Transcript Financial Analysis of California State University, Maritime

Financial Analysis of California
State University, Maritime
Howard Bunsis
Professor of Accounting, Eastern Michigan University
Chair, AAUP Collective Bargaining Congress
March 2014
1
Financial Condition
of Cal Maritime –
Ratio Analysis
2
Three main topics:
• CMA is financially in very good shape looking
at reserves , cash flows and revenues
• In spite of that, they are spending their money
on things other than instruction and faculty.
• CMA has enough money for equity 3, increase
in cruise salaries, increase in international
program salaries, putting money into ship’s
ventilation system, and other items.
Cal Maritime Net Asset Detail
Source: CSU Audited Financial Statements
Total Assets
Total Liabilities
Total Net Assets
2008
2009
2010
2011
2012
2013
75,466,046 87,456,524 86,576,065 89,344,855 89,812,000 114,682,000
16,323,945 29,143,522 22,771,398 22,471,696 21,933,000 41,369,000
59,142,101 58,313,002 63,804,667 66,873,159 67,879,000 73,313,000
Components of
Net Assets
Nonexpendable
50,022,575 51,433,618 51,232,231 51,082,314 51,434,000
0
0
0
0
0
48,508,000
0
Expendable
2,114,966
4,402,000
12,553,000
Unrestricted
Total Net Assets
7,004,560 4,691,197 9,084,921 12,793,595 12,043,000
59,142,101 58,313,002 63,804,667 66,873,159 67,879,000
12,252,000
73,313,000
Invested in Capital
2,188,187
3,487,515
2,997,250
• The first two categories of net assets do not tell us anything about the
financial health or flexibility of CSUM
• The latter two categories – expendable and unrestricted, tell us
something, as they are the two components of reserves
4
Cal Maritime Reserves
Source: CSU Audited financial Statements
30,000,000
25,000,000
20,000,000
15,000,000
Restricted
Expendable
10,000,000
Unrestricted
5,000,000
0
8 09 10 11 12 13
0
20 20 20 20 20 20
5
Cal Maritime Reserves in Context
2008
2009
2010
2011
2012
Unrestricted
7,004,560 4,691,197 9,084,921 12,793,595 12,043,000
Restricted Expendable 2,114,966
2,188,187 3,487,515 2,997,250 4,402,000
Total Reserves
9,119,526 6,879,384 12,572,436 15,790,845 16,445,000
Total Expenses
32,344,933 35,056,842 34,398,506 40,485,662 41,755,000
Primary Reserve
Ratio
28%
20%
37%
39%
39%
Primary Reserve
Ratio based on
Unrestricted Only
22%
13%
26%
32%
29%
•
•
•
•
•
For reserves, we need context: How large is $24.8 Million?
We compare reserves to total expenses, creating the primary reserve ratio,
which is defined as reserves over total expenses. Total expenses is a proxy
for the size of the university
The increase from 2012 to 2013 was due to increase in funds for the capital
PA project
Many also analyze the ratio using just unrestricted reserves in the
numerator, which the last row reports
What is a good primary reserve ratio? See next slide
2013
12,252,000
12,553,000
24,805,000
46,286,000
54%
26%
Furlough
Period
2009-10
6
Primary Reserve Ratio in Context
7
Data Behind Cash Flows
Sources: CSU Audited Statements and IPEDS
Cash flows from:
Operatiions
2008
2009
2010
2011
2012
2013
(16,750,095)
(20,634,000) (20,726,000)
Noncapital financing
(mostly State Appropriation) 22,767,011
0
Interest Paid
19,117,344
(87,351)
25,346,000
(745,000)
3,763,061
see below 2,279,898
Operaring Cash Flows
(19,003,950)
30,188,000
(2,104,000)
see below 3,967,000 7,358,000
For 2009 and 2011, since we do not have campus financial statements, we use IPEDS to estimate cash flows:
Operating Revenues
Operating Expenses
Add back non-cash
depreciation expense
Operating cash flows
Operating Cash Flows
Total Revenues
Cash Flow Ratio
2009
30,590,365
35,056,842
2011
38,518,185
40,485,662
2,368,418
(2,098,059)
3,317,390
1,349,913
2013
2012
2011
2010
2009
2008
3,763,061 (2,098,059) 2,279,898 1,349,913 3,967,000 7,358,000
38,308,072 34,227,793 39,890,171 42,440,948 42,761,000 51,720,000
9.8%
-6.1%
5.7%
3.2%
9.3%
14.2%
8
Cash Flow Ratio in Context
9
Discussion of Cash Flows
• The two strongest factors in concluding that Cal Maritime is in strong
financial position are the reserves and cash flows.
