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Fisk University

Fifth Monitoring Report

Prepared for

Southern Association of Colleges and Schools Commission on Colleges

(SACSCOC)

September 6, 2013

Contact Person

H. James Williams, President Fisk University

1000 17th Avenue North Nashville, Tennessee 37208

615-329-8555 [email protected]

(SACSCOC Special Committee Visit: October 20–23, 2013)

mailto:[email protected]

This page is intentionally left blank.

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Table of Contents

EXECUTIVE SUMMARY 1

BACKGROUND INFORMATION: OVERVIEW 5

* APPENDIX A 15

SECTION 1: RECOMMENDATION #1 17

CR 2.2 (GOVERNING BOARD) 18 1.1 REPORT OF THE SPECIAL COMMITTEE: RECOMMENDATION #1 18 1.2 BRIEF SUMMARY OF PREVIOUS RECOMMENDATION AND RESPONSE 18 1.3 CURRENT COMMISSION REQUEST: RECOMMENDATION #1 18 1.4 UNIVERSITY’S RESPONSE TO CURRENT RECOMMENDATION (#1) 19 1.4.2 BOARD ASSURANCE OF SUSTAINABLE BALANCED BUDGET 20 1.4.3 INCREASED BOARD OVERSIGHT AND ENGAGEMENT IN FINANCIAL MATTERS 22 1.5 CONCLUSION 24 1.6 APPENDIX 1 26


CR 2.11.1 (FINANCIAL RESOURCES) 28 2.1 REPORT OF THE SPECIAL COMMITTEE: RECOMMENDATION #2 28 2.2 BRIEF SUMMARY OF PREVIOUS RECOMMENDATIONS AND RESPONSES 28 2.3 CURRENT COMMISSION REQUEST: RECOMMENDATION #2 28 2.4 UNIVERSITY’S RESPONSE TO CURRENT RECOMMENDATION (#2) 29 2.4.1 UNIVERSITY’S ADHERENCE TO FUNDAMENTALS OF THE CORE REQUIREMENT 29 2.4.2 ALIGNING CORE EXPENDITURES WITH CORE REVENUES: 2012-2013 OPERATIONS 32 2.4.3 ALIGNING CORE EXPENDITURES WITH CORE REVENUES: ANNUAL OPERATING BUDGET 35 2.4.4 STUDENT ENROLLMENTS 39 2.4.5 MEASURES INSTITUTED TO ASSURE “BALANCED” FISCAL OPERATIONS 41 2.5 CONCLUSION 42 2.6 APPENDIX 2 43


CS 3.10.1 (FINANCIAL STABILITY) 46 3.1 REPORT OF THE SPECIAL COMMITTEE: RECOMMENDATION #4 46 3.2 BRIEF SUMMARY OF PREVIOUS RECOMMENDATIONS AND RESPONSES 46 3.3 CURRENT COMMISSION REQUEST: RECOMMENDATION #4 46 3.4 UNIVERSITY’S RESPONSE TO CURRENT RECOMMENDATION (#4) 47 3.4.1 UNIVERSITY’S ADHERENCE TO FUNDAMENTALS OF COMPREHENSIVE STANDARD 47 3.4.2 DEFICIT OPERATIONS 49

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3.4.3 NET TUITION AND FEES (NTF) IN COMPARISON WITH ANNUAL EXPENSES 50 3.4.4 ADJUSTING ANNUAL CORE EXPENSES TO MATCH ANNUAL CORE REVENUE STREAMS 50 3.4.5 ALIGNING CORE EXPENDITURES WITH CORE REVENUES: ANNUAL OPERATING BUDGET 53 3.4.6 MEASURES INSTITUTED TO ASSURE “BALANCED” FISCAL OPERATIONS 57 3.4.7 RECENT HISTORY OF FINANCIAL STABILITY 58 3.5 CONCLUSION 59 3.6 APPENDIX 3 60


CS 3.10.3 (CONTROL OF FINANCES) 62 4.1 REPORT OF THE SPECIAL COMMITTEE: RECOMMENDATION #5 62 4.2 BRIEF SUMMARY OF PREVIOUS RECOMMENDATIONS AND RESPONSES 62 4.3 CURRENT COMMISSION REQUEST: RECOMMENDATION #5 62 4.4 UNIVERSITY’S RESPONSE TO CURRENT RECOMMENDATION (#5) 63 4.4.1 UNIVERSITY’S ADHERENCE TO FUNDAMENTALS OF COMPREHENSIVE STANDARD 63 4.4.2 IMPROVEMENTS IN INTERNAL CONTROLS 63 4.4.3 RESPONSES TO 2011-2012 “AUDITOR FINDINGS” 65 4.4.4 RESPONSES TO 2012-2013 “AUDITOR OBSERVATIONS AND COMMENTS” 66 4.4.4.1 GRANT AND CONTRACT ACCOUNTING 66 4.4.4.2 ACCOUNTING SYSTEM SOFTWARE 67 4.4.4.3 PROPERTY AND EQUIPMENT 68 4.4.4.4 PERKINS LOAN RECONCILIATION 69 4.4.4.5. ITEM # CF 13-1 69 4.4.4.6 ITEM # CF 13-2 70 4.4.4.7 ITEM # CF 13-3 71 4.4.4.8 ITEM # CF 13-4 72 4.4.4.9 ITEM # CF 13-5 72 4.5 CONCLUSION 73 4.6 APPENDIX 4 74


FR 4.7 (TITLE IV PROGRAM RESPONSIBILITIES) 76 5.1 REPORT OF THE SPECIAL COMMITTEE: RECOMMENDATION #6 76 5.2 BRIEF SUMMARY OF PREVIOUS RECOMMENDATIONS AND RESPONSES 76 5.3 CURRENT COMMISSION REQUEST: RECOMMENDATION #6 76 5.4 UNIVERSITY’S RESPONSE TO CURRENT RECOMMENDATION (#6) 77 5.4.1 UNIVERSITY’S ADHERENCE TO FUNDAMENTALS OF FEDERAL REQUIREMENT 77 5.4.2 IMPROVEMENTS IN INTERNAL CONTROLS 77 5.4.3 RESPONSES TO 2011-2012 “AUDITOR FINDINGS” 79 5.4.4 RESPONSES TO 2012-2013 AUDITOR OBSERVATIONS AND COMMENTS 80 5.4.4.1 GRANT AND CONTRACT ACCOUNTING 81 5.4.4.2 ACCOUNTING SYSTEM SOFTWARE 81 5.4.4.3 PROPERTY AND EQUIPMENT 82 5.4.4.4 PERKINS LOAN RECONCILIATION 83 5.4.4.5 ITEM # CF 13-1 83

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5.4.4.6 ITEM # CF 13-2 84 5.4.4.7 ITEM # CF 13-3 85 5.5 CONCLUSION 85 5.6 APPENDIX 5 87

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Executive Summary Founded in 1866, Fisk University is Nashville’s first institution of higher education and is

ranked among the very best liberal arts institutions in the country, along a number of

dimensions, and within the group of top five Historically Black Colleges and Universities

(HBCUs).

In 1930, Fisk was the first HBCU to earn accreditation by the Southern Association of

Colleges and Schools (SACS). Fisk’s accreditation was reaffirmed without public

sanction by the Commission in 2009; however, the institution was required to submit a

Monitoring Report in November of 2010, to address a recommendation related to

financial stability in Comprehensive Standard 3.10.1. Due to a confluence of economic

conditions and other circumstances, the University has experienced financial challenges

over the recent past, resulting in the filing of a number of subsequent monitoring reports

and the SACSCOC’s placing the institution on Probation, in January of 2012. The

University is now in its second − and final − year of Probation.

On January 15, 2013, the SACSCOC President issued a letter to Fisk University,

requesting a Fifth Monitoring Report (due September 9, 2013). Specifically, the letter

requested institutional responses to the following five concerns.

1. CR 2.2 (Governing Board) The institution should document that the Board of

Trustees ensures that the financial resources of the institution are adequate to

provide a sound educational program, and that the institution operates within an

annual balanced budget.

2. CR 2.11.1 (Financial Resources) The institution should document that it has a

sound financial base and has demonstrated financial stability to support the

mission of the institution and scope of its programs and services, as reflected in a

balanced annual operating budget based on realistic goals.

3. CS 3.10.1 (Financial Stability) The institution should demonstrate its recent

history of financial stability.

4. CS 3.10.3 (Control of Finances) The institution should document that it exercises

appropriate control over all its financial resources.

5. FR 4.7 (Title IV Program Responsibilities) The institution should document that it

is in compliance with its program responsibilities under Title IV of the most recent

Higher Education Act as amended.

In this report the University demonstrates compliance with the SACSCOC standards in

question, as noted below.

CR 2.2 (Governing Board) The University and its Board of Trustees made a number of

changes and process improvements to assure the University’s financial resources are

adequate to provide a sound educational program. Moreover, the Board oversaw a

budget that led to the University’s finishing the 2012-2013 Fiscal Year with a surplus of

more than $330,000. Finally, the Board approved a balanced budget for the 2013-2014

Fiscal Year that is based on reasonable assumptions regarding fundraising, student

enrollments, and other revenue and expense items. This report documents that the

Board of Trustees ensures that the financial resources of the institution are adequate to

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provide a sound educational program, and that the institution operates within an annual

balanced budget.

CR 2.11.1 (Financial Resources) and CS 3.10.1 (Financial Stability) The University has

improved its financial resources. The balance sheet is strong: total net assets are up;

the total restricted cash (including restricted cash held by the University and held in

trust) is up; accounts and accrued payables are down, significantly; and notes payables

are down; and “Unrestricted Net Assets Exclusive of Plant and Plant Related Debt”

(UNAEP) exceeds a healthy $8.8 million. Moreover, the University has aligned core

expenses with core revenues: it finished the 2012-2013 Fiscal Year with a surplus; and

the 2013-2014 Budget is balanced, projecting a $500 thousand surplus, based on

reasonable estimates of student enrollments and fundraising for unrestricted gifts. This

report documents that Fisk University has demonstrated a sound financial base and

financial stability to support its mission and the scope of its programs and services, as

reflected in a balanced annual operating budget based on realistic goals.

CS 3.10.3 (Control of Finances) and FR 4.7 (Title IV Program Responsibilities) The

University has appropriate, written policies and procedures for safeguarding its physical

and financial resources. In addition, it has improved its system of internal controls

significantly, including adding an “Internal Audit function.” Finally, the institution resolved

seven of the eight auditors’ compliance findings from the prior year and partially

resolved the eighth. Finally it reduced the number of material weaknesses identified

during its most recent audit. This report demonstrates and documents that it exercises

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control over all its financial resources and complies with its Title IV program

responsibilities.

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Background Information: Overview

Fisk University

Founded in 1866, Fisk University is Nashville’s first institution of higher education.

The 2013 U.S. News & World Report’s “Best Colleges and Universities” ranked Fisk in

Tier One at #145 of more than 1,400 Liberal Arts Institutions in the United States. Only

three HBCUs are ranked in Tier One. Fisk is ranked #5 on the list of “The Best

Historically Black Colleges and Universities (HBCUs).”

The Washington Monthly, September 2012, ranked Fisk as the “#1 Liberal Arts HBCU in

Research” in its “Top Liberal Arts Colleges and Universities.” Fisk ranks in the top 6

percent of the 254 leading liberal arts institutions based on social mobility, research and

service.

For the 20th consecutive year, The Princeton Review included Fisk on its 2013 list of

“The Best Southeastern Colleges.”

During 2013, the University earned its fourth R&D 100 Award, for work in the creation of

radiation detectors developed in collaboration with several national laboratories and

corporations. No other HBCU has ever earned an R&D 100 Award. According to the

National Science Foundation, Fisk produces more African-Americans who go on to earn

doctoral degrees in the natural sciences than any school in the nation.

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Finally, Forbes’ 2013 rankings of the 650 Top Colleges, Fisk University ranks #188, the

fourth highest ranked institution in Tennessee, ahead of the University of Tennessee,

Belmont University, Christian Brothers University, East Tennessee State University, and

Tennessee State University. Also, Fisk ranked #134 among all private institutions in the

nation and #34 among all institutions in the South. Fisk is the highest ranked historically

black college/university on the list.

SACSCOC Accreditation

In 1930, Fisk was the first Historically Black College/University to earn SACS

accreditation. Its most recent reaffirmation occurred in 2009.

First Monitoring Report

Fisk’s accreditation was reaffirmed without public sanction by the Commission in 2009;

however, Fisk was required to submit a Monitoring Report on November 15, 2010, to

address a recommendation related to financial stability in Comprehensive Standard

3.10.1.

