Supplemental Information

The Capital Budgeting Process

• San Francisco State University maintains a five-year capital plan, which includes a one-year capital budget and a plan for the next four years.
• Each February, the management center will ask departments and schools for project proposals to be considered for funding as the next fiscal year's capital budget is developed. The CPDC office consolidates capital budgets for review by the management center.
• Each school or department must prioritize requests internally and identify funding sources in their submission.
• The Capital Planning, Design and Construction (CPDC) office will receive all department and school project requests, estimated and consolidated for CPDC review, estimation, and submission to the management center for further review.
• Capital budget requests are coordinated through the appropriate management center, which must review and approve them before they are submitted to the vice president (VP) for Administration and Finance.
• When necessary, the VP for Administration and Finance will request a meeting to discuss project details.
• Capital projects expected to span more than one fiscal year require a cash flow analysis prepared by the CPDC.
• In addition, the management center analyzes the annual capital plan's impact on debt ratios (i.e., expendable resource ratio, interest expense to operations, and debt service coverage ratio).
• Each April-May, the University submits the five-year capital improvement plan to the Chancellor’s Office for projects that are classified as Capital Improvement projects CIMP), state or non-state funded projects, and includes the capital budget for the next fiscal year and recommends approval to the Board of Trustees (BOT). The University president will review and approve the submittal. The detailed process is outlined in the System-wide State University Administrative Manual (SUAM Section VII -Five-Year Capital Improvement Program Procedures and Formats for the capital outlay submission – Sections 9100-9121), available Online at: http://www.calstate.edu/cpdc/suam/SUAM9100-9121.pdf
• Each year in November, the Board of Trustees will approve the final five-year capital improvement plan.
• Only the VP for Administration and Finance may modify the capital budget, which is the first year of the five-year capital plan. However, schools and departments may continue to update out-year plans (i.e., plans for years two through five) with the most current information.

Project Budget Development

• All project budgets are developed by CPDC project managers on the total project budget development sheets and then entered onto the SFSU Project Charter form (PCF) available online at: http://budget.sfsu.edu
• Project budgets evolve over time and solidify as the design progresses. Larger projects go through four stages of cost estimates: 1) a "place holder" estimate included in early planning; 2) a preliminary estimate after scope definition; 3) a more refined cost estimate after a feasibility study, and 4) a firm construction estimate, after design and bidding.
• The total project budget includes: construction costs, consulting expenses, 7% project construction management fees as endorsed in SUAM 9035, the initial complement of furniture and fixtures, expenses related to relocation of utilities and non-utility infrastructure, contingency, and any other major expense.
• Related capital construction projects, such as utility infrastructure that is not a part of the project budget, should be disclosed as supplemental information on the PCF form to keep the CPDC and the Fiscal Affairs Department informed about the full cost of the construction project. The CPDC will report significant utility infrastructure costs separately from the total project budget.
• Every project budget, regardless of the type, must include a contingency budget line. A contingency is required for the following: design, program, owner, and construction. The contingency must at minimum be 10% of the project construction cost. This amount will vary depending on the nature and scope of the project.
• The sponsoring department or project champion must develop a financial plan for funding the construction and future operational costs. This plan must be included with the PCF form.
• The project accountant will regularly review and distribute to senior administration a capital projects financial report, to include approved budgets, actual-to-date information, expense and funding projections, contingency report, unsolved issues, and project milestones.
• CPDC department is responsible to issue the amended project charter and follow the project approval requirements. An amended project charter is required for the following instances: Any ($) value change increase or decrease to its original allocation; 2) Original project scope change with no ($) value of the original allocation; 3) Project cancellation/closure; 4) Project title change; 5) Project scope merge
• Any capital project cost savings will be reimbursed after project closing process to the project requestor with the exception of projects funded from campus reserves.

Project Type Description

There are several types of capital projects that are reported in the CIP, and they follow stipulations of SUAM Section I [Capital Outlay and Public Works Contracts – Section 9000-9005] and Legal Manual Chapter 15. The SF State capital improvement includes the following types of projects:

• Capital Improvement Projects (CIMP): CIMP's alter or better a space and new buildings, additions or major renovations.

