 Category:
Financial
Related Entities Responsible Office:
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Policy Title:
Auxiliary Services Corporations Guidelines
Document Number:
9400
Effective Date:
July 01, 2003
This policy item applies to:
State-Operated Campuses
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Auxiliary Services Corporations (ASCs) are generally authorized to operate a defined set of auxiliary services where students and faculty/staff have a significant interest in the quality and price of the services provided (excluding residence halls). An ASC may also provide services to campus entities, University hospitals, clinics, long-term care facilities (e.g., Long Island Veterans Home) and members of the public at events that have an educational purpose or that are social events whose purpose will directly benefit the campus.
It is understood that as of the date of implementation of the guidelines an ASC may currently be structured or engaged in activities that would be inconsistent with the letter of the guidelines. In such cases, it may be possible for these entities to maintain their current structure or continue providing such services, following a case-by-case review and approval by the campus president and the chancellor or designee. If such variances to these University-wide guidelines are to continue, appropriate provisions must be included in the contract executed between the campus and the ASC (see Appendix A for the ASC Model Contract).
The ASC is authorized to provide the campus with a defined set of services, as follows:
The use by the ASC of the campus name and marks for fundraising purposes would be permitted pursuant to provisions contained in its contract with the campus.
The ASC (the primary corporation) must be a non-profit corporation organized and existing under the laws of the State of New York, tax-exempt under §501(c)(3) of the Internal Revenue Code (IRC), and classified as a “supporting organization” to the campus under §509(a)(3) of the IRC, unless a different §509 classification would be more appropriate under the circumstances particular to the purpose of the corporation. The primary corporation would be authorized to establish one or more affiliates or, under special circumstances, single member limited liability corporations (the single member must be a tax-exempt entity) to the extent that it is involved in auxiliary enterprises of a nature other than as defined above. Any affiliate or single member limited liability corporation would also be a 501(c)(3) corporation and classified as a “supporting organization” to the campus under §509(a)(3) of the IRC, unless a different §509 classification would be more appropriate under the circumstances particular to the purpose of the corporation. The majority of the members of the board of directors of any affiliate or single member limited liability corporation would be comprised of and supervised by members of the board of the primary corporation. The campus will oversee the activities of the ASC through a contract with the campus and representation on the board of directors of the ASC. Any exceptions to this structure would require the campus president’s written approval in consultation with the chancellor or designee.
The ASC will continue to be the main campus entity representing students and faculty in the management of services where these constituencies have the dominant interest. As such, the board of directors of the ASC would consist of faculty, students and officers of the administration of the campus, and may further include alumni and local business leaders. No members of the campus council, other than the student representative, may serve on the board of the ASC. The student constituency shall have not less than 1/3, but no more than 1/2 of the voting membership on the board, including any student serving in the capacity of a campus council representative. Any faculty members shall be appointed by the campus faculty governance organization. The campus president may appoint no more than two voting members from the local business community who have management expertise in areas related to the services provided by the ASC.
The campus president or designee is an ex officio, voting member of the board of directors of the primary corporation. A formal contract (Appendix A), terminable in whole or part with 180 days written notice given by either party, extending for a period of not more than 10 years and subject to the review and approval of the chancellor or designee (and external state agencies when required), must be executed between the campus and the primary ASC, authorizing it to operate on campus, enumerating its activities and those of each affiliate or single member limited liability corporation it establishes and providing that each such organization is bound by the same guidelines governing the primary ASC. Each activity category authorized to the corporation would be identified in the contract with written contract amendments required for new activities.
V. Accountability and Reporting
Each ASC must prepare an annual financial statement in conformity with generally accepted accounting principles and have an audit conducted by an independent certified public accounting firm or sole practitioner (independent auditor) in accordance with generally accepted auditing standards. To enable the University to include pertinent information in its annual financial statements, the audit must be completed within 90 days after the close of the ASC’s fiscal year. The independent auditor may be appointed for no more than a five-year term, after which the ASC must re-solicit these services through a competitive procurement process. No certified public accounting firm or sole practitioner can serve as the independent auditor for more than two consecutive five-year terms, after which the firm or sole practitioner is not eligible to serve again as the independent auditor until not less than a three-year intervening period has elapsed. The books and records, financial condition, operating results, and program activities of the ASC would also be subject to periodic audit by the office of the University auditor. The primary ASC (and any affiliate(s) and single member limited liability corporation(s)) may also be subject to audits of outside regulatory bodies to the extent allowed by law. All audit reports from whatever source, including the certified (consolidated) financial statements and management letter of the primary ASC (and any affiliate(s) and single member limited liability corporation(s)), must be transmitted to the offices of the campus president and the vice chancellor for finance and business and University auditor for review and acceptance.
Provisions in the articles of incorporation and other organizing documents of the ASC (and any affiliate(s) or single member limited liability corporation(s)) must provide that the net assets of the organization shall be distributed to the campus or other campus approved entity organized for similar purposes in the event that the ASC (or affiliate or single member limited liability corporation) is dissolved. Dissolutions and dispositions of related net assets are subject to all applicable laws, regulations and restrictions, and unless otherwise stated, the net assets revert to the campus or campus-approved organization.
There are no definitions relevant to this policy.
There are no procedures relevant to this policy.
There are no forms relevant to this policy.
Internal Revenue Code §501(c)(3) (Exemption from tax on corporations).
Internal Revenue Code §509(a)(3) (Tax exempt organizations).
State University of New York Board of Trustees Resolution 03-39 adopted April 29, 2003.
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
Appendix C - Guidelines for Auxiliary Services Corporations - Exhibit B
Appendix D - Auxiliary Services Corporation, Services and Activities - Exhibit C
Appendix E - Auxiliary Services Corporation, Facilities, Utilities and Other Campus Services Provided - Exhibit D
Appendix F - Auxiliary Services Corporation - Description of Affiliated Organizations and Campus-provided Resources - Exhibit E