3.10.4 Financial Control

The institution exercises appropriate control over all its financial resources.

St. Petersburg College is in compliance with this comprehensive standard because it exercises appropriate control over all its financial resources and physical inventory with a management system and information technology systems that assure proper budgeting, expenditure of funds, and management of physical assets.

The Board of Trustees of St. Petersburg College, the College’s President, and the Vice President of Information Systems, Business Services, Budgeting, Planning and Research are the primary agents of control over the College financial resources.

In accordance with Florida Statutes, the Board of Trustees shall be responsible for cost-effective policy decisions appropriate to the community college's mission, the measurement of performance, the reporting of information, and the provision of input regarding state policy, budgeting, and education standards. The President is the chief executive officer of the College, and is responsible for the operation and administration of St. Petersburg College.

Reporting to the President, the Vice President of Information Systems, Business Services, Budgeting, Planning and Research is responsible for directing and controlling all phases of business operations, including accounting, budgets, financial reporting, investment of funds, purchasing, auxiliary services, and program planning and institutional research; provides overall leadership for the College’s central computing systems, data center operations, Collegewide networking systems, computer hardware and software implementation and maintenance. These departments function in accordance with the College’s Board of Trustees Rules and Procedures and the Florida State Board of Education Administrative Rules (Chapter 6A-14, Community Colleges). St. Petersburg College employs qualified staff to manage and sustain the College’s financial stability. The Vice President of Information Systems, Business Services, Budgeting, Planning and Research is supported by qualified staff as depicted in the Business Services Organization Chart and in the Budgets, Planning and Research Contacts Chart.

St. Petersburg College does maintain accurate and up-to-date records of its physical inventory via a comprehensive assets management inventory system. In accordance with the College’s Board of Trustees Property Records Rule 6Hx23-5.13, all College property, equipment and other tangible property of a nonconsumable nature with a value of $500 or more, and having a normal life expectance of one (1) year or more shall be inventoried annually. Each item of property which is practicable to identify by marking shall be marked in the manner required by the Auditor General. Additionally, whenever there is a change in a Budget Supervisor’s responsibility, appropriate paperwork for tracking the change in asset custodianship is completed and processed to Asset Management.

Procedures have been established to control the College’s property and assets in accordance with the rules of the Florida Auditor General and Florida Statutes Chapter 274. The Facilities Planning and Institutional Services department is responsible for the annual physical inventory. Examples of property disposal and annual physical inventory procedures are noted below.

§ An identification number shall be assigned and the property shall be tagged upon receipt and assigned to a Property Custodian.

§ The College utilizes the periodic inventory method. A rolling physical inventory is conducted in which each campus or site is inventoried at least once each fiscal year.

§ The Budget Supervisors shall ensure that all property has been correctly recorded on the inventory sheets provided by Property Management; condition of property shall be verified and noted. On SPC Business Services Web site, Asset Management provides guidelines to assist the Budget Supervisors with their responsibilities for accountable equipment.

§ Asset Management provides Property Management with a file that provides a detailed list of all tangible college property and accountable equipment which is downloaded into the physical inventory staff’s scanners. The physical inventory staff will scan all tangible college property and accountable equipment, verifying the property tag number, description, make, model, serial number, location, condition and custodian. If any of the information does not match the scan file that was provided by Asset Management, the Inventory staff will make changes and flag the item for Asset Management to review. When the staff has completed the Inventory process, a missing items list is sent to the Budget Supervisor. The Budget Supervisor is responsible for locating any missing items. Property Management is notified and the Inventory staff will scan the item(s). The inventory is compared to the property records, and all discrepancies all traced and reconciled.

§ The Property Survey Committee shall in accordance with Florida Statues Section 274.06 dispose of for value, donate, destroy or abandon any equipment that is obsolete, or that is uneconomical or inefficient, or which serves no useful function.

§ Property being proposed for disposal will be reviewed by the President. Authority for the disposal of property shall be recorded in the minutes of the Board of Trustees and recording the disposal of property shall be within the guidelines of Florida Statutes Section 274.02. In addition, a report of the property declared surplus and disposed of is reported annually to the Board of Trustees.

