University of Tennessee
CBO Meeting
Knoxville, TN
October 30-31, 2013
Conference Room – 8th Floor of Andy Holt Tower
October 30, 2013
Audit and Consulting Update – Sandy Jansen
The audit plan for year ending December 31, 2013 was distributed. All audits in progress on
January 1 are complete except for an internal control audit in the College of Arts and Sciences
which has been put on hold.
Update Risk Profile – Judy Burns/Sherry Davis
HR
 Delete “Failure to properly classify non-resident aliens” (risk to remain in Payroll)
 Change “Failure to provide adequate compensation benchmarking (salary compression)”
from MH to ML
 Add E-Verify to “Failure to comply with external hiring regulations (I-9, etc.)
 Add “Undetected background risk (2,3) HM (controls in place to mitigate this risk include
background checks, code of conduct policy, financial internal controls, various unit
procedures and policies for specific programs, and internal audit reviews)
 Add “Inaccurate assignment of benefits” and change from ML to MH (risk moved from
Payroll)
Asset Management
 Change “Theft of computers or other electronic devices” from MM to MH
Purchasing/AP
 Change title to “Procurement Process”
 Add “Unauthorized individual signing of agreements” (6,14) MH (controls in place to mitigate
risk include contracting policy, payment over $5,000 cannot be processed without a contract
in system and training/awareness)
Complete College Tennessee Act (CCTA)
 Change “Data THEC uses in formula cannot be reconciled” from MH to MM
Payroll
 Add student, temp, etc. to “Failure to classify employees correctly (as exempt or non-exempt,
FLSA guidelines)
 Delete “Inaccurate assignment of benefits” (move risk to HR)
 Change “Failure to properly classify non-resident aliens” from MH to MM
Changes which were made to the risk profile will be distributed for CBO review. The updated
material will be submitted to F&A as part of the University’s acknowledgement for compliance
with the Tennessee Financial Integrity Act.
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Best Practice Showcase – All
Nancy demonstrated the new contract review and approval process being used at
Martin. She explained that it is a totally paperless process. Perfect Forms and
ECHOSIGN are being used to automate the process and provide for electronic
signature.
Nancy corrected the statement concerning revisions. The document may be rejected at
the CBO level and requested changes identified. The document is returned to
purchasing for the necessary changes and the originating department is notified of the
revisions via email. The corrected document is sent to the CBO for approval.
Purchasing Update – Mark Paganelli/Samantha Johnson
Statewide Contracts include:
1. New Touchnet Process for existing contracts (UT and TBR)
2. Furniture Contracts
 Contract Furniture Alliance – UT Competitive System-wide Bid
 NOI – State Contract
 Competitively bid anytime warranted
3. Computer Hardware
 RFP Process
 Award to Dell including their full catalog
 Award all HP and Lenovo products to PCS (including their full catalog)
Lab Furnishings
INCO Terms – International shipping terms – FOB Destination does not cover destination
charges. Shipping terms should be looked at closely.
Janitorial/Sanitation – Data analysis, gearing up for statewide bid
Bid-Limit Changes
The state increased its bid limits effective July 1, 2013 for both the formal bid limit (raising the
limit from $25,000 to $50,000); and the dollar threshold requiring a bid (raising the limit from
$5,000 to $10,000). TBR followed suit on October 1, 2013. There are advantages and
disadvantages to raising each threshold.
Purchasing’s Proposal is as follows:
1. Increase bid limit from $5,000 to $10,000, but require a requisition to facilitate data
collection on purchases within the range. Will not require a bid, a PO will be issued and
may be utilized by the department.
 Eliminates bids for $5,000 - $10,000
 Facilitates data collection
 Quick turnaround on POs which are being issued in many cases even under $5,000
 Allows Purchasing to consult with departments on off-contract spend (if necessary)
and direct them to an existing contract
2. Increase P-Card limit for non-asset transactions
 Facilitates level three pcard data collection on items purchased
 Allows department autonomy
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 Pcard audit system already in place to mitigate risk
3. Increase formal bid limit from $25,000 to $50,000
 Change will be only in purchasing departments
 Reduces number of bids from 15 to 3 quotes
 Facilitates administration of contractor’s license requirement at $25,000
 Would not apply to construction contracts, RFIs, FRPs, or any other sealed bid
process
4. No changes to current contract policy
Everyone was in agreement to raise the threshold to $10,000; however, this cannot be done in
IRIS until mid-December (due to updates). It was noted that 20-30 percent of purchase orders
are between $5,000 –$ 10,000.
