University of North Florida
Board of Trustees
Finance and Audit Committee
April 18, 2002
University Center at 1:00 p.m.
Mr. Steve Halverson (Chair), Mr. T. O’Neal Douglas, Ms. Donna Harper Gibbs, and Ms. Joan Wellhouse Newton
Mr. Wilfredo J. Gonzalez, Mr. James Stalling, and Ms. Carol Thompson
Item 1 Call to Order
Chair Halverson convened the meeting at 1:08 p.m.
Item 2 Approval of Minutes
Trustee Gibbs MOTIONED to approve the February 21, 2002 minutes. SECONDED by Trustee Newton. Motion passed.
Item 3 Review of Revised Budget
Chair Halverson stated that at the last Board of Trustees (BOT) meeting, the Audit Committee recommended, and the BOT approved, a set of budget reduction guidelines for use in reducing UNF’s 2001-2002 budget by $4.1 million. At this meeting the Board gave President Hopkins the authority to follow those guidelines in making the necessary budget reductions.
President Hopkins summarized how the budget reductions were derived and implemented:
- In early Fall 2001, there was a significant decline in State revenue. In anticipation of budget reductions, on October 4, 2001, the President instituted a freeze in a number of areas: all hiring, position reclassifications, promotions, and out-of-cycle pay raises: Other actions taken includes cancellation of merit pay increases, limitation of travel to only essential travel as determined by the vice presidents, limitation on all maintenance, repair and renovations except as necessary to continue essential services, and a twenty-five percent reduction for all non-salary/benefits University budgets.
- The vice presidents and the University Community were canvassed seeking ideas about budget reduction measures that could help save the University money. The vice presidents were requested to review their operations to determine additional cost saving initiatives.
- From all the suggestions, Scott Bennett, Inspector General, prioritized the cost saving suggestions. Through this process, three units were identified for external reviews. The unit reviews are underway and will be completed by July 2002.
- In November 2001, UNF was notified that 4.9% of its E&G Budget would have to be reduced, which equates to $4.1 million of the E&G base of $83.2 million. The $4.1 million reduction is intended to be a permanent reduction.
- The actions taken to accomplish the $4.1 million budget callback were:
- The instructional budget was held harmless, which was determined to be $32+ million from the E&G budget ($83.2 million).
- The vice presidents were asked to develop two scenarios for budget reductions from non-instructional units: a) reduce their budgets by 5%, which would be a permanent reduction as of July 1, 2002, and b) identify an additional 5% budget reduction in case of future budget callbacks.
- The results of the divisions’ budget reduction plans were forty-one E&G positions were given back to the University and there were no layoffs. 1) Fourteen of the forty-one E&G positions were transferred to Auxiliaries. This was the first time this was done as a conscious strategy to expand the budget base. 2) Expenditures on currency (technology replacement) and library books were part of the budget reduction. These had been funded with recurring dollars. Expenditures for these two items can be funded with one-time funds.
- The State of Florida is 49th in the Nation for funding in higher education, which means UNF is not well funded and budget cuts are difficult to absorb.
- For the first 5% budget reduction, no UNF services were cut, but if an additional budget reduction is needed UNF will have to find other sources or cut some services.
- The Florida Board of Education has a Funding Task Force to look at the ways universities are funded.
Chair Halverson stated that the University did a good job with the organized method to accomplish the task of the $4.1 million E&G budget reduction.
Item 4 Update on New Financial System – Enterprise Resource Planning (ERP)
Chair Halverson stated that selection, installation, and implementation of the new ERP system is going to be enormously complex and will take a few years. Chair Halverson had met with Mr. Richard Crosby, Acting Vice President for Administration and Finance, regarding the ERP system, and requested that he prepare a presentation for the Audit and Finance Committee.
President Hopkins noted that the ERP Systems project will be complex and expensive. She indicated that one of the cost drivers in doing this type of system is insisting on doing unique things; however, the UNF strategy will be to change to fit the program.
Mr. Crosby gave a PowerPoint presentation, as requested by Chair Halverson, on the ERP process.
- Currently, the state universities operate under a 20-year-old accounting system called SAMAS (State Automated Management Accounting System). SAMAS has been free to the universities during this 20-year period. All universities are scheduled to be off SAMAS by July 2004 for purchasing, accounts payable, etc. functions, and Payroll by January 2005.
- At the present time, Payroll and Human Resources are in a consortium with the University of West Florida for payroll and personnel functions. UNF’s student system is locally written and maintained. Currently, the plan is to look at vendors for the ERP that include student systems, with the option of buying the student system later, if needed.
Chair Halverson suggested that since the ERP work plan schedule is driven by the deadline for SAMAS that the deadline date should be clarified.President Hopkins said the four presidents could get together and request a change in the SAMAS timeline.
- The Comptroller has plans to upgrade the State of Florida’s central accounting system. The University of Florida, Florida State University, University of West Florida and UNF created a consortium to serve the needs of all the institutions. The consortium hired a consultant to guide the ERP process. The consultant’s costs will be shared.
- The ITN (Invitation To Negotiate) approach was chosen as the process to invite and select ERP vendors. The consultant will not receive any business from the ERP vendor. Each institution will share equally for work associated with the ITN evaluation and vendor selection. The ITN approach gives authority as a State agency to negotiate a price that is affordable.
- Some advantages to the consortium are (a) a consolidated ITN has an inherent cost efficiency over four individual procurements, (b) common issues with the institutions can be solved once rather than four times, and (c) training cost for employees will be lessened.
- Budget size and number of employees will be used to prorate the acquisition of a software license. The license will last at least 15 years.
After discussion, it was decided that Trustee Gibbs will have an opportunity to review the ERP contract with Mr. Crosby and Ms. Stone before it is executed.
Chairperson Halverson requested that the Audit Committee be kept apprised of the ERP evaluation process. Chairperson Halverson will stay in contact with President Hopkins and Mr. Crosby. Telephone conference calls will be scheduled periodically so Audit Committee trustees can participate in the calls.
Chairperson Halverson thanked Mr. Crosby for the presentation.
Item 5 Adjournment
There being no further business, the meeting was adjourned at 2:25 p.m