CALIFORNIA STATE UNIVERSITY, STANISLAUS AUXILIARY AND BUSINESS SERVICES OPERATING BUDGET FISCAL YEAR

Transcription

1 CALIFORNIA STATE UNIVERSITY, STANISLAUS AUXILIARY AND BUSINESS SERVICES OPERATING BUDGET FISCAL YEAR

2 CALIFORNIA STATE UNIVERSITY, STANISLAUS AUXILIARY AND BUSINESS SERVICES OPERATING BUDGET FISCAL YEAR Table of Contents Memorandum from Mr. Giambelluca and Ms. Hutton 3 Summary of Budget 6 (Unaudited) Operating Budget by Department General & Administrative Budget Bookstore Budget Campus Dining Budget Residential Life Village Budget Contracted Vended Operation Budget Warrior Card Budget Investments Budget Club Colors Budget Farming Activities Third Party Events 18

3 CALIFORNIA STATE UNIVERSITY STANISLAUS AUXILIARY AND BUSINESS SERVICES DATE: May 23, 2013 MEMORANDUM TO: FROM: California State University, Stanislaus Auxiliary and Business Services Board of Directors Russell Giambelluca, Secretary and Treasurer Briquel Hutton, Interim Executive Director SUBJECT: Operating Budget for Fiscal Year Background: Pursuant to the provisions of the Compilation of Policies and Procedures for California State University Auxiliary Organization Section 9.8.1, for the Educational Code Section 89904(b), the California State University, Stanislaus Auxiliary and Business Services (ABS) is required to prepare an annual operating budget. The proposed operating budget for includes: General and Administrative activities, the Bookstore, Campus Dining, Residential Life Village, Vended Operations, Warrior Card, Investments, Club Colors, Farming Activities and Third Party Events. ABS s governing Board can accomplish the requirement by reviewing and approving the annual operating budget before the start of each fiscal year. Necessary changes to the approved budgets may be made by the governing Board as the fiscal year progresses. ABS s operating budget is based on assumptions, historical performance and judgment of management ABS uses sound business principles and practices to develop the budget considering the needs and obligations of the organization. For the last three years including the current year ending June 30, 2013, ABS has not successfully generated a net surplus. Previously these deficits were significantly increased due to provision for legacy pension costs arising from historic business activities which ABS no longer engages. In the current year, however, general revenues and standard operating expenses will result in a net deficit. In the budget for the fiscal year, the projection remains negative. It is the recommendation of the Treasurer and the Interim Director, that ABS take action to sell its most marketable asset, the RLV facilities, to the state, recognizing the off balance sheet equity within this asset and increase the cash flow to ABS to permit it to reinvest funds into the vital mission related activities on campus and return to generating a net surplus from ordinary business operations. The following is a summary by department or business operation of the financial projection for

