Standards Showcase Section 13: Financial and Physical Resources

The member institution provides the following financial statements:

a. an annual budget that is preceded by sound planning, is subject to sound fiscal procedures, and is approved by the governing board. (Financial documents)

b. an institutional audit (or Standard Review Report issued in accordance with Statements on Standards for Accounting and Review Services issued by the AICPA for those institutions audited as part of a system wide or statewide audit) for the most recent fiscal year prepared by an independent certified public accountant and/or an appropriate governmental auditing agency employing the appropriate audit (or Standard Review Report) guide.

c. a statement of financial position of unrestricted net assets (without donor restrictions), exclusive of plant assets and plant-related debt, which represents the change in unrestricted net assets attributable to operations for the most recent year.

Core Requirement

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How does MTSU demonstrate compliance with this standard?

MTSU uses sound financial planning and procedures, with budgets approved by the board. The University follows a July 1–June 30 fiscal year and undergoes annual audits in accordance with U.S. generally accepted auditing standards and Government Auditing Standards. Financial statements are prepared in conformity with generally accepted accounting principles (GAAP) applicable to governmental colleges and universities as established by the Governmental Accounting Standards Board (GASB). Audits are conducted by the Tennessee Comptroller of the Treasury as required by state law. Audit reports are submitted to both the Tennessee General Assembly and the University’s Board of Trustees. MTSU provided recent audited financial statements for FY2021 through FY2024, with no materials weaknesses noted in internal controls over financial reporting. The FY2025 audit was not yet available at the time of submission of the Compliance Certification Report and provided in the Focused Report together with explanations of methodological changes and an updated UNAEP table. 

The university’s audited financial statements do not include a Statement of Unrestricted Net Position. A statement for fiscal years 2020 through 2024 was provided illustrating the change in unrestricted net position attributable to operations exclusive of plant assets and plant-related debt. Over the five-year period, UNAEP increased from $107.9 million to $130.1 million, reflecting a 20% growth in spendable unrestricted resources. The updated UNAEP table shows a net increase in UNAEP from $107,940,060.66 to $117,628,411.37, an 8.98% increase from 2020 to 2025.

The budget process is governed by formal policies and includes three submissions each year: a proposed budget, a revised budget, and a spring estimated budget. After internal review, budgets are presented to the Board of Trustees through the Finance and Personnel Committee. The committee approves budgets at its May and November meetings, with final approval by the full Board at the June and December meetings. Recent approvals for fiscal years 2023–24 through 2025–26 were provided in the Compliance Certification Report. In addition, the Tennessee Higher Education Commission sets guiding and binding tuition and fee ranges, within which the Board approves any increases.

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What questions might the On-Site Review Committee ask during their visit to confirm MTSU’s compliance with this standard?

• Are audited financial statements (or standard review reports prepared for public institutions as part of a systemwide or statewide audit) prepared in accordance with generally accepted accounting principles and the appropriate audit guide?
• Did the most recent audited financial statements bear an unmodified opinion?
• Will final audited statements be received in time for due dates of SACSCOC reports? (If not, you might check with your institution’s assigned SACSCOC vice president for possible options.)
• Are the independent auditor’s report and the report on compliance and on internal control over financial reporting included (if issued with the audit)?
• Has a schedule of UNAEP been provided based on audited numbers? (This schedule can be placed in the audited statements, in the audit footnotes, as a table or chart in the institutional narrative or as a separate schedule in institutional materials. It is important that its location be clearly indicated.)
• Is the schedule of UNAEP multiyear, indicating the change in the balance of UNAEP? (Must be at least two years, more may make a better case; it’s up to the institution.)
• What is the process for preparing the budget? (Often a flowchart or timeline outlines budget activities. Be sure to indicate offices/individuals involved.)
• Are underlying budget assumptions reasonable (e.g., enrollment, fundraising, state appropriations if applicable)? How do these budget assumptions compare to actual audited results?
• Is the budget balanced? Are there allowances for contingencies? Is there an amendment process? (Generally the SACSCOC board expects budgets to be reduced if budgeted revenues do not materialize.)
• How is the institution’s budget approved? (Often institutions provide excerpts from board minutes along with narrative describing the approval process.)

The institution (a) is in compliance with its program responsibilities under Title IV of the most recent Higher Education Act as amended and (b) audits financial aid programs as required by federal and state regulations. In reviewing the institution’s compliance with these program responsibilities under Title IV, SACSCOC relies on documentation forwarded to it by the U. S. Department of Education. (Federal and state responsibilities)

U.S. Department of Education Requirement

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How does MTSU demonstrate compliance with this standard?

