Finance and Audit Committee Meeting September 20, 2019

The Finance and Audit Committee met on Friday, September 20, 2019 at 8:00 a.m. in the Madison Room of the David Student Union, with Chairman Bruce Jennings presiding.

Present from the Committee

Mr. William R. Ermatinger
Mr. Robert R. Hatten, Esq.
Mr. W. Bruce Jennings
Mrs. Terri M. McKnight, CPA
The Honorable Gabriel A. Morgan, Sr.

Present from the University

Mr. William Brauer, Executive Vice President
Mrs. Cynthia Perry, Chief of Staff
Mrs. Jennifer Latour, Vice President for Strategy and Planning
Mrs. Faith Belote, Director of University Audit
Dr. Roberto Flores, Associate Professor
Mr. Jered Benoit, Associate Director for Enterprise Services
Mr. Shane Leisure, Associate Director of ITS Systems and Support
Mrs. Rhonda Wissinger, Executive Assistant

Public in Attendance

None

Chairman Bruce Jennings called the meeting to order and welcomed everyone in attendance. He introduced Mr. Jared Benoit, and Mr. Shane Leasure from IT services to provide training on the new BoardDocs software.

Approval of Minutes from the May 31, 2019 meeting

Chairman Bruce Jennings asked for a motion to approve the minutes from the May 31, 2019 meeting and Mrs. Terri McKnight made the motion for approval that was seconded by Mr. Robert Hatten, with all in favor.

Real Estate Foundation Presentation

Chairman Bruce Jennings introduced Mr. Mike Martin, Chair of the Real Estate Foundation. Mr. Martin made a presentation about the Real Estate Foundation and its role in supporting the goals and objectives of the University.

Chairman Bruce Jennings introduced Mrs. Jennifer Latour, Vice President of Strategy and Planning, to report on the following:

Six Year Plan for 2020-2026

Mrs. Latour reported that the six year plan is required by the 2011 Higher Education Opportunities Act, it assigns SCHEV to manage the submission process, but the full review of the Plan is completed by a group called “Op Six”. The draft plan was submitted on July 1st, with the final plan to be submitted to the STATE on October 1st once it is adopted by the Board at the September meeting. Mrs. Latour explained the select components of the plan to include strategies, tuition and fees, general fund requests, stem initiatives and new academic programs and collaborative partnerships.

Resolution 1: Six Year Plan for 2020-2026

Chairman Bruce Jennings asked for a motion to approve Resolution 1: Six Year Plan for 2020-2026 as presented. Mr. Robert Hatten made the motion for approval that was seconded by Mr. William Ermatinger, with all in favor. The resolution will be presented to the full board for approval.

Supplemental Retirement Savings Plan

Mrs. Latour reported that there has been a review of the retirement savings plans that are offered to employees and it was decided that some modifications needed to be made to the plans offered. There are two plans managed by the University (403b and 401a). A new University Retirement Plan Committee needs to be established and the new members will be the new trustees for the plans, the former trustees will be removed and the Board will delegate the duties of administrator to the new Committee and its members.

Resolution 2: Delegation of Authority to Administer Supplemental Employee Retirement Plans

Chairman Bruce Jennings asked for a motion to approve Resolution 2: Delegation of Authority to Administer Supplemental Employee Retirement Plans, The Honorable Gabriel Morgan, Sr. made the motion, seconded by Mr. Bruce Jennings with all in favor. The resolution will be presented to the full board for approval.

Succession Planning and Spans of Control

Mrs. Latour reported on the Spans of Control, which is a biennial report. The University’s policy sets the target median spans of control at 5. We are slightly below our stated goal of 5 and the University will continue to analyze the data and report back in two years. Mrs. Latour gave a data analytics report for Succession Planning that evaluates the total workforce and identifies those that are eligible for retirement within the next 5 years in order to make more informed decisions about the future.

Chairman Bruce Jennings introduced Mr. Bill Brauer, Executive Vice President, to report on the following:

Statement of Revenues and Expenditures for the Twelve Months Ending June 31, 2019 and 2018

Mr. Brauer, Executive Vice President, reported that there was a decrease in net income year over year due to the lag in reimbursements by the state $14.8 million versus $19.2 million in expenditures. This is a timing difference and will be made up in the current fiscal year. The Ferguson Center continues to do well and has eliminated a $1.6 million negative cash balance in 4 years and is now $64k to the good. An analysis is underway for University Housing due to the reduction in the number of meal plans purchased (down $90k), empty beds in the spring semester and Student Union/Recreation Facilities finished lower than the previous year.