4 General & Administrative: The General & Administrative department projection for the current year includes a portion of the allocated expenses for accounting and auditing services. No material changes to revenue or expenses have been introduced into the General & Administrative budget for fiscal year Bookstore: Total for and budgeted for are essentially the same for the Bookstore. for were generally in line with the approved budget. For the material change to expenses is the reduction in both the pro rata allocation of accounting and auditing services and contractual services. In the previous fiscal year ABS engaged an outside consultant for $9,500, which management does not anticipate reoccurring in Principal payment on the debt will total approximately $88,000 for the Bookstore in Campus Dining: For Campus Food Services received the guaranteed commission income per the terms of the contract with The Compass Group (Chartwells). In fiscal year the guaranteed annual minimum commission shall increase to $140,000 with respect to stated terms for the fifth through the eighth year of the contract. For the material change to expenses is the increase in the pro rata allocation of accounting and auditing services. Anticipated capital expenditures for Campus Dining total $7,500 for replacement of the market umbrellas in front of main dining. Residential Life Village (RLV): From a cash flow perspective the RLV business is the more successful of the ABS operations; but in the opinion of the Treasurer, this $12 million asset is not receiving a sufficient return from its leasing revenues. ABS is prevented from taking steps to improve this cash flow because of the nature of the arrangement with the University. University Housing determines the amount charged to students for the space and handles the marketing, internal upgrading of assets and the allocation of students to room. ABS has proposed to sell this asset to University Housing for $12.0 million, based upon a combination of cash payment and a long term note held by ABS for the net proceeds. We believe this approach would be beneficial to ABS and in the life cycle of the facility, generate a lower cost of operation for the University Housing unit. The contract with University Housing expires on June 30. We propose that a sale of the asset be agreed as of July 1, 2013, though obtaining all approval and completing the transaction would most likely take a substantial part of the next academic year. University Housing has been asked for an increase in lease payment; but no increase has been agreed. The budget provided identifies the results for ABS with no increase in one scenario and with an increase of $70,000 in another for one year. We are awaiting an appraisal from a third party organization and will use this material in the near future to negotiate with the University to sell the RLV facility to them. Vended Operations: Vending operations has continued to produce a small contribution to the net assets of ABS in the past year and is expected to slightly decline in The sales from the campus have been flat and much lower than what was originally projected to Pepsi in their original contract. Warrior Card: There is little change in the fundamentals of the budget for the Warrior Card activity. We have made a change in allocating accounting and auditing expenses to this endeavor. Investments: In the investment income for ABS improved due to the investment with Morgan Stanley Smith Barney in the corporate bond ladder and short-term bond pool. The annual investment income for is anticipated to remain the same as at $22,250.

5 Club Colors: During the year, ABS entered into a commission agreement to purchase logo wear for wholesale purchase and sales (to campus organizations) from an organization identified as club colors. We have further arranged to have ASI and USU participate with ABS in this endeavor. These organizations have existing infrastructure, personnel and processes to handle actual selling and handling of goods. We will share in the commissions generated by the sales received from club colors and intend to place a markup on the items purchased for other or for local retail sales to produce a net surplus for both organizations. This activity has shown a small increase in revenue due to the activities of ASI working with Club colors and the commission which ASI is now paying to ABS. Farming Activities: During the year, ABS was approached by the Chair of the Agriculture department to consider providing commercial assistance to the University Agriculture program to develop a demonstration citrus grove. The effort required ABS to underwrite a year of expenses for a farm technician to work land designated by the University to be prepared to be the site of a grove, while the academic departments applied to expand and extend a government agriculture grant. This effort to support this activity is dependent upon the demonstration grove proceeding as part of an academic program and the existence of funding from a government grant. If neither of these conditions exists, most likely ABS is support of the program would be ended. The long term commercial view was that ABS would provide a commercial umbrella for the sale of the fruits and other grown products to the local community. Third Party Events: The rental or temporary leasing of University facilities to community organizations and individuals has been an important means by which catering income has been generated for the food service program and thereby increasing the commissions to ABS under that contract. Several years ago, ABS personnel managed the leasing activities by serving as the University Reservation Office. This activity was reassigned to Advancement 5 years ago, and the individuals assigned were refocused on advancement activities and fewer efforts were placed on the commercial rental of facilities and the generation of catering revenues. During the past year discussions have occurred and the suggestion made that this activity be reassigned to ABS. In assigning this to ABS the method for operating third party rentals would be revised; new supervision and attention would be placed on these efforts; University Policies and rates for use of facilities would be updated; and this would become a means for an increase in revenue for ABS both through receiving a small share of the net funds received as a commission for its oversight and by improving the level of third party catering offered on campus to organizations using the facilities. The budget offered for the current year identifies a small deficit. We actually expect ABS to break even or generate a surplus; but given that the staffing of the activity, the hiring of a permanent director of ABS, the revision of certain policies and pricing have yet to be completed; we felt it best to provide a conservative outlook for the first year in the proposed initial budget. Recommendation: Management recommends the ABS Board of Directors approve the operating budget.

