Standard 7.B - Adequacy of Financial Resources

The Montana University System hired Dennis Jones from the National Center for Higher Education Management Systems (NCHEMS) to select peer institutions for each MUS unit and to compare the unit funding to that of selected peers. MSU Billings’ funding was 100% of its 26 independently selected peers. Peer status was based on number of students and similarity of programs.

Evidence: 7.16 Peer Institution Financial Comparison Chart

Standard 7.B.1 - Availability of Revenue Sources

A variety of revenue sources serve the University. They include the following:

General tuition supports the education and general operations of the University.
State Appropriation and six-mill levy support the education and general operations of the University. General fund money is provided to support Montana resident students. Non residents pay 300% of resident tuition and WICHE and WUE students pay 150% of resident tuition.
State appropriated one-time-only money funds purchases of updated instructional equipment to allow for use of state-of-the-art equipment. Federal appropriations focus on workforce development, healthcare occupations and para-educator training. The focus of appropriations varies from year to year.
Expanded grants and contracts operations focus on research and on workforce/economic development. Grants and contracts vary from year to year. Grant income for Indirect Costs is allocated to a) a central pool for institutional support such as the Grants and Sponsored Programs Office (60%), b) the Principal Investigator (20%), c) the College of the Principal Investigator (10%), and d) the Department of the Principal Investigator (10%).
Mandatory fees, charged to all students, support computers, instructional equipment, the Academic Support Center, recreational activities, student activities, academic building support, the library, athletics, health services and the Student Union Building.
Sales and service fees fund auxiliary enterprises.
Fees support courses having extraordinary expenses.
Land Grants for the State of Montana with timber sales from these lands provide income.
Invested funds earn return-oninvestment interest.
Federal and state financial aid programs help eligible students pay for their educational expenses
MSU Billings assists students in establishing eligibility for federal, state, institutional and private funding sources, such as vocational rehabilitation, tribal/BIA funding, Veteran’s Benefits, employee assistance, and private scholarship sources.
The Perkins Loan Emergency Fund and the LEAPs loan fund are available for students.
The MSU Billings Foundation secures, holds and manages endowed funds for the benefit of the University and assists in fundraising for various purposes.

Evidence:

7.4/Table 7.4 Sources of Financial Aid;
7.8 Endowment Fund Report;
Table 7.1 Current Funds Revenues;
7.5/Table 7.9;
7.17 MUS Tuition and Fees http://mus.edu/data/tuition_and_fees/tuition_and_fees.asp

People, Pride and Promise Campaign and New Endowments

At the conclusion of fiscal year 2000, the MSU Billings Foundation held 77 named, endowed funds totaling $7.69 million. By the conclusion of fiscal year 2008, the Foundation held 197 named, endowed funds totaling $15.8 million. These impressive increases are, for the most part, the result of active solicitation, both during the People, Pride & Promise Campaign and subsequent to the campaign. The endowments are donor restricted and produce annual income for student scholarships, faculty excellence, and university programs.

Standard 7.B.2 - Financing Structure

All financing is done by the Administrative Vice Chancellor and the Financial Services Director. All financing plans and repayment sources are reviewed in detail. Adequate resources are available to pay short- and long-term debt. Debt-service payments are made from net revenues generated through pledged auxiliary services, student building fees, student union fees, parking, bookstore, student life, rentals, and land grant income. The quality of the educational programs is not adversely affected as the payments are not made from operating budgets. Conversely, educational programs are enhanced by the purchase of technology and classroom improvements funded by bond financing. Adequacy of resources for debt-service requirements is monitored through annual audits and reporting of pledged revenues and expenditures that include debt-service coverage ratios. Debt service ratios for FY2007 and FY2006 were 1.54 and 1.57. History of borrowing is provided in the financial statements and other records. Debt-service schedules for bond payments are provided in the indenture and are maintained in the Financial Services Office for the lifetime of the debt. Annual debt-service requirements are published in the footnotes of the financial statements.

Evidence:

7.7 Debt Service Schedule;
7.12 Financial Report;
7.10 Revenue Bond Report

Standard 7.B.3 - Financial Stability

All financial statements show a history of financial stability. Audited financial statements are consolidated for all units of Montana State University. Standard 7 tables, IPEDS, and unaudited supplemental information for MSU Billings provide evidence of financial stability. No deficits and clean audit opinions indicate financial stability. Deficits in the general operating funds are not allowed by state law. Deficits in other funds are immediately addressed and corrective action is sought either through other funding sources or inter-entity loans. Negative cash balances in subfunds are not allowed for a period longer than seven days per state law.

Evidence:

7.7 Debt Service Schedule;
7.12 Financial Reports;
7.10 Revenue
Bond Report;
7.10 BOR Negative Fund Balance Policy 901.11 (http://mus.edu/ borpol/bor900/90111.htm )

Standard 7.B.4 - Accounting Standards

All transfers have been made within guidelines. Inter-fund borrowing is approved by OCHE and the State Department of Administration. The University follows Governmental Accounting Standards Board (GASB) and College and University Business Administration (CUBA) reporting requirements.