§ Before disposal of any college property, approvals are obtained from the asset’s custodian. Once all approvals are obtained, the Surplus Warehouse Department will complete a form for all transactions and obtain signatures of the new owners, when applicable. The forms and information are then forwarded to Asset Management, so that the property records can be updated in the computer system. Asset Management documents the date of disposal, the means of disposal, condition of the equipment, name of staff witnessing the disposal and the Board of Trustees Survey approval number. Furthermore, prior to the actual disposal of scrapped or donated properties, approval is obtained from the Property Survey Committee.

The Financial and Business Services Office and the Office of Budgets, Planning and Institutional Research work together to ensure that the fiscal stability of the institution is administered and monitored in accordance with Florida Statutes and generally accepted accounting principles. These departments have duties and responsibilities that are segregated to establish the proper oversight for financial transactions. They provide the appropriate level of controls and ensure compliance with external and internal requirements.

The Associate Vice President of Financial and Business Services is responsible for managing the College’s fiscal and financial operations and the adequacy of internal control procedures. The Financial and Business Services Office is responsible for the following functions: Financial Reporting and Analysis, Student Accounting and Business Systems, Scholarships and Student Financial Assistance, Purchasing, Payroll, Accounts Receivable, Accounts Payable, Asset Management, Grants and Contracts, and Auxiliary Services. This office follows the guidelines of the Florida State Accounting Manual in handling accounting transactions.

The Associate Vice President of Budgets, Planning and Institutional Research is responsible for all budget functions to include planning, coordinating, preparing and implementing the College budgets. This office is responsible for facilitating the development of the College’s operating budget, monitoring and controlling the budget and legislative appropriations, and evaluating budgetary performance and resource allocation. The office facilitates the development of the College’s operating budget through the unit planning process and working with the budget committee which is appointed by the College President on an annual basis.

Each year the President shall recommend to the Board of Trustees an annual operating budget and capital outlay budget for approval in accordance with the State Board of Education Rules 6A-14.060 Accountability Standards and 6A-14.0716 Community College Budgets. Upon approval of a budget by the Board of Trustees, such budget shall be transmitted to the Department of Education for review and approval. The President is responsible to the Board of Trustees for implementation of the approved budget. The College goes through thorough planning and budgeting processes each year in which unit plans for academic programs and administrative and student support services are reviewed and approved through department heads, Deans, Provosts, campus and College administration, the Board of Trustees, and the Florida Department of Education. Once the budgets are approved, departmental budgets are loaded into the PeopleSoft financial system. Expenditures (including expenditures for facility construction projects) can only be made in agreement with approved budgets and by authorized employees. The budget information for each fiscal year depicts the sources and uses of the operating budget.

MEMORANDUM

DATE: June 21, 2005

TO: Board of Trustees, St. Petersburg College

FROM: Carl M. Kuttler, Jr.

SUBJECT: Annual Capital Outlay Budget, Operating Budget and Auxiliary Fund Budget, and Salary Adjustments for Fiscal Year 2005-2006

VII. Collegewide Operating Budgets – Lower & Upper Divisions

Approval is sought for the Collegewide Operating Budgets for lower and upper divisions, the Auxiliary Fund Budget, and the Staffing and Program Development Budget for Fiscal Year 2005-2006. Release for spending of these budgets shall be authorized by the College President, or his designee(s).

The Collegewide Fund 10 Operating Budget for the lower division (Attachment A1, A2 and A3) is based largely on State Appropriations agreed upon during the Legislative Conference on the appropriations bill SB 2600 - 2005-2006 and projected student tuition fees. The Fund 10 lower division Operating Budget includes a 5% student tuition fee increase (Approved at May 16, 2005 BOT Meeting); up to a 7% salary increase for A&P, Career staff and student assistants; an aggregate salary increase of approximately 8.2% for full-time Faculty comprised of a minimum of 6% for all full-time Faculty and a Faculty regression adjustment in the amount of $444,103, (an additional 2.2%) including benefits. The top and the bottom of the respective salary schedules for Faculty, Career Services, and Administrative and Professional, have been raised by 7%.

Faculty and staff support for 48 full-time equivalent, new nursing students is included, as well as unit plan and cost-to-continue increases. The recurring reserves for Project Eagle and certain other federally funded Allstate Center programs, initially funded in the 2004-2005 at $635,000, have been increased tentatively to $1,422,500 in the proposed 2005-2006 budget. If approved by the Board, the FY2005-2006 Operating Budget Picture Frame will be used as the basis for completing the FY2006 Operating Budget Form Submission to the Florida Division of Community Colleges. The FY2006 Division Form Submission will be included in a future Board Meeting Agenda for information purposes (FY2005 Submission attached in part as Attachment A4 for information).

