CSU Auxiliaries 101 October 16, 2019 Pismo Beach, CA Auxiliary Organizations Association Representatives John Griffin - 2019 AOA President Executive Director, University Enterprises Corporation, CSU San Bernardino Kacie Flynn - 2019 AOA President Elect 1 Executive Director, Sponsored Programs Foundation, Humboldt State University
Auxiliary Organizations Overview of Auxiliaries ❖ Definition of Auxiliary Organizations ❖ Purpose of Auxiliary Organizations ❖ Auxiliary Structure ❖ Authorized Functions 2
Auxiliary Organizations Overview of Auxiliaries ❖ Types of Revenue Sources ❖ Advantages of Auxiliary Organizations ❖ Campus auxiliary functions versus Auxiliary Organizations ❖ Role of Auxiliary Organizations Association (AOA) 3
Auxiliary Organizations Definition of Auxiliary Organizations Auxiliary organizations at the California State University (CSU) are non-profit organizations which are separate legal entities that operate pursuant to written operating agreement with the CSU Board of Trustees, have separate governing boards with close campus linkages and follow all legal and policy rules established by the CSU system and the respective campus Administration. 4
Auxiliary Organizations Purpose of Auxiliaries ❖ Auxiliary organizations were created to perform essential functions associated with a postsecondary educational institution, which under California law were difficult, cumbersome, or legally restricted for the university and were not supported by state funding. The California State University (CSU) established a network of supplemental services that complement the core academic programs at each campus and provide the full range of educational experiences expected by its students. ❖ First auxiliary established in 1922 – the Fresno State College Association 5
Auxiliary Organizations At their core, auxiliary organizations exist to support student success by providing… ❖ Leadership opportunities in student government through Associated Student organizations ❖ Opportunities to serve as auxiliary board members and gain an in-depth understanding of non-profit organizations ❖ Opportunities to work on federally-sponsored research projects with faculty and staff ❖ On-campus employment which is more convenient and easier to coordinate with class schedule 6
Auxiliary Organizations Auxiliary Structure ❖ Authorized under the provisions of the California Education Code and TITLE 5 delegating authority to the CSU Trustees, CSU Chancellor, and University Presidents ❖ Authorized under Internal Revenue Code and California Corporations Code as 501(c)(3) nonprofit organizations and 509(a)(3) supporting organizations, operated for exempt purposes as a “public charity” under California and federal law ❖ Must have an Operating Agreement with the CSU defining approved activities for each auxiliary 7
Auxiliary Organizations Auxiliary Structure Cont. ❖ Need a written MOU with the campus to establish scope of operations and address other contractual issues ❖ Must be fiscally viable (with adequate reserves) ❖ Commercial services must be self-supporting 8
Auxiliary Organizations Authorized Functions ❖ Student Body Organizations 9
Auxiliary Organizations Authorized Functions ❖ Student Unions, Recreation Centers and Children’s Centers 10
Auxiliary Organizations Authorized Functions ❖ Bookstores, dining services, and other campus services 11
Auxiliary Organizations Authorized Functions ❖ Housing (e.g., student housing, faculty/staff for-sale housing) 12 1
Auxiliary Organizations Authorized Functions ❖ Externally funded projects including research, instructionally-related programs, conferences, and institutes 13 1
Auxiliary Organizations Authorized Functions ❖ Loans, scholarships, grants-in-aids and related financial assistance ❖ Gifts, bequests, endowments, trusts ❖ Public relations, fundraising, fund management and development ❖ Acquisition, development, sale and transfer of real and personal property, including financing transactions ❖ Alumni programs (not alumni associations) 14
Auxiliary Organizations Typical Auxiliary Revenue Sources ❖ Associated Student Body Organization Programs o Revenues from student body fees ❖ Student Unions, Rec Centers & Children’s Centers o Revenues from student union fees and operations in the facility ❖ Sponsored Projects, Research & Education Programs ❖ Externally funded grant and contract activity conducted by faculty and staff o Indirect Cost (IDC) Recovery 15