The University continues to operate an annual budget with expenditures

exceeding revenues. Operational deficits of the magnitude seen in Fiscal Year

2009 ($1.6M) jeopardize the institution’s ability to provide the stable resource

base needed to sustain its mission.

The institution should document recent financial stability. As part of the

documentation, the institution is required to submit financial audit reports and

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management letters for the two most recent fiscal years, and include its most

recent financial aid audit. The most recent year is defined as the fiscal year

ending immediately prior to the due date of this report. In addition, the institution

is required to include 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. The

institution should also document that it is meeting its enrollment goals, that is has

implemented its cost containment plan, and provide an updated budget showing

budgeted and actual items.

Second Monitoring Report

Action by the Commission in its December 2010 meeting placed Fisk on Warning for six

months and required a Second Monitoring Report, due April 15, 2011.

The University did not provide documentation requested by the Commission for

this current review. Among the essential items that were not submitted were the

2010 financial report, financial aid audit report, and management letter. The

University is required to address the following:

1. Financial audit reports and management letters for the three most

recent fiscal years, and include its most recent financial aid audit. The

most recent year is defined as the fiscal year ending immediately prior

to the due date of this report.

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2. 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.

3. Documentation that demonstrates the institution is meeting its

enrollment goals for the 2010-2011 academic year.

4. Documentation that demonstrates the institution has implemented its

cost containment plan, and

5. An updated budget showing budgeted and actual expenditures for the

2010-2011 academic year.

Third Monitoring Report

In June 2011, after review of a Second Monitoring Report, the Commission determined

that Fisk University failed to demonstrate compliance with one Core Requirement

(2.11.1), three Comprehensive Standards (3.2.8, 3.10.1, 3.10.4), and one Federal

Requirement (4.7). The Commission extended the Warning period and required a

Third Monitoring Report. A Special Committee added a recommendation regarding

Comprehensive Standard 3.10.2 to the list of recommendations during the fall, 2011

visit.

(CR 2.11.1) Review of documentation submitted found the institution's base of financial

resources is deficient. The institution experienced declines in net assets for two

consecutive fiscal years ending 2010. In 2010, the institution had an operational loss of

$4.46 million. The institution's unrestricted net assets less plant and plant related debt is

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at a significant deficit. Total net assets are $88.5 million of which $68.2 million is held in

the form of art. The last available enrollment and retention reports indicate decline.

Net tuition decreased by approximately $468,000 from 2009 to 2010.

The institution should demonstrate that it has a sound financial base and the financial

stability needed to support its mission and the scope of its programs and services.

(CS 3.2.8) The most recent audit includes several serious findings that indicate

that personnel in the accounting area may not have the appropriate skills and

experiences. The management response is that it has hired additional personnel

with required skills, however, no evidence was presented to confirm that

deficiencies have been corrected, that accurate financial information is being

produced, and thus, that qualified accounting personnel is in place. The

institution should provide evidence that it has employed qualified accounting

personnel.

(CS 3.10.1) The University did not provide documentation requested by the

Commission for this current review. Among the essential items that were not

submitted were the 2010 Financial Report, Financial Aid Audit Report and

Management Letter. The institution is required to address the following:

1. Financial Audit Reports and Management Letters for the three most

recent fiscal years, and include its most recent financial aid audit. The

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most recent year is defined as the fiscal year ending immediately prior

to the due date of this report.

2. 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.

3. Documentation that demonstrates the institution is meeting its

enrollment goals for the 2010-2011 academic year.

4. Documentation that demonstrates the institution has implemented its

cost containment plan.

5. An updated budget showing budgeted and actual expenditures for the

2010-2011 academic year.

(CS 3.10.4) Audit findings indicate serious deficiencies in internal controls,

specifically noting deficiencies necessitating an auditor’s recommendation “for

accountability of assets and the maintenance of an accurate historical record of

operations.” The institution should demonstrate that it exercises appropriate

control over all its financial resources.

(FR 4.7) The University should demonstrate that it is in compliance with its

program responsibilities under Title IV of the 1998 Higher Education

Amendment.

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Fourth Monitoring Report

In December 2011, the Commission reviewed the Third Monitoring Report and the

Report of the 2011 Special Committee. In the letter from the SACSCOC President,

dated January 24, 2012, the recommendation regarding Comprehensive Standard

3.10.2 did not appear. The Commission continued Fisk’s accreditation for Good Cause

and placed the institution on Probation for twelve months for failure to comply with Core

Requirements 2.2 and 2.11.1, Comprehensive Standards 3.2.8, 3.10.1, and 3.10.4, and

Federal Requirement 4.7. A Fourth Monitoring Report was requested and a second

Special Committee visit was authorized.

(CR 2.2) The institution should demonstrate that the Board has ensured that the

financial resources of the institution are adequate to provide a sound educational

program.

(CR 2.11.1) The Board has not ensured that the financial resources of the

institution are adequate to provide a sound educational program. The institution

indicated that the Board had repeatedly approved its operating budget to include

$8.4 million to be raised by the institution, although previous budget reviews

demonstrated the institution's inability to satisfy this requirement. This had a

negative effect on the institution's financial stability. The institution should

demonstrate that the Board has ensured that the financial resources of the

institution are adequate to provide a sound educational program.

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(CR 3.2.8) The institution provided evidence that it has hired additional

personnel in the financial and Information Technology areas; however, these

hires occurred within the past twelve months, and the impact of these individuals

on the operation of the department has not been demonstrated.

The institution should demonstrate that the personnel in the financial and

Information Technology areas, specifically those hired during the past twelve

months, have the competence and expertise to lead the institution in the areas of

finance and Information Technology, that financial transaction are handled

appropriately, and that the most recent audit shows material weaknesses have

been successfully addressed.

(CS 3.10.1) The institution has not yet demonstrated compliance because of the

recent financial conditions described in Recommendation 1 (CR 2.11.1). The

institution should demonstrate that its recent financial history indicates financial

stability, addressing issues of cash flow, the status of any outstanding line of

credit, net income from tuition and fees, tuition discount rates, enrollment,

institutional contributions to retirement plan, and fundraising.

(CS 3.10.4) The audit report for 2011 listed five material weaknesses in internal

control over financial reporting, all of which were repeat findings from the prior

year and also noted three material weaknesses in regard to internal control over

compliance with laws and regulations applicable to federal programs.

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The institution should demonstrate through the audit report for FY 2012 that

these material weaknesses have been successfully addressed.

(FR 4.7) The institution should demonstrate that it is in compliance with its

program responsibilities under Title IV of the 1998 Higher Education Amendment

and provide 1) documentation addressing the three material weaknesses [in

regard to internal control over compliance with laws and regulations applicable

to federal programs] and 2) provide all related correspondence with the

Department of Education.

Fifth Monitoring Report

Fisk University submitted the Fourth Monitoring Report on September 7, 2012 and

hosted another Special Committee on October 8th, 9th, and 10th of 2012. A Fisk team of

representatives presented its case to the SACSCOC Board on December 7, 2012.

Based on the Fourth Monitoring Report, the Report of the Special Committee, and the

University’s presentation, the Commission continued Fisk’s accreditation for Good

Cause and continued the University’s Probation for twelve months, for failure to comply

with Core Requirements 2.2 and 2.11.1, Comprehensive Standards 3.10.1 and 3.10.3,

and Federal Requirement 4.7. (The January 15, 2013 follow-up letter from the

SACSCOC President did not include Comprehensive Standard 3.2.8.)

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The January 15, 2013 letter (see Appendix A, page 1) instructed Fisk University to

prepare a Fifth Monitoring Report, for submission no later than September 9, 2013, in

anticipation of another Special Committee visit, during the month of October. This

document constitutes that Fifth Monitoring Report. It is arranged in the order of the

Recommendations included in the January 15, 2013 letter from the SACSCOC

President.

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* Appendix A

1. January 15 2013 SACSCOC letter

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FIFTH MONITORING REPORT

Section 1: Recommendation #1

Table of Contents SECTION 1: RECOMMENDATION #1 17 CR 2.2 (GOVERNING BOARD) 18

1.1 REPORT OF THE SPECIAL COMMITTEE: RECOMMENDATION #1 18

1.2 BRIEF SUMMARY OF PREVIOUS RECOMMENDATION AND RESPONSE 18

1.3 CURRENT COMMISSION REQUEST: RECOMMENDATION # 18

1.4 UNIVERSITY’S RESPONSE TO CURRENT RECOMMENDATION (#1) 19

1.4.2 BOARD ASSURANCE OF SUSTAINABLE BALANCED BUDGET 20

1.4.3 INCREASED BOARD OVERSIGHT AND ENGAGEMENT IN FINANCIAL MATTERS 22

1.4.4 CONCLUSION 24

1.4.5 APPENDIX 1 26

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CR 2.2 (Governing Board)

1.1 Report of the Special Committee: Recommendation #1

The Committee recommends that the Board of Trustees ensure that the

institution operates within an annual balanced budget.

1.2 Brief Summary of Previous Recommendation and Response

The Commission on Colleges (COC) has requested a response to, essentially, this

same recommendation on one previous occasion (see “SACSCOC Accreditation,”

above, page 12). Although the University provided what it thought at the time was a

reasonable, compelling response, the COC concluded otherwise, especially in light of

the budget approved by the Board of Trustees for the 2012-2013 Academic Year.

1.3 Current Commission Request: Recommendation #1

Although the institution’s Board made some significant modifications to the

FY 2013 operating budget following the Report of the Special Committee,

it funded the difference needed for a balanced budget with funds from an

unrestricted Fisk bank account. This Board of Trustees decision provides

a one-time fix. The Board of Trustees did not provide evidence of

approval of a sustainable balanced budget where the annual expenses do

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not exceed annual revenues. Additionally, during the interview the

institution revealed a projected 2013 negative operational cash flow. The

institution should document that the Board of Trustees ensures that the

financial resources of the institution are adequate to provide a sound

educational program, and that the institution operates within an annual

balanced budget.

1.4 University’s Response to Current Recommendation (#1)

1.4.1 Institution’s Adherence to Fundamentals of the Core Requirement

Fisk University is authorized by the State of Tennessee to offer degrees; the

authorization was most recently affirmed on June 10, 2011 (see Appendix 1, page 1).

The Fisk University Board is comprised of 25 members, representing all of the

University’s constituents and including a broad cross-section of industry and other

relevant experiences (see Board Biographical Sketches, Appendix 1, page 2). The

Board is not inappropriately influenced by groups of its members or outside

organizations; moreover, each of its members is free of contractual, employment,

personal, or familial financial interests in the University, as confirmed by annual “Conflict

of Interests” reports from its members (see, for examples, Appendix 1, pages 20-23).

Finally, the Board is an active policy-making body for the University and exercises its

responsibility to assure the University’s fiscal viability.

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1.4.2 Board Assurance of Sustainable Balanced Budget

The Board of Trustees includes 25 members and is organized into functional

committees to facilitate its operations. It includes a “Financial Strength Committee,”

(which includes a new “Facilities Sub-Committee” and a soon-to-be re-engaged

“Investments Committee”) and an “Audit Committee” that have a collective positive

impact on its responsibility to ensure that the University has adequate financial

resources to support its programs and services. The primary concern of the

Commission on Colleges (COC) is the Board’s action to ensure the financial stability of

the institution. To that end, the Board of Trustees and the University made a number of

changes to the University’s operations and processes to enhance transparency and to

strengthen and facilitate Board of Trustees oversight and control of finances and

budgets. Specifically, the University made the following changes to its operations and

accounting and reporting processes.

1. The University refined its documented process for budget approval, now

requiring that the budget articulate with the strategic plan and that the Board of

Trustees Chairperson of the Financial Strength Committee review the budget in a

special meeting with Management prior to the initial discussion with the

Committee and the broader set of Board members (see “New Budget Process,”

Appendix 1, page 26). The University now utilizes a “flexible budgeting”

approach, so as to inform Board members of the range of variations as projected

student enrollments fluctuate – and to allow for better “contingency planning”

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scenarios in advance of actual enrollments. The resulting operating and cash

flow budgets, to be approved by the full Board during its October meetings, will

be based on conservative, realistic assumptions and will result in a current

operating surplus.

2. During its May, 2013 meetings, the Board of Trustees approved a balanced

budget, with reasonable estimates of revenues, including fundraising, and

allowing for appropriate levels of depreciation and other necessary expenses.