• Operating cash flows considers:
– All cash in, from the state, tuition, grants, contracts,
– Less all cash out, to employees, benefits, vendors, utilities
• In 2013, CSUM had over $7.3 million in operating cash flows; this is a large
surplus in the context of the size of the institution.
• In years prior to 2012, cash flows have been strong as well.
• The down year was 2009, which is expected.
• The method used to estimate cash flows in 2009 and 2011 was very
conservative, and likely under-estimated operating cash flows in those
years.
• Bottom line: The administration is generating significant excess operating
cash flows every year, and we will see that the small amount of additional
compensation requested for TSGB is well within the surpluses being
generated.
10
What Do We Learn from the Ratios?
• The ratios tell us that up through 2013, Cal Maritime is in solid
financial condition – and in better condition than the CSU System as
a whole. This conclusion is based on solid reserves and very strong
cash flows.
• Does this mean the administration should spend the reserves? No.
Reserves are there for a rainy day, and there is a minimum level of
reserves that should be kept (primary reserve ratio of 20%).
• Still, any claims that there is no money, or that we must make
future cuts, are dubious at best.
• We will soon analyze what is happening going forward; but there
definitely are sufficient resources for new projects and initiatives, as
well as additional compensation for TSGB activities
11
Cal Maritime
Revenue
Analysis
12
Total Cal Maritime Revenues Over
Time
60,000,000
Source: CSU Audited Financial Statements
Large increase in 2013 was mostly due
to a large increase in tuition revenue
50,000,000
40,000,000
30,000,000
20,000,000
10,000,000
0
2008
2009
2010
2011
2012
2013
13
Percentage Change in State
Appropriation:
CSU System vs. Cal Maritime
20%
Source: CSU Audited Financial Statements
10%
0%
-10%
Cal Mari me
CSU System
-20%
-30%
-40%
2008 to 2009 to 2010 to 2011 to 2012 to
2013
2012
2011
2010
2009
2008 to
2013
• The changes for the entire system were more negative than for CSUM
• Over the long term (2008 to 2013), the change for Maritime is actually
positive, versus -30% for the system as a whole
14
Priorities of the
Administration:
Are They Being True to the
Core Academic Mission?
