June 5, 2012 Audit Finance Committee Meeting Minutes

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

Committee Members Absent:
Melissa M. Olivero

Other Board Members Physically Present:
Britney Burkart, Student Trustee

Others Physically Present:
Jerry Corcoran, President
Cheryl Roelfsema, Vice President for Business Services and Finance
Patrick Berry, Controller

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

BID RESULTS – ASBESTOS ABATEMENT – EAST CAMPUS

The apparent low bidder for asbestos abatement on the East campus project is Midwest Service Group of Schererville, Indiana at $79,885.  The Capital Development Board (CDB) has not yet determined if this is a valid bid due to some issues in the contracts department.  Dr. Driscoll made the motion to recommend to the full Board to give approval to CDB to award the project to the lowest bid and if it is determined that this is not a valid bid, CDB would award the project to the next lowest bid by Midway Contracting Group from Tinley Park at $83,000.  Dr. Huffman seconded the motion and the motion passed by voice vote.

BID RESULTS – PHASE 2 OF THE COMMUNITY INSTRUCTIONAL CENTER PROJECT

Dr. Driscoll had requested clarifying information on the overage on Phase I and now Phase 2 bids.  With the contingency lowered from ten percent to five percent, the project looks like it will end with a significant contingency balance assuming the project continues in the right direction.  Dr. Driscoll was concerned with the four alternates proposed.  In light of the economy and in light of the compression of revenues, the CTC costs need to be watched extremely close.  When there are variances that start to become significant, in excess of $1 million, Dr. Driscoll was concerned with approving all four alternates with the revenue stream shrinking.  Mr. Steve Halm noted the list of four alternates were all in the original scope of the project. Currently, Phase I contingency has a total of .05 percent in total change orders or approximately $11,000 which is very low on a project of this size.   He noted if the fourth alternate, columns to the east campus building, was not included in Phase 2 it would be a very plain building.  If the Board was to change their mind and include the columns at a later date, the cost would be much higher.  Mr. Halm stressed the point that IVCC needs to try to use all the money the State has available for this project, or the money will be returned to the State.  The bottom line has to come as close to zero as possible.  There is $1 million available in the project for moveable equipment.  The College could use this money for construction purposes and use fund balances or capital campaign unrestricted funds to purchase the moveable equipment needed.  If the $1 million is not used for moveable equipment, it would be used for Phase III.  Currently the project is over budget by $2,222,109.  If the $1 million for moveable equipment is used for construction, along with unused contingency, deletion of Building E elevator, and elimination of the columns on the East campus building, the project would be close to a balanced budget.  Dr. Driscoll made the motion, seconded by Dr. Huffman to recommend to the full Board the approval of the Vissering Construction bid as the general contractor and the CDB approved low bids of the prime contractors for Phase 2 of the Community Instructional Center Project for the base bid and alternates #1, #4, and #3 (#1 – Maintenance Building, #4 – Addition to Maintenance Building to double the size, and #3 – Paving of the Service Drive) excluding alternate #2 (Entry towers) totaling $4,720,264.  Motion passed by voice vote.

FY2013 BUDGET UPDATE

Cheryl Roelfsema reported on the Fiscal Year 2012 budget.  Given the most current information, FY 2012 will likely be $1 million under budget in revenues.  The CPPRT will be under budget by $400,000 due to overestimating the budget, but there will be $100,000 over budget due to more non-correctional credit hours in the calculation of state base operating grants.  Tuition and fees will be $600,000 below budget.  Credit hours are 6.5 percent less than FY 2011 and 4.5 percent below budget.  This decrease in credit hours accounts for approximately $400,000 of budget variance.  Truck driver training and mini-course tuition will be $200,000 below budget.  Public service revenues will be at least $100,000 below budget due to decreases in truck driver training with Sauk Valley and Waubonsee, business seminars, the IBEW contract, and building rentals.  Cheryl noted the response by the administration to lower revenues was dramatic and effective.  Expenditures were reduced in several areas and current projections show that the budget can avoid a deficit.  The largest reductions came from salaries and benefits ($400,000), materials and supplies ($200,000), and travel and capital ($100,000 each).