The approved budget also included flex components, to accommodate less than

projected student enrollments. During its October meetings, the Board will

consider a motion to ratify the approval by the Executive Committee of a flexed

budget that reflects the actual number of students enrolled at the University on

September 3, 2013. (The University began operating on a reduced budget on

August 1, 2013, as soon as it was clear that the student enrollments –

undergraduate and graduate − would fall short of the projected numbers.) The

reductions were made with a keen eye toward preserving the effectiveness of the

University’s academic programs and services.

3. During a “special call meeting,” on September 3, 2013, the Board of Trustees

Executive Committee approved revised Operations and Cash flow budgets for

the current, 2013-2014, Fiscal Year. It made a point that they will require

ratification by the full Board during its October meetings and require monitoring

and updating throughout the year.

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4. During its October, 2013 meeting, the Board of Trustees will affirm its renewed

focus on its fiduciary role regarding the University’s finances by approving a

resolution that it will not approve a deficit budget in the future (see “Draft Board

Resolution,” Appendix 1, page 27). This affirmation will document that the Board

of Trustees ensures that the financial resources of the institution are adequate to

provide a sound educational program, and that the University operates within an

annual balanced budget.

1.4.3 Increased Board Oversight and Engagement in Financial Matters

Since the Special Committee’s visit on October 8th, 9th, and 10th of 2012 and its

follow-up session with the SACSCOC Board on December 7, 2012, the Fisk

Board of Trustees has been in transition. The Board made a number of

structural and personnel changes, designed to make it more responsive to the

issues raised by SACSCOC over the past few years.

1. During its May meeting, the Board of Trustees engaged in a Board development

exercise − facilitated by an Association of Governing Boards (AGB) consultant −

that focused on Board fiduciary and stewardship responsibilities. The Board has

scheduled additional sessions to supplement this development workshop,

including one during the Board’s October meetings (see “October Board

Agenda,” Appendix 1, page 29), to promote ongoing professional development

among Board members, particularly with respect to fiduciary responsibilities and

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best practices. During the May meetings, the Board also directed the re-

engaging of the “Investments Committee,” in an effort to monitor more closely the

University’s investment activities and voted, at least effectively, to amend the By-

Laws to accomplish the following: (1) re-institute the “Nominating and

Governance Committee,” to ensure that Board members are identified, recruited,

properly oriented to the University and Higher Education, and developed

appropriately to maximize their effectiveness as Board members; and (2) create

a sub-committee of the Financial Strength Committee, the “Facilities Sub-

Committee,” to focus on monitoring and providing appropriate oversight

regarding the construction, purchase, maintenance, and care of capital projects

and facilities. Finally, the Board of Trustees elected a new slate of officers: the

Board Chairperson and Vice-Chairperson and Chairpersons for the Financial

Strength, Development, and Academic Excellence & Student Engagement

Committees. Each of the new leaders of these committees possesses a

significant financial background and extensive understanding of accounting and

financial reporting (see “Press Release,” Appendix 1, pages 32-33).

In keeping with and, in support of, its fiduciary responsibility − and indicative of its

renewed commitment to ensuring the financial stability of the University − the

Board of Trustees contributed $695,511 in cash gifts and $437,200 in in-kind gifts

during the 2012-2013 Academic Year; moreover, the members secured from

outside sources $1,086,175 in cash gifts during the 2012-2013 Academic Year –

for a total of $2,218,886. (This represents approximately 10 percent of the 2012-

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2013 operating budget.) (In addition, the Board members pledged another

$340,000.) These are the most significant levels of giving and pledging for the

Board members in the recent history of the institution and, again, demonstrate a

renewed commitment to ensuring the financial stability of Fisk University.

2. During its May, 2013 meetings, the Board approved the Comprehensive

Campaign, which includes elements of both capital and operating (i.e.,

unrestricted) dollars for the next five years. However, the University

Administration and the Board of Trustees remain totally committed to the

proposition that the budgets will not be based on fundraising for extraordinary

levels of unrestricted gifts.

3. Between the May and October Board of Trustees meetings, the Board

Chairperson worked closely with the University President, the Chairperson of the

Financial Strength Committee, the Board Executive Committee, and other

engaged Board members to monitor and facilitate the University’s addressing its

projected deficit through deficit-reduction measures implemented by the new

President (for examples, see “Various Communications,” Appendix 1, pages 34-

38). As a result, the University ended the 2012-2013 Academic Year “in the

black,” by more than $333,958 (see “Statement of Activities,” Appendix 1, page

39-40).

1.5 Conclusion

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The University and its Board of Trustees made a number of changes and process

improvements to assure the University’s financial resources are adequate to provide a

sound educational program. Moreover, the Board oversaw a budget that led to the

University’s finishing the 2012-2013 Fiscal Year with a surplus of more than $330,000.

Finally, the Board approved a balanced budget for the 2013-2014 Fiscal Year that is

based on reasonable assumptions regarding fundraising, student enrollments, and other

revenue and expense items.

The information shared above demonstrates and documents that the Fisk Board of

Trustees ensures that the financial resources of the institution are adequate to provide

sound educational programs, and that the University operates within an annual

balanced budget.

25

1.6 Appendix 1

1. State of Tennessee Authorization 1

2. Board Biographical Sketches 2

3. Conflict of Interest Reports 20

4. New Budget Process 26

5. Draft Board Resolution 27

6. October Board Agenda 30

7. Press Release 32

8. Various Communications 34

9. Statement of Activities 39

26



Table of Contents SECTION 2: RECOMMENDATION #2 27

CR 2.11.1 (FINANCIAL RESOURCES) 28


2.2 BRIEF SUMMARY OF PREVIOUS RECOMMENDATION AND RESPONSES 28

2.3 CURRENT COMMISSION REQUEST: RECOMMENDATION #2 28

2.4 UNIVERSITY’S RESPONSE TO CURRENT RECOMMENDATION (# 2) 29

2.4.1 UNIVERSITY’S ADHERENCE TO FUNDAMENTALS OF THE CORE REQUIREMENT 29

2.4.2 ALIGNING CORE EXPENDITURES WITH CORE REVENUES: 2012-2013 OPERATIONS 32

2.4.3 ALIGNING CORE EXPENDITURES WITH CORE REVENUES: ANNUAL OPERATION BUDGET 35

2.4.4 STUDENT ENROLLMENTS 39

2.4.5 MEASURES INSTITUTED TO ASSURE “BALANCED” FISCAL OPERATIONS 41

2.5 CONCLUSION 42

2.6 APPENDIX 2 43

27

CR 2.11.1 (Financial Resources)


The Committee recommends that the institution prepare a balanced

budget based on realistic enrollment and fundraising goals that address

depreciation and the use of unrestricted cash reserves.

2.2 Brief Summary of Previous Recommendations and Responses


same recommendation on two previous occasions (see “SACSCOC Accreditation,”

above, pages 2). In each instance, the COC concluded that the University failed to

provide convincing responses, at least apparently, because the University continued to

operate at deficits and develop and approve budgets that were deemed unreasonable,

either due to the individual estimates included or because the budget resulted in a

“planned” deficit.


The Institution has improved financial resources after the recent one-time

infusion of funds in cash, but this financial base is undercut by continued

operational losses and negative cash flow. The current operational model

does not indicate how this practice will cease and how the institution will

28

develop and implement a budget that will address all aspects of the

institution. The institution should document that it has a sound financial

base and has demonstrated financial stability to support the mission of the

institution and scope of its programs and services, as reflected in a

balanced annual operating budget based on realistic goals.


2.4.1 University’s Adherence to Fundamentals of the Core Requirement

Fisk University has a sound financial base and has demonstrated sufficient financial

stability to support its mission and scope of its programs.

In support of the preceding statement, the University presents audited financial

statements for the past three years (2011, 2012, and 2013), with accompanying

unqualified audit opinions, issued in accordance with Statements on Auditing Standards

issued by the AICPA (see “Financial Statements,” Appendix 2, Sections 1a, 1b, and 1c),

and a written Management Letter for the 2012-2013 Fiscal Year, its most recent fiscal

year-end (see Appendix 2, pages 193-198). The University also presents a Statement of

Financial Position of Unrestricted Net Assets Exclusive of Plant Assets (UNAEP) (see

Appendix 2, page 199) and the 2013-2014 Revised Annual Budget (see Appendix 2,

pages 200-203), resulting from a sound planning process and fiscal procedures and

duly approved by the Board of Trustees Executive Committee.

29

Unrestricted Net Assets Exclusive of Plant and Plant Related Debt (UNAEP) 2013 2012 2011 Unrestricted Net Assets $60,595,604 $60,512,039 $68,447,606 Less: Plant and Equipment $23,074,541 $23,193,521 $24,676,800 Less: Investments Held in Art $7,901,495 $7,901,495 $67,901,495 Less: Investment in Affiliate $30,000,000 $30,000,000 − Plus: Plant-Related Debt $9,262,237 $9,742,461 $10,208,260 UNAEP $8,881,805 $9,159,484 ($13,922,429)

Fisk University Business Office: Audited Financial Statements

“Cash and Cash Equivalents” decreased significantly from 2012 to 2013. This is a

result of the University’s having received the Stieglitz Art Collection proceeds at the end

of the prior year and, then, having paid off a large number of bills. In fact, “Accounts

Payable and Accrued Expenses” decreased significantly, as did “Notes Payable.” Some

of the cash was also used to support operations over the 2012-2013 Fiscal Year. In

addition, “Restricted Cash” decreased by the approximately $4,000,000 that the Court

ordered the University to transfer to Nashville’s Community Trust Fund, where it is held

as a beneficial interest to Fisk and reflected the “Beneficial Interests in Trusts and

Endowments” account). Finally, “Accounts and Grants Receivable” increased rather

significantly because the 2013 balance includes a large grant that was converted to

cash shortly after year end.

Total Net Assets

2013 2012 2011

$82,043,150 $81,709,192 $85,674,360

Over the past year, a number of outside agencies have rated Fisk’s financial condition,

including the following: (1) the Department of Education (DOE); (2) Forbes’s “College

30

Financial Grades”; (3) the Baine-Sterling Study1; and (4) the Council of Independent

Colleges (CIC). The agencies and authors utilized IPEDS data to conduct their

analyses. The DOE ratings fall within the range of -1 and 3, where ratings of 1.5 and

above indicate the school is “financially responsible”; Fisk earned a rating of 2.2.2 The

Forbes “College Financial Grades” (i.e., “A” through “D,” with “A” and “B” grades

indicating “financially healthy schools”); Fisk earned a strong “B” score, ranking 202 of

381 schools with either “A” or “B” rankings (925 schools received ranked grades). The

Baine-Sterling Study, rated colleges and universities based on the extent to which their

“expenses-to-revenues” and equity ratios increased and decreased, respectively. The

model assigns the harshest ratings for those with changes of more than 5 percent,

moderate rankings for those with changes of 0 to 5 percent, and “good” ratings for those

where expense ratios didn't increase and equity ratios didn't decrease. Fisk earned the

“Good” rating: its expense ratio did not increase, in fact, it decreased by .04 percent,

relative to revenues, and its equity ratio did not decrease − in fact, it increased by 3

percent over the five-year period ended 2010. Finally, during July of 2013, the CIC

provided the following calculation of Fisk University’s Composite Financial Index (CFI).

According to CIC, scores of less than 3 indicate a need to address the institution’s

financial condition; Fisk’s scores over the past three years exceed 6.3. The CIC

calculated the following scores for Fisk University: 2008-9, 6.4; 2009-10, 6.3, and 2010-

11, 6.9. It is worth noting that, generally, these ratings and reports suggest that Fisk

“has a sound financial base.”

1 Blumenstyk, Goldie, “One-Third of Colleges Are on Financially 'Unsustainable' Path, Bain Study Finds,” Chronicle of Higher Education, July 23, 2012. 2 For the year ended 2011.

31

2.4.2 Aligning Core Expenditures with Core Revenues: 2012-2013 Operations

Effective February 1, 2013, the University hired a new President, who has more than 30

years of higher education experience (19 in leadership roles); moreover, he is well

versed in the areas of accounting, finances, and business, generally, having earned an

undergraduate degree in Accounting, an MBA in Accounting, a PhD in Accounting, and

two Law Degrees, in securities law and taxation. Moreover, the new President is a

Certified Public Accountant and a Certified Management Accountant. As a result, the

University now has a more focused view on the financial aspects of the business of

Higher Education, generally, and the critical fiscal affairs of Fisk University, specifically.

Since the new President’s arrival, the University has revived the financial aspects of its

operations, including aligning its costs and expenditures with its financial resources.

The focus has been on aligning the University’s core expenditures with its core

revenues, so as to assure that the University lives within its means and develops the

financial discipline to ensure that it is sustainable over the long-term.