• Major Capital Projects: Major Capital Projects include major capital improvement and capital outlay projects that cost over $656,000. These may include new facilities/infrastructure and existing facility/infrastructure with critical deficiencies or modernization/renovation. State site acquisitions projects, regardless of the amount, are funded in major capital outlay.

• Minor Capital Projects: Minor Capital Projects are composed of construction projects whose estimated cost is less than or equal to $656,000.

• Non-Recurring Maintenance/Repair (NRMR): Deferred Maintenance (D/M) and Americans with Disabilities Act (ADA) compliance projects are funded primarily through the operating budget. Facility Services Enterprise (FSE) and CPDC prioritize these projects according to need and funds availability. The approval of the capital budget authorizes facility renewal/ADA projects in aggregate.

• Acquisition of Real Property: The transaction of property purchase must acquire the Department of Finance (DOF) and Department of General Services (DGS) approval.

• Real Estate Leases and Leasehold Improvements: Real Estate Leases and Leasehold Improvements include any lease (operating or capital) for space, as well as up-front costs of tenant up-fit, leasehold improvements, and fixed equipment. A Short Term lease of Less than 20 years or involving an annual payment of less than $1 million requires Campus President approval. A Long Term Lease of 20 years or greater or one involving annual payment over $1 million requires Chancellor Office (CO) approval.

• Equipment: Equipment purchase for major/minor construction equipment group II and equipment substitutions. Group II equipment is programmatic-specific but generally is movable and does not require significant utility connections. Group II items are not a part of the construction contract and are budgeted in a separate budget phase. Examples: tables, chairs, microscopes, hand-held electric tools, computers, cameras. Reference SUAM Section X 9226.

Project Approval Requirements

The following approvals are required prior to initiation of work and/or commitment of funds to a project. Any exceptions must be approved by the VP of Administration
and Finance.

• A funding plan for multi-year projects must be established prior to a project being considered for approval.
• The project ID must be issued on every project for which CPDC provides a project estimation. No funds are to be spent or committed prior to the issuance of a project code and the project charter approval.
• Related contracts or Notices to Proceed require appropriate approval in addition to the approval of a project.
• The requesting department is responsible for ensuring that adequate funding is available and transferred regularly to the project code to prevent overdrafts. For projects funded from multiple sources, funding details must be clearly documented and understood by all parties with clear agreement as to the timing, amount and person responsible for such funding transfers. The Fiscal Affairs Office (FAO) is authorized to transfer funds from the designated funding source to cover such overdrafts.

• Recurring maintenance/repairs (RMR) Projects and Capital Projects Less Than $100,000
  • Cost: Less than $100,000.
  • Funding sources: Operating budget, departmental reserves, gifts/grants.
  • Required approvals: Dean, director or department head, Associate Vice President (AVP) of CPDC, Senior AVP of Physical Planning and Development (PP&D) and Executive Director of Budget Administration and Operations.
  • Planning: Non-capital construction projects less than $100,000 are not included in the annual capital budget. Funding should be included in the operating budget or as a budgeted use of departmental/betterment reserves for non-capital and departmental reserves, central reserves, gifts/grants for capital projects less than $100,000.

• Level I Capital Projects (CIMP):
  • Cost: Between $100,000 and less than or equal to $656,000.
  • Funding sources: Departmental reserves, central reserves, gifts/grants.
  • Required approvals: Dean, director or department head, AVP of CPDC, senior AVP of PP&D, FA/BOT, and VP  of Administration and Finance.
  • Planning: The VP of Administration and Finance approves these projects in aggregate in the annual capital budget, where they are presented according to area of financial responsibility (e.g., Academic, Athletics, Housing, Parking and CCCS). An actual/budget comparison will be reported quarterly. Any unfavorable variance to the aggregate budget (by financial responsibility) requires a written explanation from the appropriate department budget official.

