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SB6 Ratio

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Randolph Sillmon

on 7 December 2016

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Transcript of SB6 Ratio

SB6 Ratio
Central State University

Randolph Sillmon
What is the SB6 ?
Senate Bill 6 of the 122nd General Assembly was enacted into law in 1997. It is designed to increase financial accountability of state colleges and universities by using a standard set of measures with which to monitor the fiscal health of campuses. Using the year-end audited financial statements submitted by each public institution, the Board of Regents annually applies these standards to monitor individual campus finances. In addition, Senate Bill 6 requires state colleges and universities to submit quarterly financial reports to the Board of Regents within 30 days after the end of each fiscal quarter.
How is the SB6 Ratio Constructed ?
The methodology for calculating the three ratios is as follows:
• Viability ratio: Expendable net assets divided by plant debt. (Note: if plant debt is zero, then the viability ratio is not calculated and a viability score of 5 is automatically assigned.)
• Primary reserve ratio: Expendable net assets divided by total operating expenses.
• Net Income Ratio: Change in total net assets divided by total revenues.

Viability Ratio
Primary Reserve Ratio
Net Income Ratio
How to Calculate the Ratio
Central State should invest more money into Sports
Add more activities around Campus to make Student want to stay
Plant Debt: Total long-term debt (including the current portion thereof), including but not limited to bond payable, notes payable and capital lease obligations
Expendable Net Assets: The sum of unrestricted net assets and restricted expendable net assets
Expendable net assets: The sum of unrestricted net assets and restricted expendable net assets
Total operating expenses: Total operating expenses, plus interest on long-term debt
Total Net assets
Changes in Total net assets: Total revenues (operating and non-operating), less total expenses (operating and non-operating)
Expendable Net Assets Plant Debt
Unrestrictred Net Asset: 21,507,529 Long-term Debt: 15,268,419
Restricted Assets: 254,689 Current Portion of Long-term debt
Total: $ 4,593,733 1,134,840
Total: $16,403,259
4,593,733/16,403,259*100= 28%
Expendable Net-Assets Operating Expenses
4,593,733 Total operating expenses
Interest Expense
=$4,593,733 =$51,269,915
4,593,733/51,269,915*100= 9%
Changes in Total Net Assets Total Revenue
18,027,573 68,868,075
18,027,573/68,868,075*100= 26%
Ratio Scores Percentage Score Weight Score
Viability .28% 1 x .30 .3
Primary Reserve .09% 5 x .50 1
Net Income .26% 2 x .20 1
What is the SB6 Ratio for ?
Increase the way money is used and managed by state colleges and universities by standard set of measures; Monitor financial matters for state departments of higher education
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