CIHE Accreditation Self-Study Report February 2006
Standard Nine: Financial Resources
Description
Fiscal policies of New Hampshire Technical Institute [NHTI] are governed by the State of New Hampshire Code of Administrative Rules and those established by the New Hampshire Community Technical College [NHCTC] System Board of Trustees. Purchasing is governed by the State of New Hampshire Plant & Property Rules and further refined by the NHCTC Purchasing Guidelines. These are all directed to assure ethical and sound financial practice.
The President of NHTI is responsible for the financial health of the college and for ensuring that resources are allocated appropriately. The governance structure of the college reflects the philosophy (as put forth in the Mission/Values/Vision statement) and the ethics of the organization by giving academic and administrative departments the opportunity to participate in the decision-making of allocation of financial resources. At every level of the organization, individuals are able take part in the process by requesting resources to perform their work.
This process has provided the institution insight into the most productive use of its resources, ensuring quality education while balancing those needs with those of other aspects of campus life. For example, a computer advisory team, with membership representative of the campus community, was created several years ago to review, prioritize, and recommend requests for technological equipment on campus. This team, now known as the Information Technology Team [ITT], was a direct result of faculty and staff's desire to ensure that technology on campus was compatible and that resources were allocated in a manner that allowed the campus to advance the use and integration of computer hardware, software, and technology. The creative thinking of this team brought forward the overall plan to "trickle down" computers from instructional labs to faculty, which maintains the instructional labs and computer technology faculty with state-of-the-art technology while providing other faculty with greater computing power than most need. The Institution Leadership Team [ILT] approves recommendations of the ITT and sends them to the President for final approval. This governance process is where the resources needed for academic excellence and quality service to students are brought together.
The college demonstrates the ability to respond to financial emergencies and unforeseen circumstances. For example, an unanticipated problem recently occurred with a residence hall (North Hall) whose structure was in need of substantial repair due to drainage problems. Through careful budget allocation, the $590,000 required to complete the repairs was found through a combination of capital funds, current operating budget, and the residence hall sustaining account, which is put aside for such emergencies.
The New Hampshire Community Technical College [NHCTC] System has the authority to assist NHTI financially by using available resources within the NHCTC System. A revision to the enabling legislation in 1996 (RSA 188-F: 14c) allows NHTI and its sister colleges to lapse balances into the System's non-lapsing general account. Prior to the enactment of that law, all monies were escheated into the State of New Hampshire General Fund. Through careful use of its budget (approximately $22,000,000 for the day school and Division of Continuing Education and $27,000,000 total appropriated budget), NHTI achieves its mission to deliver "excellent academic, technical, and professional preparation." In 2005, the NHCTC System Board of Trustees and the System Leadership Team voted to protect $500,000 from lapsed accounts as an emergency reserve for all colleges in the System.
NHTI is financially stable. The majority of the college's budget comes from student tuition and fees, with a portion from the New Hampshire State General Fund. In fiscal year 2005, approximately 65% of the college's income was provided by student tuition and fees, and 35% came from State General Fund appropriation. A review of revenues and expenditures clearly demonstrates that the primary use of NHTI's available funds is to fulfill its educational objectives.
As an agency within the government of the State of New Hampshire, the college is governed by a comprehensive capital budget process and operating budgeting process and must operate within the written fiscal code of the State of New Hampshire. The budget process is directed by the Governor of the State of New Hampshire, who provides budget guidelines to the Commissioner of the NHCTC System. In general, NHTI's biennial operating budget is based on actual revenue and expenses associated with the previous biennial budget, with adjustments made to reflect anticipated changes to expenses (e.g., wage increases) and revenue (e.g., enrollment or tuition increases). In addition, tuition revenue is projected based on trends in enrollment growth and attrition.
The college's capital budget, which covers major construction, critical maintenance and renovations costing over $50,000, and equipment costing over $25,000, is based on input from the campus solicited through the academic and non-academic departments and is developed under the direction of the President, the Chief Financial Officer [CFO], and the ILT. The proposed capital budget is submitted to the NHCTC System Office, where it is then reviewed and considered by the System Leadership Team [SLT] along with the proposed capital budgets of other colleges within the System. The entire capital budget for the NHCTC System is then submitted to the Board of Trustees for approval. The Commissioner submits a System-wide capital budget, based on input from all colleges in the System and reflecting the System goal of a 40% increase in enrollments by 2012, to the State House. During this process, NHTI's President must advocate for NHTI's capital requests with all the governing bodies involved in budget development and approval that have input and can modify the original capital budget request. Figure IX.A-1 and Figure IX.A-2, located at the end of this section, illustrate the complete flow from development to final budget.