15
CSUM Expense Distribution
Source: OUS Audited Financial Statements
Instruction
2008
32.0%
2009
32.5%
2010
31.9%
2011
32.6%
2012
30.6%
2013
26.7%
Research
Public Service
0.8%
0.0%
0.5%
0.0%
1.2%
0.0%
1.4%
0.0%
5.5%
0.0%
4.6%
0.0%
Academic Support
Student Services
4.7%
11.3%
5.5%
11.5%
4.8%
11.0%
4.4%
11.1%
4.0%
11.7%
4.3%
10.8%
Institutional Support
Plant
19.2%
13.7%
17.6%
13.5%
17.1%
11.6%
14.9%
10.6%
14.3%
8.9%
13.1%
13.4%
Scholarships
Auxiliaries
Depreciation
0.1%
12.0%
6.1%
1.6%
9.9%
6.8%
1.7%
10.0%
8.5%
2.3%
12.7%
8.2%
2.7%
12.3%
8.3%
5.8%
10.1%
8.0%
Interest
Total Expenses
0.0%
100.0%
0.8%
100.0%
2.2%
100.0%
1.8%
100.0%
1.8%
100.0%
3.1%
100.0%
•
•
Not even $1 of every $3 goes to instruction
The percent devoted to instruction has gone down over
time, including a large drop from 2012 to 2013
16
Cal Maritime Total Salaries and Benefits in Context:
Source: IPEDS (Integrated Postsecondary Education Data System of the US Dept. of Education)
IPEDS data is only available through 2012
2008
2009
2010
2011
2012
Total Salaries
15,207,505 15,653,885 14,332,813 15,949,038 15,824,310
Total Benefits
5,314,043
Total Salaries and Benefits
20,521,548 21,468,098 19,999,409 22,476,402 22,218,188
5,814,213
5,666,596
6,527,364
6,393,878
Total Cal Maritime Expenses 32,344,933 35,056,842 34,398,506 40,485,662 41,755,000
Salaries + Benefits as a
Percent of Total CSUM
Expenses
63%
61%
58%
56%
53%
•
•
For Cal Maritime, personnel costs are 53% of total expenses,
down from 63% just 5 years ago
There has been a much larger increase in benefits costs than in
salary costs
17
Comparison of Top CSUM Administrative Salaries Over Time
Source: http://www.sacbee.com/statepay/#req=employee%2Ftop%2Fyear%3D2013
Position
Rank
President
President
Past President
Administrator IV
Provost
Administrator IV
VP Admin and Finance
Administrator IV
VP Univ Advancement
Administrator IV
Dean
Administrator III
VP Student Affairs
Administrator IV
Master TS Golden Bear; Dir L/Dev Administrator III
Assoc Vice Pres Fin. Services
Administrator III
Exec Director Human Resources
Administrator III
Director of GBF Facilities Operation Administrator III
Dean of Students
Administrator III
Director, Student Health Services
Administrator III
University Planner
Administrator III
Comptroller
Administrator III
1st Engineer TSGB
Administrator III
Director of Facilities Operations
Administrator III
Chief of Police
Administrator III
Admissions
Administrator III
Director, Athletics
Administrator II
•
•
2009
2010
2011
$264,000
$77,600
$259,000
$189,000
$274,000
$200,000
$139,000
$140,000
$99,000
$135,000
$137,000
$96,600
$144,000
$145,000
$126,000
$133,000
$93,200
$100,000
$90,000
$129,000
$45,900
$95,300
$90,800
$97,200
$104,000
$138,000
$130,000
$160,000
$96,800
$103,000
$104,000
$100,000
$92,900
$90,600
$100,000
$90,500
$88,200
$100,000
$96,100
$93,900
In 2012, 13 administrators made more than $100,000 (the number would
likely have been 15 if positions were filled all year)
In 2013, 18 administrators made more than $100,000
2012
$110,000
$243,000
$200,000
$135,000
$117,000
$60,600
$144,000
$145,000
$132,000
$40,500
$138,000
$130,000
$160,000
$96,800
$108,000
$95,700
$93,200
$100,000
$96,100
$93,900
2013
$263,000
$177,000
$202,000
$173,000
$165,000
$160,000
$155,000
$146,000
$143,000
$143,000
$140,000
$131,000
$127,000
$123,000
$113,000
$108,000
$102,000
$101,000
