February 12, 2010 Audit/Finance Committee Meeting
The Audit/Finance Committee of the Board of Trustees of Illinois Valley Community College District No. 513 met at Noon on Friday, February 12, 2010 in the Board Room (C307) at Illinois Valley Community College.
Committee Members Physically Present:
Thomas C. Setchell, Chair
Michael C. Driscoll
Melissa M. Olivero
Committee Members Absent:
Other Board Members Physically Present:
Larry D. Huffman
David O. Mallery
Cheyanne Smith, Student Trustee
Others Physically Present:
Jerry Corcoran, President
Cheryl Roelfsema, Vice President for Business Services and Finance
Rick Pearce, Vice President for Learning and Student Development
Lori Scroggs, Vice President for Planning and Institutional Effectiveness
Patrick Berry, Controller
Reed Wilson, Special Project Assistant to the President
The meeting was called to order at noon by Mr. Setchell.
FINANCIAL FORECAST FOR FY 2011-2015
Mr. Pat Berry reviewed the five-year financial forecast covering fiscal years 2011 through 2015. The following factors, assumptions, and findings were included in the forecast:
- EAV flat until a three percent growth for tax years 2013 and 2014.
- Exelon EAV constant at $501,000,000 for all five years.
- Tax levy constant at $.3464 per $100 of EAV.
- Current bond tax levy of $.0446 will be split in tax year 2010 between the tort levy ($.032) and a new bond levy ($.012). The new bond levy will generate approximately $385,000 to cover the additional debt needed to complete the CTC.
- Projected credit hours for FY2011 to increase by 11.5 percent over the budgeted FY2010 hours. Part of this large increase is due to FY2010 generating more credit hours than budgeted. A one percent increase is planned for FY2012 through FY2015.
- Tuition will increase by $5.86 in FY2011 to qualify for the equalization levy. Tuition then increases by $5.00 in FY2012 and $5.50 in FY2013, FY2014, and FY2015. The increases are necessary to balance the operating funds.
- State funding is forecasted to decrease by two percent in FY2011 and then remain flat for the succeeding four years.
- The overall five-year average annual increase for salaries is 3.5 percent which includes a reduction of $187,500 for the county IT personnel.
- Benefits will increase on average of 7.1 percent each of the five years which includes a reduction of $62,500 for the county IT personnel.
- Any excess revenue over expenditures in the operating funds was added to capital expenditures.
- Utilities increased by $25,000 annually for the Ottawa Center beginning in FY2011 and $125,000 annually for the CTC beginning in FY2013.
- Payments for the CTC are planned as $1M in 2011 and 2012 with the final payment of $3M in 2013.
- Expenditures are held constant or reduced for some years depending on the revenues of each fund.
- A $400,000 transfer from the operating funds to the restricted building fund is planned for all five years. The operating funds balance except for this transfer.
- Interest from the working cash fund is transferred to the operating funds each year.
- A $200,000 contingency was used in the operating funds for each of the five years.
The question was asked what impact the current State funding has on the budget. IVCC has received payment for the second quarter, but the last two quarters will not be paid in this fiscal year. This will not be a huge cash flow problem for the College. Money collected from bonds will be placed in the operating fund. Spending down fund balances is prudent but does not provide flexibility. The College needs to capitalize on a one-time bond issue so that money is placed in the operating fund instead of reserves.
TUITION AND UNIVERSAL FEE RATE ADJUSTMENT
The administration recommended increasing tuition from $62.50 to $68.36 per credit hour. The College had received a letter from the Illinois Community College Board stating that IVCC must set its tuition and universal fee rate at 85 percent of the statewide average in order to qualify for equalization. Qualifying for equalization means approximately $2,500,000 to IVCC. Other concerns for raising tuition included the anticipation of State funding being reduced by at least two percent for fiscal year 2011 and state grant payments not being made in a timely fashion creating a serious cash flow problem.
The administration met with the Student Government Association (SGA) to discuss the tuition increase. A letter from the SGA to the Board of Trustees was distributed at the Audit/Finance Committee meeting. Members of the SGA recognized the importance of the increase and supported the administration’s position. At this meeting members of the SGA requested a $.14 increase in the universal fee from $7.25 to $7.39. Over the past 15 years, the student activity portion of the universal fee has only increased by a total of 25 cents, but the number of student organizations has nearly doubled. The administration recommended an increase of $.14 in the universal fee bringing the combined tuition and universal fee to $75.75, to take effect in the summer 2010 semester. It appears that this new rate will be the lowest of any public community college in Illinois. The question was asked if this increase would be too conservative considering state funding. It was noted that the College is projecting a $5 to $6 increase in tuition for the next few years. The administration is trying to keep the tuition low in light of the economy and to not lose sight of affordability. Ms. Olivero made the motion and Dr. Driscoll seconded it to accept the recommendation and present it at the February Board meeting. The motion passed by voice vote.
