See SBHE policy 902.3, 8 In process Completed Completed Douglas Dawes Ron Pommerer Douglas Dawes Ron Pommerer Douglas Dawes Ron Pommerer Section 3 Construction Task Status Individual Responsible Builder s risk insurance is in place See SBHE policy 902.3, 10 Completed Douglas Dawes Ron Pommerer Institution has identified an individual who will be responsible to coordinate work with the Prime Contractor Completed Douglas Dawes Ron Pommerer It has been communicated to the General Contractor that they will be responsible for coordinating work between trades Institution has identified an individual who will review and approve change orders Institution has identified an individual who will review and approve pay requests and monitor expenditures against project budget Institution has identified an individual who will conduct regular site observations and monitor project schedule Any changes in project scope and/or funding source or use have received the appropriate approvals See 902.3, (1) Institution will notify State Fire and Tornado of additional new space if required Institution will confirm municipality or other code official has issued a Certificate of Occupancy prior to occupancy Institution has identified an individual who will conduct final inspection and sign-off Completed Completed Completed Completed to be completed to be completed to be completed to be completed Douglas Dawes Ron Pommerer Douglas Dawes Ron Pommerer Douglas Dawes Ron Pommerer Douglas Dawes Ron Pommerer Douglas Dawes Ron Pommerer Douglas Dawes Ron Pommerer Douglas Dawes Ron Pommerer Douglas Dawes Ron Pommerer

16 NDUS CAPITAL PROJECT, SBHE APPROVED PRIORITIES, 10/03/14 16 Chart A: 63 rd Legislative Action Rank Campus Priority Campus Project Title Type of Project N/A 1 UND Medical School Completion of Medical School SBHE Request Other State State - Running Total Reduction in Deferred Maint. $ 62,000,000 $ 62,000,000 N/A Chart B: Valley City Flood Mitigation Rank Campus Priority Campus Project Title Type of Project N/A 2 VCSU Fine Arts Bldg, including demolition of Foss and McCarthy New Construction, including demolition SBHE Request Other State State - Running Total Reduction in Deferred Maint. $ 25,850,000 $ 25,850,000 $ 7,763,660 Chart 1: Major State General Fund Capital Project Priority Recommendations Life-Safety Priorities Projects listed below address a significant life safety condition, resulting in increased risk of personal injury or other claim. In general, the projects also address a significant deferred maintenance liability. Total deferred maintenance removed in this category: $15,971,504 Rank Campus Priority Campus Project Title Type of Project State SBHE Request Other State - Running Total Reduction in Deferred Maint. 1 1 VCSU Heating Plant New Construction, $14,289,000 $ 14,289,000 $12,426,504 Replacement including demolition 2 1 NDSU Dunbar Hall II, New Construction, $ 45,900,000 $ 60,189,000 $3,020,000 including demolition of Dunbar including demolition 3 3 DCB Nelson Science Center Renovation $ 1,098,789 $ 61,287,789 $ 525, UND Aircraft Parking Area Repair Repair and Reconstruction $16,000,000 $ 77,287,789 Page 1

17 17 Chart 2: Major State General Fund Capital Project Priority Recommendations Deferred Maintenance Priorities Projects listed below address, in the order of magnitude, the amount of deferred maintenance being completed compared to overall project cost. The projects may also address negative life safety conditions, improve functionality, or correct accreditation concerns which rank lower than the deferred maintenance mitigation. Total deferred maintenance addressed in this category: $16,146,423 Rank Campus Priority 1 1 BSC Campus Project Title Type of Project State SBHE Request Other State - Running Total Reduction in Deferred Maint. Major Campus Infrastructure Replacement $ 1,575,000 $ 1,575,000 $1,200, NDSCS Campus Water, Sewer Infrastructure Replacement $ 13,298,000 $ 14,873,000 $13,298, LRSC Switchgear, Electrical Service, Window Replacement Replacement $ 1,648,423 $ 16,521,423 $ 1,648,423 Page 2

