Purpose

To determine if the Research Foundation for the State University of New York had: a fair and equitable methodology for charging (assessing) SUNY campuses for the costs of central office operations and statewide initiatives; adequate procedures to allocate unrestricted funds to SUNY campuses and System Administration; and sufficient budgetary controls over allocations of unrestricted funds.

Background

The Research Foundation for the State University of New York (Research Foundation) is a private, nonprofit educational corporation. Its primary mission is to support research at the State University of New York (SUNY) by administering sponsored projects and sharing intellectual property. The Research Foundation has a central office and operating units at 30 SUNY campuses. The Research Foundation derives income from sponsored program activities, investments, inventions and licenses, and gifts and other sources. Revenues for the fiscal year ended June 30, 2013 totaled about $1.07 billion, mostly from sponsored grants and contracts.

The Research Foundation's central office provides payroll, purchasing, accounts payable, legal, and information technology services for grant administration to the campuses. The central office derives operating revenue from the assessments it charges the campuses and SUNY System Administration. Each location's assessment is based primarily on the amount of sponsored grant revenue it generates. For the year ended June 30, 2013, the Research Foundation generated about $203.5 million in unrestricted revenues. Through the assessment process, about $30.9 million in unrestricted funds were allocated to the Research Foundation's central office operations and certain statewide initiatives. The Research Foundation allocated the remaining $161.6 million in unrestricted funds to the campuses and SUNY System Administration to support sponsored program administration, research, and other initiatives. Additionally, $3.5 million in royalties was paid to the inventors of intellectual property and $7.5 million placed in Investment Reserves. 

Key Findings

• The Research Foundation's current methodology for assessing the campuses is fair and equitable. In addition, the assessments were calculated properly, and campus officials were satisfied with the services provided by the Research Foundation's central office.
• From 2014 through 2017, the Research Foundation projects relatively stable amounts of external grant revenues (between $1.04 billion and $1.08 billion annually) for SUNY. However, SUNY reports that sponsored revenues at the College of Nanoscale Science and Engineering could significantly exceed current projections. Material increases or decreases in sponsored revenues could impact the amounts of unrestricted funds available as well as the propriety of the current assessment methodology.
• The Research Foundation's central office has adequate procedures to allocate unrestricted funds to the campuses. Allocations were calculated correctly, and budgetary controls over such allocations were sufficient.

Key Recommendation

Continue to monitor and evaluate the current assessment methodology to ensure it remains fair and equitable. Place particular focus on changes in external revenue generation of the College of Nanoscale Science and Engineering.

Other Related Audit/Report of Interest

Research Foundation for the State University of New York: Selected Human Resource Controls and Potential Conflicts of Interest
(2011-S-24)