COURSE FEES ADJUSTMENTS
Course fee guidelines were established in October 2005 based on the supplies used and course- specific software and licenses needed. Based on these guidelines, the administration recommended adjusting course fees for 182 courses. This included four new courses, increased fees for 101 courses, and reduced fees for 77 courses. Dr. Driscoll made the motion and Ms. Olivero seconded it to accept the recommendation and present it at the February Board meeting. The motion passed by voice vote. Dr. Huffman suggested including lab fees in the tuition which would result in variable tuition. Lab fees are not currently covered under financial aid. Due to the College’s administrative software and the amount of time to implement it, the administration is seriously looking into transitioning to this model one year from now.
TRUCK DRIVER TRAINING TUITION ADJUSTMENT
The administration recommended an increase of $193 from $3,207 to $3,400 in tuition for the Truck Driver Training Program beginning in summer semester 2010. The proposed increase is to support increases in fuel and equipment rental costs. With this increase, IVCC will remain the lowest cost program offered in the region. Mr. Setchell made the motion and Ms. Olivero seconded it to accept the recommendation and present it at the February Board meeting. The motion passed by voice vote.
COMMUNITY TECHNOLOGY CENTER FINANCING
Illinois Valley Community College’s required match for the Community Technology Center is $7,614,900. The balance in the Building Reserve fund is $3,946,170, which leaves a balance of $3,668,750 needed for the match. If the administration continues to transfer $400,000 annually over the time of the project, which would amount to another $1.2 million, leaving $2,468,750 needed for the match. The plan is to go out to bid one year from now and ICCB will require 25 percent of the match in the bank. There will be three bids: 1) Community Technology Center, approximate cost of $24 million with a $5 million match; 2) East Campus; and 3) Renovations. Options and suggestions for funding the full local commitment:
- Issue debt certificates for $2,500,000 for ten years at an interest rate of 4.5 percent with the annual debt service being approximately $385,000. Bonds could be issued to cover the debt certificates.
- Issue debt certificates for $3,500,000 or $4,000,000 and not commit to the $400,000 transfer.
- Issue bonds. The current bond issue will be retiring. This would be an opportunity to issue new debt without increasing the tax rate. A portion of this bond could be used for the annual debt service on the debt certificates and the remainder for the tort liability fund levy. Tort expenditures per year are approximately $1.5 million.
- Keep the tax rate level. Do not spend all of the Tort funds and then start levying again
- Pledge a revenue stream using TIF revenues. With approximately 45 TIFs, this would be very difficult to estimate and very expensive to hire someone.
- Use tuition as a funding source.
- Propose a building fee as part of the universal fee.
- Use a combination of different sources.
The College has missed the opportunity for a bond issue for this tax levy. It takes approximately four board meetings to complete a bond issue. The decision to issue a bond will need to be done by September 1 so that it is completed by December. The administration was directed to provide three choices for the financing of the Community Technology Center. The Board will discuss these choices, select one, and begin the process by September 1.
BROADBAND GRANT APPLICATION
One year ago a stimulus package of $7.2 million was issued for greater broadband access for areas across the nation. In August 2009, the city of Ottawa compiled a plan for a fiber optic network for LaSalle County. Northern Illinois University put together a public-private partnership project called “Data Project” for DeKalb County and into Earlville. It looks like DeKalb County could be funded at $15-$16 million. Administering the grant links all the school districts, hospitals, libraries, and even agriculture. LaSalle County and the North Central Illinois Council of Governments (NCICG) have been working with potential stakeholders to replicate NIU’s grant application to provide a fiber optic network to cover the entire LaSalle County. The application deadline is March 15, 2010. The cost to cover the entire LaSalle County would be $30 million at $18 per foot for laying the fiber optic cable. Outlying areas could be connected by wireless and thus reducing the cost to $20 million. There is a nonfederal match of 20 - 30 percent or $4 - $6 million. The State of Illinois has $50 million earmarked to help entities to meet this match. Applications are due next week for State assistance. The private sector partners will be able to pledge in-kind contributions up to $1 million. Locally, $1 million is needed for the match. Pledges from all the stakeholders are currently being sought. The project would be administered by the LaSalle County government. IVCC will be expected to pledge some support, which is undetermined at the moment. This project could result in savings to the College if it is thinking of increased activity with NIU and enhanced communication with district high schools. Mr. Reed Wilson will provide updates on the existence of this effort and the role IVCC will play. The second round of funding is targeting community colleges. This will set the College up nicely to bring in the other parts of the IVCC district. LaSalle County will be administering the project. Mr. Setchell would like to see the government document. He would have more confidence in supporting the project if the College is able to recover all of its costs in seven to 10 years. NCICG is partnering with LaSalle County and LaSalle County is funding the application.
The meeting adjourned at 1:04 p.m.