Section 3000 - Fiscal Management

 

Table of Contents

3000 Fiscal Management

3100 Budget Adoption - MCL, 389.141
3122 Use of Federal Funds
3130 Investment of Funds - MCL 389.142
3310 Tuition
3431 Audits - MCL 389.143
3450 Restricted Fund
3451 Designated Fund
3460 Depositories for College Funds
3510 Authorized Signatures
3900 Gifts, Grants, Bequests, and Donations
3910 Debt Management
3920 Financial Stability
3930 Fiscal/Budget Reserves
3940 Fiscal Forecasting/Tracking
3950 Petty Cash

3100 Budget Adoption

General: The annual budget represents the programmatic direction and vision of the College. It is also designed to meet both the legal requirements and needs of the College.

The following policy statements apply:

  1. Prior to the end of each fiscal year, the Board will adopt a balanced General Fund Operating Budget, and other fund budgets as appropriate, to the end of the current fiscal year, in accordance with the Uniform Budgeting and Accounting Act of 1968, as amended from time to time.
  2. The President is responsible for the overall budgeting process and the budget recommendations to the Board.
  3. Budget revisions will be presented for Board action as necessary, but not less than twice a year, in January and June.
  4. Budget line items for personnel will be based on the Table of Authorized Positions and staffing allocations approved by the Board for the current budget year.
  5. The Finance/Audit Committee must receive and review budget reports on a monthly basis.

LEGAL REF: MCL 389.141, as amended

Approved: September 30, 1996
Revised: April 24, 2000
Reviewed: February 16, 2009
Approved: April 27, 2009

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3122 Use of Federal Funds

General: Federal funds play an important role in providing support for programs, services, and strategic initiatives of the College. Federal funds are one component in a diverse array of resources that the College pursues to insure financial stability of the institution and to provide opportunities for the development of new endeavors in general and specific categorical programs.

The following policy statements apply:

  1. The College will aggressively seek federal funding through grants, formula allocations and special funding provisions. Decisions to pursue federal funds will be made within the Grant Seeking and Reporting Guidelines of the College.
  2. Federal funds received under the Carl Perkins Vocational and Applied Technology Education Act will be used to supplement, and to the extent practicable, increase, the amount of state and local funds that may be made available for the use specified in the Act, but will not be used to supplant state or local funds.
  3. Federal funds will be spent in accordance with federal laws, guidelines, and regulations, or as specified by the funding source.
  4. All grants received will be documented in the Grant Activity Report.
  5. Responsibility for overseeing projects awarded federal funding is assigned to the Project Director and/or chief administrator where the program resides.
  6. Financial tracking and reporting on federal funds will be administered by the College’s Accounting Office in accordance with generally accepted accounting principles, regulations and requirements of applicable federal funding agency(ies).
  7. Reporting to the federal funding agency will be the responsibility of the Project Director with support from the Accounting Office and, if needed, in consultation with the Grant Development Office and the Chief Financial Officer.
  8. The College may be a partner in a federally funded program with other educational organizations, agencies, and private or non-profit groups, and may also serve as fiduciary agent when authorized. In these cases, the President will designate a division of the College which will be responsible for the College’s role in this partnership. The College’s share of the funds will be administered by the Accounting Office and included in Grant Activity reports.
  9. The College may serve as fiscal agent when participating with other entities.

LEGAL REF: 5 USC Appx. §1, as amended, and 20 USC §1087 aa, as amended

Approved: September 30, 1996
Revised: April 24, 2000
Reviewed: February 16, 2009
Approved: April 27, 2009

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3130 Investments

General: All College funds will be invested in accordance with Michigan Compiled Laws and regulations for community college investments, with the intent to safely maximize returns on those funds. Investment of College funds will conform with MCL 389.142, as amended from time to time. Investments will be structured to optimize safety, liquidity, and returns to the College.