18 18 Chart 3: Major State General Fund Capital Project Priority Recommendations Program/Accreditation Priorities Projects listed below address, in the order of magnitude, the relative importance each has to a strategic or corrective program need. Although projects may have scope components which reduce deferred maintenance or consider life safety elements, the primary purpose of the project is to advance the mission of the institution. Note that based on the ranking criteria approved by the master plan consultant, the projects below are all lower in numerical ranking than any of the projects which address either safety or deferred maintenance, above. Projects highlighted may not be a consideration for general fund appropriations, and if so should be transferred to the non-state general fund appropriated category. Total potential deferred maintenance addressed in this category: $5,000,000 Rank Campus Priority 1 1 NDSU Campus Project Title Type of Project Accreditation Projects (Sudro Hall Addition) SBHE Request Other State State - Running Total Reduction in Deferred Maint. Addition/Renovation $ 32,700,000 $ 32,700,000 N/A 2 1 UND Strategic Renovation/Renewal Renovation/ replacement $ 10,000,000 $42,700,000 $ 5,000, WSC Allied Health Facility New Construction $ 14,000,000 $56,700,000 N/A 4 2 NDSCS 5 1 MiSU 6 2 NDSU Fargo Expansion Phase 1 New Construction $ 10,000,000 $66,700,000 N/A Career and Technical Education (CTE) New Construction $ 8,000,000 $ 74,700,000 NA Accreditation Projects (Engineering) Phase 1 Renovation $27,200,000 $101,900,000 Page 3

19 19 Chart 4: Major State General Fund Capital Project Priority Recommendations for NDSU Related Entities As per NDCC, the projects listed below are to be included in the general fund budget request without alteration by the SBHE. Affiliate Location Main Station Main Station CREC, LREC, NCREC, WREC Project Title Type of Project SBHE Request Veterinary Diagnostic Lab State Other State - Running Total New construction $18,000,000 $ 18,000,000 Meats Lab Facility New construction $7,600,000 $25,600,000 Seed Cleaning Facilities Replacement $5,250,000 $30,850,000 Reduction in Deferred Maintenance Agronomy Lab (CGREC) Forest Service Forage Lab Bldg (incr. authorization from biennium ($783,796 +$400, carryover=$1,183,796) No requests Re-authorization $783,796 $31,633,796 Page 4

20 20 Chart 5: Major Non-State General Fund Capital Project Priority Campus BSC UND Project Title Student Union LL Renovation Student Engagement Type of Project SBHE Request Funding Source Reduction in Deferred Maintenance Renovation $ 600,000 N/A Misc. Renovations $6,000,000 Private NDSU Aquatic Center Expansion $11,000,000 Revenue bond/local NDSU NDSU NDSU NDSU NDSCS Memorial Union Dining Center Expansion & Accessibility Residence Dining Center Kitchen Remodel & Roof Replacement Low Rise Lavatories- Phases IV and V Minard Hall Mediation Settlement Increased Authorization Robertson Hall Restroom Renovation Addition/renovation $1,000,000 Local Renovation/Repair $2,000,000 Local $300,000 Remodel $2,327,775 Local $1,582,500 Increased authorization for settlement agreement $600,000 Insurance proceeds, legal settlements, possible deficiency appropriations and other available funds Renovation $1,500,000 Private/local $1,000,000 N/A Page 5

21 21 DSU Woods Hall Renovation Renovation/Remodel $7,500,000 Local/oil impact grant/ revenue bonds $2,250,000 (est.) VCSU VCSU Health, Wellness, and Physical Education Facility W.E. Osmon Fieldhouse Addition-Phase 2 New Construction $16,000,000 Private/local N/A Addition $3,647,750 Private N/A DCB DCB Dorm Updates and Remodeling Renovation/Remodel $ 3,784,076 N/A Health and Wellness Facility New Construction $ 6,864,118 Private/local N/A TOTAL $62,823,719 Chart 6: Projects Not Included in Recommendations Campus Project Title Type of Project DSU May Hall HVAC & Window Replacement Renovation/ replacement SBHE Request State Other Reduction in Deferred Maint. $ 4,032,960 $ 4,032,960 DSU Student Academic Center New Construction $ 14,884,665 $ 1,390,353 LRSC MaSU Dakota Precision Ag Center Facility Classroom Building Renovation New construction $ 12,405,968 N/A Renovation $ 9,632,060 $ 1,970,000 MaSU Old Main Renovation Renovation $ 19,267,525 $ 7,836,000 MiSU Expand Geo Thermal Expansion $ 4,500,000 N/A Page 6