MTSU complies with its program responsibilities under Title IV of the most recent Higher Education Act as amended and audits financial aid programs as required by state and federal regulations. The University maintains consistently low cohort default rates, which exempt it from certain federal loan disbursement restrictions, and recent state and institutional audits have reported no findings related to financial aid. MTSU provides clear information about Title IV programs and costs through its financial aid website and standardized College Financing Plan. During the 2023–2024 award year, the University administered more than $208 million in educational assistance to nearly 19,000 students, supported by in‑person and virtual advising services. Financial aid operations are supported by integrated technologies that automate awarding, documentation, reporting, and compliance monitoring while protecting student confidentiality. MTSU maintains a positive compliance record with no complaints, sanctions, or financial liabilities related to Title IV funding and has taken proactive steps to support former borrowers in repayment outreach efforts.

The university’s financial aid programs are audited regularly in accordance with federal and state regulations and meet all Title IV requirements under its Program Participation Agreement with the U.S. Department of Education. State audits conducted by the Tennessee Comptroller of the Treasury, including Financial and Compliance Audits and Single Audits, have consistently reported no findings related to financial aid. Auditors review student files for accuracy in verification, satisfactory academic progress, award calculations, return-to-Title-IV procedures, and over-awards, as well as institutional reporting and fund reconciliation. The University provides requested documentation through secure systems and participates fully in on-site audits and exit conferences. Additional oversight is provided through periodic audits by the Tennessee Student Assistance Corporation, most recently in 2023, with no findings. MTSU’s Department of Internal Audit also conducts reviews in accordance with state and professional standards, with no findings in the most recent relevant audit.

Consistent with federal regulations, educational programs offered in whole or in part through distance education are included in the institution’s Eligibility and Certification Approval Report because the University has been approved to offer distance learning by SACSCOC. The current report notes four approved off-campus instructional sites which are no longer approved for certification given SACSCOC approved MTSU’s teach-out plans in Summer 2024.

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What questions might the On-Site Review Committee ask during their visit to confirm MTSU’s compliance with this standard?

• What issues exist with Title IV programs for the institution, if any?
  • Has the institution been placed on the reimbursement method?
  • Has the institution been required to obtain a letter of credit on behalf of the Department of Education? If so, what is the status of that letter of credit?
  • Are there findings in the independent audit of the institution’s federal financial aid programs?
  • Are these findings significant, material, repeated, or indicative of administrative capability issues?
  • Are questioned costs significant?
  • Are there significant impending litigation issues with respect to financial aid activities?
  • Are there significant unpaid dollar amounts due back to the Department of Education?
  • Has adverse communication been received from the Department of Education? If so, what was the institution’s response?
  • What is the institution’s student loan default rate? Is there a finding in the audit of federal awards regarding student loan default rates?
  • Is the institution aware of infractions to regulations that would jeopardize Title IV funding?
• Did the most recent audit of Title IV federal funds bear an unmodified opinion?
• For public institutions, how often are financial aid audits required by the federal government? If not annually, explain. SACSCOC standards require an audit of federal Title IV financial aid for member institutions.
• For public institutions, if the institution is included in a group of institutions for federal awards compliance review (such as a state or system audit), is it clearly indicated by name that your institution has been reviewed? Are findings clearly delineated by institution?

The institution ensures adequate physical facilities and resources, both on and off campus, that appropriately serve the needs of the institution’s educational programs, support services, and other mission-related activities. (Physical Resources)

U.S. Department of Education Requirement

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How does MTSU demonstrate compliance with this standard?

The Campus and Campus Facilities

The MTSU campus landscape consists of an academic and administrative core, with residential, athletic, recreation, and support areas located at or adjacent to the core’s perimeter; and a small parcel of University property directly to the west, the Miller Education Center, which provides additional University office space and is home to the Songwriting Center. Satellite properties owned or leased by the University support academic programs, such as School of Agriculture farms and Department of Aerospace buildings at the municipal airport.

The University has approximately 507 classrooms and 18,095 seats in more than 542,815 square feet of instructional space. There are 241 general-purpose classrooms, including 63 with access to student laptops or fixed desktop computers. In addition, 376 classrooms come standard with automated recording, streaming, and unified communications systems using Panopto, Microsoft Teams, and Zoom Workplace. Each classroom features laptop docking (USB-C) for instructors. Fixed, smart technology is included in 368 classrooms. Most fixed, smart classroom audiovisual systems include a control system so that each classroom has similar configurations and equipment to facilitate student and faculty use. Several classrooms have multiple projection screens and in-ceiling document cameras, as well as discipline-specific technology and other software necessary for academic programs.

More than 209 classrooms are discipline-specific in design to accommodate the need for art studios, practice spaces and performance halls, engineering and mechatronics labs, audio production and recording control rooms, electronic media digital labs, science labs, simulators, and physical education instruction and human performance labs.