The operating budget, which is used to cover the daily operation of the college, is developed at the college level. The President and the CFO begin construction of the operating budget with guidelines from the Governor. The CFO then solicits requests from all Department Heads for changes in the budget, particularly regarding equipment, personnel, and plant maintenance. These requests are then merged and reconciled with projected income, which is based primarily on enrollment estimates and expected General Fund allocations. The budget is organized on the basis of this projection. The budget is then drafted by the President and the CFO and reviewed by the ILT. It is then submitted to the Commissioner to be incorporated into a System budget request. The System total operating budget is submitted to the Governor to be incorporated into the proposed State budget. Any projected surpluses are used to improve academic programs, physical facilities, and student services. Each academic department has a flexible budget for consumable supplies.
From the President's submission of both budgets to the Commissioner to their final approval by the Legislature, the budgets are subject to adjustments, both increases and decreases, by the various groups who review them: NHCTC System Leadership Team; the NHCTC System Board of Trustees; the Executive Branch; the House Finance Committee; the Senate Finance Committee; and finally the Legislature.
The dollar amounts of the proposed capital and operating budgets are realistic. Enrollment and expenditure trends from previous years provide a sound basis for developing a realistic operating budget. Both academic and nonacademic department heads familiar with costs, both past and projected, identify and present the financial requirements for the upcoming biennium to the CFO. Here the comprehensive budgets are formed, revised, made ready for presentation, and cycled into the process stated above.
Historically the state government has voted to support the college, and the total dollar support has been consistent, as indicated in Appendix Data Form 1. However, as enrollment has increased, the expenditures and revenue have increased. Since the fall of 2001, per-credit tuition cost has risen 49%, while full-time-equivalent (FTE) enrollment has increased 45%. This tuition increase has been the primary source for improving educational quality and expanding student services. To maintain financial stability, revenue growth is conservatively projected.
The college's administration has timely and accurate financial data information available through the System financial database. At the end of the fiscal year, if a budget surplus exists, it is placed into the NHCTC System non-lapsing account. The distribution of the surplus is decided by the System Leadership Team [SLT] and requires approval of the Fiscal Committee of the NH State Legislature and Governor and Council.
The rise in healthcare costs and wage increases, with limited State support for these additional expenditures, has resulted in annual increases (levied by the NHCTC Board of Trustees) in tuition to maintain the college's financial stability.
Despite these challenges, the college remains financially stable, and new funding sources are being explored, including grants and partnerships with business, industry, and professional organizations. For example, Northeast Delta Dental has supported one dental hygienist faculty position every year since 2003, and a consortium of eight hospitals is supporting Radiation Therapy for three years, with contributions of $15,000 from each hospital each year (re-negotiations are underway this year). NHTI applied for the Land and Water Conservation Grant from the Federal Bureau of Parks and Recreation and matched those funds with funds from Concord Express, a non-profit youth organization serving the Greater Concord area. This grant includes expanding recreation facilities and protecting open space. In addition, direct gifts to the college include $4000 in scholarship money annually from Northeast Delta Dental, and $300,000 in dental equipment for the new Allied Dental Education wing of MacRury Hall from the New Hampshire Dental Society. NHTI's first capital campaign is underway, focusing on a new 56,000-square-foot Academic/Career and Health Education Center. As of February 2006, the Capital Campaign stands at $2.4 million of its $3 million goal and will support a sizeable portion of this proposed building. The contributions range from major donations (including $750,000 in tax credits provided by the Community Development Finance Authority [CDFA] and a Federal grant for $491,032 from Health Care and Other Facilities [HCOF]) to small amounts of a few dollars.
Effective July 1, 2005, the NHCTC System was ordered exempt from hiring delays or freezes, prohibition on equipment purchases, and departmental budget reduction orders, through July 1, 2007 (RSA 188-F:13-a). This exemption has allowed the college to maintain a stable budget and plan accordingly through the next academic year.
