Section II: Core Requirements

2.11. The institution has a sound financial base and demonstrated financial stability, and adequate physical resources to support the mission of the institution and the scope of its programs and services. 

           The member institution provides the following financial statements: (a) an institutional audit (or Standard Review Report issued in accordance with Statements on Standards for Accounting and Review Services issued by the AICPA for those institutions audited as part of a systemwide or statewide audit) and written institutional management letter for the most recent fiscal year prepared by an independent certified public accountant and/or an appropriate governmental auditing agency employing the appropriate audit (or Standard Review Report) guide; (b) a statement of financial position of unrestricted net assets, exclusive of plant assets and plant-related debt, which represents the change in unrestricted net assets attributable to operations for the most recent year; and, (c) an annual budget that is preceded by sound planning, is subject to sound fiscal procedures, and is approved by the governing board.

            Audit requirements for applicant institutions may be found in the Commission policy entitled “Accreditation Procedures for Applicant Institutions. (Resources)

JUDGMENT OF COMPLIANCE

Compliance.

NARRATIVE/JUSTIFICATION FOR JUDGMENT OF COMPLIANCE

Northeast Alabama Community College demonstrates compliance. 

The institution presents a sound financial base, demonstrated financial stability, and adequate physical resources to support the mission of the institution and the scope of its programs and services. Two goals of the institutional Mission and Goals Statement pertain directly to financial and physical resources:

·         Goal Ten: Procurement and administration of financial resources in an effective manner.

·      Goal Eleven: Provision for and maintenance of a physical plant with instructional facilities and technology suitable for all the institution’s programs and services.

The Education Audit Division of the State of Alabama Department of Examiners of Public Accounts has assured the college that the auditor’s report for FY 2003 will be available by mid-March 2004. This audit will be submitted to the Commission as soon as it is available. A letter advising the college of this schedule is included in the accompanying documentation. The college provides institutional auditor’s reports for the three preceding years, prepared by the Alabama Department of Examiners of Public Accounts.  These audits employ the appropriate audit guide. 

The college provides an audited 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.  Statements for the three preceding years are provided within

the respective auditor’s reports.

The institution presents annual budgets for the past three years and demonstrates that budgets are preceded by sound planning, are subject to sound fiscal procedures, and are approved by the governing board. 

The institution has a sound financial base and demonstrated financial stability.  The sound financial base and financial stability are indicated by adequate operating reserves, absence of long-term debt, stable or increasing unrestricted assets, stable revenues, appropriate expenditures per full-time-equivalent enrollments (FTE), and consistent funding of all programs and services of the college.

Adequate Operating Reserves.  The Alabama Department of Postsecondary Education recommends that colleges within the system maintain a two-month operating surplus.  NACC ended the 2002-2003 fiscal year with an unrestricted fund balance operating surplus of 1.6 million, which represents a greater than two-month operating surplus.

Absence of Long-Term Debt.   NACC has no long-term debt; all annual revenues can be used for operations.

Unrestricted Assets, Investments, and Cash Balances.  As shown in Table 1, investments have increased from $162,000 in 1996 to $1.7 million in 2003.  Total unrestricted assets have increased from $951,472 in 1996 to $2.8 million in 2003, and cash balances remain stable.

Table 1

Stable Revenues. Annual revenues have shown a steady increase from FY 1999 through FY 2003 (Table 2). The increase is attributed to increased enrollment and to a statewide increase in the rate of tuition and fees. 

Table 2

The college has two primary sources of revenue.  As a state institution, the college receives an annual appropriation from the Alabama Educational Trust Fund (ETF).  Money from this fund is earmarked for education in the state. ETF monthly appropriations compose approximately one half of the annual revenue for the college.  The other primary source of revenue for the college is student tuition and fees. Sound educational planning involving the expansion of the NACC curriculum and course offerings has resulted in a twenty-five percent increase in enrollment over the past two years. This increase, along with an increase in the rate for tuition and fees, has greatly enhanced this source of funding. The fact that approximately one half of tuition and fees are paid through Pell Grants, external private and agency scholarships, and student loans contributes to the stability of tuition and fees as a funding source.

The ETF funding, by contrast, has a degree of inherent instability. Since the ETF is funded primarily by sales tax receipts and income taxes, the fund reflects fluctuations in the state and national economy. Occasionally, in years of a weak economy when revenue fails to meet state budget projections, the funds must be prorated to recipients.  This situation has occurred twice in the past decade. When this reduction occurs and appropriations to NACC are prorated, the amount of revenue lost is relatively small compared to the total revenue of the college. The most recent reduction in late spring of 2001 represented three percent of the college’s revenue for the year. The shortfall was compensated by restrictions on travel and instructional supplies, as well as reduced course offerings for the Summer 2001 term. The current NACC Administration has set as a fiscal priority the accumulation of surplus funds to protect against any shortfalls in the ETF. As mentioned earlier, the college now has this surplus. 

