June 22, 2009 Minutes of Audit/Finance Committee Meeting

FUNDING OPTIONS FOR THE COMMUNITY TECHNOLOGY CENTER

The RAMP document which has been on the capital building fund list at #12 under the name of the Community Instructional Center has state appropriations in the amount of $16,323,100 with a local match of $5,441,000 for a total of $21,764,100.  There is an additional line item for IVCC listed in the tentative capital state budget as temporary building replacement with state funding in the amount of $6,521,700 and a local match of $2,173,900 for a total of $8,695,600.  Combining the two appropriations state funding is $22,844,800, local match - $7,614.900 for a total of $30,459,700.  Options for providing the local match for the Community Technology Center without raising taxes are $3,134,900 from the Operations and Maintenance Restricted Funds (Certificate of Deposit - $1,500,000 and Illinois Funds - $1,634,900), $1,533,100 from the Information Technology Funds (Student Technology Fees - $333,100 and Internal Service Fund & Proprietary - $1,200,000), and $2,946,900 from the unrestricted Education Fund balance.  Other alternatives include permanently reducing the Working Cash Fund (If the whole amount [$4,500,000] were abolished the College would need to go back to the voters to reestablish the fund.  A portion of it could be used, but $100,000 of interest from the working cash fund is used to balance the budget each year), issuing bonds (The current bond will end with tax year 2010.  A bond issue could be structured so the tax rate would not change.), a capital campaign conducted by the IVCC Foundation with naming rights, apply tax abatements from the TIFs, and sell some of the College’s acreage (the College has approximately 400 acres, with ten acres of riverfront property that is currently in a conservation plan for 15 years, 120 acres of tillable farm land which produces revenue, and the remaining acres which produce no revenue.)  There is a lot of flexibility in obtaining the local match without raising taxes.  The dollar amounts for the Community Technology Center are based on 74,000 square feet.  The Board facilities committee and the full Board need to make the decision on the size of the building.  If they choose to increase the size to 78,000 square feet, existing reserves or fund balances could be used for the additional local match and not disturb any cash flow.

AUDIT ENGAGEMENT LETTER

The committee members had a chance to review the audit management letter.  Mr. Setchell emphasized the most important part is the internal control system which is the first line of defense.  Auditors will test the assets in the bank and test expenditures, but not every rock is overturned.  The Board relies heavily on Ms. Roelfsema and her staff on checks and balances.  The audit is an extra level legal requirement and Mr. Setchell puts more reliance on the internal control system. Gordon, Stockman & Waugh P.C. have been the auditors for the College and just recently the contract was extended for another three years.  The audit firm was selected on experience and cost.  The firm knows the community college system well.  Community colleges conduct a survey on the cost of auditors and Ms. Roelfsema uses this as a benchmark.  The committee was in consensus for Ms. Roelfsema to sign the audit engagement letter.

IDENTITY THEFT LOSS PREVENTION REPORT

The audit/finance committee had given the administration approval to move forward with Identity Theft LOSS Prevention, LLC (ITLP) to conduct a security audit. The audit/finance committee was given a summary of the report.  A two-member team met with individual departments and the information security committee to review procedures and concerns regarding information security.  One ITLP team member conducted audits of various departments throughout the campus, noting any potential information security issues.  Each department was aware of the audit and received a copy of the findings from their particular area.  They have been asked to review any shortcomings and take appropriate action.  The second ITLP team member conducted a “third-eye walkthrough.”  This person was dressed as a student and unknown to the departments.  The person tested to see if he could get into the computers and offices and looked for unlocked file cabinets.  This person found desks that were unoccupied and paper in recycling bins that should have been shredded, or piles of papers lying around waiting to be shredded.  The information security committee is working on procedures for each department to follow.  IVCC is required by the U.S. Department of Justice to have a “Red Flag” policy in place by August 1, 2009.  This policy will be presented to the Board of Trustees for approval.

THIRD PARTY ADMINISTRATORS FOR 403(b) PLANS

The College has had a 403(b) plan in place for a number of years.  Federal regulations have changed and have become more stringent.  IVCC was unable to find a suitable option for a third party administrator when the regulations went into affect the first of the year.  So the administration took on the responsibility of administering it. The administration found it hard to track the balances on the accounts and it is a huge administrative nightmare.  The administration would like to enter into a contract with Great American Plan Administrators, Inc. as a third part administrator for the IVCC 403(b) Plan.  Great American will act as a third-party remitter to all of the vendors which were reduced from ten to four as of January 1, 2009.   IVCC currently has 65 employees participating in the 403(b) plan and no fees will be charged by Great American to IVCC.  The administration reviewed other companies, the fees were high, and there were restrictions on the vendors.  The audit/finance committee authorized Ms. Roelfsema to sign the contract with Great American.