A review of the institution’s financial situation during mid-February, by the

new President and his Senior Leadership Team (SLT), comprised of the

Executive Vice President and Provost, the Vice President for Finance

(Chief Financial Officer), the Vice President for Enrollment Management,

the Vice President for Institutional Advancement, the Director of Human

Resources, and the Dean of the Chapel, revealed that the University had

32

amassed a sizable deficit through January, 31, 2013. The group projected

that deficit to expand significantly by June 30, 2013, unless the University

made some significant adjustments in its operations. As a result, on

March 13, 2013, the University implemented a number of significant

deficit-reduction measures, effective, retroactively, to March 1, 2013.

Among the deficit-reduction measures, the University implemented the

following: (1) 14 days of furloughs for all faculty and staff (including SLT

members), between March 1st and June 30th; (2) 1.67 percent pay cuts for

all faculty and staff for the same period of time; and (3) pay cuts of 12

percent for the SLT members. In addition, the University avoided

spending except in emergency situations and placed a moratorium on all

hiring, except for critical business, accounting, and faculty positions. In

addition, the President and First Lady toured the Country to speak with

alums and “Friends of Fisk” to raise monies, in support of a special

challenge the President issued to the Office of Institutional Advancement

to raise an additional $2,000,000 between March 1st and June 30th. The

Development Team raised $5,172,510 of unrestricted resources

($5,580,390 overall) during the year, including $3,624,529.35 of

unrestricted funds between March 1st and June 30th! Through these

efforts, and bolstered significantly by the giving of loyal and committed

alumni, the University was able to finish the year “in the black,” With a net

increase in net assets of $333,958. Very importantly, through this

process, the University identified important gaps and implemented critical

33

long-term measures and mechanisms calibrated to sustain this kind of

fiscal responsibility during the coming years. This is reflected in its

properly approved 2013-2014 Annual Operating and Cash Flow Budgets

(see below, page ).

The University was able to bring its spending in line with its revenues by streamlining

expenditures as well as creating a new source of revenue (i.e., online certification

programs3). Moreover, and very importantly, the University was able to streamline its

expenditures, including implementing the furlough plan, without creating negative

impacts on its academic programs (see, for example, “Furlough Memorandum,”

Appendix 2, page 204). Indeed, even during very lean fiscal years, the University made

funds available to support faculty development (including making presentations at

national meetings). Additionally, travel awards were made to faculty to support students

making presentations, as well. In an effort to abate negative impacts on the curricular

offerings, and consequently, student progress toward timely graduation, the University

has not limited course offerings; in fact, it has done what is necessary to assure a full

schedule of appropriate classes for students.

3 The University requested − and received − SACSCOC acceptance of the University’s notification for this Substantive Change (see Appendix 2, page 206).

34

Fisk hired three full-time faculty members for the 2013-2014 Academic Year and is in

the process of recruiting four additional faculty members (See “Faculty Positions,”

Appendix 2, page 205), for information on course offerings during the recent past) and a

“Vice President for Institutional Effectiveness and Accreditations.”

2.4.3 Aligning Core Expenditures with Core Revenues: Annual Operating Budget

For the 2013-2014 Academic Year, Fisk University began its annual operating budget

preparations in February to allow sufficient time to test assumptions and projections.

The Revised Fiscal Year 2014 Operating Budget Summary was built on multiple

student-enrollment assumptions (from 600 students through 756 students). The core-

revenue projections are based on tuition, fees, and room-and-board charges collectible

from students, expected unrestricted funds from private contributions, indirect cost

recovery, endowment income, grants, and other sources. The projected expenses are

based on estimates of expenditures required to provide quality education and support

for students, including continued support and development activities for faculty and

Fall2010

Fall2011

Fall2012

Spring2011

Spring2012

Spring2013

284 279 273 262 261 263 327 317 316 293 300 298

Courses Offered: Fall 2010 - Spring 2013 Fisk Only Fisk and Partner Institutions

35

staff. (The Budget is, however, monitored carefully to assure that expenses do not

outstrip revenues.)

The budget is developed from a bottom-up process that flows from the faculty and

support staff to the Provost, on the academic side, and from managers, directors, and

vice presidents, to the President on the administrative side. Salary details for each

budgeted area are verified by the Director of Human Resources. Similarly, department

heads are instructed to verify non-personnel budget requests within their areas.

The final budget is compared to published peer institution information and tested for

sound fiscal planning, by the Senior Leadership Team. As required by the University’s

bylaws, the Financial Strength Committee reviewed the budget and approved tuition,

fees, and room-and-board increases, during its May, 2013 Board of Trustees meetings.

The Committee also challenged the budget components, including the University’s

discount rate and the projected change in “Net Tuition & Fees.” The Committee also

challenged the institution’s expenditures to ensure compliance with local, State, and

Federal regulations. During its May, 2013 meetings, the Financial Strength Committee

and, ultimately, the Board of Trustees approved the following Revised Fiscal Year 2014

Operating Budget Summary.

Fisk University Fiscal Year 2014 Proposed Budget Summary

Revenues Tuition & Fees (Projection of 756 Students) $ 15,386,359 Room & Board 4,695,176 Less: University Grant and Aid 5,800,000 Less: Estimated A/R Bad Debt 400,000 Subtotal $ 13,881,535 Unrestricted Contributions $ 3,250,000 Indirect Cost Recovery 500,000 Endowment Income 400,000

36

MyCAA Certification Program 388,000 Other Income 250,000 Total Tuition & Fees and Other Revenues $ 18,669,535 Expenses President $ 1,989,395 Provost 4,011,915 Student Engagement 2,737,412 Advancement 1,227,323 Business, Finance, and Physical Plant 4,625,284 Student Meals 1,450,000 Depreciation 1,460,319 Total Operating Expenses $ 17,501,648 Revenues in Excess of Expenses $ 1,167,887

The budget priorities are driven by the University’s mission and strategic plan. Each

request is aligned with specific objectives in the existing plan that support the

University’s overall mission; the University has begun the development of a new

strategic plan (see, “S.W.O.T. Analysis,” Appendix 2, pages 207-210). The adopted

Revised Fiscal Year 2014 Operating Budget Summary is presented in the table that

follows.

In recognition of its very aggressive past approach to developing operating budgets, the

University, under the new leadership, stresses conservatism and reasonableness in

projecting the 2013-2014 Annual Budgets – as well as budgets to be developed in

subsequent years. Accordingly, the University (through the SLT) engaged in deep-level

planning to develop flexible budgets for differing levels of student enrollments, from 600

students through 756 (based on projections from the Office of the Vice President for

Enrollment Management). While the University proved that it can raise unrestricted

funds in excess of $5,000,000 within an Academic Year, it projected fundraising in the

amount of $3,900,000 for budget purposes (an average of the past three years

unrestricted fundraising). Similarly, while the University entered into a partnership to

offer online certifications in the healthcare field, which is projected to generate (based

37

on the partner’s past two years’ experience) anywhere from $800,000 to $1,000,000,

the University included only $450,000 in its flexible budgets (utilizing a projection based

on six-weeks period of time that historically represents the lowest enrollments of the

year). In addition, while the University projected student enrollments as robust as 756

students, the University developed budgets for a broad range of student enrollments,

constraining expenditures to the core potential revenues at every level. Finally, on

August 1, 2013, while the Board of Trustees approved a flexible budget that included

the 756 student enrollment level, the University began to operate at a budget level

consistent with enrolling 680 students, once the projected enrollment number was

reduced to 710 students. (It, then, began to operate on a budget at a 630-students level

during the middle of August.) The new President discussed this item with the Board

Chairperson on August 12, 2013 and communicated with the Chairperson of the

Financial Strength Committee on August 20th and 21st. On September 3, 2013, after the

final official count of student enrollments, the Board of Trustees Executive Committee

approved the operating and cash flow budgets below, which are appropriate for a

population of 630 students (see “Executive Committee Minutes,” Appendix 2, pages

211-213). (The University’s Board of Trustees will consider a motion to ratify that action

during its October meetings.)

Fisk University Revised Fiscal Year 2014 Proposed Budget Summary

Revenues Tuition & Fees (Projection of 630 Students) $ 12,772,924 Room & Board 3,927,250 Less: University Grant and Aid 4,815,392 Less: Estimated A/R Bad Debt 394,933 Subtotal $ 11,489,849 Unrestricted Contributions $ 3,900,000 Indirect Cost Recovery 500,000 Endowment Income 450,000 MyCAA Certification Program 500,000 Other Income 250,000

38

Total Tuition & Fees and Other Revenues $ 17,089,849 Expenses President $ 1,852,995 Provost 3,8746,764 Student Engagement 2,521,299 Advancement 1,026,842 Business, Finance, and Physical Plant 4,475,884 Student Meals 1,370,470 Depreciation 1,518,583 Total Operating Expenses $ 16,512,837 Revenues in Excess of Expenses $ 577,012

Fisk University: 2014 Fiscal Year Quarterly Cash Flow Budget 1st Quarter 2nd Quarter 3rd Quarter 4th Quarter Tuition & Fees (Projection of 630 Students) $ 6,547,370 − $ 6,225,554 − Room & Board 1,968,440 − 1,958,810 − Less: University Grant and Aid (2,468,358) − (2,347,034) − Less: Estimated A/R Bad Debt (1,044,542) 650,000 (500,380) 500,000 Tuition & Fees (Net) $ 5,002,909 650,000 5,336,950 500,000 Add: Private Gifts & Contributions 856,759 1,137,449 937,449 968,343 Other Income 409,999 429,999 429,999 429,999 Total Cash Collections $ 6,269,667 2,217,448 6,704,398 1,898,342 Expenses (Paid as Incurred) (4,442,611) (4,043,816) (4,043,816) (3,347,603) Debt Principal Payments (158,748) (158,748) (158,748) (158,748) Total Cash Payments (4,601,359) (4,202,564) (4,202,564) (3,506,351) Increase / (Decrease) in Cash 1,668,308 1,985,116 2,501,834 (1,608,009) Beginning Cash Balance 2,383,287 4,051,595 2,066,479 4,568,313 Ending Cash Balance $ 4,051,595 2,066,479 4,568,313 2,960,304

2.4.4 Student Enrollments

While the decrease in the projected enrollments disappointed the Senior Leadership

Team, the University’s enrollment increased from 610 students, for the 2012 Fall

Semester, to 644 students, for the 2013 Fall Semester. Moreover, the University was

able to seat an impressive group of freshman students, with an average high school

$1,000,000

$2,000,000

$3,000,000

$4,000,000

$5,000,000

1stQuarter

2ndQuarter

3rdQuarter

4thQuarter

Cas

h Bal

ance

Projected Ending Cash Balance By Quarter

39

grade-point-average of 3.1, average ACT score of 21, and average SAT score of 1506.

The new students hail from 31 states and the District of Columbia, and represent small

but significant levels of increased diversity for the University.

Although Fisk recorded a record number of applications for admission this year, the

University maintained its high academic standards in its acceptances (including ending

a partnership with a previous “feeder school,” that was no longer directing its better

students to the University. In addition, a number of externalities negatively impacted the

seating of this particular class of students. The “Parent-Plus Loan” (PPL) crisis had a

major impact on this class of potential students and their families: 107 (68%) of the 158

parents who applied for the loans were denied and only 31 of those 107 families were

allowed to reapply (many of them to no avail). In addition, the University decided it must

take a more stringent stance with students carrying large past-due balances; many

returning students whom the University expected to enroll, ultimately, could not return to

the University this year. (Indeed, for the first time in recent history, the University asked

a small group of students to leave the campus for failure to make appropriate payment

arrangements.) Of course, the Probationary status with SACSCOC has hurt the

University’s recruiting activities, at least at the margins.

The University was able to seat an impressive group of freshman students among its

644 students for the 2013-2014 Academic Year. Moreover, the University has a plan to

grow the student population aggressively and consistently over the next five years –

toward a critical mass of 870 full-time, on-campus students and 300 online students.

