The State University of New York (University) vice chancellor for finance and business has prescribed a set of administrative guidelines governing auxiliary services corporations’ administrative functions, including corporate fiscal stability requirements. Auxiliary services corporations (ASCs) are campus based, not-for-profit organizations, providing dining, vending, campus stores, student ID cards and other essential services to campuses.

I.   Officers

Whenever reference is made in these guidelines to the campus president or the vice chancellor for finance and business, such reference shall be deemed to also include such officer’s designee.

II.   Organization

A.   Board of Directors – The board of directors shall be constituted as provided in the University Board of Trustees Guidelines for Auxiliary Services Corporations. Further, the student directors shall be selected from and by the students or the representative student governing body. Directors representing the campus administration shall be appointed by the campus president.

B.   Campus Communication – The management of the corporation is vested in the board of directors as provided by not-for-profit law. However, the continuance of contractual relations between the corporation and the campus depends upon a close harmony of practice and purpose between both parties. The campus president shall receive minutes of all board meetings, have access to all corporate books and papers and be informed about significant matters of corporate business.

C.   Employment of State Employees – The corporation shall engage state employees to the extent necessary to conduct its business. State employees may be employed by the corporation provided time worked is either outside the employee’s normal work hours, or is charged as time off to leave credits.

D.   Charter/By-Law Changes – If the charter or by-laws of the corporation are to be changed in any respect during the term of the agreement, sixty (60) days prior written notice of such proposed change(s) shall be reported to the campus president and the vice chancellor for finance and business. No such change will take effect without the written approval of the campus president and the vice chancellor for finance and business.

III.   Financial

A.   General Budget – The corporation shall prepare each year a general budget as well as budgets for each auxiliary service under its control or supervision.

1.    Budget Approval – The budget shall be submitted to the campus president for review and approval at least sixty (60) days prior to the commencing date of the corporation’s fiscal year for which the budget is prepared. The review and approval or disapproval by the campus president must be made at least fifteen (15) days prior to the commencing date of the corporation’s fiscal year. A copy of the approved budget shall be forwarded promptly to the vice chancellor for finance and business by the campus president. In the event the vice chancellor for finance and business identifies a material weakness as revealed by the audit of the financial statements, or identified by other audit agencies, or other fiscal circumstances that come to light, the vice chancellor for finance and business shall notify the campus president that the budget for the corporation’s next fiscal year shall require additional approval by the vice chancellor for finance and business.

2.    Availability and Expenditures of Income – No income shall be available to the corporation for any purpose until the budget shall have been approved as herein provided by the campus president, and by the vice chancellor for finance and business when additional approval is required.

B.   Accounting Records – The corporation shall keep books of account and records of all its operations. It shall maintain systems of bookkeeping and accounting acceptable to the vice chancellor for finance and business and to the New York State comptroller and shall permit inspection of said books, records and papers of any kind by the vice chancellor for finance and business and the state comptroller.

C.   Corporate Fiscal Stability – The corporation should have a sufficient level of current assets to: (1) provide adequate amounts to meet current liabilities; (2) meet inflationary increases in operating expenses and unexpected emergencies; and (3) provide reserves to replace equipment. In this regard, the following unrestricted net asset classifications are required and will be measured annually at the end of the corporation’s fiscal year. They are:

1.    Capital assets, net of related debt – Equal to the original cost of fixed assets, including land, buildings, building/leasehold improvements and equipment less accumulated depreciation and any related debt. Capital assets net of related debt clearly identifies the corporation’s ownership share and related equity/net asset balance related to plant and equipment.

2.    Unrestricted, designated for working capital – This designated net asset class is determined as the greater of:

• five (5) percent of the previous fiscal year operating expenses, or;
• the amount necessary (increase in current assets) to achieve a working capital ratio of at least 2:1. The working capital ratio is defined as current assets divided by current liabilities. Working capital will be calculated on current assets and current liabilities excluding any amounts held for others (i.e., agency funds).