E-Procurement Update- Mark Paganelli
A meeting will be held next week with the vendor. We should have a configured contract
module that will be used primarily for purchasing agreement reminders. Data on more than 200
purchasing agreements will be loaded into the new e-Procurement system. Purchasing offices
are currently mapping out the bidding process and will then work on the future state of the
bidding process. A new “subject matter” expert has been hired to work on this system.
Term Employee Update – Mark Paganelli
The University is proposing to address issues related to employees classified as “term” as
follows:
1. Eliminate the classification of term employees. Employee classifications would be
regular (full or part-time), temporary, student, and friends or affiliates of the University.
2. Revise the retirement policy to make it clear that temporary employees are not eligible to
participate in retirement.
3. Revise the annual leave policy so that the eligibility requirements for annual leave
require an employee to be working at 75 percent effort before annual leave accrues.
General Counsel is drafting the required policy revisions.
Health Insurance Update – Mark Paganelli
The enrollment period ends on Thursday. Everything seems to be going okay. Partnership
promise participants will be required to get a physical by July 15. Flexible spending numbers
are down about half from last year. Since approximately $290,000 of FICA was saved from
individuals participating in the program, this number would be down $145 in FY 2014. The signup date has been extended to November 10.
Ag State Contract Travel Issue – Mark Paganelli
State contracts require that individuals be reimbursed for 75 percent of meal per diem charges
on day of departure and return (regardless of time) when overnight travel is involved. The group
was in favor of changing UT’s meal per diem policy to match this requirement. Based on FY
2013 travel expenses, this will save the University approximately $25,000. The new rate will
take effect after the first of the year.
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Payment Terms - Mark Paganelli
In an effort to eliminate paying vendors by check, the Treasurer’s Office has changed the
payment terms. (CBOs have the ability in IRIS to change these terms.) The quickest payment
method is now through ePayables (net). ACH payments are payable in 30 days and checks to
vendors are paid in 40 days.
Fiscal Review – Mark Paganelli
Fiscal review is requesting that previously bid agreements with extensions be presented before
the review committee. Apparently TBR is asking for an exemption; however, this has caused
Fiscal Review to ask why UT has not been presenting these agreements. We need to get with
TBR and request an exemption. If this is not granted, it will be a very painful process, as we
have hundreds of such agreements.
System Contract Items – Blake Reagan
Accomplishments:
 Improved credit application process with template letter
 Developed new hotel contracts training class
 Coordinated and created most of the material for the training website “Creating a
Vendor”
 Reached 101 master agreements (includes 74 library master agreements which
represents a 50 percent reduction in library contract volume on average and a 59
percent decrease from FY 2013)
 Reorganized master agreement website
Current Initiatives:
 Monthly training sessions over conference call
 In-person training classes for departments
- IRIS
- Contract Fiscal Policy
- Hotel Training Class
Future Initiatives:
 In-person contract officers’ meeting annually
 Explore master agreements with study abroad and software vendors
 Create more video training
 Create more in-person training for departments
- Contracts Fiscal Policy Part 2
- Confidentiality
 Grow the contract officer’s group
Basic Financial Data
Amount
FY 2013
Total Payable Amount
Total Receivable Amount
Zero Dollar
Total
FY 2012
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$
$
317,414,005.01
133,037,787.17
$
450,451,792.18
# of Contracts
2,972
1,157
1,659
5,788
Total Payable Amount
Total Receivable Amount
Zero Dollar
Total
$
$
367,717,947.98
79,460,734.78
$
447,178,682.46
Amount
FY 2011
Total Payable Amount
Total Receivable Amount
Zero Dollar
Total
FY 2010
Total Payable Amount
Total Receivable Amount
Zero Dollar
Total
$
$
306,063,061.78
156,030,555.47
$
462,093,617.25
$
$
715,027,323.88
604,586,163.04
$1,319,613,486.92
2,968
1,072
1,148
5,188
# of Contracts
2,850
1,030
1,213
5,093
2,835
918
1,097
4,850
Indemnity Agreement – Matthew Scoggins
General Council has drafted a License for the Use of University Property for Program Involving
Minors in connection with the System’s AP policy that goes into effect on January 1st. General
Council would like to know if this should be a stand-alone agreement or be incorporated into
contract agreements. Several members of the group felt that although it was complex, it is
definitely needed. The document will be reviewed again to ensure that only necessary
information is included.