40

2.4.5 Measures Instituted to Assure “Balanced” Fiscal Operations

Since February 1, 2013, the University has implemented the following measures to

assure that it plans, implements, and monitors operations consistent with a philosophy

of assuring that core expenditures do not exceed core revenues, by controlling

expenditures and managing and expanding sources of revenues: (1) formed a

partnership to offer its first online certifications (in healthcare subjects) (see Appendix 2,

pages 215-223); (2) developed a new recruitment philosophy and emphasis, with a goal

of increasing the University’s total student population to at least 870 students by 20164

(see Appendix 2, pages 224-242); (3) established a new committee – Enrollment

Management Committee – comprised of a cross-section of offices across the University

that affect the “student experience,” to monitor and improve student retention (see

“Enrollment Management Upgrades,” in Appendix 2, pages 247-248); (4) initiated new

invoicing plan to facilitate students’ paying bills in a timely fashion (see “Early Invoicing

Plan,” Appendix 2, page 249); (5) engaged a collection agency to manage accounts

receivable more effectively (see “Collection Agency Contract,” Appendix 2, pages 250-

256); (6) adopted aspects of Lean Six Sigma concepts and methods to streamline and

refine operations and expenditures (see “Lean Plan,” Appendix 2, pages 257-274); (7)

developed a flexible budget plan that reflects realistic, but conservative estimates of its

components (see “Flexible Budget,” Appendix 2, page 275); (8) instituted new discipline

to manage and monitor each revenue and expense item comprising the University’s

budget (see “Budget-Monitoring Report,” Appendix 2, pages 276-285); (9) developed

and adopted a new Purchase Order function and insistence on adherence by all

4 To support its aggressive recruiting and retention plans, the University filed an application to participate in the HBCU Capital Financing Program, to retire long-term debt and provide resources to construct a new Student Center and a new Science Building (See “Capital Financing Program Application,” Appendix 2, page 287).

41

Divisions and Units (see “New Purchase Order Policy,” Appendix 2, page 286); and (10)

assigned budget responsibilities and accountabilities to Senior Leadership Team

members, to facilitate the monitoring and controlling of spending on a regular basis.

2.5 Conclusion

Fisk University has improved its financial resources. The balance sheet is strong: total

net assets are up; the total restricted cash (including restricted cash held by the

University and held in trust) is up; accounts and accrued payables are down,

significantly; and notes payables are down; and “Unrestricted Net Assets Exclusive of

Plant and Plant Related Debt” (UNAEP) exceeds a healthy $8.8 million. Moreover, the

University has aligned core expenses with core revenues: it finished the 2012-2013

Fiscal Year with a surplus; and the 2013-2014 Budget is balanced, projecting a $500

thousand surplus, based on reasonable estimates of student enrollments and

fundraising for unrestricted gifts. This report documents that Fisk University has

demonstrated a sound financial base and financial stability to support its mission and

the scope of its programs and services, as reflected in a balanced annual operating

budget based on realistic goals.

42

2.6 Appendix 2

1. Financial Statements

a. 2011 1

b. 2012 69

c. 2013 133

2. Management Letter 193

3. UNAEP 199

4. Executive Committee Minutes 200

5. Furlough Memorandum 204

6. Faculty Positions 205

7. SACS Substantive Change Letter 206

8. SWOT Analysis 207


10. Partnership Agreement 215

11. Enrollment Plan 224

12. Enrollment Management Upgrades 247

13. Early Invoicing Plan 249

14. Collection Agency Contract 250

15. Lean Plan 257

16. Flexible Budget 275

17. Budget Monitoring Report 276

18. New Purchase Order Policy 286

19. HBCU Capital Financing Program Application 287

43


44



Table of Contents

SECTION 3: RECOMMENDATION #4________________________________ _ _45

CS 3.10.1 (FINANCIAL STABILITY)

46


3.2 BRIEF SUMMARY OR PREVIOUS RECOMMENDATIONS AND RESPONSES 46



3.4.1 UNIVERSITY’S ADHERENCE TO FUNDAMENTALS OF COMPREHENSIVE STANDARD 47

3.4.2 DEFICIT OPERATIONS 49

3.4.3 NET TUITION AND FEES (NTF) IN COMPARISON WITH ANNUAL EXPENSES 50

3.4.4 ADJUSTING ANNUAL CORE EXPENSES TO MATCH ANNUAL CORE REVENUE STREAMS 50

3.4.5 ALIGNING CORE EXPENDITURES WITH CORE REVENUES: ANNUAL OPERATING BUDGET 53

3.4.6 MEASURES INSTITUTED TO ASSURE “BALANCED” FISCAL OPERATIONS 57

3.4.7 RECENT HISTORY OF FINANCIAL STABILITY 58

3.5 CONCLUSION 59

3.6 APPENDIX 3

45

CS 3.10.1 (Financial Stability)


The Committee recommends that the institution demonstrate financial

stability through a balanced budget and increasing net assets.



same recommendation on four previous occasions. In each instance, the COC

concluded that the University failed to provide convincing responses: in the first

instance, because the University failed to include audited financial statements and a

management letter, then, in the next three instances, at least apparently, because the

University continued to operate at deficits, while experiencing difficulty raising funds and

increasing enrollments sufficiently.


Although the one-time cash infusion of funds has provided the institution

with much needed financial resources and some immediate relief, the

institution continues to operate at a deficit. The revised FY 2013 budget,

approved after receipt of the Report of the Special Committee still relies

on funds from an unrestricted Fisk bank account to cover the annual

46

operating shortfall relative to annual expenses. Net tuition and fees at the

institution have declined for the last four years, yet overall expenses have

increased for the last three years with no significant decreases in

expenses in any area. The institution is not adjusting its annual core

expenses to match its annual core revenue streams.

The institution should demonstrate its recent history of financial stability.

As part of the report, the institution is required to submit financial audit

reports and management letters for the two most recent fiscal years, and

include its most recent financial aid audit. The most recent year is defined

as the fiscal year ending immediately prior to the due date of this report.

In addition, the institution is required to include 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.


3.4.1 University’s Adherence to Fundamentals of Comprehensive Standard

Fisk University has a sound financial base and, since February 1, 2013, has the

demonstrated financial stability to support its mission and scope of its programs. In

support of this proposition, the University presents audited financial statements for the

47

past three years (2011, 2012, and 2013) (see “Financial Statements,” Appendix 3, 1a,

1b, and 1c), with accompanying unqualified audit opinions, issued in accordance with

Statements on Auditing Standards issued by the AICPA, and a written Management

Letter for the 2012-2013 Fiscal Year, its most recent fiscal year-end (see Appendix 3,

pages 193-198). The University also presents a Statement of Financial Position of

Unrestricted Net Assets Exclusive of Plant Assets (UNAEP) (see Appendix 3, page 199)

and the 2013-2014 Revised Annual Budget, resulting from a sound planning process

and fiscal procedures and duly approved by the Board of Trustees Executive Committee

(see “Revised Fiscal Year 2014 Operating Budget Summary,” Appendix 3, page 200).

Over the past year, a number of outside agencies have rated Fisk’s financial condition,

including the following: (1) the Department of Education (DOE); (2) Forbes’s “College

Financial Grades”; (3) the Baine-Sterling Study5; and (4) the Council of Independent

Colleges (CIC). The agencies and authors utilized IPEDS data to conduct their

analyses. The DOE ratings fall within the range of -1 and 3, where ratings of 1.5 and

above indicate the school is “financially responsible”; Fisk earned a rating of 2.2.6 The

Forbes “College Financial Grades” (i.e., “A” through “D,” with “A” and “B” grades

indicating “financially healthy schools”); Fisk earned a strong “B” score, ranking 202 of

381 schools with either “A” or “B” rankings (925 schools received ranked grades). The

Baine-Sterling Study, rated colleges and universities based on the extent to which their

“expenses-to-revenues” and equity ratios increased and decreased, respectively. The

model assigns the harshest ratings for those with changes of more than 5 percent,

5 Blumenstyk, Goldie, “One-Third of Colleges Are on Financially 'Unsustainable' Path, Bain Study Finds,” Chronicle of Higher Education, July 23, 2012. 6 For the year ended 2011.

48

“Moderate” rankings for those with changes of 0 to 5 percent, and “Good” ratings for

those where expense ratios didn't increase and equity ratios didn't decrease. Fisk

earned the “Good” rating: its expense ratio did not increase, in fact, it decreased by .04

percent, relative to revenues, and its equity ratio did not decrease − in fact, it increased

by 3 percent over the five-year period ended 2010. Finally, during July of 2013, the

CIC provided the following calculation of Fisk University’s Composite Financial Index

(CFI). According to the CIC, scores of less than 3 indicate a need to address the

institution’s financial condition; Fisk’s scores over the past three years exceed 6.3. The

CIC calculated the following scores for Fisk University: 2008-9, 6.4; 2009-10, 6.3, and

2010-11, 6.9. It is worth noting that, generally, these ratings and reports suggest that

Fisk “has a sound financial base.”

3.4.2 Deficit Operations

For the four years from 2009 through 2012, Fisk University operated at a deficit, for a

confluence of reasons, including the economy, negative effects of the “Artwork

Litigation” on public perception, and a lack of proper financial focus and discipline.

However, the University finished the 2012-2013 year “in the black,” by $333,958.

Moreover, during the process of “correcting” itself, the University identified important

gaps and implemented critical long-term measures and mechanisms calibrated to

sustain this kind of fiscal responsibility during the coming years, as reflected in its

properly approved 2013-2014 Annual Budget. Finally, the University Board of Trustees

is set to approve a resolution that it will never approve another “Deficit Budget,” even

one obscured by including resources from an unrestricted bank account. The Board is

committed to this resolution.

49

3.4.3 Net Tuition and Fees (NTF) in Comparison with Annual Expenses

Over the past four years, “Net Tuition and Fees” (NTF) has declined. However, for the

2012-2013 Year, the NTF reflected an increase of $516,909 (see Table, below).

Net Tuition & Fees in Comparison with Total Expenses

Net Tuition & Fees Total Expenses % of Total 2014 (Budget) $ 7,957,532 $ 20,939,4777 38%

2013 $ 6,446,171 $ 24,567,104 26% 2012 $ 5,929,262 $ 26,025,948 23% 2011 $ 5,997,320 $ 25,310,314 24% 2010 $ 6,522,387 $ 24,340,136 27% 2009 $ 6,990,776 $ 24,174,814 29%

Moreover, the 2013-2014 Budget projects a rising NTF in absolute and relative terms, in

comparison with annual expenses. Indeed, the philosophy and processes implemented

beginning in February of 2013 assure that University will be able to manage budgets

and financial operations much more effectively in the future, with a careful eye on

monitoring the NTF.

3.4.4 Adjusting Annual Core Expenses to Match Annual Core Revenue Streams

Effective February 1, 2013, the University hired a new President, who has more than 30

years of higher education experience (19 in leadership roles); moreover, he is well

versed in the areas of accounting, finances, and business, generally, having earned an

undergraduate degree in Accounting, an MBA in Accounting, a PhD in Accounting, and

two Law Degrees, in securities law and taxation. Moreover, the new President is a

7 Includes an estimate of the additional Government Grants and Contracts expenditures for 2013-2014..

50

Certified Public Accountant and a Certified Management Accountant. As a result, the

University now has a more focused view on the financial aspects of the business of

Higher Education, generally, and the critical fiscal affairs of Fisk University, specifically.

Since the new President’s arrival, the University has revived the financial aspects of its

operations, including adjusting its annual core expenses to match its annual core

revenue streams. The focus has been on aligning the University’s core expenditures

with its core revenues, so as to assure that the University lives within its means and

develops the financial discipline to ensure that it is sustainable over the long term.

On or about February 20, 2013, the Senior Leadership Team (SLT), which

is comprised of the Executive Vice President and Provost, the Vice

President for Enrollment Management, Vice President for Institutional

Advancement, Vice President of Financial Affairs (Chief Financial Officer),

Director of Human Resources, and Dean of the Chapel, realized that the

University had amassed a sizable deficit through January, 31, 2013. The

group projected that deficit to expand significantly by June 30, 2013,

unless the University made some significant adjustments in its operations.

As a result, on March 13, 2013, the University implemented a number of

deficit-reduction measures, effective, retroactively, to March 1, 2013.

Among the deficit-reduction measures, the University implemented the

following: (1) 14 days of furloughs for all faculty and staff (including SLT

members), between March 1st and June 30th; (2) 1.67 percent pay cuts for

51

all faculty and staff for the same period of time; and (3) pay cuts of 12

percent for the SLT members. In addition, the University avoided

spending except in emergency situations and placed a moratorium on all

hiring, except for critical business, accounting, and faculty positions. In

addition, the President and First Lady toured the Country to speak with

alums and “Friends of Fisk” to raise monies, in support of a special

challenge the President issued to the Office of Institutional Advancement

to raise an additional $2,000,000 between March 13th and June 30th.

Through these efforts, and bolstered significantly by the giving of loyal and

committed alumni, the University was able to finish the year “in the black.”

Very importantly, through this process, the University identified important

gaps and implemented critical long-term measures and mechanisms

calibrated to sustain this kind of fiscal responsibility during the coming

years, as reflected in its properly approved 2013-2014 Annual Budget.

