Narrative

University of North Georgia is compliant with this core requirement. 

 

Both Gainesville State College (GSC) and North Georgia College & State University (NGCSU) maintained comprehensive networks of internal controls to ensure compliance with federal, state, and local requirements. Also, procedures are in place at the consolidated University of North Georgia (UNG) to assess risk, deter non-compliance, and detect violations at the earliest opportunity. Key institutional components involved in controlling institutional finances and monitoring compliance include the University System of Georgia Board of Regents and the University System of Georgia Internal Audit function, as well as internal auditors and fiscal officers and staff.

 

The Board of Regents’ comprehensive policy manual includes finance and business policies[1] covering topics such as budget, tuition and fees, fund management, and insurance. This policy manual is supplemented by a detailed Business Procedures Manual[2] enumerating detailed processes to implement the board’s fiscal policies.

 

Financial Resources 

The consolidation has had no substantive impact on the total financial resources available to support the consolidated University of North Georgia. The Chancellor has indicated that administrative savings that should result from institutional consolidation will be available to reallocate within the institution to meet pressing needs and to expand educational programs in response to state needs.

 

University of North Georgia is the result of consolidating two institutions that individually had demonstrated adaptability and responsiveness in light of severe declines in State support.  As a result of the decrease in Georgia revenues, state appropriations to both institutions have decreased 10.1%  ($5.1 million) from a peak of $50,233,400 in FY2009 to $45,152,086 in the FY2014 original budget.  Significant tuition increases authorized by the Board of Regents (BOR) and an institutional fee helped partially offset the loss in state appropriation. Although consolidation became effective January 8, 2013, the Board-approved FY2013 balanced budgets for each institution remained in effect until June 30, 2013.  Beginning July 1, 2013 there is a single Board-approved balanced budget for the consolidated University of  North Georgia.   Recent annual financial reports for both institutions confirm the new university’s financial stability.

 

Full audits for both institutions are performed periodically by the State auditor.  NGCSU's last full audit was FY2010; GSC's last full audit was FY2003.  A "Full Disclosure Management Report” was conducted for both institutions for FY2012 and is being done for FY2013. There were no audit findings or significant deficiencies reported for NGCSU in FY2012 or the full audit in FY2010.  The audit issues identified in FY2012 and the full audit in FY2003 for GSC were corrected immediately and do not present a risk to the consolidated University of North Georgia. The FY2012 audits for NGCSU[3] and GSC[4] are attached.

                                    

In addition to state appropriations, GSC and NGCSU have sought partners in their missions to provide quality education by seeking funds from other sources. The consolidated UNG currently  relies on a diverse portfolio of financial resources, including auxiliary services, endowments and gifts, grants and contracts, capital funding, and student tuition and fees.

 

Auxiliary enterprises for UNG consists of bookstore operations, food services, student housing (Dahlonega campus), intercollegiate athletics, parking, transportation, copy services, and vending. All of these services are required to provide a full service to the university.

 

The University Advancement office seeks philanthropic support through fundraising events, annual or special solicitation mailings, and individual solicitations of major and planned gifts.  NGCSU completed its first-ever capital campaign in 2012, successfully raising over $44 million in support for the institution.

 

First-Year Budget 

The effective date of the consolidation in early January 2013 fell in the middle of Georgia’s fiscal year 2013, which ran from July 1, 2012 through June 30, 2013. Although many aspects of the consolidation went into effect at that time, GSC and NGCSU had to complete the FY 2013 budget years separately. Likewise, the Department of Education (DOE) would not stop its FY 2013 financial aid allocations mid-year. Consequently, the first half of the first year of consolidation was handled separately for GSC and NGCSU. There was budgetary adjustments made in both sets of expenditure accounts to accommodate the new administrative structure’s implementation in January 2013.  Budget management is coordinated centrally under the UNG Senior Vice President for Business and Finance.  Fiscal year 2014, which begins in the summer 2013, is the first year that the BOR and DOE have established annual budgets for the consolidated University of North Georgia. The UNG FY2014 budget[5] was approved by the Board of Regents at their April 2013 meeting[6].

 

Because the consolidation occurred when both institutions were  midway through the 2013 fiscal year, a first year budget has been computed from half of the FY2013 budget plus half of the FY2014 budget. The attached budget information[7] illustrates the combining of revenues, expenditures, and net cash flows approved for GSC and NGCSU for FY 2013 and for UNG for FY2014, as well as computed for calendar year 2013. As the table shows, the budgets are balanced as required by BOR policy.

