Central Connecticut State University’s (CCSU) total operating
revenues, including federal and private grants, almost doubled
during the ten-year period ending FY 2008 from $102 million to
$198 million. State operating budget support doubled but fell
slightly as a percentage of total revenue from 43.6% in FY
1998to 41.2 % in FY 2008. Tuition and fees offset the slight
percentage decline in state support.
Tuition and fee growth was driven by
increasing enrollment during the period. Full-time student
equivalents grew by 20% over the period from 7,301 in FY 1998 to
8,756 projected for FY 2008. While tuition charges to students
were increased sharply during the middle portion of the period
under review, CCSU’s financial stability has allowed for a
marked reduction in the percentage increase over the past three
years, with much of those increased funds being returned to the
students in the form of financial aid.
A comparison of the FY 1998 to FY 2007
balance sheet also shows a strengthening financial position.
CCSU’s unrestricted fund balance, which dropped to single digits
during the period, grew from $15 million in FY 1998 to $37
million. This increase in equity is matched with an increase in
cash to $38 million, the result of a conversion to electronic
billing and strong management of receivables.
Lastly, long-term campus improvements were
supported by an investment of $200 million over the period.
The State Legislature appropriates General
Fund dollars to the Connecticut State University System (CSUS).
In the early 1990s, CSUS was granted operational autonomy and
responsibility by several pieces of legislation known as the
These Acts gave the CSUS General Funds, in
the form of a block grant appropriation along with hiring
autonomy, check writing, and purchasing authority.
CSUS in turn has allocated State General
Funds to the four universities within the System based on
different formulas over the years. The last Board of Trustees
formula revision occurred in July 2005 at which time each
university received a base cost block grant plus fringes to
cover certain institutional and facilities fixed costs of
operation. In addition, each university receives a variable
block grant based on the sum of the prior year’s ending
full-time-equivalent of full-time students enrolled, with
out-of-state students weighted on a 1 to 2.4 basis. Enrollment
numbers are based on the average of fall and spring third-week
The Operating Budget sets forth a proposed
expenditure plan for the amount necessary to meet cost increases
while providing a constant level of services. It may also
include an amount for new or expanded programs. The Operating
Budget includes various revenue sources including the State
appropriation and tuition and fees, as well as other revenue
sources, and is implemented through the utilization of the
University’s financial accounting system known as BANNER. Under
this system, each unit and sub unit within the University
establishes a budget. Expenditures are compared against
budgeted amounts by the Budget Office to ensure proper fund
utilization and to prevent cost overruns.
Historically, the discretionary portion of
budget preparation by senior administrators revolved around the
allocation of “discretionary personal services and other
expenses,” which amounted to only 10% of total operating
expenses. Full-time personnel expenditures, which constitute
the bulk of operating expenditures, were “owned” by central
administration. If a position became vacant, a weekly committee
process would determine whether the position would be approved
for refilling. This process of required reauthorization created
a culture of “use it or lose it.” Hence, there was not much
motivation to take advantage of cost-savings opportunities or to
In FY 2007, Central converted to a budgeting
model that assigns responsibility for all controllable costs in
their respective units to each chief officer and vice president.
This conversion required reconciling each division’s costs with
the total university budget, thereby familiarizing unit budget
administrators with all costs under their control and assuring
the Budget Office that the university budget would continue to
While still a work in progress, an equally
important change in the budget process has been to add
transparency to budget preparation and improved communication of
the operating budget to the university community. Executive
Committee members presented their FY 2008 budgets to the
University Planning and Budget Committee (UPBC). In its
advisory role to the President, the UPBC serves as a
clearinghouse of ideas for discussion and advice concerning
general budget matters and evaluates planning and budget
processes and recommends changes as needed.
Having considered feedback from the UPBC,
unit administrators make appropriate adjustments to their
proposed budgets, which they present to the President in a
budget meeting that includes the Chief Financial Officer and the
Controller. Upon approval by the President, all unit budgets
are rolled into a university-wide budget and presented to the
CSUS Chancellor in the late spring for his approval and
recommendation to the Board each June.
The Connecticut State University System’s
Board of Trustees meets to review and approve the System’s
operating and capital budgets.
Each June, the Board’s Finance and
Administration Committee conducts Spending Plan Hearings at
which each University’s operating budget is discussed in detail
and recommended to the full Board for approval.
CCSU prepares and presents its annual
Spending Plan in essentially a current funds format. This
format aggregates education and general, auxiliary services
(i.e., housing and food services) and self-supporting programs
(excluding federal and private grants) operating expenses in
order to format annual financial information on a comparable
basis. This format also makes it easier to identify the causes
for changes over the years to unrestricted net assets (i.e.,
fund balance), which provides an important measure of the
University’s financial health.