The University was able to bring its spending in line with its revenues by streamlining

expenditures as well as creating a new source of revenue (i.e., online certification

programs8). Moreover, and very importantly, the University was able to streamline its

expenditures, including implementing the furlough plan, without creating negative

impacts on its academic programs (see, for example, “Furlough Memorandum,”

Appendix 3, page 201).

8 The University requested − and received − SACS acceptance of the University’s notification for this Substantive Change (see “SACS Substantive Change Letter,” Appendix 3, page 202).

52

3.4.5 Aligning Core Expenditures with Core Revenues: Annual Operating Budget

For the 2013-2014 Academic Year, Fisk University began its annual operating budget

preparations in February to allow sufficient time to test assumptions and projections.

The Fiscal Year 2014 Operating Budget Summary was built on multiple student-

enrollment assumptions (from 600 students through 756 students). The core-revenue

projections are based on tuition, fees, and room-and-board charges collectible from

students, expected unrestricted funds from private contributions, indirect cost recovery,

endowment income, grants, and other sources. The projected expenses are based on

estimates of expenditures required to provide quality education and support for

students, including continued support and development activities for faculty and staff.

(The budget is, however, monitored carefully to assure that expenses do not outstrip

revenues.)

The budget is developed from a bottom-up process that flows from the faculty and

support staff to the Provost, on the academic side, and from managers, directors, and

vice presidents, to the President on the administrative side. Salary details for each

budgeted area are verified by the Director of Human Resources. Similarly, department

heads are instructed to verify non-personnel budget requests within their areas.

The final budget is compared to published peer institution information and tested for

sound fiscal planning, by the Senior Leadership Team. As required by the University’s

bylaws, the Financial Strength Committee reviewed the budget and approved tuition,

53

fees, and room-and-board increases, during its May, 2013 Board of Trustees meetings.

The Committee challenged the budget components, including the University’s discount

rate and the projected change in “Net Tuition & Fees.” The Committee also challenged

the institution’s expenditures to ensure compliance with local, State, and Federal

regulations. During its May, 2013 meetings, the Financial Strength Committee and,

ultimately, the Board of Trustees approved the following Fiscal Year 2014 Operating

Budget Summary (see “Board of Trustees Minutes,” Appendix 3, pages 203-204).

Fisk University

Fiscal Year 2014 Proposed Budget Summary Revenues Tuition & Fees (Projection of 756 Students) $ 15,386,359 Room & Board 4,695,176 Less: University Grant and Aid 5,800,000 Less: Estimated A/R Bad Debt 400,000 Subtotal $ 13,881,535 Unrestricted Contributions $ 3,250,000 Indirect Cost Recovery 500,000 Endowment Income 400,000 MyCAA Certification Program 388,000 Other Income 250,000 Total Tuition & Fees and Other Revenues $ 18,669,535 Expenses President $ 1,989,395 Provost 4,011,915 Student Engagement 2,737,412 Advancement 1,227,323 Business, Finance, and Physical Plant 4,625,284 Student Meals 1,450,000 Depreciation 1,460,319 Total Operating Expenses $ 17,501,648 Revenues in Excess of Expenses $ 1,167,887

The budget priorities are driven by the University’s mission and strategic plan. Each

request is aligned with specific objectives in the plan that support the University’s overall

mission. The adopted Academic Year 2013-2014 Operating Budget is presented in the

table that follows.

In recognition of its very aggressive past approach to developing operating budgets, the

54

University, under the new leadership, stresses conservatism and reasonableness in

projecting the 2013-2014 Annual Budgets – as well as budgets to be developed in

subsequent years. Accordingly, the University (through the SLT) engaged in some

deep-level planning to develop flexible budgets for differing levels of student

enrollments, from 600 students through 756 (based on projections from the Office of the

Vice President for Enrollment Management). While the University proved that it can

raise unrestricted funds in excess of $5,000,000 within an Academic Year, it projected

fundraising in the amount of $3,900,000 for budget purposes (an average of the past

three years’ fundraising of unrestricted gifts). Similarly, while the University entered into

a partnership to offer online certifications in the healthcare field, which is projected to

generate (based on the partner’s past two years’ experience) anywhere from $800,000

to $1,000,000, the University included a mere $450,000 in its flexible budgets (utilizing a

projection based on the lowest-enrollments six-weeks period of the year). In addition,

while the University projected student enrollments as robust as 756 students, the

University developed budgets for a broad range of student enrollments, constraining

expenditures to the core potential revenues at every level. Finally, on August 1, 2013,

while the Board of Trustees approved a flexible budget that included the 756 student

enrollment level, the University adopted a budget level consistent with enrolling 680

students, once the projected enrollment number was reduced to 710 students. (It, then,

began to operate on a budget at a 630-students level during the middle of August.) The

new President discussed this item with the Board Chairperson August 12, 2013 and

communicated with the Chairperson of the Financial Strength Committee on August 20th

and 21st. On September 3, 2013, after the final official count of student enrollments, the

55

Board of Trustees Executive Committee approved the operating and cash flow budgets

below, which are appropriate for a population of 630 students (see “Executive

Committee Minutes,” Appendix 3, pages 205-208). (The University’s Board of Trustees

will consider a motion to ratify that action during its October meetings.)

Fisk University Revised Fiscal Year 2014 Proposed Budget Summary

Revenues Tuition & Fees (Projection of 630 Students) $ 12,772,924 Room & Board 3,927,250 Less: University Grant and Aid 4,815,392 Less: Estimated A/R Bad Debt 394,933 Subtotal $ 11,489,849 Unrestricted Contributions $ 3,900,000 Indirect Cost Recovery 500,000 Endowment Income 450,000 MyCAA Certification Program 500,000 Other Income 250,000 Total Tuition & Fees and Other Revenues $ 17,089,849 Expenses President $ 1,852,995 Provost 3,8746,764 Student Engagement 2,521,299 Advancement 1,026,842 Business, Finance, and Physical Plant 4,475,884 Student Meals 1,370,470 Depreciation 1,518,583 Total Operating Expenses $ 16,512,837 Revenues in Excess of Expenses $ 577,012

Fisk University: 2014 Fiscal Year Quarterly Cash Flow Budget 1st Quarter 2nd Quarter 3rd Quarter 4th Quarter Tuition & Fees (Projection of 630 Students) $ 6,547,370 − $ 6,225,554 − Room & Board 1,968,440 − 1,958,810 − Less: University Grant and Aid (2,468,358) − (2,347,034) − Less: Estimated A/R Bad Debt (1,044,542) 650,000 (500,380) 500,000 Tuition & Fees (Net) $ 5,002,909 650,000 5,336,950 500,000 Add: Private Gifts & Contributions 856,759 1,137,449 937,449 968,343 Other Income 409,999 429,999 429,999 429,999 Total Cash Collections $ 6,269,667 2,217,448 6,704,398 1,898,342 Expenses (Paid as Incurred) (4,442,611) (4,043,816) (4,043,816) (3,347,603) Debt Principal Payments (158,748) (158,748) (158,748) (158,748) Total Cash Payments (4,601,359) (4,202,564) (4,202,564) (3,506,351) Increase / (Decrease) in Cash 1,668,308 1,985,116 2,501,834 (1,608,009) Beginning Cash Balance 2,383,287 4,051,595 2,066,479 4,568,313 Ending Cash Balance $ 4,051,595 2,066,479 4,568,313 2,960,304

56

3.4.6 Measures Instituted to Assure “Balanced” Fiscal Operations

Since February 1, 2013, the University has implemented the following measures to

assure that it plans, implements, and monitors operations consistent with a philosophy

of assuring that core expenditures do not exceed core revenues, by controlling

expenditures and managing and expanding sources of revenues: (1) formed a

partnership to offer its first online certifications (in healthcare subjects) (see “Partnership

Agreement,” Appendix 3, pages 209-217); (2) developed a new recruitment philosophy

and emphasis, with a goal of increasing the University’s total student population to at

least 870 students by 20169 (see “Enrollment Plan,” Appendix 3, pages 218-236); (3)

established a new committee – Enrollment Management Committee – comprised of a

cross-section of offices across the University that affect the student experience, to

monitor and improve student retention (see “Enrollment Management Upgrades,”

Appendix 3, pages 241-242); (4) initiated new invoicing plan to facilitate students’

paying bills in a timely fashion (see “Early Invoicing Plan,” Appendix 3, page 243); (5)

engaged collection agency to manage accounts receivable more effectively (see

“Collection Agency Contract,” Appendix 3, pages 244-250); (6) adopted aspects of Lean

Six Sigma concepts and methods to streamline and refine operations and expenditures

9 To support its aggressive recruiting and retention plans, the University filed an application to participate in the HBCU Capital Financing Program, to retire long-term debt and provide resources to construct a new Student Center and a new Science Building (See “Capital Financing Program Application,” Appendix 2, pages 237-240).

$1,000,000

$2,000,000

$3,000,000

$4,000,000

$5,000,000

1stQuarter

2ndQuarter

3rdQuarter

4thQuarter

Cas

h Bal

ance

Projected Ending Cash Balance By Quarter

57

(see “Lean Plan,” Appendix 3, pages 251-268); (7) developed a flexible budget plan that

reflects realistic components (see “Flexible Budget,” Appendix 3, pages 269-320); (8)

instituted new discipline to manage and monitor each revenue and expense items

comprising the University’s budget (see “Budget-Monitoring Plan,” Appendix 3, pages

321-330); (9) developed and adopted a new Purchase Order function and insistence on

adherence by all Divisions and Units (see “New Purchase Order Policy,” Appendix 3,

page 331); and (10) assigned budget responsibilities and accountabilities to SLT

members, to facilitate the monitoring and control of spending on a regular basis.

3.4.7 Recent History of Financial Stability

In support of this proposition, the University presents audited financial statements for

the past three years (2011, 2012, and 2013), the accompanying audit reports and

management letters for the three most recent fiscal years (see “Financial Statements,”

Appendix 3, 1a, 1b, and 1c). The University also includes its most recent financial aid

audit (see Appendix 3, pages 332-391). In addition, the University includes a statement

of financial position of unrestricted net assets, exclusive of plant assets and plant-

related debt (UNAEP). Finally, the University presents the Revised Fiscal Year 2014

Operating Budget Summary, duly approved by the Executive Committee (see Appendix

3, page 396).

58

3.5 Conclusion

Fisk University has demonstrated its financial stability. Its financial statements received

unqualified opinions, its “Net Tuition & Fees” has increased over the past year (both in

absolute terms and relative to total expenses), and overall expenses have decreased

over the past year. In addition, the Revised Fiscal Year 2014 Operating Budget

Summary reflects another decrease in expenses, as projected “Net Tuition & Fees”

increases. Finally, the Statement of Financial Position of Unrestricted Net Assets,

Exclusive of Plant Assets and Plant-Related Debt (UNAEP) reflects an increase in

unrestricted net assets attributable operations for the most recent fiscal year. The

University has demonstrated and documented financial stability to support its mission

and the scope of its programs and services.

59

3.6 Appendix 3

1. Financial Statements

a. 2011 1

b. 2012 69

c. 2013 133

2. Management Letter 193

3. UNAEP 199

4. Revised Fiscal Year 2014 Operating Budget Summary 200

5. Furlough Memorandum 201

6. SACSCOC Substantive Change Letter 202

7. Board of Trustees Minutes 203


9. Partnership Agreement 209

10. Enrollment Plan 218

11. HBCU Capital Financing Program Application 237

12. Enrollment Management Upgrades 241

13. Early Invoicing Plan 243

14. Collection Agency Contract 244

15. Lean Plan 251

16. Flexible Budget 269

17. Budget Monitoring Report 321


19. Financial Aid Audit 332


21. Revised Fiscal Year 2014 Operating Budget Summary 396

60



Table of Contents

SECTION 4: RECOMMENDATION #5____________________________________ 61

CS 3.10.3 (CONTROL OF FINANCES)

62






4.4.2 IMPROVEMENTS IN INTERNAL CONTROLS 63

4.4.3 RESPONSES TO 201-2012 “AUDITOR FINDINGS” 65

4.4.4 RESPONSES TO 2012-2013 “AUDITOR OBSERVATIONS AND COMMENTS” 66

4.4.4.1 GRANT AND CONTRACT ACCOUNTING 66

4.4.4.2 ACCOUNTING SYSTEM SOFTWARE 67

4.4.4.3 PROPERTY AND EQUIPMENT 68

4.4.4.4 PERKINS LOAN RECONCILIATION 69

4.4.4.5 ITEM # CF 13-1 69

4.4.4.6 ITEM # CF 13-2 70

4.4.4.7 ITEM # CF 13-3 71

4.4.4.8 ITEM # CF 13-4 72

4.4.4.9 ITEM # CF 13-5 72

4.5 CONCLUSION 73

4.6 APPENDIX 4 74

61

CS 3.10.3 (Control of Finances)


The Committee recommends that the institution correct all material

weaknesses.



same recommendation on two previous occasions. After the University’s first response,

the COC concluded the auditor’s identifying a number of significant deficiencies and the

auditor’s recommendation “for accountability of assets and the maintenance of an

accurate historical record of operations,” from the previous year, suggested that the

University had more work to do. After the University’s response to the second

recommendation, the COC concluded that the auditor’s identifying five material

weaknesses, overall, each of which was a repeat finding indicated that the University

had failed to provide the requisite assurance that it can exercise appropriate control

over all its financial resources.