Patrick Berry reviewed the Fiscal Year 2013 budget.  Revenues for FY 2013 are projected to be $100,000 less than the FY 12 projections.  Property taxes will be down $100,000, or 1.1 percent, because of a decline in EAV.  The current house bill SB2443 has the most aggressive proposed cuts to the community college system.  The FY 2013 budget accounts for a decrease in revenues of $100,000 from this bill.  There was a change in the FY13 unit cost formula that will generate an additional $200,000, or 10 percent, for the IVCC base operating grant.  The additional revenue generated by the $8.25 tuition increase will be offset by a reduction in credit hours.  Current FY13 summer and fall registrations indicate that credit hours may be down by as much as 10 percent from FY12 actual credit hours.  The FY 13 budget will have $100,000 less in tuition revenue.  Salaries are down by $250,000, which includes a reduction of nine full-time equivalent positions and the following raises:  faculty – 3.15 percent per the negotiated labor agreement; service employees – 2.5 percent per the negotiated labor agreement; support staff – 3 percent; and administrators – 2.5 percent.  Utilities are up $100,000 and the contingency for FY13 has been lowered from $200,000 to $100,000.  Scholarships are up $50,000 due to the potential discontinuation of the veteran’s grant funding of $100,000 offset by lower enrollments.  Dr. Huffman thanked Cheryl and Patrick for the updates of the current budget and the projected budget for next year. 

FY13 TECHNOLOGY EXPENDITURES

The FY 12 Information Technology Progress Report was available to committee members for review.  Cost cutting features of FY12 included a special purchase of older model personal computers, donation of 70 laptops and 80 desktop computers from State Farm, a significant reduction of student printing due to the installation of the print management system, and an annual savings on the Basic Computer Skills Inventory instrument.  Emily Vescogni and Harold Barnes reviewed the proposed projects for FY 13.  The projects included the Virtual Desktop Initiative ($69,750), Colleague Migration ($335,474), and Penetration Testing ($30,000).  The Virtual Desktop Initiative is a multi-year project which replaces end-of-life computers with thin client technologies and streamlines the preparation of computers for deployment and upgrades and reduces e-waste.  The benefits of this initiative are centralization of maintenance, students can access anywhere on campus, employees can access from home or on the road, improved software license management and utilization, and it extends the use of older computers.  Migration of the Colleague administrative system from an AIX/Unidata platform to a Windows/SQL Server environment will allow the College to use less expensive virtualized servers, move to the Microsoft SQL Server database for more effective reporting, provide redundancy with automatic failover, and lower maintenance costs. The Penetration Testing will provide technical assessment of the security of IVCC information systems.  The network security will be evaluated by simulating an attack from malicious outsiders and insiders.  The IT department plans to conduct testing biannually.  Dr. Huffman was impressed with what the IT department has done to cut costs by looking at a different plan based on the budget.  He commended them for providing a good information technology environment for the faculty and staff.

UNITED STATES ECONOMIC DEVELOPMENT ADMINISTRATION GRANT

The Community Technology Center (CTC) Capital Campaign has the opportunity to obtain much of the equipment needed for the CTC through the filing of a grant application with the U.S. Economic Development Administration (EDA) in the amount of $1,572,000.  The grant has a fifty percent match requirement.  The unrestricted funds raised thus far through the CTC Capital Campaign could provide the potential IVCC match of $786,000 and allow the College to leverage these funds to receive additional money for more equipment.  There was consensus among the committee members to recommend approval of the Resolution of Support and Commitment of Funds to file a grant application with the U.S. Economic Development Administration in the amount of $1,572,000.

ADJOURNMENT