The following policy statements apply:

  1. The Board Treasurer, through the Chief Financial Officer, is authorized by the Board to invest all funds of the College other than fiduciary type funds.
  2. The President is responsible for oversight of College investments.
  3. Investments will be restricted to those permitted by Michigan law (MCL 389.142, as amended from time to time).
  4. The College will not commingle money in the funds of the Community College District for the purpose of making an investment authorized by this section, and all earnings on an investment will become a part of the fund for which the investment was made.
  5. The College will not invest or deposit any funds of the Community College District in any financial institution that is not eligible to be a depository of surplus funds belonging to this state under Section 6 of 1855 PA 105, MCL 21.146, as amended from time to time.
  6. The Community College District will comply with the Divestment from Terror Act (MCL 129.291 et seq) at making investments or depositing funds under this act.
  7. As used in this section, (a) ‘eligible collateral’ means any securities that would otherwise qualify for outright purchase under this act. (b) ‘financial institution(s)’ means a state or nationally chartered bank, or a state or federally charged savings and loan association, savings bank, or credit union whose deposits are insured by an agency of the United States government, and that maintains a principal or branch office located in this state under the laws of this state or the United States.

LEGAL REF: MCL 389.142, as amended

Approved: September 30, 1996
Revised: April 24, 2000
Reviewed: February 16, 2009
Approved: April 27, 2009

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3310 Tuition

General: Tuition and fees constitute a major source of revenue in support of a comprehensive program. The Board of Trustees acknowledges the importance of tuition and fees as a revenue source, while striving to hold rates at a reasonable level to enhance competitiveness in the marketplace and cost to students.

The following policy statements apply:

  1. The Board will review and set tuition and fees periodically.
  2. The Board will periodically compare tuition and fees for all community colleges, local colleges, and universities to assess the College’s position statewide.
  3. When fiscally prudent, tuition and fee increases will conform as much as possible to state tuition restraint guidelines.

LEGAL REF: MCL 389.123, as amended

Approved: September 30, 1996
Revised: April 24, 2000
Reviewed: February 16, 2009
Approved: April 27, 2009

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3431 Audits

Audits

General: The purpose of this policy is to provide adequate authority for a strong, competent and vigilant Finance/Audit Committee (‘the Committee’) to assist the Board in fulfilling its fiscal oversight responsibilities relating to: the integrity of the College's financial statements, the independence and performance of external and internal audit functions, the College's financial and accounting practices, the College's compliance with legal and regulatory requirements, and standards of conduct. The Committee serves as the Board’s liaison with any external auditors.

The following policy statements apply:

Membership

  1. The Committee will consist of the members of the Finance/Audit Committee. Committee members must be free of any financial or personal relationship that could impair the member’s independence. Members of the Committee must not receive consulting, advisory, or other fees from the College, contractors, or vendors.
  2. At least one member of the Committee must have an interest in College finances and should possess knowledge of public finance or have experience with private business finance, non-profit business experience, or complete Board development programs in finance. If the committee believes that it needs assistance to meet this standard, it is authorized to appoint a qualified, non-voting person to provide the desired assistance.

Duties/Responsibilities

The following are the principal duties and responsibilities of the Finance/Audit Committee:

  1. Recommend a qualified independent auditor to the Board for approval. The recommendation will be based on a periodic review of the auditor’s performance. The President and Administration are directed to cooperate with the Committee and independent auditors, and to assist the committee in evaluating potential auditors and preparing a recommendation to the Board.
  2. Be responsible for the oversight of the College's independent external auditor.
  3. Oversee and ensure independence of external auditors and audit decisions. The Committee will require disclosure of any financial or business connections to Board members or College administrators.
  4. Pre-approve all audit services provided by the independent external auditor. The independent external auditor is prohibited from performing any non-audit service or any College management function. Should extenuating circumstances exist allowing performance of non-audit services by the independent external auditor, pre-approval of the services by the Committee will be required.
  5. Ensure proper rotation of the lead audit partner of the independent audit firm. The lead partner must be rotated every three years, with a timeout of two years.
  6. Review the financial statements, adequacy of internal controls, and findings with the independent auditor(s). The Administration will provide a report to the Finance/Audit Committee regarding these reviews.
  7. Ensure that the College's senior financial management complies with internal control procedures and determine whether recommendations made by the independent auditor(s) have been pursued and/or implemented by the College.
  8. Ensure that the College President and CFO have certified that they have reviewed the College's financial statements and, to the best of their knowledge, the statements contain no material misstatements or omissions.
  9. Incorporate an employee complaint mechanism in Section 5000. The committee will periodically review the policy.
  10. Ensure that the audit is completed annually as required by MCL 389.143.
  11. Appear with the auditor at a public Board meeting to review the audit and management letter and make any appropriate recommendations.
  12. Periodically review the College's accounting principles and adequacy of controls.

The Committee will comply with this policy and other policies/bylaws.

