Site Team Report

12. Financial Environment

The "Ventures crisis" and the "Cash crisis" of 1991 (Self-Study pp 220-221) were both a direct result of poor oversight exercised by the Board of Control and lack of qualified financial professionals. The auditors, Coopers and Lybrand, walked away from the audit of Michigan Technological Ventures, Inc. and reports showed the depletion of cash leading to the cash crisis in 1991/1992. The two events culminated at approximately the same time but were not specifically related. None of the top administrators who were culpable in these two events are still at Michigan Tech. The membership of the Board of Control has also completely turned over.

Michigan Tech satisfies Criterion Four. The current university is now restructured to guard against this happening again. The University has significantly improved its financial position and is a strong position to address the future. It has well qualified financial staff in the central organization and the units, such as engineering, are starting to hire financially oriented staff. The Internal Auditor reports directly to the Board of Control and the Chief Financial Officer hires a professional financial staff and reports to the Board of Control on Treasury matters. The Board of Control established in July 1997 a Finance Committee. The academic strategic planning and financial budgeting processes are tied together. Modeling of the cash needs of the University is a recurring process. [Commendation 4]

While many of the organizational issues that caused the financial issues of the past have been addressed the organization is entering into a period when new financial challenges will arise and this will require continuous improvement in financial management.

As mentioned above, the University needs to develop the infrastructure in the areas of grants management that will allow them to handle their identified objective of increasing the dollars received from research without increasing risk.

The Board of Control's Finance Committee has just begun to meet. It is aware that it is necessary that they must look into the long term fiscal future and actively develop certain long term policies related debt ratios, reserve levels, and statement review and approval. [Suggestion 3]

Improvements/expansion to the student union are under consideration as part of the capital plan. This project would be funded by student fees and gift funds. [Suggestions 5, 6]

The University needs to develop a campus awareness and plan in order to meet the financial pressures generated by the new buildings, the increase in space, the Board of Control's commitment to faculty salaries, the need for developing an infrastructure to support research, the conversion to the semester system, the deficiencies in the library and the Board of Control's expressed desire to both increase faculty and staff salaries and remain an excellent value to students. While the University does modeling and strategic planning and budgeting, the impact of these variables on the resources does not appear to be well understood on the campus. [Suggestion 2]

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