Finance and Fund Raising: T he President’s Role

Finance and Fund Raising: The President’s Role AACC Presidents’ Academy April 17, 2010 Helen Benjamin Chancellor Contra Costa CC District, CA Jean Floten President Bellevue College, WA

Resource Management 101 • Unique role of the president • Pitfalls in budget review • Becoming “fearless with fundraising”

Unique Role of President in Finances and Fund-raising The President is the chief steward and advocate for the college in this area. • As steward, the president manages and holds in trust the property, finances, and other affairs of the institution. • As advocate, the president represents the college in all matters. • You provide leadership and stewardship to others who follow your lead and watch your every move. Set a superior example. College assets do not belong to the president but are entrusted to the president for safe keeping and appropriate use.

Unique Role of President in Finances and Fund-raising • The president is the public face of the college. • Managing funds responsibly and with integrity are key presidential responsibilities. • Before the president can fund-raise, s/he must friend-raise. • Public trust and confidence are basic to effective fund-raising.

Keeping the College Financially Sound Develop a budget process that • Is simple and easy to understand • Provides for financial stability • Provides for an appropriate level of reserves consistent with board policy and direction • Is an integral part of the district/college planning process and related to goals and objectives • Provides means to address any current or future emphasis directed by the board of trustees • Promotes efficient use of district/college resources • Allows flexibility for “local” control with accountability • Is planned in a multi-year cycle.

Keeping the College Financially Sound • Operate a balanced budget • Develop a nose for numbers, accounting logic and estimates • Keep a budget cushion • Have good accountability, internal controls/monitoring • Provide sound instructions to finance and budget staff • Fund-raise President

Setting Aside Adequate Funds in Good Times for Tough Times • Rule 1: Estimate revenue conservatively • Rule 2: Develop a culture of planning where all requests are considered during annual budget development • Rule 3: Spend conservatively • Rule 4: Manage year-end balances • Rule 5: Keep an adequate reserve

Setting Aside Adequate Funds in Good Times for Tough Times • Establish a culture in which a conservative approach to District/college finances is the norm. • Develop values that include planning for an uncertain future. • Ensure policies and procedures are in place that require a certain level of reserves. • Ensure budget management procedures are in place for • monitoring internal and external factors that could change budget assumptions; • ensuring flexibility in the event of unanticipated changes in revenue, expenses or community needs.

Coping with Possible Layoffs and Cutbacks • Honestly • Courageously • Openly • Prudently

Coping with Possible Layoffs and Cutbacks • Build relationships • Explain budget situation • Carefully consider situation/timing • Establish planning council • Consider unique opportunities • Consider early retirements, furloughs • Be transparent • Meet with affected individuals/units/ unions before communicating plan • Treat affected employees with respect and dignity • Allow for appeals

Pursuing Diversified Funding Know your particular funding model • Tuition and fees • Grants, contracts • Online education • Community service and self-support programs • Auxiliary services • Partnerships: BHAGs • Foundations .”

Questions for CFOs • Has deficit spending been occurring? If so, how is it addressed? • Is the college fund balance stable or consistently increasing? • Are enrollments increasing, declining, or stable? Are staffing and other expenses adjusted consisted with enrollment trends? • Does the college have a consistent, board approved minimum reserve?

Questions for CFOs • Are collective bargaining agreements settled within revenue sources in the last three years? Are the agreements affordable? • Is the college using one-time funds to pay for ongoing expenses? • Are internal controls in place to ensure financial integrity? • Is position control integrated with payroll? • What are the unfunded liabilities? Is there a plan to fund them?

Questions for CFOs • Headlines • Nobody told me… • Yikes! Now what…

Headlines • Audit finds college spent $1 million too soon • XXXXX college $1 million short • Bookkeeping error wasn't the first at college • College Program Under Scrutiny -- Audit Questions Use Of XXXX Kitchen

General College Health • Have an audit before or right after you are hired. • Request audits, whistleblower complaints for last five years. Issues or problems? • Facilities master plan? Severe problems; how immediate are they? • Current capital projects? Risk of going over budget? • Relationship with the City; impacts on building projects? • Pending lawsuits?

Budget Thermometer • How are you funded? What revenue can you count on? Where is risk? • Contracts sustainable? • Budget balanced? Reserves used? • How are reserves? • Overall debt? How solid is the source of funds paying it down? • Self-supporting programs/services? Risk? • Over-expenditures?

Three Pieces of Advice about Fund-Raising • If possible, establish an interdependent foundation (501 (c) 3) with the sole purpose of raising money for the college. • Hire a fund development expert to run the foundation and make that person an integral part of the college. • Develop a fund development plan in which the strategic directions of the college are reflected.

Three Pieces of Advice about Fund-Raising • Cultivate stages of giving • Understand that we must give to get • Build partnerships • Know it’s about business

Questions?

Fund-Raising Exercise

Finance and Fund Raising: T he President’s Role