Through the years, the college has benefited from other sources of funding. For a number of years prior to 2003, the college received “critical needs” funds from the Alabama Legislature for funding of the college infrastructure and facility enhancements. These funds were approximately $150,000 to $200,000 per year. In 2002 another $300,000 was obtained from the Alabama Legislature through the Alabama Department of Transportation to construct a parking lot on campus. State bond funds also have provided funding for a Technology Center, renovations to the student center, and additional lighting on campus. Federal grants, such as the Perkins Vocational/Technical Grant and grants from the Appalachian Regional Commission (ARC) have funded various technical and academic programs on campus. Recognizing that sound budget planning prohibits dependence on these less reliable external sources of funding, college personnel do not rely on these funds in budgeting for the regular, ongoing college functions.

Northeast has taken action toward pursuing other supplemental sources of funding that can contribute to enhanced instructional and physical resources. The college recently contracted with Regional Development Inc. to pursue federal and state grants.  College administrators also are negotiating with two companies to pursue direct federal appropriations for NACC. An administrative assistant recently hired has as part of her responsibilities assistance with grant writing and other fund-raising activities. A college foundation is being planned and should be activated within the 2004 calendar year. These potential sources of funding will contribute to an enhanced financial base and stronger fulfillment of the college mission.

E & G Expenditures per FTE. Table 3 shows Educational and General (E & G) expenditures per full-time equivalent student (FTE). Several factors have contributed to the lower expenditures per FTE after 1999-2000: (1) proration was declared late spring, 2001; (2) cost-containing measures were put into place effective during the 2001-2002 year, including temporarily not replacing a number of retiring personnel and reorganizing assignments to allow maximization of existing personnel; (3) addition of classes and increase in overall enrollment increased the efficiency of the instructional systems in place. The resulting stronger financial position of the college is reflected in the somewhat higher expenditure per FTE shown in 2002-2003.

Table 3

Consistent Funding of All Programs and Services of the College. Tables 4, 5, and 6 show overall funding to all aspects and services of the college over the past three fiscal years. The planning and budgeting process described later in this section allows each administrative and curricular  unit to present the needs of the respective area for consideration. Funding to all instructional programs is demonstrated in the Institutional Management Plan (IMP), which includes an annual listing of the projected equipment purchases for the various instructional areas as projected by the division chairs. Table 7 shows the IMP projections for the first year of the planning cycle covered by the 2003-2004/2005-2006 plan (dated September 2003). These projections are utilized in the budgeting process.  

Table 4

Table 5

Table 6

Table 7

The institution’s physical resources are adequate to support the mission of the institution and the scope of its programs and services. 

Adequacy is indicated by description of available physical resources with reference to the mission goals, by student perceptions of class and laboratory facilities and of safety and security on campus, by comparative analysis of use of instructional space, and by evidence of planning to maintain adequacy. 

Available Physical Resources and the Mission. The campus of Northeast consists of fourteen buildings, each of which contributes to the support of the mission.  These buildings are briefly described as follows:

§     The George C. Wallace Administration Building houses the Business Office, with the switchboard, supply room and mailroom; the office of the Dean of Administrative Services, the Financial Aid Office, and the Office of Institutional Effectiveness; a photocopying facility; the GED Testing Room; a developmental reading laboratory, a general classroom and the Yearbook Room. The Wallace Building houses functions that support mission goal one (open-door admission through the GED Testing Program); goals two, three, and six (general education, transfer and career courses, and technical/vocational courses); goal four (qualified personnel with adequate support, through the Business Office and related facilities); goal five (developmental reading instruction); and especially goal ten (procurement and administration of financial resources).

§      The Math and Science Building provides laboratories and classrooms for physics, chemistry, math, and humanities, offices for faculty, and a tiered lecture room. The Math and Science Building supports mission goals two, three, and six (general education, transfer and career courses, and technical/vocational courses).

§      The Annex contains classrooms and the bookstore. The Annex supports mission goals two, three, and six (general education, transfer and career courses, and technical/vocational courses).

§     The Nursing Building accommodates classrooms and nursing laboratories with space for equipment and individualized, computer-assisted studies. This building supports goals three and six (courses in transfer and career programs). 