The Office of Campus Planning is responsible for planning, design, and implementation of the University’s long-range facility plans, initiatives, and all associated capital projects. The Office oversees the decennial process to develop the University’s Campus Master Plan, which analyzes the University’s real property, buildings, landscape, infrastructure and transportation systems, and other physical resources to set priorities for site and infrastructure projects that support academic instruction, research, innovation, creative activities, and public service.  

Capital Outlay (Improvement) (over $10M) and Capital Maintenance (over $1M) project funding requests are completed annually as part of the MTSU Capital Budget Request to the State of Tennessee. Projects included in the budget request require approval by the MTSU Board of Trustees. After MTSU Board approval, the Capital Budget Request is sent to THEC and the Tennessee Department of Finance and Administration for review and consideration.

The process for determining and approving capital project priorities begins with the recommendations and approvals by the University’s President and the Vice President for Business and Finance, regardless of funding source. These projects, including new construction and space renovation, are then reviewed and approved by the MTSU Board of Trustees. For Capital Maintenance projects over $1 million, capital improvement projects, or any project utilizing any funding sources other than University plant funds, a project approval request and subsequent approval must be granted by the State Building Commission of Tennessee prior to commencing the project. Per State Building Commission policy, capital projects over $10 million or that utilize Tennessee State School Bond Authority (TSSBA) bonds must be disclosed to the Tennessee Higher Education Commission (THEC). 

MTSU ensures adequate facilities for on-campus and off-campus educational programs by following institutional policies and guidelines based on best practices, guidelines issued by the Tennessee Higher Education Commission (THEC), and regular consultation between Campus Planning and Facilities Services staff and the Manager for Academic Space Planning, who reports to the University Provost. Additionally, the Information Technology Division (ITD) collaborates with these individuals and the Academic Space Planning analyst on the technology infrastructure for instruction, in particular the implementation of instructional technologies funded by student Technology Access Fees (TAF). Additional measure for ensuring adequacye include Guidelines for Instructional Spaces, the University Technology Plan, the Graduating Senior Survey, and academic program and programmatic accreditation reviews. MTSU Campus Planning ensures adequate research facilities by integrating research spaces into annual capital outlay project submittals to build new or renovate existing academic buildings, such as the new Applied Engineering Building and renovation of Kirksey Old Main.

Physical resources for student support services are also part of the Campus Master Plan and capital outlay and capital maintenance projects. These include the student unions (Keathley Union Center, James Union Building, Student Union Building). Services such as the Disability and Access Center, Student Care and Conduct, and Veterans and Miliary Family Center are often housed in one of these building. The Recreation Center houses Student Health Services and the Campus Pharmacy. Housing facilities are managed by Housing and Residential Life, which is responsible for health and safety, student conduct, and student life as well as housing assignments. 

Most athletics facilities are part of the Murphy Center Complex (Murphy Center) provides campus spaces for NCAA Division I sports training, competitions, and events. Murphy Center includes:

• Charles M. Murphy Athletic Center
• Alumni Memorial Gym (volleyball)
• Johnny “Red” Floyd Stadium and Horace Jones Field (football)
• Granville “Buck” Bouldin Tennis Center
• Reese Smith Field and Stephen B. Smith Clubhouse and Indoor Training Facility (baseball)
• MT Softball Complex
• Dean A. Hayes Track and Soccer Stadium
• Kennon Hall of Fame

The Jeff Hendrix Golf Performance Center is located off-campus.

The Department of Facilities Services (Facilities Services) manages MTSU’s utilities, maintenance services, and infrastructure operations to promote and ensure a safe and clean environment for students, faculty, staff, and visitors. Work units within Facilities Services provide functional support services for environment, health, and safety; cleaning; preventative or corrective maintenance; energy efficiency; fire safety; and grounds maintenance.

Continuous assessment of the University’s physical maintenance and operations also comes through input and feedback from work order requests, as well as through feedback and reviews by Facilities personnel regarding the performance history of MTSU’s infrastructure. Facilities Services staff continuously review and update MTSU information in the state’s Physical Facilities Inventory and Survey database (PFIS) for buildings other than residence halls, recording the date of construction, square feet (gross and assignable), condition score, and ratings for the structure and its suitability to the existing program. Data from the PFIS database is also utilized and maintained by the Department of Campus Planning and Construction Services to assess and determine capital maintenance project needs and priorities ahead of system failures or other risks to the functionality of University buildings and grounds.

Risk Management, Insurance, and Inventory

The Tennessee Treasury Department provides insurance services for the State of Tennessee and all state entities, including institutions of higher education. The Treasury Department administers the state’s self-insurance program through its Division of Claims and Risk Management. It pays for losses caused by damage and destruction to state-owned buildings and property out of the Risk Management Fund for claims between $25,000 and $7.5 million. Additional losses between $7.5 million and $750 million are paid out of the Risk Management Fund by contract with excess insurance carriers. As a participant in the state’s self-insurance program, the University’s Campus Planning Department provides building and property updates annually to the Division of Claims and Risk Management via a Property Value Report. The reports contain lists of the University’s buildings, square footage, construction materials, use type, contents, and replacement values to ensure appropriate levels of coverage through the state’s insurance carriers.