The recommended FY2005-2006 Auxiliary Fund Budget, including a summary comparison to FY2004-2005, is provided in Attachment C1.

The Operating Budget for the upper division baccalaureate programs for Fiscal Year 2005-2006, as provided in Attachment B1, is based on the 2005-2006 state appropriation for the baccalaureate program and projected 4-year student fees. The tuition for the baccalaureate program is prescribed in the appropriations bill for 2005-2006. The fees for the baccalaureate program were approved by the Board at the May 16, 2005 meeting.

The above budgets have been reviewed by the President’s Cabinet and are recommended by the President.

Reporting to constituencies: Excerpt from 2006-2007 Budget Submission to State of Florida

Internal budget control is accomplished by recording the budget in the accounting records to allow constant review. Through a system of requisitions and encumbering of purchase orders which are entered as a charge against the appropriate budget, strict budgetary control is maintained. The College’s accounting system includes verification of available budgeted funds and provides Budget Supervisors online access to their financial data. Each unit division is responsible for expending funds within the original priority established by the strategic planning process and approving expenditures. Budget Supervisors are responsible on a daily basis for effective fiscal management of each College account. Therefore, monthly budget reports are provided to the appropriate budget supervisors to monitor progress. These budget reports (mobud.rpt) provide current month and year-to-date activity, and remaining available budget. Quarterly reports on the financial status of the College are provided to the President and the Board of Trustees. These reports include Budget Summary Reports, Revenues and Expenditures by Fund, Statement of Net Assets by Fund, and a current–year-only summary of revenues and expenditures as well as assets, liabilities and fund balances for Funds 10-18 and selected other Funds 20-77. These reports are used to make financial decisions and to assess the financial performance of the College.

Goods and services are purchased using a requisition system. Expenditures are reviewed prior to payment by the Accounts Payable staff. Purchases are executed according to approval limits; purchases where the value exceeds College approval limits must be approved by the Board of Trustees. Currently, the Board of Trustees must approve all purchases that exceed $250,000. The Director of Purchasing is responsible for managing the College’s purchasing requirements according to Florida Statutes Section 287.01; Florida State Board of Education Administrative Rule 6A-14.0734; Board of Trustee Rules 6Hx23-5.12 Purchasing and 6Hx23-5.903 Contract Administration. A quarterly informational report of exempt and other purchases not exceeding $250,000 each is prepared by the Purchasing Department and provided to the Board of Trustees. The Purchasing Department staff handles all purchases and competitive solicitations. As such, the Purchasing Department staff is prohibited from accepting gifts which could influence decisions made in handling the department’s responsibilities. On the College’s Financial and Business Services Web site, the Purchasing Department provides guidance for employees of the College concerning the procurement (purchasing) process.

The College has policies and procedures for safeguarding cash. As such, surprise cash counts are conducted at the campus Business Offices. The campus Business Offices follows the Board of Trustees Rules and Procedures for receipt and deposit of funds. The process for reconciling the bank accounts of the College is assigned to the Financial and Business Services Office’s Office Manager. Bank accounts are reconciled on a monthly basis. Blank paper check stock is maintained in a locked vault with limited access; checks are signed as part of the printing process by the printer. In addition, the check printing access and process have compensating controls in that only two computers which are controlled by specific user profiles as well as the printer, have special fonts and codes that enable checks to be created in a report format that is compatible with the printer’s special fonts. The College utilizes SunTrust Bank’s controlled positive pay system in which files are transmitted each day to the bank to prevent fraudulent checks from being cashed.

Investments are in accordance with the College’s Board of Trustees Investment of Surplus Funds Rule 6Hx23-5.05. Currently the types of investments the College has are State of Florida State Board of Administration (SBA) investments, State of Florida Department of Treasury Special Purpose Investment Account (SPIA), SunTrust Investment Pool, and securities and instrumentalities of the U.S. Government. The College’s Administrative Procedures require that investments be made in accordance with the “Prudent Person Rule”. Accounting records and investment statements are reconciled monthly.

Auxiliary enterprises are self-supporting activities that support or enhance the College’s mission. Auxiliary contract units of the College include bookstore management, manual food service vending, and pay for print. The budget management process for auxiliaries is separate from that of Education and General Revenue. Funds derived from auxiliary enterprises are to be used for the benefit of the College in accordance with the State Board of Education Administrative Rules and the Board of Trustees Rule.