For FY 2012, three material weaknesses in internal control were reported,

all of which were repeat findings from the previous year. In addition, four

material weaknesses in internal control over compliance with laws and

62

regulations applicable to federal programs were reported. The institution

should document that it exercises appropriate control over all its financial

resources.


4.4.1 University’s Adherence to Fundamentals of Comprehensive Standard

The University has appropriate, written policies and procedures for safeguarding its

assets, including cash, for the management of the distributions from its endowment

accounts, for approval of expenditures, and for proper oversight of its physical and

financial assets (e.g., see Fisk University Business and Financial Policies and

Procedures manual, Appendix 4, pages 1-153). These policies and procedures provide

the guidance necessary for the University to exercise control over its physical and

financial resources. The University also manages the risk associated with its physical

and financial resources, carrying insurance to the extent reasonable under the

circumstances (see “Detailed Insurance Schedule,” in Appendix 4, pages 154-157).

Moreover, the University recently hired a consultant to provide support for an overall

Risk Assessment (see “Consultant Contract,” Appendix 4, pages 158-167).

4.4.2 Improvements in Internal Controls

Over the past year-and-one-half, the University has made a number of changes to

improve its internal controls over both its accounting processes and compliance with

laws and regulations of its various Federal programs. Since, March of 2012, upon the

hiring of the current Vice-President for Finance (CFO, the University has made the

following improvements to its internal control practices and procedures: (1) the Vice

63

President for Finance (CFO), has provided some much needed leadership and

continuity in the Business Office; (2) the CFO has orchestrated a number of changes in

the Business Office, including revising the annual budgeting process, insisting on

adherence to the Purchase Order policy (see Appendix 4, page 168); (3) the University

hired four persons in the Business Office, to provide additional expertise and control

over the University’s financial assets (see “Resumes,” Appendix 4, pages 169-175); and

(4) the University’s Board of Trustees directed the re-engaging of the Investment

Committee, to facilitate the control and monitoring of investment assets and to ensure

consistent compliance with the University’s investment policy (see “Executive

Committee Minutes,” Appendix 4, page 176).

Beginning with the 2013-2014 Academic Year, the University has entered into an

agreement with a local external auditing firm to provide “Internal Auditing” functions

related to internal controls to assure the University remains in compliance with its own

policies and procedures, as well as those of other funding authorities. The Internal

Auditor (see “Engagement Letter,” Appendix 4, pages 177-178) reports directly to the

President of Fisk University. This new function provides an additional check, on a more

regular basis, of the University’s operations, including internal controls and Federal

Programs’ responsibilities. This additional control feature will promote improved

compliance with the specified guidelines. In addition, the Internal Audit function allows

the University an opportunity to correct mistakes in a timely manner. Finally, the

function’s reporting directly to the University President affords ideal objectivity on the

part of new “Internal Audit” function.

64

4.4.3 Responses to 2011-2012 “Auditor Findings”

In the prior year’s audit (2012), the external auditors criticized severely the overall

account and information systems environment at the University, identifying a broad

range of items and issues that required attention. The University is pleased to report

that it overhauled the system significantly and resolved all the issues related to that

significant and overarching indictment of its internal controls environment (see “Prior

Audit Findings and Questioned Costs,” Appendix 4, pages 179-180). The work actually

began immediately upon the hiring of the current Vice President for Finance (CFO) on

March 27, 2012. (Unfortunately, he was hired too late to have much of an effect on the

2012 internal control issues.) The CFO is helping to develop a new culture of discipline

and professionalism in the Business Office that promises to continue to enhance the

University’s overall internal control environment.

Indeed, the University responded to all the external auditors’ findings for the 2011-2012

audit, developing and revising policies and procedures as necessary to address each of

the material weaknesses and significant deficiencies identified, both in internal controls

and with respect to Title IV compliance (see “Summary Schedule of Prior Audit

Findings: Status,” in Appendix 4, pages 181-189). Accordingly, the auditors noted that

each of the prior year’s issues was resolved, except one. Fisk’s management believes

the one “repeat finding” included in the 2012-2013 Audit (see “ITEM# IC 13-1,” in

Appendix 4, page 190), relating to “Grant and Contract Accounting,” is, at most, a

“partial” repeat, in that the “repeat” finding includes a new element of “…management

evaluation of the collectability and validity …” Still, as the auditor notes, “the errors

65

were ultimately resolved and corrected by the University during the audit process…”

(see “ITEM# IC 13-1,” in Appendix 4, page 190). Moreover, the University hired an

experienced grants coordinator who provides the needed expertise in the grants and

contracts accounting area. The coordinator has completed online training in the Banner

grants module. The coordinator is reviewing and analyzing all grant activity to assure

accurate recording and reporting.

4.4.4 Responses to 2012-2013 “Auditor Observations and Comments”

The external auditors identified two internal control weaknesses they classify as

“Material Weaknesses,” for purposes of conducting the financial statement audit. That

represents an improvement over the three material weaknesses identified during the

2011-2012 Audit.

The auditors identified other control deficiencies related to the laws and regulations of

the University’s Federal Programs. According to the auditor (Managing Partner), while

the Student Financial Aid component of the Federal Programs audit resulted in a

qualified opinion, the Research and Development component received an unqualified

opinion. (Please note that Fisk invites the Special Committee to meet with the Auditor

during the visit; he has agreed to make himself available.) The University made the

adjustments to its policies and procedures, identified below, for each of the areas

implicated.

4.4.4.1 Grant and Contract Accounting

66

Auditor Observation (Material Weakness)

Although significant improvements to the grant and contract accounting process were

made during fiscal 2013, we encountered certain errors in the University’s schedule of

expenditures of Federal awards and the related internal grant roll-forward schedule.

The primary reason for these errors appears to be a lack of consistent reconciliation and

review of grant data input into Banner with the grant agreements and underlying reports

supporting actual grant transaction activity (grant expenditures and billings).

Contributing to this deficiency was turnover in the grants coordinator position during the

year. The errors were ultimately resolved and corrected by the University during the

audit process.

Management’s Response

On June 1, 2013, the University hired an experienced grants coordinator who provides

the needed expertise in the grants and contracts accounting area. The coordinator has

completed online training in the Banner grants module. The coordinator is reviewing

and analyzing all grant activity to assure accurate recording and reporting.

4.4.4.2 Accounting System Software


During the audit, the auditors noted that University accounting personnel encountered

certain recurring issues and inconsistencies in operation and functionality of Banner (the

University’s primary accounting system) and in the financial data provided by the

system. Problems include random postings to the general ledger and lost or suspended

feeds of data in the system. These issues have to be researched and corrected by

67

management, which is time consuming and inefficient. It also increases the risk of error

and misstated financial information.


The University agrees with the recommendation and has contracted with Ellucian

Banner to provide its Ellucian “Banner Revitalization Program” (See “Fisk University

Discovery and Planning for Revitalization Services Agenda,” Appendix 4, pages 191-

194). The discovery phase of this service started August 27, 2013, with the goal of

identifying problems areas in the University’s current installation. As this program

progresses, Ellucian Banner will assist the University in developing a plan of action to

prevent data from being suspended or lost. The plan will also allow the University to

use the Banner enterprise system fully.

4.4.4.3 Property and Equipment

Auditor Observation (not material weakness)

The University expensed certain fixed assets purchased during the year and made

adjustments during the audit process to capitalize these fixed assets. The University

has an established capitalization policy, however, interpretation of the policy is varied

and the policy does not appear to be consistently applied. Not properly capitalizing

fixed asset additions as they are acquired understates assets and depreciation

expense, and distorts interim financial data. It also provides for the possibility that all

capital assets will not be properly identified and capitalized at year-end.

68


The University has reviewed the proper capitalization of fixed assets with the

accountant responsible. The Controller is responsible for reviewing this process

monthly.

4.4.4.4 Perkins Loan Reconciliation

Auditor Observation (not material weakness)

Many aspects of administrative and financial maintenance and collection of loans under

the Perkins loan program are administered by a third-party. Certain adjustments were

required to be made during the audit process to reconcile to the reports provided by the

third-party servicer to the general ledger. Also, the auditors noted that data for new

loans made under the Perkins program for fiscal 2013 were not submitted by the

University to the third-party servicer until after year end.


The University has developed and implemented a policy that requires the submitting of

new Perkins loans to the third-party servicer on a monthly basis. The Bursar

understands and is responsible for compliance. Moreover, the new “Internal Audit”

function will provide additional assurance of compliance.

4.4.4.5. Item # CF 13-1

(Federal Student Aid Cluster: CFDA No. 84.007, 84.033, 84.038, 84.063, 84.268, U.S.

Department of Education)

69

Auditor’s Comment: Condition and Context

One of thirty three students selected for testing received Federal Direct Loans in excess

of federal aggregate limits.

Management Response

The University corrected the tracking code that alerts the Financial Aid staff when a

student’s borrowing approaches the appropriate loan limit.

4.4.4.6 Item # CF 13-2

(Federal Student Aid Cluster:

CFDA No. 84.007, 84.033, 84.038, 84.063, 84.268; U.S. Department of Education)


The University could not provide documentation for eleven of eleven students tested

that the required terms of employment detailing the purpose of the student’s job, duties,

and responsibilities, job qualifications, job wage rate, term of employment, supervisor at

time of employment, and name of employer were provided to the student.


As a part of the hiring process, the University provides each student worker with the

employment information required to comply with all regulations related to student

employment, including job descriptions − evidence of which is documented by a check

70

list completed when the student is hired. Although the checklist indicated the students

had seen the job descriptions, the job descriptions were not completed and signed by

the student. Management has reviewed and updated the procedures to require the job

descriptions be completed, signed by the student, and included in the student’s file.

Management has also reviewed this requirement with University personnel to assure

their thorough understanding of the need to obtain and maintain appropriate

documentation.

4.4.4.7 Item # CF 13-3

(Federal Student Aid Cluster: CFDA No. 84.007, 84.033, 84.038, 84.063, 84.268; U.S.



One of eleven students selected for testing was paid for 90 hours of work study when

the student’s time card indicated 9 hours had been worked.


This error was caused by a computational error when the student’s time card was

created. The problem causing the error was corrected but, unfortunately, this error was

not identified. Payroll personnel and student worker supervisors have been counseled

to follow proper University procedures to prevent future errors.

71

4.4.4.8 Item # CF 13-4

(Research and Development Cluster: CFDA No. 12.630, U.S. Department of Defense –

U.S. Army – Development of Optical Crystals)


Documentation of preparation and submittal of certain financial reports for one of twenty

two grants tested was not maintained by the University.


Federal financial reports (FFRs) are normally required to be filed with the granting

agency on a quarterly basis. More specifically, the FFRs are to be completed within 30

days of the end of each quarter. The University inadvertently missed filing the FFRs for

the grant and the period noted. These reports have been completed and filed with the

grantor agency. Going forward, we will incorporate the task of completing and filing

FFRs into our routine monthly activities.

4.4.4.9 Item # CF 13-5

(Research and Development Cluster: HBCU UP Planning Grant; CFDA No. 47.076;

National Science Foundation)


For one of sixty program expenditures selected for testing the participating employee

was not paid the amount that was indicated in the personnel action forms as submitted

to the human resources department for the program.

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The recommended procedures currently exist and University personnel had identified

this error but had not made the appropriate correction until after June 30. Management

has reviewed the University’s procedures with grant personnel and counseled those

responsible to make corrections in a timely manner so the University records are

corrected in a timely manner.

4.5 Conclusion

Fisk University has appropriate, written policies and procedures for safeguarding its

physical and financial assets. In addition, in a paraphrase of the words of its auditors, “it

has improved its internal controls significantly over the past one-and-one-half years,”

resolving a major concern with its overall internal control environment.

