Mandatory student fees : improvements in administration of student fees allow for greater accountability and transparency

Follow-Up Review 12-13 2011

June 2012

Georgia Department of Audits and Accounts
Performance Audit Division
Russell Hinton, State Auditor Leslie McGuire, Director

Why we did this review
This follow-up review was conducted to determine the extent to which the Board of Regents has addressed the recommendations presented in our May 2010 performance audit (09-05).
The purpose of the audit was to review mandatory student fees charged by all USG institutions to identify the amount collected from students for each fee, to determine how the fees are used and if the use of funds is consistent with statutory and policy constraints, and to determine if internal controls exist to appropriately account for and monitor the use of these funds.
Who we are
The Performance Audit Division was established in 1971 to conduct indepth reviews of state programs. The purpose of our reviews is to determine if programs are meeting their goals and objectives; provide measurements of program results and effectiveness; identify other means of meeting goals; evaluate the efficiency of resource allocation; assess compliance with laws and regulations; and provide credible management information to decision-makers.
Website: www.audits.ga.gov Phone: 404-657-5220 Fax: 404-656-7535

Follow-Up Review Mandatory Student Fees
Improvements in administration of student fees allow for greater accountability and transparency
What we found BOR has taken action to address all of the findings and recommendations in our 2010 performance audit of mandatory student fees charged by the state's colleges and universities. Overall, the BOR has improved the guidance it provides USG institutions for setting and using fees, its process for reviewing fees, and its requirements for student involvement in student fees.
Specifically, BOR has drafted a new section of its Business Procedures Manual regarding mandatory student fees. This new section, estimated to be in effect by July 2012, will provide robust guidance for USG institutions by outlining the appropriate budgeting and uses for fees.
BOR has improved its annual fee monitoring and review process to ensure that all fees assessed by USG institutions are reported and have been approved. BOR policies now require that all changes to mandatory student fees must show evidence of consultation with a student advisory committee. We also found that the BOR has improved its monitoring process by annually comparing the fees listed on each USG institution's website to those approved by BOR.
BOR has revised mandatory fee request forms to provide more accountability and transparency than in previous years. Revenue, expenditure and fund balance information submitted by USG institutions now contains specific and defined data fields, and institutions must explain the planned use of revenue surpluses and fund balances. Additionally, new fee request

Mandatory Student Fees

2

forms have automated calculations and two year trend data regarding the fee revenue expended. As a result, the BOR has better data available to make informed decisions regarding fee requests.
BOR has taken steps to improve the monitoring and financing of Public Private Ventures (PPVs) that are supported by student fees. Since July 2011, several divisions within BOR have held monthly joint meetings to monitor and discuss the progress of PPVs. Furthermore, requests for maintenance and operation appropriations will be made separately for PPVs and non-PPV facilities. Although BOR did not request maintenance and operation funds for PPVs in fiscal year 2013, it plans on making requests in future years. These funding requests segregated by facility type should allow the General Assembly to make fully informed budgeting decisions, and coordinated monitoring within BOR should ensure that no PPV scopes are significantly altered without BOR approval.
BOR should continue its efforts to improve the review process for mandatory fee requests by adding specific questions relating to the amounts and time frame of planned fund balance expenditure.
BOR Response: BOR stated that they will finalize the one "partially implemented" recommendation by July 2012. "Completion of this item will ensure that we fully implement all recommendations in addition to the eight recommendations already fully implemented."
The following table summarizes the findings and recommendations in our 2010 report and actions taken by BOR to address them. A copy of the 2010 performance audit report may be accessed at http://www.audits.ga.gov/rsaAudits.

Mandatory Student Fees

3

Mandatory Student Fees Follow-Up Review, June 2012

Original Findings/Recommendations

Current Status

To ensure greater accountability and transparency, BOR should provide greater guidance to USG institutions regarding mandatory student fees.

Partially Implemented BOR staff have drafted a new section of its Business Procedures Manual regarding mandatory student fees. Beginning in fiscal year 2013, these new procedures will provide robust guidance for USG institutions regarding the budgeting and expenditures of mandatory student fees.

BOR should implement a periodic review process to ensure that all mandatory student fees assessed by USG institutions have been appropriately approved.

Fully Implemented BOR staff annually compare the mandatory student fees listed on each USG institution's website to the fees approved by BOR.