Audits are made to determine whether financial resources are properly accounted for; whether compliance with applicable laws, rules, regulations, and policies are met; whether proper and effective internal controls are in place over entity operations; and whether assets are properly safeguarded. As a component unit of the State of Florida, St. Petersburg College is subject to financial and operational audits performed by the State’s Auditor General’s Office. The Auditor General shall annually conduct financial audits pursuant to the provisions of Florida Statutes, Section 11.45. These financial audits examine the financial statements of the College and provide a determination of whether management has complied with applicable laws, administrative rules, regulations, contracts, and grants that are material to the financial statements. The purpose of the operational audit is to evaluate management’s performance in administering assigned responsibilities in accordance with applicable laws and other guidelines, to determine the extent to which the internal control, as designed and placed in operation, promotes the achievement of management’s control objectives in the categories of compliance, economic and efficient operations, and whether assets are properly safeguarded. As an early auditee in the operational audit cycle, St. Petersburg College often is subjected to the new emphases within the State Audit process, most recently in reviewing the institution’s budget amendment process. Although never cited in the past, SPC corrected this new finding with energy and integrity The College also contracts annually with an independent CPA firm for management consulting engagements to ensure that internal control procedures are followed and to note where improvements or updates to procedures are required.

In 2001 the College transferred all non-expendable endowments and earnings to the St. Petersburg College Foundation, Inc., because all eligible contributions received by the College’s foundation are eligible for state matching funds. Even though the College has three component units which are also direct-support organizations, the St. Petersburg College Foundation, Inc. is the only organization that has non-expendable endowment funds. All contributions for the College are steered towards the SPC Foundation to take advantage of the state’s matching program; Board of Trustees Rule 6Hx23-5.0711 Transfer of College Funds to Direct Support Organization. The College has quasi-endowment funds (Fund 40) for funding of short term loans, student financial aid and Planetarium. The College adheres to the following rules and regulations: Florida Statutes Section 1004.70; State Board of Education Administrative Rules: 6A-14.075; Board of Trustee Rules and Procedures for Direct Support Organizations- Rule 6Hx23-1.33 and Procedure P6Hx23-1.33; and the Foundation, Inc.’s by-laws.

St. Petersburg College has had a bifurcated Risk Management Program with worker’s compensation and related issues including health insurance under the auspices of the Human Resources Department and the other aspects of risk management under the Purchasing Department. Beginning with fiscal year 2005-2006, a significant change was made by creating the office of Director of Security, Safety & Risk Management and transferring most of the duties of risk management from Purchasing to that office. In addition, the Human Resources Department’s responsibility for worker’s compensation issues was transferred to that office along with a position (Human Resources continues to administer the self-insured health program). The transition was completed prior to July 1, 2006. The responsibility for the SPC Insurance Budget (which does not include health insurance) will remain in the Purchasing Department.

The Board of Trustees has established an individual self-insured program to provide group health insurance for its employees, retirees, former employees, and their dependents. The College’s liability was limited by excess reinsurance to $200,000 per insured person for the 2004-2005 fiscal year. The plan is provided by an insurance company licensed by the State of Florida, Department of Financial Services, and Office of Insurance Regulation. The Board of Trustees contributes a portion of employee premiums as a fringe benefit and the remaining portion of the employee premium and dependent coverage is by payroll deduction and coverage for retirees, former employees, and their dependents is by prepaid premium.

As a participating member of the Florida Community Colleges Risk Management Consortium (FCCRMC), the College must comply with the agreement, policies and procedures and other directives as may be issued from the Risk Management Council. The Consortium is self-sustaining through member assessments (premiums) and is reinsured through commercial companies for claims in excess of specified amounts. Additionally, the College is a participating member in the Property/Casualty Program, which entitles participation in any of the Optional Programs of coverage. The Florida Legislature has provided authority for community colleges to participate in programs of self-insurance. Listed below is the specific authority provided in the 2005 Florida Statutes.

The assessment each year for the participation of member colleges is based upon each college’s FTE (full time equivalent student population). The Consortium is on a March 1 through February 28, fiscal year, and because the colleges are on a July 1 through June 30, fiscal year, the assessment is bifurcated. The following report is an example of the annual membership assessment for the College that is submitted to the Board of Trustees.