6 CSU STANISLAUS AUXILIARY AND BUSINESS SERVICES, INC. Summary of Operating Budget Commission $ 575,000 $ 571,000 $ 581,000 Contributions 10,000 10,000 10,000 Event Income ,000 Interest Income 15,052 2,550 2,550 Lease Income 580, , ,000 Other Non Operating s 0 6,300 0 Other Operating s 36,675 46,700 45,000 from Investments 0 13,250 13,250 Royalties 28,000 28,000 28,000 Merchandise Sales 20, ,000 Unrealized Gains(Losses) 0 6,500 6,500 Warrior Card 5, Warrior Card Transaction Fee 2,500 1,200 1,200 Total s 1,272,227 1,265,500 1,322,500 Accounting and Auditing Fees 363, , ,744 Advertising & Promotional Publications 0 5,900 10,000 Awards, Gifts and Donations 10,200 11,150 10,200 Bank Charges 4,000 3,600 4,000 Contractual Services 45,500 66,000 53,095 Cost of Bond Issuance Amortization 3,264 3,264 3,264 Dental Insurance Depreciation Expense - Building 156, , ,354 Depreciation Expense - Equipment, F&F 56,351 52,560 53,200 Depreciation Expense - LHI 232, , ,000 Direct Overhead-Chancellors Office 30,000 14,194 14,194 Employee and Board Health and Welfare 12,000 21,265 12,752 Hospitality Insurance Premiums 51,500 40,390 40,307 Interest Expense 373, , ,596 Investment Service Charge 0 1,100 1,100 Legal 5,000 7,000 8,000 Life Insurance Medicare - Payroll Taxes Membership & Dues ,000 Merchandise for Sale 5, ,250 Other Equipment 9,500 6,100 5,000 Other Tax and License Fees 5,000 4,000 4,200 Payroll Taxes - SDI 0 1, Postage and Freight 600 1, Printing & Reproduction 1,100 1,785 1,000 Repair and Maintenance 31,000 5,700 5,700 Repairs and Maintenance - Facilities 36,500 17,550 22,500 Retirement 0 4, State Pro Rata 7,500 3,960 4,661 Supplies and Services 7,200 3,560 8,227 Support Staff Salaries 0 7,650 63,775 Travel In State 1,000 1,200 1,200 Utilities Electric 30,000 27,000 27,780 Vision Care Workers Compensation Total 1,478,883 1,446,896 1,475,147 Increase (Decrease) in Net Assets (206,656) (181,396) (152,647) Add: Non Cash Depreciation Expense - Bldg 156, , ,354 Depreciation Expense - Equipment, F&F 56,351 52,560 53,200 Depreciation Expense - Leasehold Improvements 232, , ,000 Total Non Cash 444, , ,554 Less: Cash Outlay for Capital Expenditures & Debt Service Principle Payment - Long Term Debt (302,991) (302,991) (318,118) Other Captial Expenditures (30,000) (6,300) (5,000) Capital Improvements - Campus Dining (56,000) (7,300) (7,500) Total Cash Outlay for Capital Expenditures & Debt Service (388,991) (316,591) (330,618) Increase (Decrease) in Cash Outlay $ (150,748) $ (30,073) $ (13,711)