LEGAL REF: MCL 389.143

Approved: September 30, 1996
Revised: April 24, 2000
Reviewed: March 9, 2009
Approved: April 27, 2009

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3450 Restricted Fund

General: The Board may establish restricted funds for special purposes, programs or activities at its discretion.

The following policy statements apply:

  1. A restricted fund will be established to account for all revenues and expenditures as specified by the grantor.
  2. The President is authorized to expend restricted funds in accordance with Board established criteria, and restrictions specified by the grantor or funding source.
  3. The Finance/Audit Committee will receive periodic reports from the Administration regarding restricted funds.

LEGAL REF: MCL 389.143; MCL 389.144, as amended

Approved: September 30, 1996
Revised: April 24, 2000
Reviewed: March 16, 2009
Approved: April 27, 2009

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3451 Designated Fund

General: The Board may designate resources for specific purposes, projects, or activities. Revenues received will be deposited in the general fund.

The following policy statements apply:

  1. Expenditures from the fund will conform to the original designation.
  2. The President is authorized to expend designated funds in accordance with Board established criteria.
  3. The Finance/Audit Committee will receive periodic reports from the Administration regarding designated funds.

LEGAL REF: MCL 389.143, as amended

Approved: April 24, 2000
Reviewed: March 16, 2009
Approved: April 27, 2009

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3460 Depositories for College Funds

General: The Board is responsible for selecting depositories for its funds. Therefore, the Board establishes this policy to properly account for its funds and to provide opportunity for local financial institutions to compete for financial services.

The following policy statements apply:

  1. The Board will, select depositories for College funds at its biennial reorganization meeting.
  2. A set of financial accounting numbers by fund will be established and monitored by the Administration.
  3. General operating funds, building and site funds, and debt retirement funds will be maintained separately and not be commingled.
  4. The President or his/her designee will periodically review its depository (ies) (including local financial institution capacity) and make recommendations to the Board.

LEGAL REF: MCL 389.143, as amended

Approved: April 24, 2000
Reviewed: March 16, 2009
Approved: April 27, 2009

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3510 Authorized Signatures

General: The Board designates signatories to financial documents and funds of the College. The authorization is made to carry out fiduciary responsibilities in an efficient and responsible manner.

The following policy statements apply:

  1. Checks or drafts on any and all College funds in any bank or financial institution may be drawn when signed by those authorized in this policy.
  2. Checks or drafts for amounts up to, and including, $10,000 must be signed by one of the following. Checks or drafts for amounts greater than $10,000 must be signed by any two of the following, after necessary approvals have been completed utilizing applicable payroll/financial management software applications :

    Chief Financial Officer
    President
    Board Treasurer
    Board Chairperson

  3. Checks or drafts for payroll for amounts up to, and including $7,500, must be signed by one of the following. Checks or drafts for amounts greater than $7,500 must be signed by any two of the following, after necessary approvals have been completed utilizing all applicable payroll/financial management software applications :

    Chief Financial Officer
    President
    Board Treasurer
    Board Chairperson

  4. All checks for any amount whatsoever made payable to Charles Stewart Mott Community College for transfer between internal accounts must be signed by one of the following :>

    Chief Financial Officer
    President
    Board Treasurer
    Board Chairperson

  5. All signatories must be bonded.

LEGAL REF: MCL 389.143, as amended

Approved: September 30, 1996
Revised: April 24, 2000
Reviewed: March 16, 2009
Approved: April 27, 2009

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3900 Gifts, Grants, Bequests and Donations

General: The primary financial responsibility for funding the College rests with the local community, the State of Michigan, and the federal government. While these sources are primary, other funding sources, such as commercial business, industry, foundations, support groups, public or private agencies, and individuals, may provide additional support including financial donations, supplies, materials, equipment and facilities. Gifts, grants, and bequests provide an important source of alternative funding for College programs, cultural activities, and enrichment of all aspects of the College climate and environment. This policy is established to provide for a common basis for receiving gifts, grants, bequests, and donations.