Fully Implemented BOR staff revised the annual mandatory fee request process in order to improve the completeness, accuracy and consistency of annual fee requests.

BOR should ensure that prior-year fee revenue surplus and fund balance information received from USG institutions is complete, accurate, and consistent.

Improvements in Forms BOR staff revised fee request forms which now contain specific questions regarding the planned use of fees. Additionally, financial information must now include specific amounts related to fund balance, such as encumbrances and reserves.
Improvements in Review BOR revised the request process by requiring institutions to submit a separate request form for each existing and new fee. In addition, BOR staff implemented a checklist for identifying problems such as missing documentation or incomplete request forms.

The revisions to the request forms and review process allow BOR staff to review similar information at each institution. BOR should continue to improve its review process by revising forms to ask for dollar amounts and timeframes for expected expenditure of fund balances.

To ensure that members of BOR have sufficient information to determine if fee increases are necessary, they should be provided with better data regarding annual fee surpluses and the planned uses for fund balances when considering annual fee rate requests.

Fully Implemented BOR staff revised the annual fee request forms to automatically calculate the percent of revenue expended. The calculations are shown over a two-year period and must include an explanation if 80% or less of fee revenue was expended. Also, BOR requires institutions to include the planned use for fund balances. This additional data allows BOR staff to make informed recommendations to the BOR regarding whether or not to approve a requested fee rate.

Mandatory Student Fees

4

Mandatory Student Fees Follow-Up Review, June 2012

Original Findings/Recommendations

Current Status

BOR should develop a policy that requires USG institutions to seek input from the appropriate student fee advisory committee and approval from BOR if an institution substantially changes the use of an existing fee.

Fully Implemented BOR revised its policy manual to require the input of a student advisory committee and the approval of BOR when an institution substantially changes the purpose of an existing fee.

In general, the mandatory student fee expenditures that were reviewed appeared to be appropriate and properly documented; however, at three institutions we found expenditures that were either not appropriate or not properly documented.

No Response Needed

Both student activity fee revenue and state appropriations were used to fund travel expenses that were wasteful and abusive at the University of West Georgia.

Fully Implemented According to BOR staff, the employee in question resigned and paid back the $1500 travel expenses. Also, BOR indicated in its response that UWG revised procedures to provide adequate internal controls over student and group travel to ensure funds are expended with the full knowledge, intent, and approval of management.

Student activity fee revenue was used to fund abusive, wasteful, and potentially fraudulent travel expenses at Fort Valley State University.

Fully Implemented According to BOR staff, personnel action was taken against the employee with questionable travel expenses. Also, BOR reports that FVSU enhanced travel procedures and added a travel assistant to review travel expenses.

The acquisition and rehabilitation of two large facilities at Georgia Gwinnett College, costing approximately $14 million, that were financed through public-private ventures do not appear to have been appropriately authorized by BOR.

Fully Implemented The BOR offices of Academic Affairs, Fiscal Affairs, Facilities and Internal Audit now meet monthly to discuss existing PPVs. According to BOR staff, these multi-office meetings should help minimize the risk of changes being made to PPV terms without the approval of the BOR. Additionally, meetings between the offices of Academic Affairs, Fiscal Affairs and Facilities are held on an as needed basis to discuss the feasibility of newly proposed PPVs.

Although the construction or renovation of USG facilities financed through publicprivate ventures and supported with student fee revenue are not approved by the General Assembly, the USG obtains state appropriations to operate and maintain these facilities.

Fully Implemented According to BOR staff, maintenance and operation funds for PPV facilities were not requested in fiscal year 2013 because the General Assembly decided not to fund maintenance and operations for any type of USG facility in the fiscal year 2012 budget. Requests for PPV facility maintenance and operations funding may be made in future years, but will be made separately from requests for non-PPV facilities. These separate requests should allow the General Assembly to determine if it wishes to provide state appropriations to operate and maintain PPVs.

Mandatory Student Fees

5

Mandatory Student Fees Follow-Up Review, June 2012

Original Findings/Recommendations

Current Status

8 Fully Implemented

10 Recommendations

1 Partially Implemented 0 Not Implemented

1 No Response Needed

For additional information or for copies of this report call 404-657-5220 or see our website: http://www.audits.ga.gov/rsaAudits