7 CALIFORNIA STATE UNIVERSITY STANISLAUS AUXILIARY AND BUSINESS SERVICES (Unaudited) General & Administrative Bookstore Campus Dining Residential Life Village Contracted Vending Warrior Card Investment Club Colors Farming Activities Total Contributions $ - $ 10,000 $ - $ - $ - $ - $ - $ - $ - $ 10,000 Commission - 425, ,000-14, , ,000 Event Income Farming Interest Income , ,550 from Investments , ,250 Lease Income , ,000 Other Non Operating s 6,300 6,300 Other Operating s ,700 10, ,700 Royalties , ,000 Merchandise Sales Unrealized Gains(Losses) , ,500 Warrior Card , ,200 Total 6, , , ,000 50,700 39,250 22,250 2, ,265,500 Accounting & Auditing Fees 90,849 98,116 29, ,822 7,268 7, ,395 Advertising & Promotional Publications - 1,000 1, , ,900 Awards, Gifts & Donations , ,150 Bank Charges , ,600 Contractual Services 5,000 26,000 35, ,000 Cost of Bond Issuance Amortization , ,264 Dental Insurance Depreciation Expense - Bldg , ,354 Depreciation Expense - Equip - 2,110 50, ,560 Depreciation Expense - LHI - 180,950 78, ,000 Direct Overhead - Chancellor's Office 14, ,194 Employee & Board Health & Welfare 10, ,515 21,265 Hospitality Insurance Premiums ,700 10,100 18, ,390 Interest - 237, , ,034 Investment Service Charge , ,100 Legal 7, ,000 Life Insurance Medicare - Payroll Taxes Membership & Dues Merchandise for Resale Other Equipment 1,000-3, , ,100 Other Tax & License Fees , ,000 Payroll Taxes - SDI ,875 1,875 Postage & Freight 1, ,200 Printing & Reproduction , ,785 Repair & Maintenance , ,700 Repairs & Maintenance - Facilities - 2,000 15, ,550 Retirement ,250 4,250 State Pro Rata Charges 3, ,960 Supplies and Services 200-5, (1,800) ,560 Support Staff Salaries ,650 7,650 Travel In State 1, ,200 Utilities 27, ,000 Vision Care Workers Compensation Total 137, , , ,307 7,768 15,328 4, ,810 1,446,896 Increase (Decrease) in Net Assets $ (130,918) $ (162,093) $ (102,522) $ 154,693 $ 42,932 $ 23,922 $ 17,350 $ 1,050 $ (25,810) $ (181,396)

8 CALIFORNIA STATE UNIVERSITY STANISLAUS AUXILIARY AND BUSINESS SERVICES Operating Budget by Department General & Administrative Bookstore Campus Dining Residential Life Village Contracted Vending Warrior Card Investment Club Colors Farming Activities Third Party Events Total Contributions $ - $ 10,000 $ - $ - $ - $ - $ - $ - $ - $ - $ 10,000 Commission - 425, ,000-14, , ,000 Event Income ,000 50,000 Farming Interest Income , ,550 from Investments , ,250 Lease Income , ,000 Other Operating s ,000 10, ,000 Royalties , ,000 Merchandise Sales , ,000 Unrealized Gains(Losses) , ,500 Warrior Card , ,200 Total 0 435, , ,000 49,000 39,250 22,250 7, ,000 1,322,500 Accounting & Auditing Fees 89,634 84,256 84,256 82,464 3,585 3,585 3,585 1,793 1,793 1, ,744 Advertising & Promotional Publications - 1,000 1, , ,000 10,000 Awards, Gifts & Donations , ,200 Bank Charges , ,000 Contractual Services 5,000 16,750 25, , ,345 53,095 Cost of Bond Issuance Amortization , ,264 Dental Insurance Depreciation Expense - Bldg , ,354 Depreciation Expense - Equip - 2,200 51, ,200 Depreciation Expense - LHI - 181,000 79, ,000 Direct Overhead - Chancellor's Office 14, ,194 Employee & Board Health & Welfare 11, ,752-12,752 Hospitality Insurance Premiums ,665 9,492 17, ,307 Interest - 233, , ,596 Investment Service Charge , ,100 Legal 7,000-1, ,000 Life Insurance Medicare - Payroll Taxes Membership & Dues ,000 Merchandise for Resale , ,250 Other Equipment 1,000-4, ,000 Other Tax & License Fees , ,200 Payroll Taxes - SDI Postage & Freight Printing & Reproduction ,000 Repair & Maintenance , ,700 Repairs & Maintenance - Facilities - 2,000 15,000 5, ,500 Retirement State Pro Rata Charges 4, ,661 Supplies and Services 200-5, , ,000 8,227 Support Staff Salaries ,275 62,500 63,775 Travel In State 1, ,200 Utilities 27, ,780 Vision Care Workers Compensation Total 136, , , ,525 4,373 16,173 8,830 3,188 6,240 75,063 1,475,147 Increase (Decrease) in Net Assets $ (136,579) $ (135,428) $ (139,748) $ 205,475 $ 44,627 $ 23,077 $ 13,420 $ 3,812 $ (6,240) $ (25,063) $ (152,647)