22 22 MiSU NDSU Purchase and Renovate Augustana Church Crop Quality Food Science Facility (Harris Hall replacement) Renovation/Purchase $ 2,500,000 N/A Replacement, including demolition $ 32,000,000 $1,980,000 UND Infrastructure Pool Replacement $ 40,000,000 $ 6,037,000 TOTAL $ 139,223,178 $ 23,246,313 Page 7

23 23 Other Capital Funding Needs Currently, NDUS institutions have four funding methods available for facility maintenance and improvements: 1. Base funding for operational costs. This funding is provided through the SCH funding model and is used for such things as utilities, housekeeping, and sundry repairs. 2. Base funding for Extraordinary Repairs. The amount of this funding is currently based on a OMB formula which is intended to provide 2% of Facility Replacement Value (FRV) for any building over five years old; however, historically and currently, the NDUS has received less than 15% of the required formula funding. The Paulien & Associates report recommends funding at the national standard of two percent, which has been determined to be the amount necessary to maintain deferred maintenance at a level of twenty to twenty-five percent of the FRV. Furthermore, campuses must fund special assessment payments from their extra-ordinary repairs funding for city improvements to adjacent property, further reducing the amount left for on-campus improvements. Below is a summary of the estimated amount to pay-off special assessment balances after the biennium, and the amount need for the installment payments, if the balances are not paid off. SPECIAL ASSESSMENT BALANCES Campus Pay-off Balance Estimate Est payment Current Extraordinary Repairs Funding BSC $1,357,600 $491,800 $417,673 LRSC $155,367 WSC $285,000 $45,000 $197,801 UND $241,585 $66,815 $4,601,566 NDSU $1,591,426 $407,089 $2,732,244 NDSCS $275,098 $98,794 $1,012,379 DSU $409,078 MaSU $228,285 $74,876 $358,992 MiSU $899,620 VCSU $243,238 $65,555 $658,319 DCB $28,457 $7,755 $114,007 TOTAL $4,250,690 $1,259,683 $11,557,046 Page 8

24 24 OMB Extra-Ordinary Repairs Formula Funding Current Base Funding $11.2 million 100% of OMB formula of FRV) $88 million Differential to current base funding $76.8 million 50% of OMB formula of FRV) $44 million Differential to current base funding $32.8 million 35% of OMB formula of FRV) $30.8 million Differential to current base funding $19.6 Million History of Deferred Maintenance Pool 3. Deferred Maintenance one-time funding. According to the Paulien & Associates report, and based on the findings by VFA Inc., the NDUS has an estimated $800 million in deferred maintenance. Because of the relative age of the NDUS buildings and condition, increasing the Extraordinary Repair base funding to 100% of the OMB formula of $88M/biennium would allow for continued degradation, resulting in a $1,500M backlog by They suggest increasing the Extraordinary Repair base funding from $11.2M to $266M to maintain the current condition of NDUS at an FCI of 31%. 1 To realize substantial progress on deferred maintenance liabilities, and avoid critical failures of facility systems, institutions must be able to address the backlog with one-time funding investments coupled with realistic base funding. NDUS Request Legislative Appropriation Biennium $11 million $11 million Appropriated to SBHE Biennium $50 million $20 million Appropriated to campuses 1 See page 46 of the Paulien and Associates NDUS System Wide Master Plan. Page 9

25 25 History of Major Capital Project Appropriations 2 4. Major Capital projects. Generally, includes new construction or major renovation or major remodeling projects related to buildings and/or infrastructure, whereby deferred maintenance is reduced when the cost of the project is so great it is not feasible or reasonable to achieve through separate extraordinary repair and/or deferred maintenance funding. These projects should remove a significant amount of deferred maintenance while also providing improvements for institution programs. General Fund Permanent Oil Trust Fund State Bonds Total $177,174,763 $177,174, $47,136,000 $47,136, $39,008,248 $10,400,000 $49,408, $13,808,235 $4,809,515 $18,617, $658,875 $13,168,111 $13,826, $8,022,347 $8,022, $4,141,000 $9,838,133 $13,979,133 2 Does not include appropriations for one-time deferred maintenance or base funding for extra-ordinary repairs. Page 10