Demo of New IRIS Report – Facilities Planning - Tim McKeehan
A new capital project summary report is available in IRIS which combines two reports into one.
The report can be emailed as a searchable pdf.
IRIS transaction - ZFM_CAP_PROJ_SUM (Capital Project Summary)
Menu Path - IRIS Reporting > Capital Project Reporting.
By entering JXX*, you will be able to see all released projects in a specific unit. To look at an
old account, the specific account number must be entered. The report will include general
information, the project’s current status, and the sources and uses of funds.
Capital Projects Update – Robbi Stivers
The capital outlay budget process has been completed and requests have been submitted to
THEC. UTK’s Science Building is the number one project on the list. It will be time to prepare
for 2015-2016 in about two months. UT would like to have the capital outlay threshold
increased to $1M.
Archibus Update – Les Mathews and Robbi Stivers
The space module is now up and running on all campuses (25 licenses). We are migrating from
using IRIS to Archibus to do the space survey for THEC. The software is easy to use. The
Real Property Division is beginning to set up a “sandbox” which will allow them to see all of the
data and allow them to run reports. It is hopeful that we will be able to download the state’s
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data into Archibus. The Knoxville campus has contracted with Archibus for certain modules
which will be loaded onto the same server which holds space management. In order to facilitate
their needs, it will be necessary to upgrade our existing space system.
Business Impact Analysis for ERP Systems – James Perry
UTSA IT Services (ITS) has been charged with responsibility for disaster recovery of statewide
ERP systems (not including Banner). ITS is developing surveys that will be distributed to key
individuals to obtain relevant data that will aid in ensuring that the current disaster recovery
program appropriately meets the university’s needs.
For Finance and Human Resources, the survey will include:
·
Individual’s Name and Campus
·
In regards to the core IRIS system, does the 72 hour threshold meet your
business requirements (requires a yes/no answer)
·
Eight additional IRIS related system processes are broken down by timeline
requirement
·
LDAP/AD Directory, Outlook E-Mail System and SharePoint are also included.
It was the general consensus for the CBOs to complete this survey by conference call.
ITS will work with the Research Administration and Alumni & Development communities of
practice to develop appropriate surveys for those areas and will distribute them as determined
by the COP.
October 31, 2013
CAB Update – Richard Brown
CAB met consistent with the Board meeting. They recommended to the President that all
campuses move the base pay for regular employees to $9/hour on January 1 and $9.50/hour on
July 1. Regarding the SIBSON salary gap, since 2011, all campuses/institutes have spent
$30M to close the gap. The actual number is $150M (with benefits). CAB recommended to the
President that he request $14M for UT to move toward the 80 percent market benchmark.
Including TBR, this would include a $20-$25M investment in salaries to close the gap.
Employee of choice subcommittees are doing well.
NOTE: UTK will raise the minimum amount to $9.50/hour in June so that employees will
receive potential salary increases on the new amount. Changes should be entered in IRIS each
campus/institute.
IRIS Update – Les Mathews
All Teams
 Annual Support Packs
Finance
 Fee waiver processing
 e-Procurement implementation
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 Re-write effort certification web entry process
HR/Payroll
 W-2/1099/1042s/1098 Tax Reporting
 Re-host retirement processing from AS400 to IRIS
 Implement Taleo for Faculty Recruiting
 Position change/Transfer e-Form
Data Warehouse
 Complete implementation of Business Objects
 Develop Crystal reports as replacement for queries
 Import ANDI data – develop reports
Customer Support/Security
 Develop new classes and revise documentation
 Integrate e-Learning for enrollment, delivery and tracking
 Develop security for BW HR queries
Archibus
 Upgrade to current version of space management
 Implement Real Property & Lease Management
 Assist Knox and Memphis campuses in local implementations
Nancy stated that she was interested in the integration of PerfectForms with IRIS. Les stated
that they are currently working on a simple form at this time. There will be two scenarios; 1)
information is originated through PerfectForms and then routed through IRIS; or 2) a form will be
completed in PerfectForms, route through IRIS, and then convert back to PerfectForms for
completion. Integration (at the end of the process) will be pulled into IRIS and will not have to
be re-keyed.