9 General & Administrative Operating Budget s Royalties Other Operating s $ 1,675 $ - $ - Other Nonoperating s 0 6,300 0 Total s 1,675 6,300 0 Accounting & Auditing Fees 90,849 90,849 89,634 Awards, Gifts & Donations Bank Charges Contractual Services 500 5,000 5,000 Direct Overhead-Chancellors Office 30,000 14,194 14,194 Employee & Board Health & Welfare 12,000 10,750 11,000 Hospitality Insurance Premiums Legal 3,000 7,000 7,000 Other Tax & License Fees Membership & Dues Other Equipment 2,000 1,000 1,000 Postage & Freight 200 1, Printing & Reproduction State Pro Rata Charges 7,500 3,960 4,661 Supplies and Services Travel In State 1,000 1,200 1,200 Total 149, , ,579 Increase (Decrease) in Net Assets $ (147,874) $ (130,918) $ (136,579)

10 Bookstore Operating Budget Contributions $ 10,000 $ 10,000 $ 10,000 Commission 425, , ,000 Total s 435, , ,000 Accounting & Auditing Fees 98,116 98,116 84,256 Advertising & Promotional Publications 0 1,000 1,000 Awards, Gifts & Donations 10,000 10,000 10,000 Contractual Services 25,000 26,000 16,750 Depreciation Expense - Equipment, F&F 1,053 2,110 2,200 Depreciation Expense - LHI 171, , ,000 Insurance Premiums 14,000 11,700 11,665 Interest Expense 237, , ,857 Repair & Maintenance 1, Repairs & Maintenance - Facilities 6,000 2,000 2,000 Utilities 30,000 27,000 27,000 Total 594, , ,428 Increase (Decrease) in Net Assets (159,218) (162,093) (135,428) Add: Non Cash Depreciation Expense - Equipment, F&F 1,053 2,110 2,200 Depreciation Expense - LHI 171, , ,000 Total Non Cash 172, , ,200 Less: Cash Outlay for Capital Expenditures & Debt Service Principle Payment - Long Term Debt (82,991) (82,991) (88,118) Total Cash Outlay for Capital Expenditures & Debt Service (82,991) (82,991) (88,118) Increase (Decrease) in Cash Outlay $ (69,624) $ (62,024) $ (40,346)

11 Campus Dining Operating Budget Commission $ 150,000 $ 130,000 $ 140,000 Total s 150, , ,000 Accounting & Auditing Fees 29,072 29,072 84,256 Advertising & Promotional Publications 0 1,000 1,000 Contractual Services 20,000 35,000 25,000 Depreciation Expense - Equipment, F&F 55,298 50,450 51,000 Depreciation Expense - LHI 60,662 78,050 79,000 Employee & Board Insurance Premiums 15,000 10,100 9,492 Legal 2, ,000 Other Equipment 7,500 3,850 4,000 Postage & Freight Repair & Maintenance 30,000 5,000 5,000 Repairs & Maintenance - Facilities 5,000 15,000 15,000 Supplies and Services 5,000 5,000 5,000 Total 230, , ,748 Increase (Decrease) in Net Assets (80,182) (102,522) (139,748) Add: Non Cash Depreciation Expense - Equipment, F&F 55,298 50,450 51,000 Depreciation Expense - LHI ,050 79,000 Total Non Cash 55, , ,000 Increase (Decrease) in Cash Outlay $ (24,634) $ 25,978 $ (9,748)