§       The Student Center provides a cafeteria, a large dining area for students, a guest dining room, counseling offices, the Admissions and Student Services offices, and the Campus Security and Physical Plant offices.  A computerized, dedicated laboratory is used for COMPASS assessment, the diagnostic instrument used to identify students who need developmental coursework. This building is in specific support of goal one (open admissions) and goal eight (student services, through the Office of Admissions and Student Services). It also supports goal five (developmental education, through the assessment that takes place in the COMPASS lab) and goal eleven (maintenance of physical plant, through the Physical Plant and Security offices). 

§        The W. M. Beck Health and Fine Arts Building houses art, music, the Learning Logic Laboratory (mathematics), Adult Basic Education, the gymnasium (with a newly renovated Wellness Center), and general classrooms. One classroom is allocated to truck driver training, a program of the Adult Education and Skills Training Division. The Health and Fine Arts Building contains the Small Auditorium, which is used for musical productions, community service meetings, classes viewing audiovisuals, and faculty and staff meetings. The building also provides class laboratory areas for piano, stringed instruments, the Jazz Band, Chorus and Encore (vocal groups). This building contains a Conference Room for authorized community groups who wish to meet on the NACC campus. The large and multifaceted building serves mission goals two, three and six (general education, courses in transfer and career courses, and technical programs); goal four (professional development for faculty through use of the Small Auditorium), goal five, (developmental education through the mathematics laboratory and the Adult Basic Education facility); goal seven (training for business and industry through the truck driving classroom);  goal nine (student services, through physical education facilities); and goal nine (community services, through use of the Small Auditorium, Conference Room, and Adult Basic Education). 

§       The Maintenance Building provides facilities for the upkeep of the physical plant and grounds. This building is a necessary support to mission goal eleven, the provision and maintenance of a physical plant suitable for the institution’s programs and services.

§       The Emergency Medical Services Building houses Emergency Medical Services training areas and offices. This building supports mission goal six, technical and vocational education. Through the many ways in which the EMS program provides training to community healthcare personnel, it also is a strong support to mission goal seven (training that meets specific educational needs of community businesses and industries).

§       The Harry Campbell Business Education Building houses faculty offices, business and general classrooms and lecture rooms, and the Student Government Association Office. A student writing laboratory with word processing resources is located in this building. The Business Education Building supports mission goals two, three, and six (general education, courses in transfer and career programs, and technical programs); goal five (developmental education, supported by the writing laboratory); and goal eight (student services).

§       The Cecil B. Word Learning Resources Building houses an audiovisual room and audiovisual resources, a 25-station distance learning facility, classrooms, and faculty offices as well as library stacks (approaching 52,000 volumes) and a 23-station Internet-equipped computer resource for students. The facility also provides a word processing room for student use. The Learning Resources Center supports mission goals two, three, and six (general education, courses in transfer and career programs, and technical education), and goal nine (community services for personal growth and cultural enrichment, through community use of the library).

§      The E. R. Knox Science Laboratory Building houses chemistry and biology laboratories and faculty offices. This building supports mission goals two, three, and six (general education, courses in transfer and career programs, and, through laboratory facilities, technical and career education programs).

§       The Tom Bevill Lyceum houses the theatre, drama classrooms, and offices. The lobby of this facility serves additionally as a location for meetings, special presentations, and institutional and community social functions. The drama department uses the theatre to host three productions annually, each of which presents eight performances over two weekends. Total annual attendance at the performances is approximately 15,000. The Lyceum contains two classrooms and areas for set construction and storage. It also provides a location for community forums, guest lecturers, faculty and staff in-service meetings, and graduation exercises. This facility provides support to mission goals two and three (general education and transfer programs), goal four (faculty professional development), and goal nine (community services for personal growth and cultural enrichment).

§       The Charles M. Pendley Administration Building houses the offices of the President, the Dean of Instruction, the Dean of Technology and Workforce Development, the Dean of Extended Day, the Director of Promotions and Marketing, the Director of High School and College Relations, the Veterans’ Affairs Director, and the Registrar’s Office (Management Information Services), in addition to classrooms and computer laboratories. Space within this facility is also allocated to Work Keys assessment activities, a function within the Technology and Workforce Development Division. This facility provides support to mission goal one (open admission), goal six (technical and vocational programs), goal seven (training to meet specific needs of business and industry, through the Adult Education and Skills Training Office as well as the Work Keys facility); and goals two and three (general education and transfer courses).