 

The BOR has invested significant resources into ensuring the consolidated universities are successful. The FY 2014 budget assumes that the enrollment projections  of 2% increase in headcount will be met. This anticipated growth in the student body will result in increased revenue from tuition and fees in FY 2014 and increased state appropriations for formula funding workload gains starting in FY2015. Should revenues not materialize as projected and unexpected state funding cuts occur mid-year, contingency plans will be pursued. Contingency resources include tuition reserve carry-forward balances, public service program reserve balances, and significant auxiliary enterprise reserves.  Substantial assets reside with the institution's philanthropic foundations, and additional funds could be requested from them as needed.  The consolidated revenue projections for the University of North Georgia represent conservative, attainable enrollment growth that will provide sufficient revenue to meet current and projected capacity.  Continued trends in state and federal funding reductions could limit the growth capacity and service potential for the region.

 

The capital projects budget is submitted by the President after consultation with the chief facilities officer and is categorized as infrastructure and utility (MRR) repairs under $1 million, small capital projects over $1 million, major capital projects over $5 million, and public-private ventures. Projects recently approved by the Governor and the Legislature include a $1 million enhancement project for the wet lab at the Gainesville campus.  In FY2013, the two institutions were awarded $850,804 in MRR funding (combined).

 

Both GSC and NGCSU have historically maintained balanced budgets in accordance with state mandates as demonstrated by their financial reports.  The practice of maintaining a balanced budget, adequate cash reserves, and a positive net asset balance all indicate that the consolidated Univeristy of North Georgia will be sound and that the institution has the financial resources to carry out its programs and services in accordance with strategic objectives.

 

As part of the University System of Georgia (USG),  GSC and NGCSU employed similar budgeting and accounting systems and processes for complying with the state of Georgia’s accounting and procurement policies.  Both GSC’s and NGCSU’s systems, as well as that of UNG, are hosted by the USG systems group. Both entities will continue to use the budget-checking functionality that precludes any expenditure being committed should sufficient budgeted funds not materialize.

 

Unrestricted net assets represent resources derived from student tuition and fees, state appropriations sales and services of educational departments, and auxiliary enterprises. These resources are used for transactions relating to the educational and general operations of the university, and may be used to meet current expenses for those purposes, except for unexpended state appropriations (surplus). Unexpended state appropriations must be refunded to the Board of Regents of the University System of Georgia, University System Office, for remittance to the Office of the State Treasurer. Auxiliary enterprise funds receive no state appropriation and represent the re-sale operations of the university, including parking, housing, dining, the bookstore and other retail operations.  The Athletic fee is also categorized in the auxiliary fund group.

 

Total unrestricted net assets for NGCSU were $11.6 million as of June 30, 2012, a figure which represents an increase of $2.6 million over the prior year.  Gainesville State College had total unrestricted net assets of $12.3 million as of June 30, 2012, which is an increase of $1.7 million over the prior year. The  FY2012 "Statement of Unrestricted Net Position, Exclusive of Plant" is attached for NGCSU[8] and GSC[9].

 

The Georgia State Financing and Investment Commission oversees the proper application of proceeds from general obligation debt and the issuance of all public debt by the State.  The Dahlonega Campus recently completed a $20 million state-funded renovation program.  This program supported renovations to the Student Success Center, historic Young Hall, historic Barnes Hall, and the Hoag Student Center.  A total of 98,500 square feet of space was renovated and the campus implemented its first central cooling plant system through this effort.

 

The Gainesville Campus completed the State General Obligation Bond funded Martha T. Nesbitt academic building in August 2011.  This signficant new structure includes 135,000 square feet of teaching, lab, and office space.  It was constructed with a $35 million budget.

 

NGCSU, through its related party organizations (NGCSU Real Estate Foundation and NGCSU Foundation), has ten bond-related debts from three separate public-private ventures (PPV). The first PPV project was issued in February 2007 for $46,485,000 to cover several projects and three distinct lease obligations. The PPV bond issue was used to refinance a 314-bed university student housing facility, construct a 586-space parking deck and a 58,000 square foot recreation center, acquire 100 acres of undeveloped land and build a road on it, and acquire a 31,000 square foot office building. NGCSU leases these facilities from the NGCSU Foundation. The lease payments are generated by the rental for room occupancy for the student housing, access and use fees for the parking deck and recreation center, and a mixture of 3rd party rental income and E&G funds for the office building. The debt will retire in 2037. In FY2012, the debt ratio on this PPV was 1.04 which exceeds the 1.00 debit ratio target set by the Board of Regents Facilities Office. This PPV also carries a couple of reserve balances.  As of June 30, 2012, the reserves include a debt service reserve amount of $3,920,630 and a maintenance reserve of $427,407.