26 26 Summary Recommendations for Biennium In order to protect the state s assets and meet the educational needs of the twenty first students learning needs will require a combination of the following strategies: A.) Request base funding of $32.8 million to bring all campuses to 50% of the OMB extra-ordinary repairs formula Cost $32.8 million base funding B.) Request one-time funding of $1,259,683 for special assessment payments. Cost $1,259,683 one-time funding C.) Request one-time funding for a system deferred maintenance pool. Cost $20 million one-time with the following stipulations: D.) Completion of a comprehensive deferred maintenance inspection and estimate (included in the $750,000 budget request, below) of all general fund supported facilities similar to that undertaken by VFA Inc. in the Paulien & Associates Master Plan. (See page 122 of the report for a sample of the proposed inspection and estimate information, which can be updated with expenditures to re-calculate the deferred maintenance values. No less than 80% of the total project cost must be attributable to the resolution of deferred maintenance. Clear demonstration of corresponding reduction in deferred maintenance. Projects require prior approval by Chancellor. E.) Request one-time funding of $750,000 to complete the space utilization, deferred maintenance and space inventory evaluation at all campuses. Cost $750,000 one-time funding (Already included in SBHE approved operating budget request) Recommended Motion SBHE Capital Project Request Motion to approve and request the following be included within the Governor s Budget Request to the 64 th Legislative Assembly: 1. Project listed on Chart A: 63 rd Legislative Action 2. Project listed on Chart B: Valley City Flood Mitigation 3. All projects listed Chart 1: Major State General Fund Capital Project Priority Recommendations - Life-Safety Priorities 4. All projects listed in Chart 2: Major State General Fund Capital Project Priority Recommendations Deferred Maintenance Priorities 5. All projects listed in Chart 3: Major State General Fund Capital Project Priority Recommendations Program/Accreditation Priorities 6. All projects listed in Chart 4: Major State General Fund Capital Project Priority Recommendations NDSU Related Entities 7. All projects listed in Chart 5: Chart 5: Major Non-State General Fund Capital Project Priorities 8. All funding requests specified in the Summary Recommendations for Biennium (above) with the included stipulations and requirements, excluding those items already included in the SBHE approved operating budget request. Page 11

27 27 CHART SUMMARY CHART TOTAL STATE-RUNNING TOTAL Chart A: 63 rd Legislative Action $ 62,000,000 $62,000,000 Chart B: Valley City Flood Mitigation $ 25,850,000 $ 87,850,000 Chart 1: Major State General Fund Capital Project Priority Recommendations Chart 2: Major State General Fund Capital Project Priority Recommendations Deferred Maintenance Priorities Chart 3: Major State General Fund Capital Project Priority Recommendations Program/Accreditation Priorities Chart 4: Major State General Fund Capital Project Priority Recommendations for NDSU Related Entities $ 77,287,789 $ 165,137,789 $ 16,521,423 $ 181,659,212 $101,900,000 $283,559,212 $ 31,633,796 $ 315,193,008 Chart 5: Major Non-State General Fund Capital Project Priority $62,823,719 TOTAL REQUESTS CHART TOTAL STATE-RUNNING TOTAL Capital Projects* + $ 221,559,212 (one-time) $ 221,559,212 Cover Special Assessment payments $ 1,259,683 (one-time) $ 222,818,895 Deferred Maintenance Pool $ 20,000,000 (one-time) $ 242,818,895 50% of OMB Extra-ordinary repairs formula $32,860,444 (base funding) $ 275,679,339 *Capital projects address $48,881,587 in deferred maintenance. + Excludes $62,000,000 for UND Medical School and $31,633,796 for NDSU related entities g:\laura\docswp\15-17 budget\capital projects\bfc recommendation revised docx Page 12

