911±¬ÁÏÍø

Part 1. Purpose

To define auxiliary enterprises at 911±¬ÁÏÍø and determine their general governance.

Part 2. Definitions

Enterprise Funds: The Governmental Accounting Standards Board defines enterprise funds as those funds used "to account for operations (a) that are financed and operated in a manner similar to private business enterprises - where the intent of the governing body is that the cost (expenses, including depreciation) of providing goods or services to the general public on a continuing basis be financed or recovered primarily through user charges; or (b) where the governing body has decided that periodic determination of revenues earned, expenses incurred, and /or net income is appropriate for capital maintenance, public policy, management control, accountability, or other purposes."

Auxiliary Enterprises: Within the Minnesota State the term "auxiliary enterprises" is used at various times to refer to types of operations meeting the definition of enterprises fund activities.

In the Minnesota State accounting system, "auxiliary enterprises" are usually designated by appropriation ENT (Enterprise) or REV (Revenue) and are largely limited to housing services, food services, retail sales (including the retail operations of the student centers and bookstore sales), loan programs and parking.

Prior to Inception: any new Auxiliary Enterprises will need President’s Council approval and will need to present a business plan which reflects each of the criteria identified in Part 3.

Part 3. Related Processes

Subpart A. Allowable Auxiliary Enterprises

All auxiliary enterprises must be integral to the fulfillment of the College's instructional, research, or public service missions. An auxiliary enterprise must meet at least one of the following criteria:

• There are compelling reasons of economic efficiency to do so;
• The project or service is unavailable elsewhere in the community;
• Providing the product or service is a major convenience to the campus community or to members of the public participating in institutional activities; or
• Offering the product or service is of major importance to maintaining the quality of the institution.

Subpart B. Cost Recovery

Prices and rates should be established to recover full costs. The president may determine that specified other resources will be used to subsidize the enterprise. The president may also set prices in excess of those necessary to recover the full cost to generate resources for student scholarships or activities that otherwise benefit students.

Subpart C. Budget

The Director of Auxiliary Services is responsible for providing a fully developed revenue and expenditure budget to the budget office during the annual budget development process.

Subpart D. Revenue and Loans

Generally, revenues are to be expended for the auxiliary enterprise for which they were generated. Any subsidizing of one auxiliary enterprise by another auxiliary enterprise or by another fund must be approved by the Vice President of Finance and Operations, recorded in the accounting system, and documented with a letter to the file/email regarding the circumstances.

All inter-program loans, including loans to the general fund and special revenue fund supported activities, shall be approved by the Vice President of Finance and Operations and recorded as a loan in the accounting system. A written agreement is required for a loan and must include a defined time period for repayment.

Excess funds shall be invested in accordance with Minnesota State Board Policy 7.5 Financial Institutions and Investments and System Procedure 7.5.1 Local Cash and Investments.

Subpart E. Generally Accepted Accounting Principles

The use of Generally Accepted Accounting Principles (GAAP) is expected for effective fiscal management to ensure that all revenues and expenses are recognized and matched in the appropriate periods, that liabilities are fully recognized, and that assets and their impairment are fully considered.

Auxiliary enterprise financial transactions are recorded on the cash basis in the College’s ERP system and converted to accrual, GAAP-compliant financial statements annually. 

Subpart F. Retained Earnings

911±¬ÁÏÍø has an annual review process and multi-year plan in place to ensure that adequate but not excessive retained earnings and designated reserves are established and maintained.

• Retained earnings designated as reserves equal 30% of the prior year's operating expenses.
• Any retained earnings accumulations in excess of the levels recommended in the above, must be clearly linked to specific programming and operating needs, such as student scholarships, establishing a quasi-endowment, or planned capital expenditures.
• Except as provided in the above, above, funds in excess of acceptable levels should be used to reduce fees and charges in the next year's operating budget, or invested in compliance with College policy to ensure the future integrity of operations.

Subpart G. Direct and Indirect Costs

Auxiliary enterprise operations shall be allocated and may be charged for both direct and indirect costs as provided in College Procedure 5.03.01, Cost Allocation, and related guidelines.

Subpart H. Compliance

911±¬ÁÏÍø is responsible for ensuring the programmatic and fiscal soundness of their auxiliary enterprises and maintaining a written multi-year finance/business plan.

The Minnesota State System office will monitor the fiscal soundness of auxiliary enterprises through financial statement reviews.

Owner(s) Title: Vice President of Finance and Operations

Date of Adoption: 12/27/2005

Date of Implementation (if different from adoption date): Changes approved on 1/13/2022 will be implemented with the approval of the full revisions of the College’s finance policies section in May 2025.

Date Last Reviewed: 5/1/2025 (Limited)1/13/2022

History and Subject of Revisions: 5/1/2025 (Limited Review), 1/13/2022 (Comprehensive Review. Part of the review of all finance policies. Updated Purpose. Removed Authority section. Updated definitions. Removed information related to pricing practices since it was not applicable and covered by system guidance. Added transaction information to the Acceptance of Accounting Principles section. Structural and grammatical updates to aid clarity.), 1/2/2019 (non-substantive changes), 12/27/2005 (Adopted)

Regulatory Authority (e.g. Minnesota State policy, federal or state law): Minnesota State Board Policy 7.5 Financial Institutions and Investments and System Procedure 7.5.1 Local Cash and Investments.