The following auxiliary accounts are all self supporting and the revenues received from them are used to enhance and improve educational programs, community outreach, and student life: Residence Hall; Wellness Center; Child and Family Development Center; Student Activities Fees (controlled by the Student Senate); Board Account; and the Student Center.
Financial aid policy and procedures are reviewed at least once yearly and throughout the year as needed. The reviews are done internally within the office by members of the Financial Aid staff. If questions arise, the policy and/or procedures are taken to the Financial Aid User Group, made up of Financial Aid Directors from each of the NHCTC System campuses and the NHCTC System Internal Auditor, which meets regularly. Policy and procedures are kept on a network-specific drive for financial aid staff access only. The purpose of the annual review is to improve access and increase the quality of information shared with students. The Financial Aid Handbook is updated each award year based on the information that evolves from this meeting.
The NHCTC System has an internal auditor that regularly audits certain aspects of financial aid to assure compliance with federal regulations. External auditors in conjunction with the Office of Legislative Budget Assistance are performing an A-133 audit of NHTI for the award year 2004-2005.
The Director of Financial Aid, the Chief Financial Officer, and the Bursar review State, private, and Foundation scholarships to determine if they are still active and conform to purpose. The website and catalog are updated reflecting the latest scholarship information.
The System Office of the NHCTC System and NHTI are jointly responsible for establishing and maintaining an internal control structure. The State of New Hampshire has financial procedures in place that provide NHTI with reasonable, but not absolute, assurance that assets are protected against loss from unauthorized use or disposition. These procedures also ensure that transactions are executed in accordance with management's authorization and are recorded properly to permit the preparation of financial statements in accordance with generally accepted accounting principles.
The processes in place, both internal and external, work well and allow the college to control and direct financial resources effectively to meet its goals and objectives.
A detailed financial control system provides monthly reports on revenue and expenditures by class (consumable supplies, equipment, and salaries). It also provides prior year history and allows projections of annual expenses. This report can be updated as often as needed. Purchasing and payroll are tracked using an internal database management program and the on-line New Hampshire Integrated Financial System provided by the State of New Hampshire. NHTI also utilizes the BANNER™ software system to provide all student account-receivable information. This information is used to analyze and estimate revenues.
If there is a possibility that the college will be facing a deficit, the President, CFO, and the Vice Presidents develop a strategic financial plan to reduce the expenses of the college while minimizing the impact on educational quality and services. The NHCTC System maintains a non-lapsing account from prior years' closing balances which would be used to assist NHTI should the college be unable to meet its obligations. In addition, the NHCTC System Board of Trustees "is authorized to transfer funds between line items within and among any budgetary unit. By October 31 of each fiscal year, the department submits a report to the Joint Fiscal Committee detailing all transfers made during the last fiscal year and the reasons for them" (as detailed in RSA 188-F:14).
On July 1, 2006, the NHCTC System will implement BANNER™ 7, including the BANNER™ Finance module, and integrate all System colleges into one database. BANNER™ Finance, a cost accounting program, will allow the development of a detailed record of accounts to provide better tracking of the cost of operations within the college and help inform decision-making at every level. Because the Banner Finance module will incorporate all aspects of NHTI's financial status, the update will allow the college to have more complete oversight of its overall financial picture.
Policies governing grants and gifts are maintained and available through the NHCTC System and Board of Trustees. NHTI must conform to the NHCTC System Grants Office policy, which stipulates that all grants are subject to review by the NHCTC System Board of Trustees, as outlined in RSA 188-F:4-a-IIIa. The NHCTC System Foundation has its own Board of Directors and gift policy, available through the Foundation.
Based on the agency's organizational structure, the NHCTC System Office is effectively responsible for overseeing the finance and operations of the college, but the college has the authority to allocate funds within the context of State requirements.
NHTI maintains an ethical oversight of its financial resources and practices through strong institutional and System leadership. The State, too, has established protocols for ethical practice for State employees and agencies (Executive Order 98-1). These protocols are currently applicable to this agency and its employees.
