McNeese State University

Section 2:
Core Requirements
2.1	2.2	2.3
2.4	2.5	2.6
2.7.1	2.7.2	2.7.3
2.7.4	2.8	2.9
2.10	2.11	2.12
Section 3:
Comprehensive Standards
3.1.1	3.2.1
3.2.2.1	3.2.2.2	3.2.2.3
3.2.2.4	3.2.3	3.2.4
3.2.5	3.2.6	3.2.7
3.2.8	3.2.9	3.2.10
3.2.11	3.2.12	3.2.13
3.2.14	3.3.1	3.4.1
3.4.2	3.4.3	3.4.4
3.4.5	3.4.6	3.4.7
3.4.8	3.4.9	3.4.10
3.4.11	3.4.12	3.4.13
3.4.14	3.5.1	3.5.2
3.6.1	3.6.2	3.6.3
3.7.1	3.7.2	3.7.3
3.7.4	3.7.5	3.8.1
3.8.2	3.8.3	3.9.1
3.9.2	3.9.3	3.10.1
3.10.2	3.10.3	3.10.4
3.10.5	3.10.6	3.10.7
Section 4:
Federal Requirements
4.1	4.2	4.3
4.4	4.5	4.6
4.7	4.8

McNeese State University
Compliance Plan for Reaffirmation

Section 2.11: Resources

Judgment of Compliance

Compliance

Partial Compliance

Non-compliance

Requirement

The institution has a sound financial base, demonstrated financial stability, and adequate physical resources to support the mission of the institution and the scope of its programs and services. The member institution provides the following financial statements: (a) an institutional audit (or Standard Review Report issued in accordance with Statements on Standards for Accounting and Review Services issued by the AICPA for those institutions audited as part of a systemwide or statewide audit) and written institutional management letter for the most recent fiscal year prepared by an independent certified public accountant and/or an appropriate governmental auditing agency employing the appropriate audit (or Standard Review Report) guide; (b) a statement of financial position of unrestricted net assets, exclusive of plant assets and plant-related debt, which represents the change in unrestricted net assets attributable to operations for the most recent year; and (c) an annual budget that is preceded by sound planning, is subject to sound fiscal procedures, and is approved by the governing board. Audit requirements for applicant institutions may be found in the Commission policy entitled Accreditation Procedures for Applicant Institutions.

Narrative

McNeese State University is in compliance with Core Requirement 2.11.

The University’s mission to provide education, research, and service that support the core values of student success, academic excellence, fiscal responsibility, and university-community alliances is achieved in part by providing adequate physical resources supported by the institution's financial stability and solid financial background. As evidence of the University’s financial stability, audits, net asset evaluation, and annual financial statements are provided.

The University currently sustains accreditation in all of the baccalaureate and graduate programs mandated by the Board of Regents at the completion of the 2005-2006 academic year. These and other programs are made possible by the University’s diligent stewardship of its resources. In order to meet the obligations of such programs across the campus, the University must maintain a sound financial base as demonstrated by financial stability. The fiscal health of the University is reflected in periodic institutional audits.

INSTITUTIONAL AUDITS

External Audits

The Office of the Legislative Auditor audits the University of Louisiana System, of which McNeese State University is a part, annually. These audits are performed in accordance with auditing standards generally accepted in the United States of America and the standards applicable to financial audits contained in Government Auditing Standards, issued by the Comptroller General of the United States.

As part of the audit of the University System’s financial statements, the Office of the Legislative Auditor considers the University’s internal control over financial reporting, examines evidence supporting certain accounts and balances material to the University of Louisiana System’s financial statements, and gauges the University’s compliance with laws and regulations that could have a direct and material effect on the University of Louisiana System’s financial statements.

In addition, the Legislative Auditor considers McNeese State University’s internal control over compliance that could have a direct and material impact on a major federal program as defined by the Single Audit of the Louisiana. The Legislative Auditor also gauges the University’s compliance with the laws and regulations that could have a direct and material effect on the major federal programs as required by the U.S. Office of Management and Budget Circular A-133.