12 Residential Life Village Operating Budget Scenerio 1 Scenerio 2 Lease Income 580, , , ,000 Total s 580, , , ,000 Accounting & Auditing Fees 130, ,822 82,464 82,464 Cost of Bond Issuance Amortization 3,264 3,264 3,264 3,264 Depreciation Expense - Bldg 156, , , ,354 Insurance Premiums 22,000 18,300 17,704 17,704 Interest Expense 136, , , ,739 Repairs & Maintenance - Facilities 25, ,000 5,000 Total 473, , , ,525 Increase (Decrease) in Net Assets 106, , , ,475 Add: Non Cash Depreciation Expense - Building 156, , , ,354 Total Non Cash 156, , , ,354 Less: Cash Outlay for Capital Expenditures & Debt Service Principle Payment - Long Term Debt (220,000) (220,000) (230,000) (230,000) Total Cash Outlay for Capital Expenditures & Debt Service (220,000) (220,000) (230,000) (230,000) Increase (Decrease) in Cash Outlay $ 42,756 $ 91,047 $ 131,829 $ 201,829

13 Contracted Vended Operations Operating Budget Commission 0 14,000 14,000 Other Operating 35,000 36,700 35,000 Total s $ 35,000 $ 50,700 $ 49,000 Accounting & Auditing Fees 7,268 7,268 3,585 Advertising & Promotional Publications Insurance Premiums Total 7,268 7,768 4,085 Increase (Decrease) in Net Assets $ 27,732 $ 42,932 $ 44,915

14 Warrior Card Operating Budget Interest Income $ 52 $ 50 $ 50 Other Operating 0 10,000 10,000 Royalties 28,000 28,000 28,000 Warrior Card 5, Warrior Card Transaction Fee 2,500 1,200 1,200 Total s 35,552 39,250 39,250 Accounting & Auditing Fees 7,268 7,268 3,585 Advertising & Promotional Publications 0 3,400 2,500 Bank Charges 3,500 3,100 3,500 Contractual Services 0 0 3,000 Insurance Expense Other Equipment 0 1,250 0 Printing & Reproduction 800 1, Repairs & Maint -Facilities Supplies and Services 2,000 (1,800) 2,000 Total 14,068 15,328 16,173 Increase (Decrease) in Net Assets $ 21,484 $ 23,922 $ 23,077

15 Investments Operating Budget Investment Income $ - $ 13,250 $ 13,250 Unrealized Gains (Losses) 0 6,500 6,500 Interest Income 15,000 2,500 2,500 Total s 15,000 22,250 22,250 Accounting & Auditing Fees 0 0 3,585 Insurance Expense Investment Service Charges 0 1,100 1,100 Other Tax & License Fees 5,000 3,800 4,000 Total 5,000 4,900 8,830 Increase (Decrease) in Net Assets $ 10,000 $ 17,350 $ 13,420

16 Club Colors Operating Budget Commission $ - $ 2,000 $ 2,000 Merchandise Sales 20, ,000 Total s 20,000 2,000 7,000 Accounting & Auditing Fees 0 0 1,793 Awards, Gifts & Donations Insurance Expense Merchandise for Resale 5, ,250 Total 5, ,188 Increase (Decrease) in Net Assets $ 15,000 $ 1,050 $ 3,812

17 Farming Activities Operating Budget Farming Total s Accounting & Auditing Fees 0 0 1,793 Dental Insurance Health & Welfare 0 10,515 1,752 Insurance Expense Life Insurance Payroll Taxes - Medicare Payroll Taxes - SDI 0 1, Retirement 0 4, Supplies & Services Support Staff Salary 0 7,650 1,275 Vision Care Worker's Compensation Total 0 25,810 6,240 Increase (Decrease) in Net Assets 0 $ (25,810) $ (6,240)

18 Third Party Events Operating Budget Event Income $ - $ - $ 50,000 Total s ,000 Accounting & Auditing Fees 0 0 1,793 Advertising & Promotional Publications 0 0 5,000 Membership & Dues Support Staff Salaries ,500 Contractual Services - Facility Charges 0 0 1,125 Contractual Services - Public Safety Charges 0 0 1,500 Contractual Services - Catering Charges Insurance Expense Supplies & Services 0 0 1,000 Utilities Total ,063 Increase (Decrease) in Net Assets 0 0 $ (25,063)

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