The University successfully resolved seven of the eight auditors’ compliance findings

from the prior year and partially resolved the eighth. In addition, it reduced the number

of material weaknesses identified during its most recent year. Fisk University has

demonstrated and documented that it exercises control over all its financial resources.

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4.6 Appendix 4

1. Business and Financial Policies 1

2. Detailed Insurance Schedule 154

3. Consultant Contract 158


5. Resumes 169


7. Engagement Letter 177

8. Prior Audit Finds and Questioned Costs 179

9. Summary Schedule of Prior Audit Findings 181

10. Item #IC 13-1 190

11. Discovery and Planning for Revitalization Services Agenda 191

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Table of Contents

SECTION 5: RECOMMENDATION #6______________________________ ______61

FR 4.7 (TITLE IV PROGRAM RESPONSIBILITIES)

62






5.4.2 IMPROVEMENTS IN INTERNAL CONTROLS 63

5.4.3 RESPONSES TO 201-2012 “AUDITOR FINDINGS” 65

5.4.4 RESPONSES TO 2012-2013 “AUDITOR OBSERVATIONS AND COMMENTS” 66

5.4.4.1 GRANT AND CONTRACT ACCOUNTING 66

5.4.4.2 ACCOUNTING SYSTEM SOFTWARE 67

5.4.4.3 PROPERTY AND EQUIPMENT 68

5.4.4.4 PERKINS LOAN RECONCILIATION 69

5.4.4.5 ITEM # CF 13-1 69

5.4.4.6 ITEM # CF 13-2 70

5.4.4.7 ITEM # CF 13-3 71

5.5 CONCLUSION 73

5.6 APPENDIX 4 74

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FR 4.7 (Title IV Program Responsibilities)


The Committee recommends that the institution satisfy its program

responsibilities under Title IV of the 1998 Higher Education Act.


The Commission on Colleges (COC) has requested a response to,

essentially, this same recommendation on two previous occasions. In

both instances, the COC concluded that the University failed to provide

convincing responses, noting, in the first instance, that the University

needed to address three material weaknesses in internal controls and that

it needed to provide all related correspondence with the Department of

Education. In rejecting the University’s second response, the COC

pointed to three material weaknesses in internal controls, which led to a

“qualified” opinion.


For FY 2012, three material weaknesses in internal control over

compliance with laws and regulations applicable to federal programs were

reported resulting in a qualified opinion. The institution should document

that it is in compliance with its program responsibilities under Title IV of

the most recent Higher Education Act as amended.

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5.4.1 University’s Adherence to Fundamentals of Federal Requirement

Although the University does have a letter of credit in favor of the Department of

Education (DOE) (see Appendix 5, page 1), it has no “issues” with Title IV Programs,

has not been placed on the reimbursement method, and has not been required to obtain

a letter of credit in favor of any other financial regulatory agency. In addition, the

University knows of no financial aid complaints filed with the DOE, no significant

litigation with respect to financial aid activities, and no infractions of regulations that

would jeopardize Title IV funding.

No adverse communication has been received from, nor are there any significant

unpaid dollar amounts due to the DOE. Finally, for the 2009-2010 Academic Year,

Fisk’s official two-year student loan default rate was 15 percent. The University’s draft

default rate for 2010-2011 is 6.8 percent; the University expects the new official rate

sometime during September.

5.4.2 Improvements in Internal Controls

Over the past year-and-one-half, the University has made a number of changes to

improve its internal controls over both its accounting processes and compliance with

laws and regulations of its various Federal programs. Since, March of 2012, upon the

hiring of the current Vice-President for Finance (CFO), the University has made the

following improvements to its internal control practices and procedures: (1) the Vice

President for Finance (CFO), has provided some much needed leadership and

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continuity in the Business Office; (2) the CFO has orchestrated a number of changes in

the Business Office, including revising the annual budgeting process, insisting on

adherence to the Purchase Order policy (see “New Purchase Order Policy,” Appendix 4,

page 2); (3) the University hired four persons in the Business Office, to provide

additional expertise and control over the University’s financial assets (see “Resumes,”

Appendix 4, pages 3-9); and (4) the University’s Board of Trustees directed the re-

engaging of the Investments Committee, to facilitate control and monitoring of

investment assets and to ensure consistent compliance with the University’s investment

policies (see “Executive Committee Minutes,” Appendix 5, page 10).

Beginning with the 2013-2014 Academic Year, the University has entered into an

agreement with a local external auditing firm to provide “Internal Auditing” functions

related to internal controls to assure the University remains in compliance with laws and

regulations related to Federal and other programs. The Internal Auditor (see

“Engagement Letter,” Appendix 5, pages 11-12) reports directly to the President of Fisk

University. This new function provides an additional check, on a more regular basis, of

the University’s operations, including internal controls and Federal Programs’

responsibilities. This additional control feature will promote improved compliance with

the specified guidelines. The Internal Audit function allows the University an opportunity

to correct mistakes in a timely manner. Finally, the function’s reporting directly to the

University President is a “best practice” for effective internal audit functions.

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5.4.3 Responses to 2011-2012 “Auditor Findings”

In the prior year’s audit (2012), the external auditors criticized severely the overall

accounting and information systems environment at the University, identifying a broad

range of items and issues that required attention. The University is pleased to report

that it overhauled the system significantly and resolved all the issues related to that

significant and overarching indictment of the entity’s internal controls environment (see

“Prior Audit Findings and Questioned Costs,” Appendix 5, pages 13-14). The work

actually began immediately upon the hiring of the current Vice President for Finance

(CFO), on March 27, 2012. (Unfortunately, he was hired too late to have a significant

impact on the 2012 internal control issues.) The CFO is helping to develop a new

culture of discipline and professionalism in the Business Office that promises to

continue to enhance the University’s overall internal control environment.

Indeed, the University responded to all the external auditors’ findings for the 2011-2012

audit, developing and revising policies and procedures as necessary to address each of

the material weaknesses and significant deficiencies identified, both in internal controls

and with respect to Title IV compliance (see “Summary Schedule of Prior Audit

Findings: Status,” in Appendix 5, at the bottoms of pages 13-23). Accordingly, the

auditors noted that each of the prior year’s issues was resolved, except one. Fisk’s

management believes the one “repeat finding” included in the 2012-2013 Audit (see

“ITEM# IC 13-1,” in Appendix 5, page 25), relating to “Grant and Contract Accounting,”

is, at most, a “partial” repeat, in that the “repeat” finding includes a new element of

“…management evaluation of the collectability and validity …” Still, as the auditor

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notes, “the errors were ultimately resolved and corrected by the University during the

audit process…” (see “ITEM# IC 13-1,” in Appendix 5, page 25). Moreover, the

University hired an experienced grants coordinator who provides the needed expertise

in the grants and contracts accounting area. The coordinator has completed online

training in the Banner grants module. The coordinator is reviewing and analyzing all

grant activity to assure accurate recording and reporting.

5.4.4 Responses to 2012-2013 Auditor Observations and Comments

The external auditors identified two internal control weaknesses they classify as

“Material Weaknesses,” for purposes of conducting the financial statement audit. That

represents an improvement over the three material weaknesses identified during the

2011-2012 Audit.

The auditors identified other control deficiencies related to the laws and regulations of

the University’s Federal Programs. According to the auditor (Managing Partner), while

the Student Financial Aid component of the Federal Programs audit resulted in a

qualified opinion, the Research and Development component received an unqualified

opinion. (Please note that Fisk invites the Special Committee to meet with the Auditor

during the visit; he has agreed to make himself available.) The University made the

adjustments to its policies and procedures, identified below, for each of the areas

implicated.

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5.4.4.1 Grant and Contract Accounting


Although significant improvements to the grant and contract accounting process were

made during fiscal 2013, we encountered certain errors in the University’s schedule of

expenditures of Federal awards and the related internal grant roll-forward schedule.

The primary reason for these errors appears to be a lack of consistent reconciliation and

review of grant data input into Banner with the grant agreements and underlying reports

supporting actual grant transaction activity (grant expenditures and billings).

Contributing to this deficiency was turnover in the grants coordinator position during the

year. The errors were ultimately resolved and corrected by the University during the

audit process.


On June 1, 2013, the University hired an experienced grants coordinator who provides

the needed expertise in the grants and contracts accounting area. The coordinator has

completed online training in the Banner grants module. The coordinator is reviewing

and analyzing all grant activity to assure accurate recording and reporting.

5.4.4.2 Accounting System Software


During the audit, the auditors noted that University accounting personnel encountered

certain recurring issues and inconsistencies in operation and functionality of Banner (the

University’s primary accounting system) and the in the financial data provided by the

system. Problems include random postings to the general ledger and lost or suspended

81

feeds of data in the system. These issues have to be researched and corrected by

management, which is time consuming and inefficient. It also increases the risk of error

and misstated financial information.


The University agrees with the recommendation and has contracted with Ellusian

Banner to provide its Ellusian “Banner Revitalization Program” (See “Fisk University

Discovery and Planning for Revitalization Services Agenda,” Appendix 5, pages 26-29).

The discovery phase of this service started August 27, 2013, with the goal of identifying

problem areas in the University’s current installation. As this program progresses,

Banner will assist the University in developing a plan of action to prevent data from

being suspended or lost. The plan will also allow the University to fully use the Banner

enterprise system.

5.4.4.3 Property and Equipment

Auditor Observation

The University expensed certain fixed assets purchased during the year and made

adjustments during the audit process to capitalize these fixed assets. The University

has an established capitalization policy, however, interpretation of the policy is varied

and the policy does not appear to be consistently applied. Not properly capitalizing

fixed asset additions as they are acquired understates assets and depreciation

expense, and distorts interim financial data. It also provides for the possibility that all

capital assets will not be properly identified and capitalized at year-end.

82


The University has reviewed the proper capitalization of fixed assets with the

accountant responsible. The Controller is responsible for reviewing this process

monthly.

5.4.4.4 Perkins Loan Reconciliation

Auditor Observation

Many aspects of administrative and financial maintenance and collection of loans under

the Perkins loan program are administered by a third-party. Certain adjustments were

required to be made during the audit process to reconcile to the reports provided by the

third-party servicer to the general ledger. Also, the auditors noted that data for new

loans made under the Perkins program for fiscal 2013 were not submitted by the

University to the third-party servicer until after year end.


The University has developed and implemented a policy that requires the submitting of

new Perkins loans to the third-party servicer on a monthly basis. The Bursar

understands and is responsible for compliance.

5.4.4.5 Item # CF 13-1




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One of thirty three students selected for testing received Federal Direct Loans in excess

of federal aggregate limits.

Management Response

The University corrected the tracking code that alerts the Financial Aid staff when a

student’s borrowing approaches the appropriate loan limit.

5.4.4.6 Item # CF 13-2

(Federal Student Aid Cluster: CFDA No. 84.007, 84.033, 84.038, 84.063, 84.268,

U.S. Department of Education)


The University could not provide documentation for eleven of eleven students tested

that the required terms of employment detailing the purpose of the student’s job, duties,

and responsibilities, job qualifications, job wage rate, term of employment, supervisor at

time of employment, and name of employer were provided to the student.


As a part of the hiring process, the University provides each student worker with the

employment information required to comply with all regulations related to student

employment, including job descriptions − evidence of which is documented by a check

list completed when the student is hired. Although the checklist indicated the students

had seen the job descriptions, the job descriptions were not completed and signed by

the student. Management has reviewed and updated the procedures to require the job

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descriptions be completed, signed by the student, and included in the student’s file.

Management has also reviewed this requirement with University personnel to assure

their thorough understanding of the need to obtain and maintain appropriate

documentation.

5.4.4.7 Item # CF 13-3




One of eleven students selected for testing was paid for 90 hours of work study when

the student’s time card indicated 9 hours had been worked.


This error was caused by a computational error when the student’s time card was

created. The problem causing the error was corrected but, unfortunately, this error was

not identified. Payroll personnel and student worker supervisors have been counseled

to follow proper University procedures to prevent future errors.

5.5 Conclusion

The University successfully resolved seven of the eight auditors’ compliance findings for

the prior year and partially resolved the eighth. In addition, it reduced the number of

material weaknesses identified during its most recent year. Fisk University has

85

demonstrated and documented that it is in compliance with its program responsibilities

under Title IV of the most recent Higher Education Act, as amended.

86

5.6 Appendix 5

1. Letter of Credit 1


3. Resumes 3


5. Engagement Letter 11

6. Prior Audit Findings and Questioned Costs 13

7. Item #IC 13-1 15

8. Fisk University Discovery and Planning for Revitalization

Services Agenda 26

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