FY2020 Annual SWaM Procurement Plan

Mr. Brauer, Executive Vice President, reported the University will be seeking Level 2.5 by adding delegated purchasing authority to its delegated authority in capital and IT. Only George Mason and James Madison Universities are level 2.5 schools. Christopher Newport University successfully passed a rigorous procurement audit last spring (at our request) and is now seeking full delegated purchasing authority from the State and admission to the VASCUPP (the Virginia Association of State Colleges and Universities Purchasing Professionals) organization. Following approval from the State, the University will submit an MOU to the Finance, General Administration and Education Secretaries to request full Level 2.5 authority.

SWaM Report for the Twelve Months Ended June 30, 2019

Mr. Brauer, Executive Vice President, reported that Christopher Newport University improved slightly with the SWaM target goal of 42%, to end the year at 43.39%. This compares to the state at 33.71% and to all Education at 41.03%. Mr. Brauer also reported on the Governor’s Executive Order 35 from July 3, 2019, which maintains a State-wide SWaM goal of 42%, adds a new goal of 50% SWaM discretionary spend for all NEW capital outlay construction. There are also new categories that have been added which include micro business, service disabled veterans, employment service organization, 8a (Indian and Alaskan Native Americans), economically disadvantaged women-owned small businesses and federal service disabled veterans.

Resolution 3: Fiscal Year 2020 Annual Small, Women and Minority Owned (SWaM) Procurement Plan

Chairman Bruce Jennings asked for a motion to approve Resolution 3: Fiscal Year 2020 Annual Small, Women and Minority Owned (SWaM) Procurement Plan, Mrs. Terri McKnight made the motion, seconded by Mr. Robert Hatten with all in favor. The resolution will be presented to the full board for approval.

Annual Debt Service Report

Mr. Brauer, Executive Vice President, reported that the Annual Debt Service Report is presented at the end of each fiscal year to the Board to show the University’s debt portfolio by maturity and by administrative unit. The University’s aggregate debt balance will be reduced in half by the end of Fiscal Year 2025. The current debt to operating ratio is 6.87% far below the NACUBO (National Association of College and University Business Officers) best practice and Board required standard of 10%.

Resolution 4: Virginia College Building Authority Financing Authorization

Resolution 4 authorizes the University to issue debt for the Turf Field and other associated Athletic Expansion projects in the amount of $4,730,000. Repayment of the debt is covered by Comp Fees that have already been factored into Tuition and Fees.

Chairman Bruce Jennings asked for a motion to approve Resolution 4: Virginia College Building Authority Financing Authorization. The Honorable Gabriel Morgan, Sr. made the motion, seconded by Mr. William Ermatinger with all in favor. The resolution will be presented to the full board for approval.

Chairman Bruce Jennings introduced Mrs. Faith Belote, Director of University Audit, to report on the following:

Internal Audit Report

Mrs. Faith Belote, Director of University Audit, provided a report on staffing; The Information Technology Internal Auditor and Senior Internal Auditor positions are vacant at this time. Both positions are currently in the interview process. The annual audit plan will be monitored for possible adjustments needed due to the reduction of available resources. Admissions audit fieldwork is in progress. The Facilities Management-Contract Administration audit report was presented. The iModules, University Firewall and Business Office Cash Services audits are complete. There are four open audit points targeted for completion by December 1, 2019. Mrs. Belote confirmed that the internal audit activity is independent and objective in performing its audit work. Auditors have maintained an impartial, unbiased attitude. There have been no personal conflict of interests. There have been no restrictions of access to all functions, records, personnel and properties.

Resolution 5: Amendment to the Audit Committee Charter

Mrs. Faith Belote reported that the Board of Visitors approved the Audit Committee Charter on February 24, 2017 upon the recommendation of the Finance and Audit Committee. The Standards supplemental guidance has recently been enhanced by the Institute of Internal Auditors and common practice revisions are recommended which requires an amendment to the Audit Committee Charter. These recommendations include minutes being taken at Finance and Audit Committee meetings, yearly inquiry of the Director of Internal Audit as to whether any evidence of fraud has been identified during internal audit engagements, and for the Committee to make recommendations concerning internal audit projects.

Chairman Bruce Jennings asked for a motion to approve Resolution 5: Amendment to the Audit Committee Charter, Mrs. Terri McKnight made the motion, seconded by Mr. William Ermatinger with all in favor. The resolution will be presented to the full board for approval.

There being no further discussion the meeting was adjourned at 10:10 a.m.