The financial information that follows is
from the Spending Plans submitted to and approved by the Board
of Trustees. These plans are on file in the document room
The table below compares CCSU’s operating
revenue for the last ten-year accreditation review (FY 1998),
the five-year update (FY 2003), and the budget for FY 2008,
showing state support, tuition and fees, housing and food
services, and other revenue. The state appropriation has
increased in each year presented but has declined as a
percentage of total revenue to just over 41%. This percentage
shortfall has been made up in tuition and fees, both from annual
increases and a growth in enrollment.
Housing & Food Service
Tuition & Fees
While overall headcount for full- and part-time students has
grown by only 3% over the ten years, full-time undergraduate and
graduate headcount are up over 30% from 5,899 students in FY
1998 to 7,713 projected for FY 2008. CCSU has seen a 26%
decline in part-time student headcount, but full-and part-time
student full-time equivalents (FTE’s) have grown from 7,301 in
FY 1998 to 8,756 projected for FY 2008, an increase of 20%.
Enrollment-driven revenue growth, coupled
with operating surpluses, has allowed CCSU to hold student
tuition and fee increases to just cover inflation, substantially
boost student financial aid, provide for “one-time” academic
program expenditures, and build fund balances to finance
necessary capital improvements that are not expected to be
financed by the State.
Increasing enrollment and tuition increases
averaging 10.5% for the four years ending FY 2005, restored
CCSU’s financial health and allowed for an average 4.5%
reduction in student tuition burden from FY 2006 through FY
2008. Moreover, much of the recent tuition increases were
returned to the students as direct financial aid, which grew
from $3.4 million in FY 1998 to $7.8 million in FY 2008. When
adding in student employment and waivers, total student support
exceeded $10 million in FY 2008, or about 6.4% of total
Salary savings contributed to operating
surpluses in FY 2006 and FY 2007, $4.6 million of which was
reinvested largely in “one-time” academic program enhancements.
The remainder of recent surpluses restored unrestricted fund
balances (which had dropped from $15 million at the end of FY
1998 to $8.3 million in FY 2003) to $37 million at June 30,
2007. A significant portion of the FY 2007 fund balance is
earmarked for proposed plant and athletic field improvements,
and acquisition and development of property for residence hall
Annual government and private grants and
contracts have averaged more than $14 million over the ten-year
period, but have trended up to more than $21 million over the
past three years.
For a complete summary of all current
unrestricted and restricted funds operating results for the ten
year period ending FY 2008, see Exhibit 9.2: Appendix A.
Capital Projects are financed by State
general obligation bonds, Connecticut Health and Education
Financing Authority (CHEFA) bonds repaid with student fees, or
university plant fund reserves accumulated from operating
surpluses. For the nine-year period ended FY 2007, more than
$200 million has been invested in plant, mostly through State
and CHEFA bonds.
The bulk of improvements took place through
FY 2004. Bonding allotments have been notably weak for the
three years ending FY 2007, as the State has focused on other
priorities. However, the expectation is that State funding will
dramatically increase with the passage of CSUS 2020 Legislation,
which provides for $950 million for the ten years beginning with
FY 2009. Central’s portion is $248 million and will include
significant improvements to classroom facilities. Exhibit 9.3:
Appendix B shows capital expenditures by year and by funding
Supplementing State support is a significant
commitment of the FY 2007 unrestricted fund balance to improve
athletic fields and expand the footprint of the University in
order to build much needed residence halls.
Each University President reports to the
CSUS Chancellor who has accountability to the CSUS Board of
Trustees. Reporting to Central’s President, the Chief Financial
Officer oversees all of the traditional financial functions
through a Controller and Director of Business Services.
The Controller manages the activities of
financial accounting, budgeting, cash management, financial
reporting and audit. In addition, the Controller has oversight
for the Office of Grants Administration (OGA), which is
responsible for the accounting and monitoring of funds received
from federal, state and private grants and contracts. The OGA
also works closely with the Financial Aid Office and the
Sponsored Programs Office.
The Director of Business Services has
responsibility for student financial services which includes the
bursar, cashier and student loan collections along with
purchasing, accounts payable, payroll and contracts.
Separately, the Chief Administrative Officer
reports directly to the President and is responsible for all
planning and design, budgeting, construction and monitoring of
all capital improvements.
The Connecticut State University
System Board of Trustees has an Audit Committee that receives
annual financial audits and management letters from both
independent auditing firms and the
State Auditors for each University and
the CSU System office In addition, the System has an internal
audit function that audits financial activities at each
University in depth and issues detailed findings and
recommendations to the Audit Committee.
In order to satisfy other specialized
requirements, the State Auditors perform an NCAA-required audit
of athletics and a state-wide indirect cost audit for the
federal government, and a private independent accounting firm
audits and renders an opinion on the CCSU Foundation, Inc.
The CCSU Foundation Inc, incorporated in
1971, is the nonprofit, eleemosynary organization designated to
receive gifts that benefit Central Connecticut State University
or its students. The University Development office oversees all
fund-raising efforts conducted by the Foundation. Fund raising
priorities are derived from institutional goals and objectives.