3.    Unrestricted, designated for equipment replacement – Unrestricted net assets, designated for equipment replacement should equal or exceed the equipment replacement reserve. The equipment replacement reserve, in the form of unrestricted cash and investments, is to be maintained to ensure adequate reserves for the replacement of equipment. The equipment replacement reserve is equal to 50% of the reported accumulated depreciation/amortization on the gross (historical cost) equipment balance as of the end of the fiscal year. For example, gross equipment = $10,000, accumulated depreciation = $6,000, the equipment reserve = 50% of $6,000 or $3,000.

4.    Unrestricted, undesignated – Represents the remaining unrestricted net asset determined as the total unrestricted net assets less the designated unrestricted net assets in items 1, 2, and 3 above.

Corporations that do not meet these corporate fiscal stability guidelines shall establish a plan to satisfy these requirements within a three-year timeframe. Total unrestricted undesignated net assets should not accumulate an excessive amount.

IV.   Public Information

The corporation shall have available for inspection by any member of the campus community the minutes of annual or any regular meetings, annual certified financial statements and annual budgets and subsequent revisions.

V.   Standard Contract Clauses

The corporation shall adhere to all provisions included in Exhibits A and A-1 (New York State Standard Contract Clauses — see Appendix B and B-1 below).

VI. Inappropriate Activities

A.    Corporations shall not engage in any of the following activities or practices:

1.    those contrary to the policies of the University or the campus;

2.    the purchase of real estate (land and/or buildings) for the purpose of investment or speculation;

3.    the employment of faculty or staff personnel or their remuneration, when the service performed is not directly related to the operations of the corporation;

4.    the provision of furnishings for faculty or student housing not owned by the corporation; or

5.    financing of campus capital construction projects not included within the space made available to the corporation.

VII. Agency Funds

A.   The campus president may, upon request, authorize the corporation to act as agent for the receipt, custody and disbursement of monies for campus organizations or informal associations of students, faculty or staff members. For example, the corporation is authorized to act as the independent fiscal agent of the student government.

B.   Administration of Agency Funds

1.    A reasonable management fee may be collected by the corporation.

2.    Agency funds may not be commingled with funds of the corporation. Separate agency accounts may be combined or commingled for efficiency and income improvement.

3.    In the event that agency funds are combined, detailed accounting must be made, indicating debits and credits to each and all accounts so combined.

4.    The corporation shall maintain an agreement specifying any limitation upon the types of investments allowed. Also, based on this agreement the corporation may credit interest earned on the investment of agency funds to the agency account, or retain the interest so earned in lieu of a management fee or charge a management fee and retain the interest.

5.    Agency fund accounts should not be used for monies belonging to New York State either as general revenues or as revenues accountable through an income fund reimbursable account, nor should such monies be used for corporation purposes.

There are no definitions relevant to this policy.

Auxiliary Services Corporations Guidelines

There are no procedures relevant to this policy.

There are no forms relevant to this policy.

State University of New York Board of Trustees Resolution 03-39 adopted April 29, 2003.

Amended – July 1, 2004:

• authorized by University Board of Trustees Resolution 03-39, the chancellor’s designee issued supplementary administrative guidelines and established new corporate fiscal stability requirements.

Amended – May 27, 1992:

• Board of Trustees Resolution 92-104, revised funded reserves for state-owned equipment, corporate equity requirements and defined inappropriate ASC activities.

Established – December 17, 1975:

• Board of Trustees Resolution 75-330 established contract and guidelines for auxiliary services corporations, including reserves for state-owned equipment replacement and appropriated corporate equity requirements.

Standard Contract Clauses State University of New York - Exhibit A

Appendix A - Auxiliary Services Corporation (ASC) Model Contract

Appendix B-1 - Standard Contract Clauses - Affirmative Action Clauses - Exhibit A-1