Preparing for a Base Year

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Isabel Mae Jordan
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Smolnik, Senior G&C Officer, Arizona State University Steve

1 MAXIMUS Higher Education 27 th Annual Users Meeting Newport, RI September 10-13, 2014 Preparing for a Base Year Jennifer Smolnik, Senior G&C Officer, Arizona State University Steve Bradley, Director at MAXIMUS Jason Guilbeault, Senior Consultant at MAXIMUS 1

2 This is my base year, what do I do? Define your Objectives Review Past Problems Identify Resources Plan Get Resources Commitment Start Early

3 Major Problems Base / Space Relation Space Survey Reconciliation of Financial Statement Research to Organized Research Rates are decreasing, lower Admin components also Time Constraints Add your own

4 Major Opportunities Special Studies External Bond Interest New Construction since last proposal Should be occupied Review Facilities Cost Projection in DCA Best Practices Manual (section XII) Equipment By Room Quality Space Survey

5 Where To Start Goals Rate Increase Maintain Rate Minimize Effort Resources Internal External

6 Define The Base Define Base Financial Statement reconciliation issues Financial Statement reclasses out of OR Financial Statement reclasses that are large amounts (i.e. into O&M) Cost Sharing Space Survey Implications

7 Need For Special Studies Library Study Requires Full Year of Data Componentization The components of a building have different useful lives Results in recognizing more depreciation faster Remember: Per A-21, depreciation method in F&A Proposal must match method in Financials

8 Interest Obtain data from SWCAP for state universities Identify to Building or project Get it by the total amount for interest associated with Campus-wide Improvements Review requirements in DCA Best Practices Manual (section IV, page 38)

9 New Construction/Projection What new research intensive buildings are coming on line? When will the building be completed? What departments are moving into that space? What is happening to the space they vacate? Will this building support new or existing research?

10 Equipment Ideally, want to match 80-90% of items on a room-by-room basis Accurate Inventory Well documented Split funded equipment (data may be hard to come by)

11 Space Survey Best if done in the final months of the base year (spring) or some schools are conducting the survey after the base year ends Identify source and quality of Base Inventory Identify departments to survey Identify survey tools (e.g., manual or electronic) Identify resources

12 Space Survey Develop Survey Plan Develop Survey Materials Train Surveyors Conduct Survey Quality Assurance Review Results

13 Anticipate Results Conduct a practice year Use partial year data to model results Make adjustments to accounting system before year end (e.g., account function / program codes) Review physical plant accounting (e.g. for O&M pools)

14 Results The more you can do before year end, the better No surprises during the rate calculation Maximize rate calculation With cleaner data, you can spend more time focusing on data analysis, instead of data clean up

15 Issues for Senior Management If Senior Management thinks something is a critical issue, then it is! They need to know the risk to the institution and to make an informed decision They are the one signing the Certificate of F&A, stating that YOU didn t knowingly make an error

16 Issues for Senior Management Sometimes the proposal due date is not a realistic deadline Role in the F&A Process Resource Requirements Review Negotiations Post Review

17 Senior Management Roles To Facilitate Identify resources Ensure cooperation Responsible for content of the proposal Responsible for final negotiated rate

18 University Resources Staffing University Community/Environment Written Policies Financial Systems External Cooperation Auditors

19 Review Base Reclassifications Cost Sharing Space Survey Operations & Maintenance Compliance with A-21 Format Compliance with DS-2

20 Review F&A Proposal is based on the application of averages Theory of large numbers Moving the rate up or down requires significant dollar changes Are there significant percent changes in the individual components of the rate when compared with your last base year?

21 Review Value of 1 Point at your school What does 1 point provide the University in incremental F&A $ Recoveries? How many Admin dollars are required to increase the admin component by one point? How many Facilities dollars are required to increase the facilities rate by one point? How much OR space is needed to increase the rate?

22 Review What departments have large DCE ratios, why? Does your system coding facilitate the proper identification of other expenses? Does the campus have a clearly defined Definition for Organized Research? Other Sponsored Activities? OIA? Do you have a common consistent understanding of University Data?

23 Review What three things are you most comfortable with? What three things do you have the most concern about? Where are there possibilities for an increase in the rate? If you were the government, where would you look to decrease the rate?

24 Review Required Summary Elements Rate Schedules Reconciliation to the Financial Statements Schedule of Exclusions (Recon 2) Classification into A-21 Cost Pools (Recon 3) Adjustments/Transfers(Recon4) Stepdown Schedule

25 Negotiations What is the submitted rate? What is the minimum rate the University will accept? What rate can the University live with? What is the ideal rate the University would like? What is the actual rate of recovery?

26 Negotiations Do you have new research intensive buildings coming on line? Ideal to have a full year of costs in your proposal. How many years should you negotiate for? Do you need to change your off-campus definition? Are you considering an equipment capitalization change?

27 Post Analysis Did the original data require any changes? Are there consistent Department numbers across data files? Do your buildings have the same name in the space and building value? Do you use the same building numbers for the space, building value and equipment inventory?

28 Post Analysis What did you do right? What can you do better next time? Would a practice year benefit you? Document, document, document. Fix it before you start the next one!

29 Questions/Comments Jennifer Smolnik (480) Steve Bradley (847) Jason Guilbeault (518)

30 Thank you for attending this presentation 30 30

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