The tests of McNeese State University are performed biennially. The results of the tests at the University are reported in a management letter to the University and the University of Louisiana System. The most recent management letter, which addressed the fiscal year ended June 30, 2005, reported two findings. The findings were identified as follows:

• Improper Request and Disbursement of Federal Family Education Loans;

• Weaknesses in Movable Property Controls.

McNeese State University administration has implemented correction plans for these findings, and the corrective action plans are included in this report with the management letter. The management letter also reported that a finding for the year ended June 30, 2003. The 2003 finding addressed a statewide finding concerning record retention schedules. This finding has been resolved.

Internal Audits

The McNeese State University Internal Auditor conducts internal audits of the University’s operations in accordance with standards for the professional practice of internal auditing. Internal audits are performed at the request of the University of Louisiana System, McNeese State University management, and/or from the judgment of the Internal Auditor. Internal audits reports are submitted to the University’s administration and the University of Louisiana System Audit Committee.

Standard Review Report and Institutional Management Letter

The Office of the Legislative Auditor will perform a review of the University’s financial statements and will prepare a Standard Review Report in accordance with Statements on Standards for Accounting and Review Services issued by the AICPA and will issue an institutional management letter for the fiscal year ending June 30, 2006. The Standard Review Report and institutional management letter will be made available to SACS no later than October 24, 2006.

UNRESTRICTED NET ASSETS

McNeese State University prepares its financial statements in accordance with accounting principles established by the Governmental Accounting Standards Board. The Governmental Accounting Standards Board (GASB) identifies accounting principles generally accepted in the United States of America and reporting standards for state and local governments. These principles are found in the Codification of Governmental Accounting and Financial Reporting Standards, published by the GASB.

Net assets represent accumulated resources derived through University operations. Net assets are classified and describe as follows:

Invested in Capital Assets, Net of Related Debt
This category represents the institution’s total investment in capital assets, net of accumulated depreciation and reduced by outstanding debt obligations related to acquisition, construction, or improvement of those capital assets.
Restricted Net Assets – Expendable
Restricted expendable net assets include resources which the institution is legally or contractually obligated to spend in accordance with restrictions imposed by external third parties.
Restricted Net Assets – Nonexpendable
Restricted nonexpendable net assets consist of endowment and similar funds which donors or other outside sources have stipulated, as a condition of the gift instrument, that the principal is to be maintained inviolate and in perpetuity and invested for the purpose of producing present and future income, which may either be expended or added to principal.
Unrestricted Net Assets
Unrestricted net assets represent resources derived from student tuition and fees, state appropriations, and sales and services through educational departments and auxiliary enterprises. These resources are used for transactions relating to the educational and general operations of the University and may be used at the discretion of the governing board to meet current expenses and for any purpose.
When an expense is incurred that can be paid using either restricted or unrestricted resources, the University’s policy is to first apply the expense towards unrestricted resources and then towards restricted resources. Information on Unrestricted Net Assets for fiscal year 2006 is provided in a Statement of Financial Position of Unrestricted Net Assets, exclusive of plant assets and plant-related debt. This statement will accompany the McNeese State University annual financial report for the year ended June 30, 2006. Unrestricted net assets, exclusive of plant assets and plant-related debt, and total net assets for the two most recent fiscal years prior to 2006 are as follows:

2004 2005

Unrestricted net assets $6,126,742
$8,939,909

Total net assets $57,713,000 $60,128,000

PHYSICAL RESOURCES

The McNeese State University campus consists of 77 buildings located on 501 acres of land. The University has a demonstrated history of construction and major renovations in an effort to keep pace with increasing student enrollment and expansion of educational initiatives. For additional information, Comprehensive Standard 3.10.7 provides a detailed description of the University’s physical facilities, capital construction, and major renovations.

Supporting documents are provided below to illustrate student satisfaction with University facilities.

BUDGET

Prepared in accordance with University of Louisiana System and Board of Regents rules, the budget process is overseen by the President’s Executive Staff. Budget preparation is an on-going process requiring continuous and careful scrutiny and evaluation. The budget planning process is firmly rooted in meeting the institutional mission and goals.

The process is outlined below:

• The annual Operating Budget preparation commences in April of each year. Discussions about priorities for replacing vacant faculty or administrative positions begin in late fall.