28 28 CURRENT DEFICIT ENERGY & ENVIRONMENTAL RESEARCH CENTER 3-YEAR FINANCIAL PLAN October 17, 2014 As of July 1, 2014, the Energy & Environmental Research Center (EERC) has a deficit fund balance of $2,684,124. This includes a $1,145,893 deficit at the end of FY13, an additional deficit of $592,356 in FY14, and a remaining obligation of $945,875 as a result of the James Hardie lawsuit. FY13 AND FY14 BUDGETS AND ESTIMATED FY15 BASELINE BUDGET The following are the actual expenses and income for FY13 and FY14 and the baseline budget for FY15. For FY15, we are predicting a 6% growth in modified total direct costs (MTDC). The facilities and administration (F&A) expenses for the FY15 baseline are largely based on the FY14 budget. The most significant changes in the budget between FY14 and FY15 are, in decreasing order of impact, a 13.3% increase in the fringe benefit rate, an increase in total hours worked because of the adjustment for last year s supplemental leave, and an average salary increase of 3%, which is largely offset by a decrease in salaries because of the placement of an interim director. FY13 Actual FY14 Actual FY15 Baseline Budget MTDC Expense $17,857,838 $16,894,995 $17,908,695 F&A Income $9,501,512 $9,053,055 $9,572,197 F&A Expenses $10,620,310 $9,645,411 $10,516,155 Yearly Deficit ($1,118,798) ($592,356) ($943,958) ELEMENTS OF FINANCIAL PLAN As the EERC moves forward, it is critical that we increase research and decrease/eliminate future deficits through: 1) increasing the annual research expenditure growth rate, 2) reducing F&A expenditures through efficiency gains, 3) increasing the research portfolio and decreasing costs across the University of North Dakota (UND), 4) increasing interdepartmental research collaboration, and 5) research investment. It is vital that any financial plan must allow the EERC to maintain a critical level of research support and provide for maintenance and operation of the existing research capacity. This plan does not yet reflect the full potential impact of recommendations contained in the Huron report. The Huron report was intended to provide UND with a starting point for additional self-review and critical analysis. As results/recommendations emerge from ongoing review, the plan will be modified to reflect the financial impact. It is anticipated that these modifications will occur over the next few years. Increasing the Annual Research Expenditure Growth Rate The EERC has seen a decrease of over 20% in MTDC over the last two years. The EERC is extremely focused on reversing this trend and growing its research expenses, which directly affects the amount of revenue available to pay F&A expenses. Growth in research requires two 1

29 29 primary factors: 1) increasing awards and 2) hiring additional research employees once additional funding is available. Efforts this year are specifically focused on increasing funding from the U.S. Department of Energy and the state of North Dakota and growing its private sector funding base through strategic relationships. The EERC has set a goal of increasing its research expenditures by over 20% over the next three years. Reducing F&A Expenditures through Efficiency Gains Significant opportunities to reduce expenses and gain efficiency have been implemented at the EERC over the last two years, including employee layoffs. The EERC is committed to reducing the current FY15 baseline budget by $100,000 and will reallocate an additional $100,000 of F&A expenditures toward program development. Additional methods of reducing expenses and reallocating F&A expenditures toward program development will be evaluated as opportunities present themselves. Increasing the Research Portfolio and Decreasing Costs across UND Although much more difficult to quantify at this time, there are opportunities to utilize the expertise and reputation of the EERC to grow the greater University research portfolio as well as enhance efficiency and decrease overall costs. The EERC has been very successful in pursuing innovative sources of funding, especially with private industry. The EERC could facilitate proposal development, contracting, contract management, and project management and create a culture that fosters research. This, in turn, would elevate research across the University as UND strives to become a very high activity Carnegie-recognized research institution. Although it is difficult to estimate the overall savings to UND as a whole, it is envisioned that $500,000 of savings could be realized in both FY16 and FY17 by increasing coordination between the core EERC administrative functions and those of the Office of Research and Economic Development. A work group will be identified to focus on this opportunity. Increasing Interdepartmental Research Collaboration Interdepartmental research collaboration is more likely to be successful when there is a financial driver that supports initial collaboration. To encourage interdisciplinary approaches, faculty members and EERC researchers could draw from an existing Interdepartmental Research Collaboration fund to support program development expenses in developing interdepartmental research proposals. Research Investment Investment in the development of research programs at the EERC, and throughout the University, is critical to seeing long-term growth of research programs. Such dedicated funding does not currently exist nor have specific sources/reallocations been identified to support this investment at this time. This will require focused efforts during FY15 to address. Continued investment in the enhanced program development activities at the EERC, as well as an overall investment to aid with the current financial stress, will lead to growth in future programs. In FY14, the EERC brought in approximately $24.5 million in research awards. Additional investment in the EERC will help significantly in the goal of reaching research awards of $28 million in FY15, $31 million in FY16, and $34 million in FY17. 2