The Director of Financial Services and Administrative Vice Chancellor approve all major transfers.

The University follows several sets of guidelines for recording and classifying transfers and inter-fund borrowing including GASB, CUBA, BOR Policies and Procedures, Montana Codes Annotated (MCA) and the Administrative Rules of Montana (ARM).

Internal and external audits provide checks that guidelines and procedures are followed.

Evidence:

7.12 Financial Report;
7.21 Montana Operations Manual (MOMS) 2-5000 (http://doaforms.mt.gov/accountingforms/
chapters/5000%20Interfund%20 activities.doc )

Standard 7.B.5 - Operating Budget Standards

Adequate resources are allocated to insure both the success of the strategic initiatives and maintenance of current obligations. As an institution, MSU Billings balances its budget annually; the University has not and is currently not operating in a financial deficit. The adequacy of financial resources is demonstrated in published financial reports, including financial statements, budgets and audits. Academic programs requiring extra funding in addition to departmental operating budgets charge a BOR-approved fee to the students enrolled. Examples include but are not limited to the following:

Art courses
Field experiences—internships, cooperative education, student teaching
Lab courses

Students pay additional fees to support University initiatives such as computer technology and electronic assessment data storage. The fee schedule is reviewed annually and revised with BOR approval.

Evidence:

7.17 Student Fee Schedule;
7.3 Table/7.3 Summary Report of Revenues and Expenditures

Standard 7.B.6 - Financial Aid Resources for Students

Sources of financial aid for current student enrollments include the following:

Federal Pell Grant
Federal Supplemental Education Opportunity Grant (SEOG)
Federal Perkins Loans
Federal Family Educational Loans
Subsidized Stafford Loans
Unsubsidized Stafford Loans
PLUS Loans (for parents)
Federal Academic Competiveness Grant (ACG) and National Science and Mathematics Access to Retain Talent Grant (SMART)
Federal Work Study
State Work Study
Montana Higher Education Grants
Montana Tuition Assistance Program
Montana Guaranteed Student Loan Program Grants
Student Assistance Foundation Access Grants
State Tuition Waivers, Statutory
State Tuition Waivers, Discretionary
Institutional scholarships
Other federal, state, institutional and private scholarships and funding

The MSU Billings Foundation has a two-pronged approach in its planning for future financial aid. The scholarship drive has been a successful, growing component of the Foundation’s annual drive. For instance, the Foundation provided twice as much scholarship funding in FY 2007-2008 as it did six years ago, FY 2001-2002 — $1,149,714 in FY 2007-2008, as compared to $541,198 in FY 2001-2002.

The Foundation is committed to building its scholarship endowment. The largest initiative of the People, Pride and Promise campaign was the scholarship component — $7.65 million.

The Foundation exceeded its campaign goal, raising over $8.5 million for scholarships during the five-year project. Approximately half of the total is funding for permanently endowed scholarships.

Chart 7.4 - Growth in Scholarship Funding From the MSU Billings Foundation

When tuition is increased, the University increases the amount of funding available for student fee waivers proportionally to ensure adequate fee waiver resources.

The University submits the Fiscal Operations Report and Application to Participate (FISAP) for University based financial aid programs to the Federal Government annually. This report is a monitoring tool used by the Federal Government.

Evidence:

7.4/Table 7.4 Sources of Financial Aid;
7.15 Two-year Default Rate;
7.10 FISAP report

Standard 7.B.7 - Operating Budget Reserves

The Chancellor has typically required a four percent reserve in the General Operating Budget to assure coverage of unexpected changes in revenue or expenses. In the event a department overspends its budget due to unforeseen circumstances or poor fiscal management, the Chancellor and the Vice Chancellors have reserves that can be reallocated to cover the deficit. A reserve for renewal and replacement of bond funds is required in the indenture and is held in investments by the bond trustee. Reserves are also budgeted for athletics. In the past, overages were supplemented with reserves; however, the Provost has made efforts to fund distance delivery through a self-support model.

Evidence: 7.3/Table 7.3 Summary Report of Revenues and Expenditures

Standard 7.B.8 - Auxiliary Enterprises

The financial relationship among education, general operations and the auxiliary enterprises must be independent. Auxiliary enterprises have not been used to supplement education and general operations. In the past, education and general operations have had to assist auxiliaries. This has been noted, and changes are being made in auxiliary enterprises to ensure self-sufficiency. One change is increasing the mandatory board plan; another change is expansion of conferencing in the Student Union to bring additional revenue to University. Administrative costs incurred in education and general funds to support auxiliary enterprises are recovered through a recharge system. The recharge amounts are determined based on the use of the service by auxiliaries and the reasonable cost of that service.

Evidence: