1. The Minnesota State Colleges and Universities system is an Equal Opportunity employer and educator. Audit Committee Meeting September 16, 2008 College, University and System Affiliated Foundations

2. Slide 2 Objectives Study compliance with Board Policies 7.7 and 8.3, and Procedure 8.3.1 Provide useful information regarding the renewal of the MnSCU Foundation contract Facilitate policy analysis of Board Policy 8.3

3. Slide 3 Policy Matter #1 What should be the economic tests, if any, used to evaluate foundations affiliated with MnSCU?

4. Slide 4 MnSCU Affiliated Foundations – Flow of Funds for Fiscal Year 2007 Slide 4

5. Slide 5 Economic Tests Current Board Test – Cost to Raise $1 MnSCU Support Costs ÷ Program Benefits $8.0 ÷ $20.7

6. Slide 6 Economic Tests Current Board Test – Cost to Raise $1 MnSCU Support Costs ÷ Program Benefits Donor Test – Distribution of Donor Funds Program Benefits ÷ Foundation Operating Costs $20.7 ÷ ($20.7 + $4.2)

7. Slide 7 Economic Tests Current Board Test – Cost to Raise $1 MnSCU Support Costs ÷ Program Benefits Donor Test – Distribution of Donor Funds Program Benefits ÷ Foundation Operating Costs Operating Efficiency Test - Distribution of All Funds Program Benefits ÷ ( Foundation Operating Costs + MnSCU Support Costs) $20.7 ÷ ($20.7 + $4.2 + $8.0)

8. Slide 8 Policy Matter #2 To what extent, if any, should foundations be subject to oversight provisions beyond the basic requirements for non-profit charitable organizations?

9. Slide 9 Possible Oversight Provisions Accountability standards. Dissolution clause. Presidents on foundation governing boards. Foundation strategic plan. Compliance with state and federal laws and regulations. Disclose MnSCU support costs. Annual approved budget.

10. Slide 10 Possible Oversight Provisions Notice about new affiliations being explored. Preclude governmental grants to foundations. Foundation gifts subject to MnSCU acceptance. Remedy audit exceptions satisfactorily.

11. Slide 11 Policy Matter #3 What should be the ramifications for foundations that cannot meet board requirements?

12. Slide 12 Possible Ramifications Extensions for required reports. Reporting of non-compliance. Alternative administrative structures.

13. Slide 13 Policy Matter #4 To what extent, if any, should board policy be broadened to address relationships with other private, non-profit organizations, such as booster clubs and alumni associations?

14. Slide 14 Broadening Board Policy MnSCU Board Policy does not contain provisions for other types of affiliated organizations. Other higher education systems have policies that require external entity to be recognized by the system’s governing board. Athletic booster clubs may pose particular risks to universities that have Division I intercollegiate sports.

15. The Minnesota State Colleges and Universities system is an Equal Opportunity employer and educator. Audit Committee Meeting September 16, 2008 Fiscal Year 2009 Internal Auditing Audit Plan

16. Slide 16 Possible Internal Audit Topics for FY 2009 Information Technology Operations –Project Management, including adherence to schedules and budget –Quality Assurance Testing –Data Warehouse Compliance with Board Policies & Procedures –Procedure 7.3.3 Credit Cards –Policy 5.20 Presidential Expense Accounts Spending on Diversity programs

17. Slide 17 Possible Internal Audit Topics for FY 2009 Other Possible Policy Analyses –2.6 Intercollegiate Athletics –3.2 Academic Program Inventory –3.21 Undergraduate Credit Transfer –3.4 Admissions –3.26 Intellectual Property –3.3 Student Assessment –3.5 Post-secondary Enrollment Options –4.9 Employee Evaluation

18. Slide 18 COMMITTEE ACTION: On September 16, 2008, the audit committee reviewed the draft Fiscal Year 2009 Internal Auditing Plan and approved the following motion: RECOMMENDED MOTION: The Board of Trustees approves the Office of Internal Auditing annual audit plan for fiscal year 2009.