Chapter Meeting Tomorrow Noon on USF Tampa in EDU 161
The Chapter will meet tomorrow Friday at 12 noon on USF Tampa in EDU 161. This meeting, and the November 22 meeting, will be the last two meetings of the semester. As always, there will be sandwiches, chips, and soda. All USF UFF employees, members and non-members, are invited: come and bring a friend!
$ 500 Travel Grants for New UFF Members - and for UFF Members Who Recruit New Members
The USF Chapter of the UFF will award four $ 500 Travel Scholarships for next spring and summer.
This initiative is part of our membership campaign. If you would like to become active in the UFF USF Membership Drive, contact the Membership Chair, Art Shapiro.
- UFF USF employees who join UFF this fall (i.e., joined after August 25 and who join no later than December 31) are eligible for one of two scholarships to be randomly selected at the January 10 UFF USF Chapter Meeting. For information on how new members (or non-members who would like to join UFF) may apply, see the flyer for new and prospective members. Non-members wishing to be eligible must have their membership forms in our hands by December 31. Proposals must also be in our hands by December 31. Two proposals from new members will be randomly selected for funding.
- Current UFF members who recruit at least one new UFF member are eligible for one of two scholarships to be randomly selected at the January 10 UFF USF Chapter Meeting. For information on how UFF members may apply, see the flyer for UFF members who would like to recruit new members. Notice that recruiters should put their name on the membership form for the new member. If a new member is recruited, the new member is eligible for one of the scholarships for new members and the recruiter is eligible for one of the scholarships for current members. Again, membership forms and proposals must be in our hands by December 31, and two proposals by recruiters will be randomly selected for funding.
It's Getting to be That Time of Year
One again, the USF Chapter of the UFF will be participating in the West Central Florida Central Labor Council Holiday Toy Drive. New, unwrapped toys will be collected at the November 8 and November 22 Chapter meetings. In addition, new, unwrapped toys may be delivered to the office of the Department of Mathematics and Statistics, CMC 342, for Gregory McColm (UFF USF Chapter Secretary) before December 3.
All toys collected will be delivered to the Central Labor Council on December 3 at the Council's Holiday Social at 7 pm (note time change) in the union hall of the International Brotherhood of Electrical Workers local # 824, at 6603 E. Chelsea Street in Tampa (0.9 miles east of N. 56th Street). The Holiday Social is open to all union members - who bring a toy.
Mark your calendars. UFF USF Chapter meetings next semester will be on alternate Fridays, at noon, as follows:
There will be sandwiches, soda, and chips. All UFF USF employees - UFF members and non-members alike - are invited.
- On January 10 in USF Tampa and on January 24 in USF St. Petersburg.
- On February 7 in USF Tampa and on February 21 in USF Sarasota / Manatee.
- On March 7 in USF Tampa and on March 21 in USF St. Petersburg.
- On April 4 in USF Tampa and on April 18 in USF Sarasota / Manatee.
- On May 2 in USF Tampa.
Speaking of next spring, the UFF USF Chapter will hold its elections next spring. All UFF members - and only UFF members - will be eligible to vote.
IN THIS ISSUE
Report on the UFF Senate Meeting IV:
University Budgets (Second of Two Reports)
The UFF Biweekly of 10 October 2013 was about the university budget workshop at the September UFF Senate meeting. The primary focus of that workshop was: how might a union bargaining committee determine how much money a university board and administration has available for bargaining purposes. That is slightly different from the question raised at USF during the last few months: how to tell if a university faces a shortfall. In this issue, we look at one of the blunt instruments one can use to assess an institution's position.
- Background. The financial crunch appeared during the summer, but the exact problem was not clear, and what would be done about it kept changing. For more, see below or click here.
- Assessing the Situation. After the workshop, we discussed liquidity assessments with the workshop organizer, and he presented us with some blunt instruments for measuring USF's situation. For a look at one of them, see below or at click here.
On July 2, at the start of the 2013 - 2014 fiscal year, President Judy Genshaft sent an email to the USF community reminding everyone that over the last six years, state funding for the State University System has been cut 40 %. She also announced:
Most media coverage focused on the raises, but then on July 30, Vice provost Graham Tobin resigned. In his resignation letter, Tobin wrote that the "... draconian budget cuts, including the freeze on all hires, the sweeping of carry-forward money, the disproportionate impact on academic programs, and the intent to balance the budget in a single year, while at the same time curtailing the ability of deans to manage their own units, is clearly not strategic. ... should these cuts be put into effect, the university's plans and metrics must be significantly amended ..." The implication was that the cuts would have a negative impact on progress towards AAU membership.
- In order to boost faculty retention, the USF leadership would create a pool of funds "to reward high-achieving, dedicated employees," in addition to Governor Scott's mandated raises, and:
- To "[i]ncrease the mandatory cash reserves by an additional 5%" as "[o]ur reserves were depleted over the recent years as we sought to shield jobs and programs from the worst of the budget cuts."
Tobin's resignation was reported in Inside Higher Ed, the Oracle, and the Times.
On August 14, President Genshaft sent a second letter to the USF community, focusing more directly on the financial crunch and announcing that "The restoration of the cash reserves will be a three-year project with definitive goals set for
restoring cash reserves for each of the three years," but that "[o]ur mandate to increase the cash reserves by an additional 2% over state and USF Board of Trustees policies remains in effect." She reminded us to "[p]lease be mindful that the restoration of our cash reserves is imperative to protect the USF System's excellent bond rating."
