Standard 2.11: The Institution has a sound
financial base and demonstrated financial stability, and adequate physical
resources to support the mission of the Institution and the scope of its
programs and services.
The member Institution provides the following financial statements: (a) an
Institutional audit
(or Standard Review Report issued in accordance
with Statements on Standards for Accounting and Review Services issued by the
AICPA for those Institutions audited as part of a systemwide or statewide audit) and written Institutional management letter for the
most recent fiscal year prepared by an independent certified public accountant
and/or an appropriate governmental auditing agency employing the appropriate
audit (
or Standard Review Report) guide; (b) a statement of financial
position of unrestricted net assets, exclusive of plant assets and
plant-related debt, which represents the change in unrestricted net assets
attributable to operations for the most recent year; and, (c) an annual budget
that is preceded by sound planning, is subject to sound fiscal procedures, and
is approved by the governing board.
Audit requirements for applicant Institutions may be found in the Commission
policy entitled “Accreditation Procedures for Applicant Institutions.”
(Resources)
Judgment of Compliance
|
X |
Compliance |
Partial Compliance |
Non-Compliance |
NARRATIVE/JUSTIFICATION FOR JUDGMENT OF COMPLIANCE
Southeast Kentucky Community and Technical College (SKCTC) has a sound financial base, financial stability and adequate
resources to support its mission, programs and services.
(a) The
independent public accounting firm of Crowe Chizek and Company LLC conducted the audit for 2004-05 for KCTCS and Southeast
Kentucky Community and Technical
College.
(b) SKCTC
showed Unrestricted Net Assets of $682,000 in the 2005 audit [1].The
audited financial report reflects the changed format of GASB #35. The 2005 audited statement of financial
position reflects that the College is on a sound financial basis. The ratio of current assets to current liabilities
is 2.55 and has gone up over the past four years. SKCTC shows a total assets vs. total liabilities ratio of 29.3 [2]. The College has benefited in this regard from
the Commonwealth
of Kentucky’s decision to
assume capital debt service rather than assigning this to KCTCS
Institutions.
Like other state supported Institutions, SKCTC, has had to
deal with budgetary shortfalls on the state level for past several years (with
2004-05 being an exception). These
budget cuts have meant that several hard choices have had to be made at the
Institution in order to maintain a stable financial base. Since 2002, some 15 full time positions have
been cut from the budget. Total savings
from these actions, not including fringe benefits, total more than
$600,000. Programs (or program options)
in hospitality management, golf course management, surveying and mapping, and
diesel mechanics (Harlan Campus) have been discontinued.
Concurrent to these mandated state budget cuts, a number of
pro-active steps have been taken to bolster the SKCTC financial base and to
increase revenue. These include starting
new one-semester weekend programs in the areas of medical transcription,
medical coding, and licensed practical nursing, and launching a new certificate
program in historic information management, developing specialized training
programs for the U.S. National Park Service, and expanding offerings to the
coal mining industry. The college has
been able to initiate these programs with grant funding, but anticipates these
programs being self sustaining in FY 2007.
(c) SKCTC
has a defined budgeting process [3] that is directly related to the Institution’s strategic plan [4],
annual plan [5] and strategic needs analysis document [6]. As a member of the Kentucky Community and
Technical College System, the College’s budgeting process is aligned with those
of the system [7].
The College prepares a detailed planned-expenditure budget each year, organized
by major program classification categories as recommended by the National
Association of College and University Business Officers. The operational budget [8] lists expenditures down to the unit level and by type (salaries, travel, etc)
for each unit in the College. Income
estimates used in the budgetary process are derived from the estimated general
fund allocation to be received by SKCTC from KCTCS, the estimated revenues from
tuition and fees, sales and services based on prior year performance and
anticipated gifts and grants. Once the
budget is prepared internally, it is submitted to the SKCTC Board of Directors
for their review and approval [9]. Following this approval, the budget is
submitted to the KCTCS President for presentation to and approval by the Board
of Regents.
In summary, SKCTC provides a sound financial base and
demonstrates financial stability, and adequate physical resources to support
the mission of the Institution and the scope of its programs and services.