Auxiliary Organizations Auxiliary Revenue Sources Cont.… ❖ Commercial Services o Revenue from bookstore sales, dining services, child care centers, and other commercial activities ❖ Gifts, Endowments, Trusts, and Fundraising o Funds come from external entities intended to support scholarships and other university operations; Philanthropic Foundation revenues come from gift assessments and endowment administrative fees ❖ Real and Personal Property o Auxiliaries can incur debt to purchase property and/or engage in partnership projects to develop property 16
Auxiliary Organizations Impact with CSU In Fiscal Year 2017/2018: ❖ $4.8 billion in net assets or 25% of total $19.5 billion for CSU ❖ $2.0 billion in revenues or 17% of total $11.7 billion for CSU ❖ $586.2 million in contracts and grants ❖ $1.7 billion in endowment funds Data Source: 2019 CSU Fact Book https://www2.calstate.edu/csu-system/about-the-csu/facts-about-the-csu/Documents/facts2019.pdf 17
Auxiliary Organizations Financial Reporting for Auxiliaries ❖ Auxiliary organizations are required to produce independently audited financial statements and file federal and state tax returns annually and post on their website ❖ Auxiliary organizations with gross revenues of $2 million or more are required by the California Nonprofit Integrity Act of 2004 to present and review the audited financials with an Audit Committee appointed by the auxiliary board of directors ❖ Supplementary financial information from the audit is used by the campus and Chancellor’s Office for consolidation reporting ❖ Auxiliaries are subject to audits from the Office of Audit and Advisory Services 16
Auxiliary Organizations Advantages of Auxiliary Organizations ❖ Operate on a self-support basis. No CSU allocations (General Fund appropriations) ❖ Diversify resources by generating net revenues from commercial enterprises, contract and grant management, and gift administration ❖ Offer “private - sector” efficiency and flexibility ❖ Offer reduced operating costs and alternative employment relationships ❖ Accept entrepreneurial and special program risk exposures not appropriate for the public entity 19
Auxiliary Organizations Advantages of Auxiliary Organizations Cont.…. ❖ Flexibility in managing endowment funds (e.g., invest in equities to maximize returns) ❖ Create a separate Board of Directors for an auxiliary philanthropic foundation, allowing increased opportunities for community engagement ❖ Enter into public/private partnerships that support the university (shift ❖ of project risk and debt issuance) ❖ Facilitate certain types of financing, and add debt capacity ❖ Manage risk exposure 20
Auxiliary Organizations Campus auxiliary functions vs Auxiliary Organizations ❖ Auxiliary Organizations are NOT “Auxiliary Enterprises” or “Auxiliary Services” which are functions or operations that are departments of the university – not separate legal organizations. Examples are: o Housing – Dormitory Revenue Fund o Parking Fund o Continuing Education Fund (CERF) 21 o Student Health Center
Auxiliary Organizations AOA Mission Statement We are a consortium of diverse, entrepreneurial, service-oriented California State University Auxiliary Organizations whose purpose is to assist in exemplary services, programs, and facilities that further the educational mission of each campus. 22
Auxiliary Organizations AOA Brief History In the years following World War II, managers of auxiliary organizations at colleges and universities in California, Arizona and Oregon met once a year in an informal organization to discuss mutual problems, exchange ideas and to share common knowledge. CSU campuses included in these early meetings included Chico, Fresno, San Diego, San Jose, and San Luis Obispo. During the 1960’s the organization for auxiliary managers became more formalized after Arizona and Oregon stopped attending the meetings. The name “California Association of College and University Auxiliary Managers” was adopted. 23
Auxiliary Organizations AOA Brief History Cont. In 1970, a new constitution was approved with a new name – California State College Auxiliary Organizations Association (CSCAOA). Over the past 50 years, that organization has grown together with the CSU System and evolved into the present day Auxiliary Organization Association (AOA) with 87 auxiliaries represented from all 23 campuses. …Celebrating AOA's Past and Promising Future 24
Auxiliary Organizations AOA Resources ❖ Website Resources ❖ (www.csuaoa.org) o Information sharing o Membership directory o Legislative and Legal Updates o Library of resource materials o Sample policies, procedures & forms 25
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