§    The Technology Center houses industrial electronics, computer-aided drafting, and faculty offices. The opening of this Center during Fall 2002 gave a home to developing technical programs and meanwhile freed space for the Adult Basic Education Program, which moved to campus July 2003. The Technology Center provides specific support to goal six of the mission (technical and vocational programs).

Additionally, Northeast provides students with several computer resource facilities across campus. Internet access is provided through the Alabama Supercomputer Authority in Huntsville, Alabama, and the campus network. Student-accessible computer labs on campus include the Computer Science, Mathematics, Nursing, Office Administration, Computer-Aided Drafting, Writing, foreign language, Work Keys, Industrial Electronics, and COMPASS labs. All computer labs are available to any student when not in use by a scheduled class. As classes are primarily scheduled in the morning and evening, computers are widely available in the afternoons.  In addition, computers are always available in the LRC. A full explanation of technology resources is included in Comprehensive Standard 3.4.14.

Student Perceptions. The Graduated Student Survey, administered one year after graduation, solicits student perspectives on physical facilities as well as many other aspects of their experience at Northeast. The Year 2003 survey of Year 2002 graduates yielded the ratings shown in Table 8. In all cases, the respondents rated the facilities as average or better.  The opening of the Nature and Walking Trail in December 2003, along with the development of the Wellness Center, may contribute to a stronger rating on physical education resources (shown here at 3.18 on the 5 to 1 scale) by later graduates.

A recent survey of students and personnel regarding their perceptions of safety and security on campus showed a very positive response, indicating that people using the campus feel that reasonable steps are being taken to provide a healthy, safe, and secure environment. This survey is reported in full in Comprehensive Standard 3.10.6.

Table 8

Comparative Analysis of Use of Instructional Space. The Space Utilization Study periodically required of Alabama public colleges is summarized by the Alabama Commission on Higher Education (ACHE) to derive an index of the use and adequacy of physical resources among the institutions. The study looks at the number of classrooms and class laboratories (laboratories being defined as any room with layout or equipment that precludes its use for other than a specific discipline), along with the number of students in the rooms at given times, the times the rooms are in use, and the total number of hours the rooms are in scheduled, credit-bearing use.  A summary of Northeast’s data along with that of all the public two-year colleges of Alabama for the most recent study of this type is shown in Tables 9 and 10. The observations that can be drawn from these tables are that, for classrooms, (1) the average student station count per room (51.1) was higher than that for the system (29.2); (2) correspondingly, the average net assignable square feet (NASF) per room (932) was somewhat more than that for the system (853); (3) the average NASF per student station at Northeast (18.2) was somewhat less than that of the system (29.2); the average room utilization rate (AvRUR) at Northeast was 14.3 while that for the system was 17.8 (relatively comparable); and (4) the average station occupancy rate (AvSOR) (.6) was almost the same as that for the system (.7). The study derives a space factor by dividing weekly scheduled class hours (WSCH) into net assignable square feet; these figures are 2.2 for Northeast and 2.5 for the system, indicating that Northeast was making slightly greater use of available space than was the system. All of the comparisons are considered within an acceptable range.  Similar comparisons are shown for class laboratories in Table 11, the notable figure here being that class labs at Northeast show about twice the use of those system wide. This comparison, derived from Fall of 2001, would be affected now by (1) the opening of the Technology Center in the Fall of 2002, which made available new laboratory space for the Industrial Electronics and Computer-Aided Drafting programs; and (2) two new biology labs (one also serving microbiology) in newly renovated rooms 124 and 125 of the Math and Science Building.

Table 9

Table 10

Planning to Maintain Adequacy of Physical Resources. In planning for a growing institution, NACC personnel realize that it is important to include the development of future physical resources. The Institutional Management and Planning Committee has addressed this issue for long-range planning. The Committee, with faculty and staff input, determined that future building plans should be developed with three priorities: (1) a Health Education Complex to house all health-related programs; (2) a general classroom building to provide additional classroom and office space; and (3) a Student Center/Conference Center Complex.

College officials are in the initial stages of seeking funding for the first and second of these buildings. Sources of revenue being pursued are as follows: Title III funds for instructional equipment, private grants from foundations, direct federal appropriations through the U.S. Congress and Senate, grants from the Alabama State Government, and bond financing. The Institutional Management and Planning Committee will continue to monitor and project the long-range physical resource needs of the institution.

Audit reports are prepared by the appropriate governing auditing agency and employ the appropriate audit guide.