The following basic policy statements apply:

  1. The President is responsible for the oversight of gifts, grants, bequests, and donations. The President and staff will set forth criteria to be met in the acceptance of gifts and the procedure for examining and evaluating offers of gifts to the College.
  2. Gifts received by the College may be forwarded to The Foundation for Mott Community College on behalf of the College.
  3. Gifts and donations are encouraged to augment local, state and federal funding sources. Gifts without conditions attached are preferred.
  4. Prospective donors are encouraged to contact the President or his/her designee in advance of fundraising activities in an effort to coordinate the need and timing of events in accordance with the College fundraising policy and program need.
  5. The Board is the final approving authority for gifts and donations. The Board reserves the right to accept or reject any gift or donation and reserves the right to suggest stipulations on donations prior to acceptance to ensure program continuity.
  6. Any funds received will be placed in the appropriate fund and will be accounted for and administered by the Board in accordance with applicable statutes.
  7. The College expects The Foundation to thank each donor in writing.
  8. The College expects The Foundation to publish annually a list of gifts and donors, unless anonymity is requested by the donor.

Approved: April 24, 2000
Reviewed: March 16, 2009
Approved: April 27, 2009

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3910 Debt Management

General: Debt instruments such as bank loans, installment purchase agreements, etc. have a significant impact on the ability of the College to bond and/or acquire adequate facilities and equipment in support of its mission.

The following basic policy statements apply:

  1. The fiscal affairs of the College will be operated in a manner reflecting honesty and integrity, conforming to generally accepted accounting principles and within current statutory requirements and limitations leading to high quality bond ratings.
  2. The Administration will develop long range plans, including accompanying budgets and bonding recommendations.
  3. All bonding proposals must be approved by the Board, in accordance with the provisions of PA 331, 1966.
  4. It is the intent of the Board to insure that any bonding proposal presented to the electorate or approved by the Board without the vote of its constituents is manageable within the debt retirement millage, contributions from the general fund, contributions from the building and site fund or other special revenue sources.
  5. The College may utilize various debt vehicles (i.e. voted bonds, non-voted bonds, revenue enterprise bond loans, installment purchase agreements), contracts and vendor agreements to meet long term capital needs.
  6. The proceeds of various debt instruments may be used to purchase real estate, construct facilities, equip and improve capital assets, and refund previously issued indebtedness, unless otherwise specified. These proposals should emphasize integrating the faculty vision, enrollment projections and curriculum plans within the financing plan.
  7. The President is authorized to incur short-term debt and execute financing agreements without approval of the Board for the following:
    1. Short-term debt (five years of less) provided repayment is contained in the approved college budget (or amended budget) or from other designated revenue sources.
    2. Vendor agreements/contracts/long-term leases with or without options to purchase at the end of the contracted period.
    3. Short-term notes or loans to meet operational contingencies such as payroll expenses or other required payments provided they will be repaid within the current budget and fiscal year.
  8. The President or his/her designee will engage the College attorney, financial advisors, and underwriters, as appropriate, in short-term debt matters.
  9. The President will report the status of college debt on a periodic basis through the Board Finance/Audit Committee.
  10. The College auditors must provide a complete accounting of all debt as a part of the annual audit or as requested by the President or the Board.
  11. The Administration will maintain long-term capital needs forecasts and strategies in support of the campus master plan.

LEGAL REF: Michigan Constitution ART IX, §6; MCL 389.122, as amended

Revised: September 10, 2003
Approved: October 27, 2003
Reviewed: March 16, 2009
Approved: April 27, 2009

 

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3920 Financial Stability

General: The Board is committed to maintaining financial stability of the College, its mission, programs, facilities, faculty, staff, and students, in line with its strategic plan.

The following basic policy statements apply:

  1. Financial resources will be allocated to purposes consistent with the College mission, current strategic plan, grant requirements, and conditions of special gifts and bequests.
  2. Input from College staff will be sought in the development of the institution’s strategic plan, programs, and facilities needs.
  3. Fiscal stability requires a balance of human resources, professional development, capital funding, and ongoing maintenance of capital assets.
  4. All College budgets will be managed utilizing generally accepted accounting principles, developing and implementing internal controls, and insuring honesty and integrity in all actions.
  5. The Activities Classification Structure financial and program data and trends comparisons among Michigan community colleges will be reviewed and utilized in bench marking MCC, and the implications will be reviewed as the budget is developed.
  6. Long-term financial forecasts will be developed with underlying rationale and clearly stated assumptions to protect assets through adequate fiscal resources and available cash sufficient to meet payroll and debts, avoid borrowing for operational purposes, and insure the necessary resources to carry out programs and services for students and the community.
  7. A major goal of financial stability is to maintain student access, affordability, and equity.
  8. The Administration will attempt to diversify funding through grants, endowments, foundations, and other non-traditional revenue sources.
  9. The Board will designate and set aside appropriate fund reserves to support plans for long-term capital and operating commitments.
  10. Periodic review of student fees will be conducted in order that the student or course fees are appropriate and cover expenses incurred.
  11. The President and designated staff will provide regular financial reports on all College funds and will alert the Board to any potential problems.
  12. Complete review and assessment of grants and contracts will be made by the Administration to ensure that participation in them will be cost-effective and of value to the College.