Martin went to PerfectForms on a pilot basis; this year UTK adopted the software. Hopefully,
next July it will be rolled out to all campuses.
Tony mentioned that contract management would be beneficial to Memphis.
Sally Townsend has been contacting other universities regarding how they handle travel
advances. A fundamental problem is that when an individual receives an advance and wants to
receive money before the trip, the cost is netted out. Therefore, an individual cannot get an
advance and claim a reimbursement before the trip.
Gail suggested working on things that would benefit the most people (employee self-service,
travel, and Crystal reporting from Data Warehouse.
Chris questioned why IT wants to invest dollars in Tableau instead of using the products we
already have (Crystal, IRIS).
Spending Analysis – Rip Mecherle
Spending policy considerations
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 Strike a balance
 Invest for perpetuity/preserve purchasing power (save now) vs.
 Maximize current distributions (spend now)
 Align short and long-term objectives
 Spending policy and asset allocation should be in “sync”
 Short-term: optimum distribution level w/minimum variance
 Long-term: grow at or above inflation + spending (5.5%) within appropriate risk
parameters.
Smoothing formulas improve consistency of distributions without sacrificing long-term growth of
capital.
Typical Spending Methods
 Moving Average: Traditional moving average based on percentage of a set number of
years’ market values; 3-year to 7-year is typical.
 Moving Average w/Cap and Floor: Same traditional moving average above, but
spending is contained within a range +/- a certain percentage of previous year’s
spending.
 Geometric: Weight given to inflation adjusted spending and target spending of market
value.
 (X%)*((1+inflation or a set %)*(last year’s spending)) + (1-x%)*((target
spending)*(moving average market value))
 Constant Growth: Increase spending a set percentage each year, but constrained to a
‘tunnel’ between a certain percentage of a moving average market value (e.g., 4-6%)
No correct answer, just a “best-fit” solution that considers an institution’s:
 Risk Parameters, such as max drawdown or volatility (driven by asset allocation)
 Level of institutional support (percent of operating budget funded)
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This spending plan will be presented to the President and Chancellors. If approved by the
Investment Committee in December, it will be presented to the Board in February. If approved
by the Board, the spending plan would take effect in FY 2016.
Fiscal Policy Update – Ron Maples
Policies issued since last CBO meeting:
 Revised - Employee Services Between the University, Board of Regents Institutions, and
State Agencies
 New - Fringe Benefits Provided to Employees
 New - Taxability of Graduate Tuition Waiver for Employees
 Revised - Effort Certification
 Revised - Disposition of Gift Personal Property
 Revised - Records Management
 Revised - Entertainment
 Revised - Employee Gift Acceptance
 Revised - Retirement Receptions
Policies in the pipeline for CBOs:
 Personal Purchases (Bookstore – Oct 21); (Purchasing – Oct 21)
 Procurement Card – Oct 21
 Student Payments –
 Independent Contractor’s – Waiting on forms. This policy will be reissued with the form
before it is finalized.
 Accounts Payable – Waiting on forms.
 Accounts Payable Vendors – Waiting on forms.
 Student Fee Approval – Waiting on Ron
 Credit Card Processing – waiting on revision
 Travel – Oct 31
The Fiscal policy website has been revamped. The basic categories are: Board of Trustees;
Fiscal; HR; Information Technology; and Safety. Sandy mentioned that a review committee is
looking at best practices to see how our processes line up with practices across the US on
managing policies. One discovery is that we need a revision schedule (how often are policies
reviewed). Sandy stated that she hopes to have a report before end of the year.
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State Audit Update – Ron Maples
The auditors are lined up on the opinion part of their audit. They have been given all financial
statements except for research. The State F&A Office has been prompting us to finish quicker.