Scholarships for students, academic development, library, and
intercollegiate athletics represent the highest priorities for
The University’s endowment has experienced
considerable growth in the decade since NEASC’s last visit,
having increased from $5,430,789 in 1998 to $26,063,243 in 2007.
The hiring of a new Vice President for Institutional Advancement
and the creation of five new positions for development officers
reflect CCSU’s increased emphasis on advancement under the
In 1995, State of Connecticut legislation
provided for an endowment matching program. Each dollar of
contributions received for endowment was matched by $1.00 for
the first two years and then by $.50 from the State up to an
annual maximum. In the spring of 2005, the program was reduced
to a match of $.25 on the dollar and included a provision that
payments from the State would not occur until the amount in the
State Budget Reserve equals 10% of the net General Fund
appropriations. Through December 31, 2006 a total of $2.9
million has been received under the State matching program.
As would be expected, Central’s
participation in Division I intercollegiate athletics has
required an increase in resource commitment. As the NCAA-required
audited financial statements (Exhibit 9.4) for athletics show,
total operating expenditures in FY 1998 amounted to $5.1 million
and increased to $8.8 million projected for FY 2008. Most of
the increase was as a result of increasing Grants-in-Aid by 250%
to $2.5 million and an increase in salary support, in part to
convert part-time coaches to full time.
Although athletic revenues and gifts went up
substantially during the same period, university support was
required in all years. That support totaled $4.8 million in FY
1998 and grew to $7.8 million in FY 2008. While this represents
a $3.0 million increase in direct support, as a percentage of
total operating expenditures, the intercollegiate athletic
budget dropped from 6.22% of total operating expenditures in FY
1998 to 5.77% in FY 2008. Moreover, net support from the
University, which was 5.77% in FY 1998 dropped to 4.66% in FY
fiscal policies are stated in writing and
can be found in the document room and/or on CCSU’s Web site.
Central Connecticut State University is a
financially stable Institution with very high quality education
programs. The fiscal year ending June 30, 2008 concluded with a
balanced budget and a strong balance sheet.
An increasingly bleak outlook for the
national and state economy has caused the Governor to institute
a 3% rescission of FY 2009 state support which will reduce
Central’s funding by about $2.1 million dollars. At the same
time, the Connecticut State University System has changed the
allocation of state support to correct disproportionate support
for fixed costs between the two larger Universities and the two
smaller ones causing an additional reduction of approximately
$900,000 in General Fund dollars to Central for FY 2009 and FY
A favorable outcome of the new budgeting
process has been to prepare the University for more difficult
times ahead. Moreover, the new budget process received high
marks for transparency, clarity and inclusiveness of the entire
university community in a December 2007 university-wide survey.
However, that same survey indicated the need
for the budget process to focus on more internal communication
on the significant increases in the amount of funding provided
for student financial support over the last three years. In FY
2007 alone, 96% of the 5% tuition increase was returned to the
students in either direct aid or increased funds for student
employment. As indicated in the Description Section, the past
three years has seen support for student aid, waivers and
employment grow to $10 million dollars, or 6.4% of the FY 2008
operating budget as compared to $3.4 million or less than 4% of
the FY 1998 budget. Moreover, this increase in student support
has been accomplished while achieving another budgetary goal of
maintaining tuition and fees at or below market rates.
Notwithstanding the strong headwinds
buffeting the overall economy, Central is well positioned to
meet all financial challenges and continue to expand quality
educational programs. A 2% greater than budget increase in
enrollment in FY 2008 and careful control of expenditure budgets
by management from the executive level down to departmental
supervisors will assist in offsetting the above $3,000,000 loss
of funding for FY 2009.
Exhibit 9.5: Appendix C displays our FY 2009
Board approved operating budget as well as a comparative
forecast for FY 2010 and FY 2011. The schedule shows all three
years with balanced budgets and is followed by the principles
and assumptions guiding the development of the forecast.
No growth in enrollment is anticipated for
the coming year. However, there is a very good chance of
exceeding enrollment targets in certain areas such as
engineering and nursing. Tuition and fee increases have been
held to inflationary increases and the forecast assumes that the
FY 2009 General Fund budget reduction by the State will be
restored in 2010 and maintained in 2011.
To the extent that state funding does not
reach expected levels, Central has historically had a sufficient
number of full time personnel vacancies to allow for managing
turnover to assist in balancing the budget by not filling 100%
of these vacancies. This approach was encouraged when the
System Office implemented a hiring freeze for FY 2009, which
excluded certain categories of employees such as teaching
faculty. We do not expect increasingly scarce resources to
preclude growing the number of full time teaching faculty
positions which is among the highest priorities as referenced in
the University’s Strategic Plan.
CCSU has appropriate checks and balances built
into its financial controls. Moreover, as a state institution,
there are an abundance of external mechanisms to evaluate fiscal
condition and financial management and to maintain its
integrity. These review processes generate questions and
recommendations to the CCSU administration identifying areas for
improvement. This on-going process has resulted in a continued
strengthening of our financial monitoring efforts throughout the
period under review.