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April 3, 2012 Audit/Finance Committee Meeting Minutes

The Audit/Finance Committee of the Board of Trustees of Illinois Valley Community College District No. 513 met at 6 p.m. on Tuesday, April 3, 2012 in the Board Room (C307) at Illinois Valley Community College.

Committee Members Physically Present:
Larry D. Huffman, Chair
Michael C. Driscoll
Melissa M. Olivero

Others Physically Present:
Jerry Corcoran, President
Cheryl Roelfsema, Vice President for Business Services and Finance
Rick Pearce, Vice President for Learning and Student Development
Patrick Berry, Controller                                             

The meeting was called to order at 6 p.m. by Dr. Huffman.

 

REQUEST FOR PROPOSAL – AUDIT SERVICES

A summary of the proposals received for audit services was provided to the committee members prior to the meeting.  McGladrey & Pullen, LLP submitted the lowest cost proposal.  The firm is the sixth largest accounting and consulting firm in the United States and conducts the second highest number of Federal Single Audits.  In 2011, McGladrey & Pullen, LLP also performed audits for five (5) other Illinois community colleges:  Illinois Central, Kaskaskia, Sauk Valley, Joliet, and Heartland.  The reference check on McGladrey & Pullen was positive.  There was consensus to support the recommendation of McGladrey & Pullen, LLP by the Audit/Finance Committee members.

 

REQUEST FOR PROPOSAL – BANK DEPOSITORY AND SERVICES FOR OPERATING FUNDS

A summary of the proposals received for banking services was provided to the committee members prior to the meeting.  Centrue Bank of Princeton offered the best interest rate and the lowest fees.  They have locations in Peru and Ottawa.  There was consensus to support the recommendation of Centrue Bank by the Audit/Finance Committee members.

 

BUDGET UPDATE

Cheryl Roelfsema had disappointing news for the current fiscal year on the revenue side.  Property taxes will be $100,000 under budget.  LaSalle County had 25 property tax appeals resulting in a decrease in equalized assessed valuation of $27 million.  This includes the reduction in the Exelon plant of $21 million.  This results in a $67,500 decrease in the operating funds.  Property tax revenues are spread over two fiscal years - $37,500 less in operating funds for FY12, with the full reduction in FY13.  Corporate Personal Property Replacement Tax (CPPRT) will be under budget by $400,000.  The budget amount was based on FY11 receipts.  It was discovered the FY11 receipts were inflated due to one-time events.  The College is now aware of a report published by the State that will help with projecting the CPPRT revenues going forward.  Tuition and fees will be $600,000 below budget.  Credit hours are 6.5 percent less than FY11 and 4.5 percent below budget.  Truck driver training and mini-course tuition will be $200,000 below budget.  Public service revenues will be $200,000 below budget due to decreases in truck driver training with Sauk Valley and Waubonsee, continuing education, and the IBEW contract for instruction.  This information was communicated across the campus.  Open meetings were well attended and resulted in great dialogue among the staff and administration.  In trying to avoid a deficit for the year, the following actions have been taken:  1) implemented a hiring freeze; 2) focus on increasing course utilization.  Increasing the average student count per section from 17.7 to 18.7 would save approximately $200,000; 3) necessity-only expenditures; and 4) effectively stopped non-extension site travel; effectively stopped capital spending.  On the expenditure side, legal fees will be at least $130,000 over budget.  The additional legal fees are being spent to protect future revenues of the College.  It will be difficult to eliminate the deficit, but the College continues to monitor purchases and is doing everything to cut costs.   Credit hours are projected by past history and institutional research.  Other factors that may affect enrollments include availability of financial aid and the economy.  The number of students has not decreased as much as the number of credit hours.  This may be due to students receiving the Pell Grant receive the maximum amount at 12 credit hours.  A number of students could take 15 or 18 hours, but at 12 hours they could get the full grant and use the remaining amount for gas and rent.  It was suggested to consider giving a reduced tuition rate if the student takes additional hours beyond 12.  Dr. Corcoran will explore if this is a best practice at any other community colleges.  Currently, there is a $1.4 million shortfall for FY12.  Pat Berry presented an update on the FY2013 budget.  Revenues for FY13 are projected to be $1.1 million less than the FY12 budget but $300,000 more than the FY12 actual projections.  The College is budgeting a five percent decrease in credit hours which equates to $400,000 less in revenue. The $8.25 tuition increase will add $700,000 in revenue.  Given the revenue decline, the College must look at all positions and programs against the core mission.  Contract services, materials, and travel will be cut.  Other areas to be discussed for reduction include:  1) Personnel costs account for 77 percent of the operating fund expenditures.  Some of the reductions must come from full- and part-time staff; 2) Institutional waivers totaled $235,000 in FY12.  These include athletics, art, journalism, music, theater, Student Government, Honors program, etc; 3) E2College waivers totaled $215,000 in FY12.  This represents a 50 percent reduction in tuition in high school students; and 4) bad debt write-offs accounted for $77,000 in FY11.  More aggressive collection efforts will be considered.  Dr. Corcoran reported there has been a change in the money-purchase pension formula and the College is seeing a wave of retirements across the community college system.  Three outstanding IVCC faculty at the higher end of the salary schedule have submitted their retirement notices and plan to come back to teach part-time which would help the financial situation.  Mission-critical services must be looked at and this means some positions could be reduced.  Dr. Corcoran commended the work of the budget council and administration working together to prepare a balanced budget.  If the College needs to reduce some of its services, the administration needs to prepare for it.  It was noted by Dr. Driscoll that the administration must keep in mind during these discussions that the students and quality instruction need to come first.  It was suggested the administration needs to look at the number of tuition waivers.  Another update for the audit/finance committee could be presented in early June before the tentative budget is presented in July and the final adoption in August.