Revised: September 10, 2003
Reviewed: March 16, 2009
Approved: April 27, 2009

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3930 Fiscal/Budget Reserves

General: Fiscal and budget reserves are essential in order to maintain financial stability at the College.

The following basic policy statements apply:

  1. Basic budget reserves must be established in all funds to maintain stability, to protect the operation of the College during times of funding decline (local, state, national), unexpected emergencies, tax base erosion, or failure of millage or debt proposals.
  2. A minimum unrestricted fund balance must be established for each fund as specified:

    General Operating Fund = 5% - 10%
    Building Site Fund = 1% - 3% of the college depreciated capital assets
    Maintenance & Repair Fund = 1% - 3% of the college depreciated capital assets

    (In the event that the minimum level specified may be in jeopardy, the President must notify the Board through its Finance/Audit Committee and prepare recommendations to attain the minimum prescribed level of fund balance.)

  3. The Debt Service Fund must have a minimum balance sufficient to pay all principal and interest and other debt millage expenses for the entire year.
  4. In addition to the fund balances specified above, a rainy day fund must be established in the amount of 1% of the operating funds. This fund will only be used when catastrophic revenue loss occurs, or exceptional expenditures are required beyond the capability of either the general operating fund or maintenance and replacement fund.
  5. The Administration will explore the possibility of a building and site millage/sinking fund to provide appropriate revenues in expanding, maintaining, and improving capital facilities.

Revised: September 10, 2003
Reviewed: March 16, 2009
Approved: April 27, 2009

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3940 Fiscal Forecasting/Tracking

General: Fiscal forecasting/tracking is an important element of short and long range planning. This data enables the College to position itself for political and legislative leadership in securing funding for the College.

The following basic policy statements apply:

  1. The Administration will develop ongoing plans and procedures to assess local, state, and federal fiscal trends impacting College funding and programs.
  2. The Administration will maintain contact with its state and federal legislative delegations regarding funding and budget projections affecting the College.
  3. The Administration will communicate regularly with local elected and appointed officials (i.e., Treasurers, Assessors, etc.) to identify local tax base trends and their implications for College millages and monies.
  4. Periodic updates concerning fiscal trends/forecasts will be presented by the Administration to the Finance/Audit Committee.
  5. The Administration will utilize the resources of its state and national organizations in fiscal forecasting/tracking and pursue funding sources to offset any reduced funding.
  6. The Foundation for Mott Community College is expected to provide regular updates on funding projections impacting College programs and fiscal support of College initiatives.
  7. The Chief Financial Officer of the College will maintain a comprehensive database containing current forecasting and tracking data regarding significant revenue and expenditure categories. This database will be utilized in budget development, grant solicitations, budget amendments, College funding initiatives, and legislative proposals. Revenue and expenditure trends will be communicated to key decision makers at the local, state, and federal level.

LEGAL REF: MCL 389.103; MCL 389.143, as amended

Reviewed: March 16, 2009
Approved: April 27, 2009

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3950 Petty Cash

General: Petty cash funds will be established by the Administration, as necessary, for day-to-day operations. The Board requires imposition of controls as will prevent abuse of these funds.

The following basic policy statements apply:

  1. Petty cash funds may be used to pay for materials, supplies, and expenses that are:
    1. Considered usual and legitimate expenses of the district;
    2. Needed immediately;
    3. For small amounts of money, usually no more than $25, at one time, or at the discretion of the Chief Financial Officer.
  2. The custodian of each petty cash fund will prepare a schedule of disbursements when the funds available in petty cash need to be replenished.
  3. No petty cash funds may be used to circumvent the purchasing procedures required by law, and/or by the policies of the Board.
  4. The Chief Financial Officer will oversee petty cash funds, and will determine the need for any additional funds.

LEGAL REF: MCL 389.143, as amended

Reviewed: March 16, 2009
Approved: April 27, 2009