$97,300
$95,300
18
Number of Employees, FTE Basis
Source: http://www.calstate.edu/budget/final-budget-summaries/
2014-15
2007-08 2008-09 2009-10 2010-11 2011-12 2012-13 2013-14 Proposed
Management
34.4
36.5
36.2
35.7
37.7
43.1
44.9
44.9
Academic
78.9
77.1
77.3
75.6
76.7
79.5
82.7
82.7
Support Staff
117.7
143.3
137.7
138.4
138.2
143.5
175.1
175.1
Total
231.0
256.9
251.2
249.7
252.6
266.1
302.7
302.7
Ratio of
Management
to Faculty
0.44
0.47
0.47
0.47
0.49
0.54
0.54
0.54
•
•
Number of management employees over the number of academic
employees. We will compare this to the other CSU institutions
It is not appropriate that this ratio is increasing over time
19
Enrollment Details: By Major 07-13
Source: h J p://www.csum.edu/web/registrar/enrollment
Fall 2007
Fall 2008
Fall 2009
Fall 2010
Fall 2011
Fall 2012
Fall 2013
83
34
77
157
310
131
0
35
0
827
67
29
107
141
331
135
0
1
65
876
68
25
102
155
328
144
0
1
0
823
101
17
112
166
324
114
21
2
0
857
116
22
102
165
318
133
31
2
0
889
137
29
112
199
312
155
31
1
0
976
142
47
127
193
323
206
7
1
0
1,046
Number
Percent
Business Administration
59
71%
14%
Facilities Engineering Tech
13
50
36
13
38%
65%
23%
4%
4%
Business Administration
Facilities Engineering Tech
Global Studies & Maritime Aff
Marine Engineering Technology
Marine Transportation
Mechanical Engineering H License Track
Mechanical Engineering H Unlicense Track
Undeclared
Undeclared (Cruise)
Total
Changes, Fall 2007 to Fall 2013
Global Studies & Maritime Aff
Marine Engineering Technology
Marine Transportation
Mechanical Engineering H License Track
All Other
Total Change From 2007 to 2013
75
(27)
219
57%
% of Total,
Fall 13
18%
31%
20%
Marine Transportation is the
largest major
12%
1%
+26%
•
•
•
ME grew largest in #
Business grew largest in %
20
Instructional Salaries and Benefits Compared to
Total Expenses per IPEDS
2008
2009
2010
2011
2012
Instruction Salaries
+ Benefits
8,577,505
8,527,508
7,786,024
8,998,195
8,174,271
Total Cal Maritime
Expenses
32,344,933
35,056,842
34,398,506
40,485,662
41,755,000
26.5%
24.3%
22.6%
22.2%
19.6%
Instruction Salaries +
Benefits as a % of Total
Cal Maritime Expenses
• That is right: Only 19.6 cents of every dollar goes to pay people who
teach class
• When the 2013 IPEDS data gets reported in April of 2014. we will
see if this 19.6% actually got lower
21
Percentage Change in the Number of Employees by Category:
2007-08 to 2013-14
Source: http://www.calstate.edu/budget/final-budget-summaries/
60%
50%
49%
40%
31%
30%
26%
20%
10%
5%
0%
Support Staff
Management
Enrollment
Academic
22
0.00
Mari me
Channel Islands
Bakersfield
Monterey Bay
Sonoma
Humboldt
Chico
San Marcos
East Bay
San Diego State
Pomona
Polytechnic
San Bernardino
Fullerton
Sacramento
Dominguez Hills
Stanislaus
San Jose
LA
San Francisco
Northridge
Fresno
Long Beach
Ratio of Management Employees to Academic
Employees, All CSU Institutions
Source: http://www.calstate.edu/budget/final-budget-summaries/
0.60
0.50
0.40
0.30
0.20
0.10
23
Data For Ratio of Management Employees to Academic
Employees
Source: http://www.calstate.edu/budget/final-budget-summaries/
Campus:
Maritime
Channel Islands
Bakersfield
Monterey Bay
Sonoma
Humboldt
Chico
San Marcos
East Bay
San Diego State
Pomona
Polytechnic
San Bernardino
Fullerton
Sacramento
Dominguez Hills
Stanislaus
San Jose
LA
San Francisco
Northridge
Fresno
Long Beach
Ratio
0.54
0.39