As far as audit findings, there are two financial aid findings Martin and Knoxville); one potential
financial aid finding (Memphis); and an IT audit (Banner on the Knoxville campus). The good
news is that although there were some findings, they were only in the honorable mention
category. It is not known where we are with the sunset auditors.
SACS Review Update – Ron Maples
Financial statements were prepared for Martin’s accreditation. No word is expected on this
review until December.
SACS is considering Memphis as a new (initial) accreditation and will not accredit them without
an opinion audit. It was our belief that the state would not give us an opinion audit on a piece of
our business; however, the state has decided this is possible and will issue an opinion letter by
April. The statements submitted for Martin were also submitted for Memphis, but was not
acceptable for this engagement.
Knoxville will be accredited for entities 01, 02 and 18 (Knoxville, Tullahoma and CVM).
Adjustments have had to be made in the Controller’s Office regarding these entries. A report
has been created so that when these entries are made, accurate numbers can be obtained. As
part of the financial statement preparation for the Statement of Net Position and the Statement
of Revenues, a breakdown for each accredited unit could be included as a supplemental
schedule in the back of the Report of the Treasurer. Doing this should meet the SACS
requirement and protect us going forward. Otherwise, every time we are accredited, the
auditors will have to do a 3-year audit on a piece of the business.
Formula Review Committee Update – Peccolo/Cimino/Brown
There is no new information since our last conference call. THEC is committed to forming a
review committee next year to consider metric weightings, prior learning assessments and
reverse articulations.
UT Foundation Funding Model – Peccolo/Loewen
When the original UT Foundation model was proposed, each campus/institute was to pay a
fixed amount (“direct support”) equal to their budget for the fiscal year ending prior to transition.
The System’s portion of the development/alumni cost was to be offset by other sources of
income (e.g. administrative fees from endowments, affinity card). Any additional funding was to
come from the fund raising efforts of the foundation. Over time, we have drifted from this funding
arrangement particularly due to the economic recession and new leadership at the foundation.
Dr. DiPietro has decided that the funding model should be studied again. Campus Chancellors
want foundation directors to have dual reporting lines where the directors report to their
chancellor and the Foundation President which is inconsistent with the “leased employee”
arrangement in the current agreement. Keith Carver is heading up a study to see how this
arrangement should be changed. Pending no changes, we still have a problem since the
Affinity Card funding has gone away. This charge will shift to campuses and institutes this year.
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Foundation expenses in FY 2013 are 30 percent higher than FY 2011.
FY 2015 State Appropriations – Peccolo/Loewen
F&A has asked state agencies to prepare scenarios for a 5 percent budget cut for FY 2015;
however, we have not received any direction from THEC. THEC is recommending a 3 ½
percent increase to non-formula units (outside of salary increases). Legislators still do not
understand that when funding salary increases for formula units, only 55 percent of the requisite
funding is appropriated with the balance to come from student fee increases. THEC is
proposing a $40-45M improvement package to governor. They are also recommending capital
improvements at levels similar to past years. THEC would like to recommend to the Governor
that tuition increases stay between 2-4 percent.
Revenues for September 2013 are 1.2 percent below last year and 6.4 percent below budget.
Monthly collections exceeded budget and previous year in 8 out of the last 12 months.
System Charge – Ron Loewen
This handout includes costs for the final phase-in for the FY 2010 cost study and a possible 3
percent salary increase (for planning purposes only). IT allocations are not included.
IT Contract Cost Allocation – Ron Loewen
The IT allocations on the centralized contracts allow the University to pool their purchasing
power on the contracts. There are no increases for FY 2015; however, there are adjustments.
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Projected Banner allocations are also fairly similar to current year.
President’s Residence – Butch Peccolo
The President’s residence has been sold; however, we are waiting to settle. The residence has
furnishings (UTC has gotten some to include in the Chancellor’s home). Before we burden
surplus property, let Butch know if there are items that can be used. Ron Maples will distribute
a list.
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2014 MEETING DATES
January 22-23, 2014
May 21-22, 2014
September 24-25, 2014
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Knoxville
Knoxville
Knoxville