 

TUITION WAIVERS

Dr. Pearce distributed information on the number and the cost of institutional waivers over the past five academic years.  For all the waivers, one full-time waiver is 32 credit hours except for the honors full waiver, which is six credit hours.  Tracy Morris and Dr. Pearce met with Tommy Canale to discuss options of modifying the way the waivers are distributed and the number of credit hours allowed. The National Junior College Athletic Association mandates the maximum number of students receiving tuition waivers per sport.  The athletic department can grant a full waiver or half waiver – 16 hours per semester or 8 hours per semester.  Dr. Pearce proposed establishing the number of credit hours, instead of the number of waivers, per sport that the coaches could use in recruiting.  This would still be within the NJCAA limit but would provide more freedom in recruiting.  He proposed to decrease the number of waivers from 74 to 50 which would result in a $50,000 savings.  The athletic department would still have ample resources to recruit.  He also proposed to maintain the academic waivers as is and the honors program with 14 waivers at six credit hours each.  They also discussed the elimination of a couple sports.  The whole athletic program is subsidized.  The tennis program has no facilities and is not competitive.  He would recommend eliminating both men’s and women’s tennis.  The College would still honor waivers already given to tennis students.  Dr. Driscoll would like financial information (the cost per student, per sport) to help with his decision.  Patrick Berry and Tracy Morris looked at each sport as to what each cost, but some are very active in fundraising.  Tommy Canale and Tracy Morris have been involved in the decision to eliminate the tennis programs.  Dr. Huffman noted that when it comes time to cut the budget, the administration may have to look further at the athletic program.  The Board must place education first.  Dr. Pearce noted there is an Arrowhead Conference meeting on April 26 and if the Board plans to eliminate a sport, IVCC should give them notice at that meeting.  As far as the coaches, they need to know before the waivers are given.  Eliminating tennis represents a substantial savings in a way that will not create havoc in the athletic department.  The Board could take action at the April board meeting.  The audit finance committee had consensus in principal and the administration will proceed.  Although Dr. Huffman is not big on student referenda, if further drastic steps were needed in athletics, he could see asking the students if they would pay a higher fee for playing athletics or asking all students if they are willing to pay more to sustain the program.

 

ADJOURNMENT

The meeting adjourned at 6:48 p.m.