The “Summary of Examiner’s Results” statements presented in the auditor’s reports indicate that Northeast’s financial statements were consistently determined to be excellent.  The examiner’s opinion was issued as “unqualified,” with no material weaknesses identified concerning internal controls, no reportable conditions found, and no material noncompliance found. For federal awards, the opinion was also “unqualified,” with no internal control weaknesses identified and no reportable weaknesses.

The financial statements of Northeast Alabama Community College are prepared in accordance with accounting principles generally accepted in the United States. The Governmental Accounting Standards Board (GASB) is the accepted standard-setting body for establishing governmental accounting and financial reporting principles.  Beginning with the fiscal year ending September 30, 2002, Northeast’s financial statements reflect the implementation of GASB Statement Number 34 (approved June 1999) and Statement Number 35 (November 1999); together these Statements require colleges and universities to follow the guidance of one of three reporting models in their issued reports. Of the three reporting models defined, Northeast has elected to follow the Business Type Activities (BTA) Model. Multiple measures for determining financial health are indicated by this model, which is demonstrated in the FY 2002 Auditor’s Report: (1) A Management’s Discussion and Analysis (MD&A) section providing an analysis of the College’s overall financial position and results of operations; (2) a single column presentation of the College’s activities with required basic financial statements consisting of Statement of Net Assets; Statement of Revenues, Expenses, and Changes in Net Assets; and Statement of Cash Flows; and (3) Accounting and Reporting of Revenues Net of Discounts and Allowances. Additionally, each audit assesses internal control over financial reporting and internal control over major programs of Federal awards.

Northeast follows all applicable GASB pronouncements as well as the following pronouncements issued on or before November 30, 1989, unless those pronouncements conflict with or contradict GASB pronouncements: Financial Accounting Standards Board (FASB) Statements and Interpretations, Accounting Principles Board (APB) Opinions, and Accounting Research Bulletins (ARBs).

The audited statement of financial position describes unrestricted net assets, exclusive of plant assets and plant-related debt.  The statement represents the change in unrestricted net assets attributable to operations for the most recent fiscal year.

The audited statements of financial position meet these specifications. 

Budgets are preceded by sound planning, are subject to sound fiscal procedures, and are approved by the governing board.

Northeast's annual budget is developed in conjunction with the institutional planning and evaluation process for institutional effectiveness by the Institutional Management and Planning Committee. This committee is comprised of representatives of all divisions and offices on campus. As data is reviewed and evaluated for effectiveness in accomplishing the institutional mission, accomplishments and deficiencies are identified. New directive goals are developed to enhance the effectiveness of the institution. Based on these goals, resources needed for their accomplishment are identified by all divisions and administrative offices of the institution. Full-time staff personnel needs are determined by the President during this process, with input from the deans. The Dean of Instruction, the Dean of Technology and Workforce Development, and the Dean of Extended Day together identify the needs for full-time and adjunct faculty positions.  Personnel lists and contract amounts are provided to the Business Office by these individuals to be included in the budget. Utilities, contractual services, and other physical plant needs are determined and included in the budget by the Dean of Administrative Services using historical data and needs identified during the institutional planning and evaluation process.

Budget request forms are distributed by the business office to each division chair and office supervisor to be completed with input and assistance of personnel within the division and office. These budget requests include travel, materials and supplies, computers and printers, other equipment, and other needs of the division or office. A sample request form is provided in the accompanying documentation.

As planning progresses, the President schedules a budget meeting with each individual division and administrative office to discuss the indicated resource needs and budget requests. The Dean of Administrative Services provides current financial status information and projected revenue and expenditure estimates identified to this point during these meetings. As the request from each division and office is finalized and approved by the President, it is incorporated into the itemized totals for the institution by the business office.

A draft of the final budget is reviewed by the President and Dean of Administrative Services. Any necessary modifications are made prior to final budget preparation. The completed budget is submitted to the Department of Postsecondary Education by June 30 of each year to be included in the Alabama College System budget, and presented to the Alabama State Board of Education for final approval. Minutes of the August 2002 and 2003 board meetings containing approval of

the Alabama College System 2002-2003 and 2003-2004 budgets are in the accompanying documentation.

The administration of Northeast Alabama Community College is committed to maintaining a sound financial base, financial stability, and adequate physical resources for the accomplishment of all aspects of the mission. The commitment to these ideals and to integrity in accounting and budgeting will continue to be a hallmark of this institution.

SUPPORT DOCUMENTATION

Some documentation files were created in Adobe Acrobat 6.0.  You must have Adobe Acrobat Reader 6.0 in order to view them correctly.  Click here to download free version.