30 30 PROPOSED FY15, FY16, AND FY17 FINANCIAL PLAN The subsequent table shows the proposed financial plan for the next three years, with the following assumptions: MTDC growth from FY14 to FY15 is 6%, FY15 to FY16 is 7%, and FY16 to FY17 is 7.5%. Note: In FY13, the EERC saw a decrease in MTDC of 15.0% and an additional decrease of 5.4% in FY14. Average effective F&A rate of 53.45% (based on a historical average). Our federal rate is currently 50.5% (49.5% in FY14) and our commercial rate is 60.0%. Increasing the overall work with the private sector will help to increase the effective rate and generate additional F&A in the future. In FY15, an additional $100,000 of base F&A savings will be realized, and a minimum of $100,000 will be reallocated toward program development because of attrition and other cost-saving measures. 4% escalation in EERC F&A budgets for FY16 and FY17; however, it is assumed that additional savings will be realized and applied directly to the existing program development funds (goal of providing an additional $150,000 in FY16 and $200,000 in FY17). One method to reduce research support costs may be the greater use of undergraduate and graduate students to support the research support activities of the EERC. Note: The plan assumes that the UND Central Service expense of $1,378,970 remain flat for FY15, FY16 and FY17. Enhanced Program Development funding will be used specifically for developing new projects and relationships. The Interdepartmental Research Collaboration funds are intended to be spent primarily by faculty and to a lesser extent EERC researchers directly supporting interdepartmental collaboration. The EERC will partner with other UND units to translate its approach to proposal development, contracting, contract management, and project management to support research throughout the University. Using the EERC s expertise to support, and ultimately increase, the University s overall research portfolio may present overall savings (estimated at $500,000). Repayment of the existing deficit ($2,684,124) will begin in FY18 after a mutually agreedupon plan is in effect. No significant capital expenditures are contained within this plan. Additionally, growing the overall program development funding beyond what is described here will be extremely beneficial for more rapid growth. As additional funding becomes available through additional cost savings, other revenue generation, state funding, the EERC Foundation, or the UND Alumni Association & Foundation, program development and capital expenditures will be given priority. 3

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32 32 Semi-annual Budget Reporting Deficit fund balance of $50,000 or more Deficit Reduction Plan October 6, 2014 As stated in June 30, 2014 Semi-annual Budget Report MaSU Fund Food Services - there is a strong correlation between housing occupancy and board plan participation. Housing occupancy was down 16% and board plans were down 12% from previous year resulting in a $89,000 reduction in Food Service revenue. The reduced revenue was compounded by a $41,000 increase in operating costs primarily from recognizing accumulated bad debts ($25,000) and increased cost of goods sold ($16,000). Reduced board plans should have resulted in $55,000 savings in food costs but was not realized because of increased food prices. Our goal is to balance the operating budget, and eliminate the accumulated deficit over the next three fiscal years. A deficit plan will be created after fall registration numbers are determined. History of Fund June 30, 2014 (148,462) Deficit Reduction Plan Fund Food Services- Fall 2014 housing and board plan participants have rebounded strongly with 47 additional students (+20% increase ) in housing, and 55 additional students (+18% increase) in board. The increased board participation in addition to 9% approved increases in board rates will generate revenue necessary to balance the operating budget and reduce the accumulated deficit approximately $30,000. Revenue and expenses will be monitored quarterly. Our request is to eliminate the deficit in no more than 5 years.

