HENRY FORD COMMUNITY COLLEGE STUDENT REFUND PROCESS Process Improvement Plan Fall 2013 Table of Contents Process Improvement Team 3 Background 4 Project Statement 5 Glossary 6 Current Student Refund Process 8 Cause-and-Effect Diagram 9 Cost of Paper Check Student Refunds 10 MCCBOA Survey 11 From the Old Process to the New 12 New Student Refund Process 13 Cost Savings 14 Force Field 15 Project Time Line – Gantt Chart 16 Key People 17 Steering Committee Feedback 18 Ideas for Future Process Improvement Teams 19 Acknowledgments 20 2 Process Improvement Team Team Sponsor John Satkowski – Vice President for Financial and Auxiliary Services Team Members Kevin Culler – Financial Aid Director (Team Leader) Scott Barnett – Mathematics Instructor (Team Scribe) Thomas Anderson – Adjunct History Instructor Barb Eisterhold – General Accounting Manager Sandro Silvestri – Director, Information Technology Services Mary Szymanski – Accounting Associate, Accounts Payable 3 Background The Process Improvement Team for Budgeting determined that the problems encountered by students and staff due to the current student-refund process, and the significant costs to the College for the current process, should be addressed. 4 Project Statement To improve the process for issuing refunds to students who have credit balances on their accounts, as measured by the reduction in the number of paper refund checks, reduction in costs (e.g. supplies, postage, bank fees), reduction in reported refund-related cases of fraud, and reallocation of staff time. 5 Glossary of Terms Account with a Bank or Credit Union: Arranged transactions with a bank or credit union which could be a checking account, savings account or a deposit account. Affidavit: An affidavit is a legal document that contains sworn facts and statements. Bank Reconciliation: A bank reconciliation is a process that explains the difference between the bank balance shown in an organization’s bank statement, as supplied by the bank, and the corresponding amount shown in the organization's own accounting records at a particular point in time. Check fraud: This refers to a category of criminal acts that involve making the unlawful use of checks in order to illegally acquire or borrow funds that do not exist within the account balance or account-holder's legal ownership. Counterfeit Check: An imitation check intended to be passed off fraudulently or deceptively as genuine. Debit Card: A plastic card that resembles a credit card but functions like a check. Debit Cards can be used to access cash via ATM’s or can be used for paying purchases or services. Payment is made available electronically to the bank accounts of participating retailing establishments directly from the Debit Card. EFT/E-Check/Direct Deposit: Electronic funds transfer (EFT) is the electronic exchange, transfer of money from one account to another, either within a single financial institution or across multiple institutions, through computer-based systems. Emergency Checks: Checks that are issued by the Cashier’s Office to process a check outside of the normal weekly check run. Escheat: The College is required to make annual reports to the State of Michigan for all checks that remain un-cashed over a period of one year. The College sends a check to the State along with specific check information. After a check is escheated, the payee on the check (who the check is written to) works directly with the State to retrieve funds owed. 6 Escheatment: Escheatment is a procedure in which property, in this case checks issued by the College, which appears to be abandoned reverts to the ownership of the government. The government enters the property into its bookkeeping, and may dispose of it as it pleases. If a claimant to the property later appears and the claim is legitimate, the government provides compensation in accordance with the amount entered at the time of the escheatment. Financial Aid Awards: This is an aid package to help alleviate or defray out of pocket costs to attend college. Awards can be based on merit or need. Some awards, such as loans, must be eventually paid back, other awards, such as scholarships and grants do not. Paper Check: A written order, usually on a standard printed form, directing a bank to pay money to a particular person for a certain amount. Positive Pay: This is a treasury service that banks provide to businesses that forms a partnership between the two parties to prevent check fraud. Positive Pay involves the bank matching checks presented for payment with those issued by the company. Pressure Sealed form Check Stock: Pressure seal forms include adhesive around the edges. When pressure is applied with a pressure seal machine, tiny glue capsules burst and create a secure bond. The form is folded, sealed and ready to mail! Pressure seal is perfect for processing a high volume of forms. Pressure Sealed forms