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A04.06.01 Self-Funded Activities

Effective Date: February 17, 2009

New: 

Replaces: December 16, 2003

Revision: X

Policy Statement

Guiding Principles

Scope

Procedures/Rules Statements

Appendix A

Appendix B

(NB: See Appendices A and B)

Policy Statement

Douglas College is committed to expand fully cost recoverable non-base funded activities in support of the delivery of quality education programs, services and activities and to provide net earnings to support College strategic directions.

Guiding Principles

Self-funded activities will be governed by the following principles:

  • support our mission, mandate and strategic priorities;
  • increase the revenues of the College and not expose the College to unreasonable risk - financial or other;
  • ensure employees follow a consistent and collaborative approach in developing quality self-funded opportunities;
  • recognize the roles and responsibilities of the various units of the College; and
  • adhere to College policies.

Scope

  1. This fiscal policy applies to all activities that are directly linked to educational opportunities not funded by the Ministry of Advanced Education's Annual Operating Grant. Activity could include development of curriculum, provision of instruction and learning services, International Education contract activities, research and consulting, etc.
  2. The activities of Continuing Education and The Training Group are covered by this policy.
  3. This policy does not apply to International students in credit programs at Douglas College.

Procedures/Rules Statements

  1. Self-funded activities will be divided into two categories:
    1. College Based - In consideration of the uncertainty associated with International projects and the risks involved (financial, legal, political, reputation, etc.), all International projects will be considered College based. All College based activity will be managed by the Associate Vice President, International Education in conjunction with the appropriate Vice President.
    2. Faculty/Department Based - all domestic activities in support of Faculty/Department initiatives will be considered Faculty/Department based. All Faculty/Department based activity will be managed by the appropriate Dean/Director.
  2. A consistent and collaborative approach in developing quality self-funded opportunities will be used throughout the College (see Appendix A).
  3. A consistent Costing Model will be used throughout the College (see Appendix B).

Appendix A (To Policy A04.06.01: Self Funded Activities)

I.   IDENTIFICATION OF SELF-FUNDED ACTIVITY

  1. Faculty, staff and administrators who see a potential for self-funded activities should inform their immediate administrator of such an opportunity.
  2. Employees will adhere to the Conflict of Interest Policy when considering or engaging in self-funded activities.
  3. Self-funded activities may be delivered either through:
    1. an instructional/service unit of the College independent of other instructional/service units; or
    2. an instructional/service unit of the College in partnership with other instructional/service units (notably The Training Group and the International Education service unit) and/or other external institutions, agencies or partners.

The decision will be made through consultation between the Vice President or Deans/Directors of the appropriate units.

II.   FEASIBILITY STUDY

  1. Initial contacts with potential contractor/client will be made under the authority of the appropriate Vice President, AVP International Education or Dean/Director.
  2. Early in the feasibility considerations, decisions must be made on the merit of the College's involvement with the proposed self-funded activity including assessing factors such as:

    • relevance for College strategic directions,

    • relationship to ongoing College programs and services,

    • potential to generate FTE (immediate and future),

    • potential to generate net earnings,

    • ability to create new capacity,

    • potential long-term cost and implications,

    • faculty, staff and administrative roles and other operational implications,

    • facility requirements,

    • client ability to pay and to enter into a contract,

    • readiness of the client organization

    • risk involved in the project.

  3. Under the authority of the Vice President, AVP International Education or Dean/Director and based on initial exploration of contract feasibility an individual or cross-functional team will be identified to assume responsibility for further development of contract feasibility including:

    • consultations with contractor/client

    • consultations re: expertise required, including possible internal and external partnerships

    • consultation re: internal and external logistics and required support services

    • development of budget for proposed activity to determine cost feasibility

    • development of draft proposal for service/contract.

  4. Clear responsibility for management of any contracted project will be identified as part of the feasibility study and/or contract negotiations.
  5. When potential contracts have major impact on College operations either as a result of size of budget, inherent risk, and/or major new directions for the College, the proposal will be tabled at Senior Management Team (SMT) for discussion and direction as part of feasibility consultations.

III.    COSTING (See Appendix B)

IV.     CONTRACT PREPARATION

  1. Contracts must be in writing and formally signed, regardless of the standing of the other party. Contract language should be used that minimizes College exposure to risk or liability.
  2. The legal and financial risk on self-funded activities may differ from base programs. The appropriate Vice President, AVP International Education or Dean/Director will be responsible for consulting with the Vice President, Finance and Administration, to ensure appropriate advice and coverage is obtained on legal, financial and insurance matters.
  3. Where the terms of engagement are simple and the dollar value is low (less than $25,000) a Letter of Agreement signed by both parties will suffice.
  4. The Vice President or Dean/Director will be responsible for submitting to the Financial Services Department, a copy of the contract, a completed budget and a project implementation plan.
  5. In establishing the terms of payment, the timing of payments by the other party should be such that a positive cash flow is maintained.

V.   CONTRACT APPROVAL

  1. The Dean/Director has the authority to commit the College to a domestic contract for up to $100,000 and he/she would be held responsible for contract delivery. Contracts may be signed by the Dean/Director or by other College officials if circumstances require (e.g. ceremonial signing, client requirement, etc.).
  2. Approval to enter into a domestic contract over $100,000 rests with the appropriate Vice President, in consultation with a Dean/Director. Contracts will be signed off by both the appropriate Dean/Director and Vice President.
  3. Approval to enter into any International contract rests with the appropriate Vice President in consultation with Associate Vice President, International Education and the Vice President,  Finance and Administration.

VI.   CONTRACT MANAGEMENT

  1. The Administrator coordinating the project is responsible for project management, maintaining non-financial records, activity reporting and project evaluation. Financial reporting is completed through the Financial Services Department which will be responsible for maintaining financial records for audit purposes and for supporting the development of financial reports, as required by the contractor.
  2. All collection of revenue will be through an official College invoice issued by Financial Services.
  3. Financial management and transactions of self-funded activities will be consistent with the policies and procedures which apply to all College activities .

Appendix B: (To Policy A04.06.01 Self Funded Activities): COSTING MODEL

When Douglas College contracts with an organization to provide services, the true and total costs of delivering the services will be paid by the client organization and, wherever possible, reasonable "net earnings" above the direct and indirect costs will be built into the pricing of the College's services.

I.   Revenue will at least meet expenditures, and expenditures must include all direct costs and indirect costs.

  1. Direct Costs are those that can be directly and easily attributable to a particular self-funded activity, and include (but are not limited to):
    • costs of faculty/staff specifically related to the activity (see below for salary/benefit rates)
    • costs of contracted work
    • cost of The Training Group staffing if involved in the development, negotiation and/or management of the activity
    • program supplies and materials
    • mileage, travel, meals, catering, etc.
    • off campus facility rental or purchase
    • advertising (from outside sources)
    • additional, identifiable furniture and equipment, including computing needs charges for special communication requirements (e.g. cellular telephones, video-conferencing, etc.)
    • computer hardware/software, library collections and other capital costs, acquired for contracted activities
    • greater than normal use of:

    - printing and photocopying

    -  long distance charges

    -  postage

    -  extensive and/or special requirements from support areas

    -  computing services

    -  audiovisual / educational technology services.

    A standard rate for the recovery of salaries for faculty working on self-funded activities as part of their departmentally assigned (DCFA) workload will be established annually. This rate will incorporate applicable benefits, including health, vacation, professional development and education leave provisions.

    Contracts that are expected to be one-time only or are occurring for the first time may negotiate with the appropriate Vice President and the Vice President of Finance and Administration a special rate as low as an established minimum to be set annually (for 2008/09 the minimum is $9000). This minimum rate includes all benefits and provides the Administrator with discretion to charge a rate between this minimum and the standard rate in order to secure the first contract.

    Staff and Administrators will be costed at the appropriate pay level, including benefits costed at a published rate.

    Any budget omission is the responsibility of the Administrator and will be charged against the contract.

  2. Indirect Costs include those resources that are consumed by self-funded activities but in a level and manner that makes them more difficult to attribute and cost directly. Such costs include (but are not limited to):
    • personnel and payroll services
    • accounting and purchasing services
    • cleaning and maintenance
    • computing services (network services)
    • student and learner services (registration, advising, counseling, audio-visual, library, etc.)
    • utilities, telephone, fax, and security
    • photocopying/printing and postage.

    Given that contracted programs do not normally utilize/require the same scope or amount of student and/ or administrative support services, as base-budget educational programs (which provide for 30% general institutional support), and that off-campus activities are likely to utilize less support services, a two-tiered rate, subject to annual review, will be initially established as follows:

    1. 7% of direct costs for those projects that (a) do not have on-site classroom or lab requirements and (b) have only minimal (less than 3) office/workstation needs.
    2. 12% of direct costs for all other contracts.

II.   ALLOCATION OF NET EARNINGS

      Faculty/Department Based Activities:

  1. The principle of sharing net earnings between the College and the faculty/department responsible for the self-funded activity will be supported through an established profit sharing formula (see 4 below)
  2. Self-funded activities are to be managed within each Faculty/Department.  Allocation of net earnings from contracts will take place at the end of each fiscal year.  Calculation of net earnings/losses will be based on all completed contract activity within a Dean/Director's area, with the exception of Faculty/Department Continuing Education which will stand on its own within a Faculty/Department with respect to calculation of net earnings/losses.
  3. Any losses on a contract is the responsibility of the designated Administrator and will be netted against other contract net earnings prior to distribution.  A net loss withion a Faculty/Department or a Continuing Education unit of a Faculty/Department will be carried over to future fiscal years and applied against future profits.
  4. All net earnings (funds over and above direct and indirect costs of the contracts will be proportionately allocated as follows:
    • first $5,000 to responsible department/unit
    • 50% of remaining balance to responsible department/unit
    • balance to general College revenues
  5. Net earnings/losses from all projects undertaken by The Training Group will be aggregated annually to arrive at an overall net earnings figure.  The first $5,000 will then be allocated to The Training Group and the balance divided equally between The Training Group and the College.
  6. Continuing Education will be looked at on a Faculty by Faculty basis.  Net earnings/losses from all Continuing Education activities of a Faculty will be aggregated annually to arrive at an overall net earnings figure for the Faculty Continuing Education unit.  The first $5,000 will then be allocated to the Faculty Continuing Education unit and the balance divided equally between the Faculty Continuing Education unit and the College.
  7. The Dean/Director has spending authority over faculty/departmental net earnings.  Net earnings may be used by the Dean/Director based upon established terms of reference, College strategic directions and department priorities and may be carred over the future years. 

   College Based Activities:

  On an annual basis net earnings from College based projects will be allocated in the following order:

  1. Net earnings by project will be firstly used on a pro rata basis to cover any losses originating from other International projects.
  2. On a per project basis the next $20,000 of net earnings (as available) will be allocated to the Faculty/Department delivering the project to be managed in accordance with point #7 in the Faculty/Department Based Activities Section above.  If an individaul project has had a loss in a prior year, this loss must be fully repaid before any distribution to the Faculty/Department is made.
  3. All remaining net earnings will be aggregated and divided equally between the International Education Office and the College.  International Education Office earnings will be used to manage risk, for development opportunities and to support strategic international directions.  College earnings will be managed centrally to support College strategic directions.  These directions may include items such as program/curriculum development, new project development, capital expansion, etc.  Earnings may be carried over to future fiscal years.

III.   OTHER CONSIDERATIONS

  1. Contract funds that are essentially "flow-through" to other organizations/institutions are generally exempted from the costing model.
  2. A contract which is deemed a priority for the College (and/or may lead to longer term benefit to the College) and has revenues that will not cover all expenditures may be exempted from full application of the costing model by the SMT on a case-by-case basis.  This exemption must be approved prior to entering into a formal contract.