33 33 Food Service Fund Revenue and Expenses - Actual FY14, Projection FY15 and FY16 Actual Project FY14(3) FY14(12) FY15(3) FY15(12) Revenue Board contracts 330, , , ,134 Other revenue sources 160, ,540 Total 773,527 1,015,674 Expenses Salaries and benefits 521, ,026 Cost of good sold 334, ,013 Other 72,448 70,000 Total 928, ,039 Revenue > expenses (155,408) 29,636 Total board counts FY14 or FY15(3) is FY revenue through september FY14, FY15 or FY16(12) is FY total actual or projected for entire year

34 34 Project FY16(12) 1,066,458 1,035,341 31,118

35 35 The Foundation and Booster Club met last night (Oct. 6) and agreed that they would gift enough money to WSC so that the athletic deficit at 6/30/14 would be eliminated before June 30, Laurie Furuseth, CPA Chief Financial Officer Williston State College 1410 University Avenue, Williston, ND ext WSC Fundraising goals of the Booster Club have not been met for the past couple of years. Additionally, the Hockey team has had added expenditures for travel to national championship games for the past three years. Turnover in the athletic director and hockey coach positions have made it difficult to follow through on pledges of support. Over the past couple years coaching salaries have shifted from auxiliary funding to appropriated funding. The current reorganization with a full time athletic director will permit the department to focus on fundraising and budget monitoring. A meeting is being scheduled with the new athletic director, the foundation director, and the booster club to create a plan of action for fundraising to cover prior year operating deficits. The fiscal year 2015 budget was reduced approximately 20%. The Athletic budget will be closely monitored. A deficit plan should be available for review by the Budget and Finance Committee in October. June 30, 2014 ($299,806)

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65 65 NORTH DAKOTA STATE BOARD OF HIGHER EDUCATION POLICY MANUAL SUBJECT: FINANCIAL AFFAIRS EFFECTIVE: November 17, 2011 Section: Application, Course, Program and Other Miscellaneous Fees 1. Institutions shall charge these fees: a. An application fee charged all students applying to an institution at either the undergraduate or graduate level or to a professional program, except as designated by NDUS Procedure to be used for processing applications and other institutional costs. The undergraduate application fee shall be the same at each institution. The graduate application fee shall be the same at each graduate institution. The Chancellor shall approve application fees. Upon an institution s request and documentation of special circumstances, the Chancellor may approve a waiver of the application fee. An institution president may approve a waiver of the application fee. b. An audit fee for courses available for audit not less than one half of the per credit hour resident tuition charge for the course. Institutions shall waive the audit fee for on-campus courses for persons 65 years of age or older and may adopt policies providing for waiver of the fee under other circumstances defined by those policies. c. A course challenge fee to students who elect to earn credit for a course through testing rather than regular enrollment, not to exceed fifty percent of the regular per credit hour tuition charge (resident or nonresident) for the course. This fee does not apply to students who earn credit by taking a standardized test for credit or advanced placement. d. A fee approved by the Chancellor, on a per credit hour basis, to students seeking postsecondary credit pursuant to articulation agreements with secondary schools. e. A technology fee to be used for networking or technology purposes. Fee revenue sufficient to retire bonds used for campus networking issued pursuant to N.D.C.C. chapter shall be dedicated for that purpose pursuant to applicable law. Additional fee revenue shall be used for technology purposes, including acquisition of technology and software, infrastructure, technology support staff, training and related expenses. Institutions shall establish procedures providing for student input concerning the amount of the fee and use of fee revenue. The Chancellor shall approve the amount of the fee at each institution.