Both internal and external auditors ensure compliance with all State and Federal rules, regulations, and directives. A Federal audit on Federally-received funds is performed annually, and the NHCTC System conducts periodic audits. NHTI audits completed by Federal authorities and by the State of New Hampshire's Office of Legislative Budget Assistance [LBA] have been performed in accordance with Government Auditing Standards issued by the Comptroller General of the United States and satisfy the requirements of Title 31, Chapter 75, United States Code. The State of New Hampshire's annual reports contain the financial statements, schedules, and an independent auditor's opinions necessary to comply with this statute; however, NHTI is not a separate entity in the State's annual report.
NHTI's fundraising efforts have increased in recent years. RSA 188-F:4-IIIa, effective in July 1999, allowed the System to create a Foundation, accept money without going to Governor and Council, and employ a Director of Institutional Development to solicit donations and endowments for all colleges in the System. At the present time, NHTI's Director of Institutional and Alumni Development is working with the NHCTC Foundation to develop fund-raising strategies. The NHCTC System Board of Trustees is authorized to accept any gifts it deems appropriate.
Appraisal
NHTI has a long history of financial stability, prudently using and managing its resources. The financial decision-making process follows the model established ten years ago when the college committed to a shared Governance Model. The model has proven to be an effective mechanism for providing the information needed to make effective financial decisions. Whether it is to install emergency call boxes in the parking lots or to manage an unexpected residence hall drainage problem, the college has the budgeting expertise, as well as the financial capacity and flexibility, to address issues. Enrollment growth and tuition increases have provided a reliable and increasing stream of revenue to improve the quality of education and enhance student life.
Under the administration of the Director of Institutional and Alumni Development, the college is in the midst of its first capital campaign, and fund-raising efforts with alumni and business and industry partners are underway. These efforts are proving successful in expanding the financial resources of the institution.
The budget process, incorporating both the capital and operating budgets, as required by the fiscal code of the State of New Hampshire, is complex and requires much negotiation at all levels. On occasion, the System Board of Trustees must make hard choices between increasing tuition and fees (the principal source of revenue) or cutting services to students. While the President has significant input into this decision-making process, the results are not always to the advantage of the Institute.
Current processes in financial planning and revenue distribution are fair and equitable. The revenues are wholly devoted to maintaining and improving educational quality. The current structure and sources of revenue are directed to that end. Prudent financial planning has allowed the college to improve educational quality, advance programs, and build capacity, as evidenced by enrollment increase, student/employer satisfaction, and graduation rates.
Projection
In order to support its Mission/Values/Vision statement, NHTI will continue its prudent and realistic financial planning and decision-making and will continue to administer its financial resources with integrity. The college anticipates that the implementation of the BANNER™ Finance module in the summer of 2006 will assist in meeting this goal. The college's financial stability will also enable it to respond to unforeseen circumstances without damage to academic integrity.
Due to the enabling legislation passed in September 2005, the NHCTC System Board of Trustees will continue its appropriate authority in overseeing all budget processes. The President and CFO of the college will continue to solicit input from various campus constituencies in preparing the capital and operating budgets, to advance the educational objectives of the college.
The Institutional and Alumni Development Office will continue to diversify and explore creative fund-raising avenues to meet the needs of the growing student enrollment. As a result of the current Capital Campaign, some relief will come in the next few years from the construction of the new Academic/Career and Allied Health Education Center. The Institutional and Alumni Development Office will continue to accept and verify that donors' gifts are utilized in a manner which meets the donors' intentions; the CFO monitors this process. The college will explore developing a stronger alumni network by dividing the alumni functions from the development.
NHTI will continue to review its financial aid policies and practices annually.
Tuition increases will likely continue if state financial support continues to decline. Access to affordable education in New Hampshire will continue to be a challenge, regardless of state funding. However, the college will remain stable as it looks for new programs and seeks to broaden the appeal of existing programs to bring in additional enrollments.
The System Board of Trustees and the Commissioner have recently proposed the "Tuition Stabilization Bill" to the State Legislature. This legislation proposes to hold tuition at the current rate if the legislature funds the college's fixed increases in wages and insurance in the FY 2007 operating budget. The legislature has yet to vote on this proposal, but the possibility of holding tuition at the current level would be an important advance for NHTI and for New Hampshire's citizens.
NHTI will continue to ensure ethical oversight of its financial resources through internal and external audits and careful review of policies and procedures.