0.31
0.30
0.26
0.21
0.19
0.19
0.18
0.17
0.16
0.16
0.16
0.16
0.16
0.16
0.15
0.13
0.13
0.13
0.12
0.12
0.09
Academic
82.7
229.6
363.4
299.3
429.8
380.9
686.7
491.9
535.6
1,316.5
810.1
1,025.9
644.2
1,401.6
1,013.6
571.6
406.8
1,277.2
979.3
1,149.7
1,474.4
924.1
1,552.9
MGMT
44.9
88.9
111.5
90.1
113.4
78.1
131.9
93.1
97.5
223.4
133.1
167.7
103.3
220.4
158.7
89.2
61.5
167.3
127.4
144.4
178.1
108.9
146.7
Averages w/o Maritime
Median w/o Maritime
0.18
0.16
816.6
748.4
128.8
120.4
• Maritime is by far the
smallest institution,
and the ratio is going
to be higher
• However, the number
of upper level
administrators seems
high even for the size
of Maritime;
Stanislaus has only 16
more admins, but has
325 more academic
instructors
24
Cal Maritime 2013 Faculty Salaries vs. Peers- Levels
Sources: AAUP Salary Survey and IPEDS
2013
Texas A&M Galveston
Maine Maritime
Cal Maritime
Ferris State
SUNY Maritime
Masschusetts Maritime
Full
$105,894
$93,996
$93,423
$91,799
$86,356
$83,961
Associate
$70,659
$72,063
$76,671
$74,328
$77,289
$64,593
Assistant
$67,374
$57,015
$63,815
$66,443
$61,985
$57,510
Cal Maritime rank (of 6)
Mean w/o Cal Maritime
3
$92,401
2
$71,786
3
$62,065
Cal Maritime vs. Mean
$1,022
$4,885
$1,749
• Very few of the comparable institutions reported instructor and
lecturer salaries; historically, that data has not been reliable, as
different institutions use different definitions for those categories
• Ferris State and Galveston data is for the entire university
25
Cal Maritime Faculty Salaries vs. Peers - Changes from 2008 to
2013
Sources: AAUP Salary Survey and IPEDS
Cal Maritime Averages,
2008
Peer Average w/o Cal
Maritime, 2008
Cal Maritime 2008 Rank
(out of 6)
Ranking Gain (Loss) from
2008 to 2013
Cal Maritime vs. Peer
Average, 2008
$$ Gain (Loss) vs. Peers
from 2008 to 2013
% Loss vs. Peers from
2008 to 2013
Full
Associate
Assistant
$90,477
$84,193
$63,054
$80,720
$63,359
$56,270
2
1
2
-1
-1
-1
$9,757
$20,834
$6,784
($8,736)
($15,950)
($5,035)
-9.7%
-18.9%
-8.0%
26
Discussion of Faculty Salaries
• In terms of levels, salaries for Cal Maritime faculty have
not increased much over time. The associate professor
salary in 2008 may be high, but Associates has not seen
large increases over the last few years
• In terms of peers, Cal Maritime faculty are now middle
of the pack, after having been significantly ahead of
these peers just a few years ago. Given the cost of
living in this area, and general inflation, faculty salaries
have not done well over the last several years
• In general, efforts should be made to move faculty
salaries to an appropriate place versus peers, and
consider the cost of living generally and the cost of
living in California versus other states. The resources
exist for this to happen.
27
See The Report
• www.calfac.org\calmaritime
Conclusions
The Financial Condition
of CSU System and the
State of CA
• Appropriation and enrollment in
2014 and 2015 are up for the
CSU System, and state tax
revenues are higher
Financial Condition
of Cal Maritime
• Despite a huge decline in the
state appropriation, reserves
and cash flows are very solid.
• Any claim of financial hardship
are not supported by the
evidence – CSUM is NOT BROKE!
Priorities of the
Administration
• The number of Cal Maritime
administrators has increased,
especially when compared to faculty
• Pay for faculty is lagging peers
29