 

The second PPV project was issued in August 2009 for $80,660,000 to construct a 1000-space parking deck, two student housing facilities (352 bed and 596 bed), and a 1086-seat dining facility. There are four separate lease obligations. NGCSU leases these facilities from the NGCSU Real Estate Foundation. The lease payments are generated by the rental for room occupancy for student housing, access fees for the parking deck and meal plans for the dining hall. The debt will retire in 2040. The FY12 debt ratio on this PPV was 1.15 which is much stronger than the 1.00 debt ratio target set by the Board of Regents Facilities Office. This PPV also carries several reserves including a debt service reserve of $7,100,857 and a maintenance reserve of $286,918. 

 

The third PPV project was issued in November 2010 for $30,430,000 to construct a 264-bed student housing facility, renovate a 166 bed student housing facility, and construct a 47,000 square foot mixed use facility to accommodate student health services, campus bookstore, office space, and 3rd party retailers. There are three separate lease obligations related to this PPV. NGCSU leases these facilities from the NGCSU Real Estate Foundation. The lease payments are generated by the rental for room occupancy for student housing, rental of retail space to 3rd parties, mandatory student health fees, Auxiliary Services operation profits, and E&G funds for office space use.  The debt will retire in 2040. The FY12 debt ratio on this PPV was 1.05 which exceeds the 1.00 debt ratio target set by the Board of Regents Facilities Office. This PPV also carries a couple reserve balances.  As of June 30, 2012 the reserves include a debt service reserve amount of $1,963,986, and a maintenance reserve of $23,252.The total PPV debt burden for NGCSU was 7.72% for FY12.

 

In November 2011, NGCSU Real Estate Foundation secured financing to construct a 38,000 square foot academic building in the City of Cumming for the use of NGCSU and GSC. The building is master-leased to NGCSU for 11 years, with the lease obligation expiring in 2023. The lease payments are generated by tuition revenue generated by each campus.  

 

GSC has two bond-related debts from two separate PPVs.  The first project is a Georgia Higher Education Facilities Authority (GHEFA) project issued in August of 2009 for $5,367,608 to construct a Parking Deck that would accommodate 382 more parking spaces on campus.  Debt Service payments are paid on December 1st and June 1st of each year to the USG Real Estate Foundation I, LLC.  This debt will expire on June 30, 2040.

 

The second bond PPV is the Athens Center, or the Oconee Campus in Watkinsville, GA.  The Oconee Campus was purchased for $7,660,088 by the Gainesville State College Real Estate Holding LLC and leased to Gainesville State College beginning January 2009.  Payments to the Foundation are made monthly and the debt will expire December 2027.

 

Contractual and Support Services

Resources for out-sourced services in FY2013 are shown in the attached table[10].

 

Operational, Management, and Physical Resources

Business and financial functions for UNG have been centralized under the Senior Vice President for Business and Finance, who reports directly to the President.  The Senior Vice President is responsible for all of the institution’s fiscal and physical assets, and for the development and administration of the budget. The Senior Vice President oversees a leadership team of professionals with vast experience in managing and planning university finances, including associate vice presidents, comptroller and budget/ financial planning director.

 

For ongoing financial planning and oversight, sound educational planning goals and objectives are set as part of the university’s continuous improvement efforts, and appropriate resources are allocated to accomplish these objectives. The university’s strategic plan will provide the basic framework for the overall planning process; however, most of the educational planning is done at the unit level.  The institution’s education and general budget is based on a combination of state appropriation and projected tuition and fee revenue.

 

As discussed in Core Requirement 2.11.2, UNG has adequate physical resources to support the mission of the institution and the scope of its programs and services.

Evidence
[ 1 ]   File  BOR_PolicyManual_Section7 
[ 2 ]   File  USG_BusinessProceduresManual 
[ 3 ]   File  FY12_NGCSU_Audit 
[ 4 ]   File  FY12_GSC_Audit 
[ 5 ]   File  FY-14 Original Budget by Area_Totals 
[ 6 ]   File  Minutes_BOR_ 2013_04 Page 2
[ 7 ]   File  UNG Combined Revenues and Expenditures All Funds 
[ 8 ]   File  NGCSU Statement of Net Position 2012 
[ 9 ]   File  GSC Statement of Net Position 2012 
[ 10 ]   File  OutsourcedServicesFY2013