replaces the need for an envelope. Request for Proposal (RFP): A solicitation document used to obtain offers of price and proposed method of execution of a specific project. We use a bid or request for quotation when we can specifically define the item that needs to be procured Stop Payment: An order by the issuer of a check to the bank that the check is drawn on, not to pay a specified check. Possible reasons include a lost check or a stolen check. HFCC is charged a fee by the bank for this service. Student Refund: A refund is a reimbursement issued to a student if account payments, loans, grants (financial aid) were more than what they owed for classes owing after the add/drop period. Third Party Vendor: An outside company that provides services, on behalf of the College, to our employees or vendors. 7 Current Student Refund Check Run Process EPBR: Vouchers Web Focus report ARTM: Saved list Student RFVR: Use created for payment: captures student used to create report SLED: Create RFVC: Money Financial Aid list to create report signed balances, pulls IDs, refunds to be offsetting current & Saved list for now pulled from and forwarded to saves list. voucher register; issued past term credit batch refunding student accounts DFS no money pulled. balances CKSE: both paper & CKPR: Print screen CKRS: accept CKPO: Posts electonic requests dates for screen for checks to general refunds authorized checks, then printed in properly printed ledger cashiers vault checks, marks Y/N SCKR: Creates a ECHP: Processes ECPP: Pre-notes SLCR: Creates a file for general electonic checks, bank account saved list for pre- accounting; run posts to general information to noting checks twice, for paper ledger verify correctness and electonic Run RERG: Create file Copy file and charge to captures Fin. Ser. ties data Fin. Ser. verifies Run SNDACRCN Verify file acceptance Email completed to process Paper Checks Notify Financial approp. area to allow Notify Cashiers that Financial check data to to Cashiers # of checks, $ process to transmit and that file processed transmitted form refunds services via email file to be recognized by checks can be mailed Services process information amount of run file to Comerica was complete to Comerica system Cashier's Review for Fin. Ser. Daily Review for Save returned file Office Print Checks Fold Checks Canadian banking: prior day bad addresses Mail Checks Addresses runs banking reporting Copy file & charge EFTs ext. to approp. area Process Pre- Notify Financial Transmit file to Verify file by Notify Cashier's office that Clear checks in Hank & tie (process is so file can be note file services via email Comerica phone file has been verified totals to banking report run twice) recognized by Comerica Copy file & charge Process ext. to approp. area Notify Financial Transmit file to Verify file by Notify Cashier's office that Regular echeck so file can be services via email Comerica phone file has been verified file recognized by Comerica 8 Cause-and-Effect Diagram Environment Process Issues Materials Fraud Escheat Regulations Cost Lack of Financial Literacy Fraud/counterfeiting - Check stock - Lack of Bank Accounts Stop-payment requests - Postage - Understanding banking fees Emergency checks - Toner Check reissuement Problem Statement Problems encountered issuing refunds to HFCC students Potential cost to students Labor Cost - Check-cashing services Paper check vs. - Cashier's office - Debit card/ATM fees - Own debit card - Accounting - 3rd party debit card - Responding to - Bank acct calls about - EFT checks Measurement Methods People 9 Refund Cost by Academic Year Cost of Paper Check Student Refunds Year Total cost 2005/2006 $ 73,833.87 $160,000.00 2006/2007 $ 80,013.32 2007/2008 $ 97,566.37 $150,000.00 2008/2009 $ 122,797.12 $140,000.00 2009/2010 $ 153,656.22 $130,000.00 2010/2011 $ 134,929.56 $120,000.00 2011/2012 $ 130,776.86 2012/2013 $ 109,614.49 $110,000.00 $100,000.00 Cashier hours $90,000.00 Acct hours $80,000.00 $70,000.00 Stop payments $60,000.00 Postage $50,000.00 Paper & toner $40,000.00 $30,000.00 $20,000.00 $10,000.00 $- 2005/2006 2006/2007 2007/2008 2008/2009 2009/2010 2010/2011 2011/2012 2012/2013 10 MCCBOA (Michigan Community College Business Officers Association) SURVEY Issuing Student Refunds Requested by: Barb Eisterhold Henry Ford Community College – Emailed 9/19/13 – Updated 11/8/13 Community College Provide options offered to students to If funds placed on Cost to College for issuing Debit Card Comments receive refunds Debit Card, please provide vendor Alpena Community College Paper Checks Bay De Noc Community College Delta College Paper Checks Glen Oaks Community College Paper Checks Gogebic Community College Grand Rapids Community College Paper Check, Direct Deposit, Debit Card Higher One .40 Per transaction Higher One does all options. If they fail to log in and make a choice, default is check.