Procurement assesses its operations through an annual physical inventory. The results of the inventory not only provide an accounting of assets but they also serve as a baseline for discussion of best practices with various constituencies interfacing with procurement and logistic processes, including academic department chairs/directors, unit heads, i.e., Business and Finance personnel, Audit and Consulting Services, the Tennessee Comptroller’s Office, Division of State Audit. MTSU has an internal audit department, Audit and Consulting Services, which is an integral part of the management control system and reports administratively to the President and functionally to the Board of Trustees through the Audit and Compliance Committee. The Division of State Audit of the Office of the Tennessee Comptroller of the Treasury conducts an annual audit of the statement of net position; statement of revenue, expenses, and changes in net position; and statement of cash flows of Middle Tennessee State University. The statement of net position includes net investment in capital assets (property, plant, and equipment) and debt administration connected to those assets, such as construction projects in progress, as reported by the University’s Business Office. 

Distance Education and Off-Campus Instructional Sites

The main campus of the University has 415 classrooms equipped with videoconferencing and lecture capture technology that allows for synchronous and asynchronous online courses and programs. Equipment is typically replaced through the TAF request process described above. Additional improvements/enhancements such as interactive technologies, wireless audiovisual capabilities, and enhanced online learning are often funded through academic department accounts with support from the TAF process. These classrooms provide technological resources to offer high-quality desktop videoconferencing courses.

The Testing Center houses the MTSU Online and Distance Education Test Center. The Test Center proctors exams for these learners in the same three testing rooms used for other tests. These rooms are outfitted with more than 60 computer stations for online exams and more than 80 table stations for paper exams. Three additional computers provide workstations for administrative staff and servers for exams. 

Although MTSU does not have any SACSCOC-approved off-campus instructional sites at the time of submission of this Compliance Certification Report, the University has policies and procedures that ensure oversight of facilities where it offers courses at off-campus sites approved by the Tennessee Higher Education Commission and those about which it has notified the Commission.

To serve students who cannot access MTSU programs because of their geographic distance from the campus, limited technology resources, or dual enrollment location at a high school, MTSU utilizes off-site locations appropriate for undergraduate and graduate programs. University Policy 253 Permanent or Semi-Permanent Off-Campus Instructional Facilities includes a provision for off-campus instructional sites. Administrative support for off-campus instructional sites is the responsibility of University College in collaboration with the deans, chairs, program coordinators, and faculty of courses and programs offered at these sites. University College staff work with officials of the off-campus instructional site to develop and sign a memorandum of agreement (MOA) for a semester or academic year. The MOA specifies each party’s responsibilities, including those for physical, technological, library, and student support services. The University College Associate Dean and the Director of Dual Enrollment conduct regular visits to off-campus instructional sites to ensure the facilities and resources are adequate and in compliance with the MOA. All classrooms, computer labs, and library spaces are reviewed; staff check computer equipment and internet connections to ensure faculty and student access to the University’s learning management system, library and information resources, and virtual support services. In addition, staff secure necessary internet, printer, and copier access codes for faculty teaching at the site, when applicable.

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What questions might the On-Site Review Committee ask during their visit to confirm MTSU’s compliance with this standard?

• Are overall physical facilities of the institution adequate in quality, scope, and condition to support the mission of its programs and services?
• Are there specific areas of concern in physical resources? How are these concerns being addressed by the institution?
• Does the institution have a master facility plan in place designed to meet current and future needs of the institution? How is it revised and updated?
• How does the institution evaluate the appropriateness and sufficiency of physical resources at off-campus instructional sites, whether or not such sites are under the direct control of the institution?
• Are there details available relating to classrooms, libraries, laboratories, and other specific areas that address adequacy and appropriateness of facilities? Capacity reviews? Utilization studies?
• Are there surveys or other information sources that provide information as to whether or not physical facilities are adequate and appropriate?
• What is the extent of deferred maintenance? Does the institution have a specific plan to manage deferred maintenance? Is there evidence the plan is followed?
• Are facilities properly and routinely maintained?
• How does the institution manage risk as it relates to physical resources? Is a risk-management plan in place with the institution’s insurance company? Are there proper levels of property insurance? Coverage for loss of use?
• Is there a physical inventory? Frequency? How are items tracked? Tagged? Assigned?
• Is there a disposal policy?
• Were there findings related to fixed assets in the Auditor’s Report on Internal Controls? Or in the federal awards audit? 
• Is the technological infrastructure sufficient for the needs of the institution, especially for distance and correspondence education?