At the USF Tampa Faculty Senate meeting on 18 September 2013, Chief Operating Officer John Long told the Senate that Tallahassee's spring 2013 restoration of the spring 2012 cuts merely returned USF to the status quo ante. He reported that during the 2010 - 2011 academic year, the USF leadership chose to draw down "cash reserves," and that plus recent events had left USF's cash reserves about $ 100 million short of what it should be. Furthermore, last year, USF Health and non-academic units were cut in order to protect Academic Affairs, and making up the $ 100 million would require cuts in academics, too.
Since then, there have been a variety of reports on what the cash reserves were last year and what they are now. In addition, the Tampa Tribune recently reported that "Wilcox recently told members of USF's faculty senate that a round of cutbacks at the university would be softened by an unprojected spike in nonresident enrollment this fall."
So what is USF's situation?
Assessing the Situation
Although COO Long told the USF Tampa Faculty Senate that our predicament was three years in the making, all of the discussion of the "cash reserves" has occurred during this fiscal year, which means that while we should look at the past few years, the last fiscal year (ending in summer, 2013) is most critical. That is the year that we would like to look at.
Long told the Senate the USF had already sent the report for the 2012 - 2013 fiscal year to the Florida Auditor General, but the Auditor General usually takes several months to post his report online. The UFF USF Bargaining Team was interested in USF's financial position, and was unwilling to wait on the Auditor General, so it asked the USF Administration for the Administration's estimates of what will appear in that report, and we will use those numbers.
The public debate has concerned "cash reserves," but that phrase appears nowhere in the annual Financial Statements (it really seems to apply to banks) (but there are references to unspecified "reserve funds"), so the UFF USF Bargaining Team also asked what "cash reserves" were. The response from the USF General Counsel was: "Please note the university does not have a definition of what qualifies as a cash reserve." So we are left to try to guess what was meant by "cash reserves." Let's look for "cash".
We will look at USF's Financial Reports for the fiscal years 2007 - 2012, as well as the USF Administration's (unaudited) Statement of Net Position for 2012 - 2013. We will pick the following cherry.
The Quick or Acid Test ratio is described by the National Education Association's Understanding Budget and Financial Audit Analysis handbook as an estimate of "cash solvency," i.e., "an institutionís ability to generate sufficient cash from its current assets to pay for its current liabilities." It is a formula based on "Cash & Cash Equivalents" (which consists of cash in hand and in demand accounts), "Marketable Securities" (which Investopedia defines as Very liquid securities that can be converted into cash quickly at a reasonable price), "Receivables" (which we will approximate with Total Accounts Receivable), and Current Liabilities (which Investopedia defines as bills that are due to creditors and suppliers within a short period of time). The Quick Ratio is:
There are two major caveats:
Cash & Cash Equivalents + Marketable Securities + Receivables
So we will use Total Accounts Receivable in the Financial Statements for "Receivables," presuming that the money will be received. And since the Administration currently proposes to rectify the cash reserve problem over the next three years, it does not appear unreasonable presume that all University Investments are marketable within that time period, so we will take University Investments for "Marketable Securities." We will get a slightly distorted result, perhaps more useful in determining a trend than in generating a single number estimating USF's current solvency.
- The Quick Ratio, like other metrics, is criticized for being a blunt instrument at best. For example, "Receivables" consists of a lot of anticipated payments (e.g. tuition) which may not be in hand and actually might not materialize. In addition, being dependent on four variables, it does not measure many important factors, at least not directly.
- "Marketable Securities" are not discussed in the Financial Reports, so we have to approximate. One would count an investment as a Marketable Security if it matures within a year or if it can be sold at a fair price readily. University Investments range (in the 2011 - 2012 Financial Report, see page 24) from over three million dollars in Federal Agency Obligations scheduled to mature (on average) in about five years, to $ 29 million scheduled to mature (on average, as of July, 2012) within two months; the bulk of the investment was $ 351 million in Mutual Fund Bonds scheduled to mature (on average) in about three years. We might guess that the picture has not changed much in a year.
Here are the results for 2007 - 2013. Cash & Equiv., Investments, Receivables, and Liabilities are in millions of dollars.
Money-zine claims that in private corporations, "a current ratio of 2.0 or higher is considered acceptable; meaning the company appears to have the financial resources to meet its short term debt obligations." Recalling the approximations, it may be more significant that the trend in the Quick Ratio is, if anything, upwards.
|Year||Cash & Equiv.||Investments||Receivables||Liability||Ratio|
Of course, there are many other metrics, but recalling that the public debate was over "cash reserves" (which does not seem to be discussed in the Financial Reports and which the General Counsel was unable to define), and considering that Cash and Cash Equivalents have not plunged $ 100 million recently, it may be more useful to ask the USF Administration to make a more precise statement about what the problem is. Until then, we can only guess at what metric correctly reflects USF's predicament.
There is one interesting development, though. Unrestricted Net Assets (the amount that the Board of Trustees are free to use, one way or the other) are down to $ 260 million, down from a high of $ 349 million in 2011. That's the lowest since 2008, when the Unrestricted Net Assets were $ 240 million. This may have been what COO Long was referring to when he said that USF had spent a lot of money protecting the university. On the other hand, as far as we know, only UFF has discussed Unrestricted Net Assets in this discussion. And anyway, Total Assets are now at $ 1.4 billion, even corrected for inflation, substantially more than at any time in the past.
This concludes the report on the workshop on University Budgets, although we will be returning to the subject as conditions call for it. And in the next issue of the Biweekly - the last regular issue of the semester - we will take a look at Moody's, the dragon that USF seeks to propitiate.