66 66 f. A fee approved by the Board for administrative, financial and student information systems replacement costs. g. A fee approved by the Chancellor, not to exceed fifty percent of the regular per credit hour tuition charge (resident or non-resident), for attached credit. Attached credit means credit for instruction sponsored or approved by an institution taught by an instructor not employed or paid by the institution. h. A fee approved by the chancellor, not to exceed fifty percent of the regular per credit hour tuition charge (resident or non-resident), for prior learning credit. 2. Institutions may charge these additional fees: a. A capacity enrollment fee, in addition to the application fee, to students applying to programs for which enrollment is limited. b. A distance learning access fee to students taking distance learning courses. The fee may not exceed the resident per credit tuition charge for the course, except with approval of the Chancellor. c. Special course fees to cover added and unique costs specifically related to a particular course. Such fees may include, but are not limited to, laboratory fees, welding fees, data processing fees, fees for required periodicals, tests or liability insurance. d. Program fees, restricted to students enrolled in a particular program to support programs that have exceptional and critical needs that are not adequately funded through other sources. (1) Program fee revenue must be substantially allocated for the primary benefit of students enrolled in that program during their course of study; however, campuses are permitted to set aside a reasonable amount of funds for specialized programmatic equipment replacement, with funding utilized on a timely basis consistent with replacement cycles. Such benefits may include, but are not limited to, exceptional or unique costs for instructional and support staff, library, equipment, supplies and student stipends unique to a program. Program fees are intended to benefit students by paying or contributing to payment of exceptional and unique needs of students in a program to directly support student instruction and not those common to all programs. (2) Program fees may not exceed amounts needed to pay for exceptional and unique program needs and are not intended as an extension to tuition, course fees or other fees that are generally charged all students.

67 67 (3) Institutions shall establish procedures providing for timely and meaningful student input, including input from students enrolled in affected programs for which a program fee is collected or proposed, concerning program fee proposals and allocation of fee revenue. Procedures must include student review and input on proposed or increased fee amounts and initial, and subsequent material changes, in proposed fee revenue allocations. The procedure shall require that information submitted for student review regarding fee amounts or fee revenue allocations also be simultaneously submitted to the NDUS Office. A request to establish or change a program fee must include a summary of the process for student input and documented student reaction to the proposal. (4) A program fee may be instituted or increased only with Board approval. All requests for new program fees to support new academic programs must be submitted for Board consideration as part of the new program request. All requests for new or revised program fees for existing academic programs must be submitted for consideration when the Board acts on annual budget guidelines, including tuition rates and other fees. Program fee requests must be submitted on a form approved by the Chancellor for that purpose and include a high level budget of planned expenditures which clearly document the exceptional or unique nature of the expenditures. e. Parking fees and such additional incidental fees as may be necessary to facilitate the operation of the institution. Reference: NDUS Procedure HISTORY: New Policy. SBHE Minutes, April 4, Amendment SBHE Minutes, June 16, Amendment SBHE Minutes, March 30, Amendment SBHE Minutes, June 20-21, Amendment SBHE Minutes, April 6, 2006 Amendment SBHE Minutes, November 6, 2008 Amendment SBHE Minutes, June 17, 2010 Amendment SBHE Minutes, November 17, 2011.

68 68 Overview of FY14 Financial Statement and Year-End Close Process Prepared by Robin Putnam, NDUS Director of Financial Reporting Timeline Fiscal year ends on June 30 th Campus, System Office and CTS general ledger s close deadline is August 29 th. Foundations audited financial statements due to NDUSO by September 15 th. Deadline to submit NDUS combined financial statements and templates to the State s Auditor Office is October 10 th. Deadline to submit NDUS statements and templates to OMB is November 14 th Overview of Process Campuses: Campus accounting department responsible for closing their general ledger. Campuses update Excel templates using Sharepoint. Templates mainly used for footnote disclosure purposes. Foundations complete templates and to NDUSO. Statement of Net Position (SNP) and Statement of Revenue, Expenses and Changes in Net Position (SRECNP) generated directly from PeopleSoft System. Elimination entries prepared by NDUSO, using information obtained from campuses as well as system reports. Foundations: NDUS reports 18 foundations in NDUS financial statements. Classified as major or non-major component unit. There are 7 majors and 11 non-majors. Challenges Foundations audited financial information manually updated in Excel. Foundations templates prepared by Foundation staff and submitted by to NDUSO. NDUSO prepares combined financial statements and footnote schedules. Staffing o 1 FTE at System Office for 11 institutions, 1 system office, CTS and 18 foundations. Hire additional part-time CPA from August through mid-november. o From , NDUS and Foundations net position increased 39% and 93%, respectively, yet timeframe and resources remain the same. Dollar amount and number of adjustments decreased significantly during this time. o In comparison, MNSCU has 6.75 FTEs with 31 institutions, 1 system office and 9 foundations.