• The process begins with a review of the current year budget status and income projections (tuition/fee, state appropriations, and self-generated revenues) for the upcoming budget. The process includes both formal and informal input.

• Each vice president reviews new or reallocation of program funding requests and priorities submitted through their respective deans and department heads. Decisions regarding personnel are made as soon as preliminary information about legislative priorities and student enrollment projections are available.

• The vice presidents compare the requests with the institution’s goals and strategic plan.

• The Budget Officer collects information from administrators to conduct a review of projected expenses including salaries, utilities, benefits, debt service, and other expenses.

• The Executive Staff reviews the information on projected revenues and expenses, University goals, program/unit assessments, and input from faculty, staff, and community advisory groups to assess the institution’s direction and funding priorities.

The University Budgetary Council is responsible for understanding budget implications and mandates by the Board of Regents and for making budget recommendations to the Executive Staff. The Council normally meets once annually unless circumstances dictate otherwise. Several other committees/councils provide important information for the budget’s preparation: System Fund Budget Council (Faculty/Staff Handbook, Section 637), Student Self-Assessed Fee Oversight Council (Faculty/Staff Handbook, Section 636), and the Athletic Budget Advisory Council (Faculty/Staff Handbook, Section 607).

State funding is appropriated annually by the State Legislature during the legislative session, which ends each year in June. Immediately on notification of final state budget appropriations through the Appropriation Act and notification by the University of Louisiana System and Board of Regents, the University prepares the final budget request. The Executive Staff finalizes the budget request and submits it to the University of Louisiana System and Board of Regents for the respective boards’ approval in August each year.

• The budget request is submitted according to ULS and Board of Regents requirements. The University must submit a balanced budget by mid August. The budget request contains numerous standardized forms required by the University of Louisiana System and Board of Regents. The forms are identified as either a ULS (University of Louisiana System) form or a BOR (Board of Regents) form. These forms provide the following information:

o Projected revenues and expenditures;
o Detail of revenue sources;
o Detail of expenditures by function and object;
o Scholarships;
o Auxiliary operations;
o Organizational chart;
o Other operational information.

• Budget requests are approved by the ULS and Board of Regents.

Once approved, the budget requests become the university’s formal budget, and any change to this budget requires Board approval for a formal budget adjustment. A budget adjustment (BA7) must have the approval of the University of Louisiana System, State Division of Administration, and the Joint Legislative Committee on the Budget, a State Legislative committee comprised of members of the Louisiana Senate and House of Representatives.

Hurricane Rita Impact

Hurricane Rita, which struck the Louisiana/Texas coast on September 24, 2005, caused severe damage to the University’s buildings and other facilities. Information about damage, remediation, and repair may be found in Comprehensive Standard 3.10.7.

Between fall 2001 and fall 2005 semesters, the University experienced enrollment increases for fourteen consecutive semesters. This enrollment growth continued through the implementation of two tiers of selective admissions standards, one in fall 2001 and the second in fall 2005.

The effects of Hurricane Rita, however, on area housing and employment markets played a significant role in declining enrollment during spring 2006. To remedy this problem, the University has initiated an aggressive marketing/image campaign.

A temporary decline in enrollment is expected to continue into the fall 2006 semester. To offset the decline in enrollment, the Louisiana Board of Regents has pledged to provide funds to state institutions in Louisiana aimed affected by the hurricanes. The Louisiana Legislature has provided $12,000,000 for this purpose. Distribution among affected institutions will be based on fourteenth-day enrollment figures.

The University has also contracted with the Louisiana Board of Regents to receive $2,600,000 of U. S. Department of Education emergency grant funds. The University will use these funds to pay faculty salaries and to purchase or replace needed equipment and instructional materials other than supplies.

In addition, FEMA has provided $1,134,000 to replace hurricane damaged equipment.

On February 9, 2006, the institution received $1,500,000 from the Bush-Clinton Katrina Fund. The university is using these funds to repair damaged facilities that are of critical need and where the cost of repairs falls in the scope of these funds.

This assistance contributes to the financial stability of the University despite the serious impact of Hurricane Rita.