Central Michigan University’s Board of Trustees today reviewed an independent audit of the university’s 2014-2015 financial statements. Representatives of auditing firm Plante Moran said they have written a clean, unmodified opinion — the highest level of assurance — of CMU’s financials.
The audit will be finalized later this fall, after the Michigan Auditor General determines CMU’s share of a pension liability to the Michigan Public School Employees’ Retirement System. The liability is expected to be about $93 million.
The MPSERS pension system is underfunded, creating a significant liability for Michigan’s K-12 schools, community colleges and seven public universities, including CMU.
Plante Moran auditor Vicki VanDenBerg said the recording of the liability has created a deficit for several universities. Fortunately, CMU has managed its resources well and is financially sound. The liability will, however, significantly reduce CMU’s unrestricted net position.
“This is a substantial hit,” President George E. Ross said. “This pension liability is a major cost for CMU, for other colleges and universities, and for K-12 schools — a multimillion dollar cost over which we have no control.”
In other audit highlights, VanDenBerg said CMU contributes a greater percentage of its budget to educational operations than do most of its peers.
“CMU allocates 55 percent of its expenses to academics and student services,” VanDenBerg said. “We generally recommend 40 to 60 percent expenditure on academics, so CMU is on the high end. That’s good. It means you’re investing where you should.”
Although the full audit won’t be available until it’s final, Plante Moran’s presentation is available online. The board will call a special meeting to approve the audit once the state pension liability numbers are finalized.
In other matters, Ross briefed trustees about progress on CMU’s strategic priorities, initiatives and metrics. Highlights of the report showed improvements in the freshman-to-sophomore retention rate and growth in the number of students taking internships. It also showed a reduction in faculty research activity and funding, an area that will be reviewed.
Trustees discussed how the metrics were determined, noting that the accountability allows the university to celebrate its successes while identifying areas of improvement.
“That which gets measured, gets done,” Trustee Tricia Keith said. “While we see opportunities in the numbers, this is a good report.”
In addition to a review of last year’s activities, trustees adopted initiatives and metrics for the current academic year.
In other action, trustees:
• Learned that fundraising for the fiscal year that ended in June totaled $13.7 million and was third highest in CMU history.
• Announced plans for the annual presidential review process. This year’s review is more extensive as required by board bylaws and will include a self-assessment by the president, a survey, and one-on-one interviews.
• Amended the emeritus rank policy to recognize medical faculty and long-serving fixed-term faculty.
• Learned Plachta Auditorium in Warriner Hall will reopen next week after being closed all summer because of asbestos abatement.
• Heard from President Ross, who said CMU last week was ranked again among the top 200 universities of America’s more than 720 four-year public institutions.
A transcript of President Ross’ full report is available on the president’s website.