• Level II Non-Recurring Maintenance and Repair Projects-(NRMR):
  • Cost: More than $656,000 (NRMR) and does not require BOT approval.
  • Funding sources: Departmental reserves, central reserves, internal loans, gifts/grants, or external debt. The VP of Administration and Finance must approve any external debt financing by resolution.
  • Required approvals: Dean, director or department head, AVP of CPDC, Senior AVP of PP&D, FA/BOT, VP of Administration and Finance, and President
  • Planning: An aggregate amount (by financial responsibility) will be included for approval in the annual capital budget. An actual/budget comparison will be reported quarterly. Any unfavorable variance to the aggregate budget (by financial responsibility) requires a written explanation from the appropriatemanagement center budget official.

• Level III Capital Improvement Projects-(CIMP):
  • Cost: More than $656,000 (CIMP) requires BOT approval
  • Funding sources: Departmental reserves, central reserves, internal loans, gifts/grants, external debt financing.
  • Required approvals: Capital Projects Executive Committee and BOT
  • Planning: A Level III Capital Project report will be included in Campus Planning Committee materials at each of the committee’s regular meetings.

• Level IV Capital Projects:
  • Must follow the SUAM (Section VII—Five-Year Capital Improvement Program Procedures and Formats for the capital outlay submission –Sections 9100-9121), available for review at: http://www.calstate.edu/cpdc/suam/SUAM9100-9121.pdf.
  • The VP of Administration and Finance must approve the budget, and each stage of the project budget, for each Level III project.*

CIP Approvers and Members

• Capital Planning Design and Construction — Responsible for review of all capital projects to:
  1. Develop and review the PCF form for completeness.
  2. Ensure that the technical reviews were completed.
  3. Recommend approval, disapproval, or approval with modification to the CPMC
  4. Review for compliance with the approved capital budget.
• Members: AVP of Capital Planning Design and Construction, AVP of Housing, and AVP of Facilities.
• Capital Planning Management Center — Responsible for managing the board-approved capital budget and prioritizing projects
  • Members: Fiscal Affairs, Budget Administration and Operation, and VP of Administration and Finance.
• Capital Project Executive Committee (CPEC) — Responsible for approving the projects.
  • Members: VP of Administration and Finance, senior AVP of PP&D, and President.
• Board of Trustees (BOT)

Capital Improvement Plan Timeline

Five-Year Capital Improvement Program 2016-17 to 2020-21

January

• Govenor/Board of Trustees: Govenor's Budget Proposal for 2016-2017
• SF State University Budget Office: Q2 Financial Review

February

• DOF/Treasury: DOF provides preliminary list 2016-2017 approved CSU projects to JLBC

March

• Govenor/Board of Trustees: Legislative Committee hearings on the 2016-2017 budget
• SF State University Budget Office: Annual call for SFSU 2016-2017 CIP Process

April

• Govenor/Board of Trustees: Legislative Committee hearings on the 2016-2017 budget
• SF State University Budget Office: Campuses submit the 201617 Deferred Maintenance Links
• SF State University Budget Office: Annual call for SFSU 2016-2017 CIP Process
• SF State University Budget Office: Q3 Budget Review
• DOF/Treasury: DOF Submits final list of 2016-17 approved projects to CSU

May

• Govenor/Board of Trustees: Legislative Committee hearings on the 2016-2017 budget
• DOF/Treasury: Financing and Treasury approves financial plans to be bond funded 2016-2017

June

• SF State University Budget Office: Campuses submit the final 2017-18 COP and CIP
• DOF/Treasury: Financing and Treasury approves financial plans to be bond funded 2016-2017

July

• DOF/Treasury: Financing and Treasury approves financial plans to be bond funded 2016-2017

August

• SF State University Budget Office: Publish SFSU 2016-2017 CIP Book
• DOF/Treasury: Financing and Treasury approves financial plans to be bond funded 2016-2017

September

• Govenor/Board of Trustees: BOT approves draft 2017-18 COP & CIP & Statement of Support
• SF State University Budget Office: Publish SFSU 2016-2017 CIP Book

October

• SF State University Budget Office: Q1 Financial Review

November

• Govenor/Board of Trustees: BOT approves the Final 2017-18 COP & CIP

Accounting, Reporting and Controls

• A)  All SFSU capital projects must use the following PeopleSoft (PS) chart combination.
• B)  Fund-unique department ID 6270- Capital Projects – Capital outlay object code – account and mandatory/unique project identifier.
• C)  CSU Fund Matrix for Capital Projects:

Non-Enterprise Funds

Enterprise Funds (Self Support)

• D)  For all NRMR projects and CIMP project it is recommended to use the series of 607xxx or other FOC accounts- available information at: http://www.calstate.edu/SFSR/standards_and_rule/New_Capital_Outlay_Objec... http://www.calstate.edu/SFSR/standards_and_rules/2011/CPDC_Accounting_In... Additional information about project attribute is available at Legal manual Chapter 15 – Capital Projects-Academic Facilities: http://www.calstate.edu/sfsr/y-e-r_instructions/legalmanual/index.shtml
• E)  For a multi-funded project, the expenditures must be recorded in the source fund at the voucher level. All claims must be processed within 30 days on bond funded expenditures. The spending is accorded to the hierarchy to meet spending benchmarks as follows:
  1. Optional #1a Planning and Design costs: Pay-as-you-go funding for up front project costs not to exceed 10% of the total estimated project cost until proceeds are available.
  2. Required #1b Bond Funding: Once proceeds are available, these funds should be spent first.
  3. Required #2 General Fund (CSO fund 0001) funding: Evaluate if appropriation(s) has earlier "available to" or "reversion date" than bond funds.
  4. Optional #3 Supplemental funding: Donor, Reserve, Interest and Enterprise funds.
  5. Optional #4 Pay-as-you-go funding.
  6. Optional #5 Auxiliary funding.
  7. The project ID format will follow the Oracle financial project chart of accounts format of nine digits. Project charter is submitted to Accounting Office for review. Based upon GAAP regulations on capital assets, Accounting Office will determine the project ID appropriately.
     • Project Attribute: CIMP-Capital Improvement; NRMR- Non-Recurring Maintenance/
     • Type Project ID: Repair MC/DM
     • FY: Fiscal year that runs July 1 to June 30, two digits
     • Building: Three digits
     • Last two digits: “00”
     • Sample: MC16ADM00 or DM16ADM00
• F)  A comprehensive capital projects report updated after the close of each fiscal month reflects funding and expenditures and projected expenses and revenues.
• G) The current financial information is taken from the University financial system Oracle Financial, SFSU’s official ledger of record. Each month, the project manager projects expenditures; the project accountant reconciles and reviews the BI financial statements, and the accounting department projects financing costs (if the project is funded by debt).
• H)  Direct salaries should never be charged to capital construction projects. Project management fees are recorded as internal professional fees, not as a payroll expense. Only project expenses within the approved budget may be charged to the project. The VP of Administration and Finance must approve any exceptions to this procedure.
• I)  Without prior approval, projects do not run in overdraft. Departmental reserves are the first source of funding for any unauthorized overdrafts. The project accountant will close out the capital project code no later than one year after occupancy of the facility, or when it is declared substantially complete. If invoices or other payments remain outstanding, the project manager must write to accounting requesting to delay closing the project code.
• J)  The status and financial position of capital projects will be reviewed regularly with the project owner, chaired by the management center.
• K)  Project Funding: The project champion department is responsible for ensuring that adequate funding is available and transferred regularly to the project code to prevent overdrafts.
• L)  Project managers with the support of the project accountant maintain the total project budget and track expenditures, prepare projections, estimate cash requirements, and account for the use of contingencies. The project manager reviews project estimates with the AVP of CPDC. The project accountant reviews monthly accounting system statements from BI for discrepancies. Project managers, financial owners and the members of management center meet quarterly to discuss the financial status of all major capital projects.
• M)  After the capital fund is approved the only new projects that will be included as amendments will be projects that qualified as emergency projects.
• N)  Capital project contingency funds should be tightly controlled to deal with unexpected project developments and should be included in the original estimated cost (no less than 10% to the construction estimated cost). All significant programmatic and owner controlled scope changes that occur during the design or construction phase and which significantly impact the contingency or total project budget must be approved by the appropriate department project requestor, and a new project charter change order must be issued and approved. The project manager will track all uses of project contingencies.
• O)  Project managers monitor all project schedules and keep all interested parties informed of changes to the anticipated schedules.