January 28, 2013 Audit/Finance Committee Meeting

The Audit/Finance Committee of the Board of Trustees of Illinois Valley Community College District No. 513 met at 5:30 p.m. on Monday, January 28, 2013 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
Patrick Berry, Controller

The meeting was called to order at 5:30 p.m. by Dr. Huffman.

FINANCIAL FORECAST FOR FY 2014-2018

Pat Berry and Cheryl Roelfsema prepared a five-year financial forecast covering the fiscal years 2014 through 2018.  Using specific factors, assumptions, and findings, the budget for FY2014 will have a deficit of $360,000 which is equivalent to six full-time positions.  The College plans to maximize revenue sources and cut back on expenditures where it can.  The last resort will be to cut personnel.  Due to reduced revenues from the state and modest increases in enrollments and the EAV, tuition will increase at a relatively high rate in the foreseeable future.  The total tax rate is fixed at .3584 for all five years in the forecast.  Dislocated Workers Center revenues and expenditures have been removed from Fund 6 in 2014 and beyond.  BEST, Inc. will take over the administration of DWC and all revenues will flow through BEST.  Salary increases average three percent in 2014 as they are already negotiated in the bargaining agreements.  Salary increases drop to one percent in 2015 and slowly climb back up to 2.5 percent by 2018.  A ten percent increase in tuition is forecasted for 2014.  Even with this increase, the College is faced with a deficit.   Health insurance rates increase three percent in 2014 due to the current 18-month plan year.  Rates then increase six percent for all remaining years.  Starting in 2015, an additional $100,000 is added every year based on the likelihood of the College paying the employer’s portion of SURS.  This legislation has not passed, but the College is planning for it.  The large item in 2018 is the excise tax of $350,000 due to the Affordable Healthcare Act.  The only way the College can lower this tax is by lowering the benefits of its health plan.  Professional development was increased from $150,000 to $200,000 each year and a $100,000 operating contingency is included each year.  Utilities will increase in 2014.  The College will save on the cost of gas due to the older buildings on the east campus being demolished, but electricity will increase because of the CTC.  The interest from the Working Cash Fund is transferred to the Operating Funds each year.  Athletics will continue to be funded by the bookstore fund balance.  It is projected the fund balance will be depleted by the year 2021.  The revenues in the bookstore are not as strong as they used to be due to the rental program and online purchases.  In 2013, the College eliminated the equivalent of 2.5 full-time positions and has not filled another 7 full-time positions.  Dr. Driscoll did not want to compromise the educational aspect of the College and suggested alternative revenues with additional seminars and creating consortiums with local businesses.  He asked if the College was maintaining the required level in the fund balances.  Cheryl indicated the board policy guidelines are to establish and maintain a general fund balance of at least 25 percent of normal annual operating expenditures.  The College’s fund balances are running between 27 and 28 percent.  Dr. Corcoran suggested taking the contingency of $100,000 out of the budget which would lower the deficit to $260,000. 

TUITION ADJUSTMENT

The administration recommended increasing tuition from $84.38 to $93.60 per credit hour to be effective with the summer 2013 semester.  The universal fee would remain at $7.39.  The combined tuition and universal fee would be $100.99.   The increase of $9.22 per credit hour is a 10 percent increase over the FY2013 combined tuition and universal fee of $91.77.  The state average combined tuition and universal fee is $107.89 for fiscal year 2013.  The Early Entry College (E²C) tuition rate will remain at one-half of the standard tuition rate with no universal fee.  IVCC is one of the lower tuition rates.  For ICCB Peer Group III, which includes IVCC, the average FY2013 tuition and fees is $99.94.  Estimates of $2 to $4 increases are expected for the other community colleges.  For a number of years IVCC had low increases, but the last two years it has had some of the highest.  Dr. Driscoll indicated that IVCC takes pride in affordability and now it is being pushed in a direction that it doesn’t want to go.  The administration did discuss the tuition increase with the Student Government Association (SGA) and they were understanding and supportive of the ten percent increase.  Ms. Burkart indicated the students did not believe the increase was so high that it would keep students from attending.  Dr. Driscoll noted the five-year forecast indicated a ten percent increase in 2014; five percent increases in 2015 through 2017 and a ten percent increase in 2018, which is due to the excise tax beginning in 2018.  Dr. Huffman indicated the University of Illinois is increasing their tuition by 1.4 percent for next year.  Their base is $12,000 just for tuition and when the room and board is added they are much more expensive.  Even though IVCC has to pass along this kind of increase, it is still the best buy.  There was consensus to recommend the tuition increase, but both Ms. Olivero and Dr. Driscoll reluctantly agreed.  Dr. Huffman noted even with the tuition increase, the budget is several hundreds of thousands away from balancing. 

COURSE FEES/ADJUSTMENTS

Course fees are reviewed annually by Program Coordinators and Deans using approved course fee guidelines.  The board members received the current course fee guidelines along with the proposed fee changes for FY2014.  The recommendation was to increase fees for 64 courses, decrease fees for 48 courses, add course fees to 4 existing courses, and add course fees for 8 new courses. The increases were made to cover the costs associated with each course.  A tuition increase for the truck driver training program was also included.  The last tuition increase was approved in May 2012.  The recommended tuition and fees would increase the truck driver training program from $3,207 to $3,418.  Program costs are affected by increased external factors such as fuel, wages, equipment rental, and a new $45 fee for the National Safety Council Defensive Driving for Truck Drivers test.  In comparing the tuition and fees for truck driver training with other Illinois community colleges, IVCC’s tuition is one of the lowest.  The administration has applied for a grant to help subsidize the truck driver training program for students who cannot afford the program due to financial need.

STUDENT PRINTING CHARGES

IVCC students are not charged for printing in the labs or open areas.  The Information Technology Committee studied practices of other colleges and found it is common that students are charged for printing.  Charging the students will not generate revenues, but it will cover costs and help curb wasteful printing.  Faculty agreed to charge the students for printing, but thought it would be disruptive in the instructional labs.  Therefore, the recommendation was to charge .05 a copy for black and white printing and .25 a copy for color printing only in Jacobs Library, the Learning Commons, and the open lab at the Ottawa Center.  Ms. Burkart indicated that the Student Government Association supported charging students for printing.

PURCHASE REQUEST – PRINT MANAGEMENT UPGRADES

The purchase request for additional equipment is needed to implement a charge-per-print system for students in open computer labs.  Estimated start-up costs for the system are $13,762. 

PETER MILLER COMMUNITY TECHNOLOGY CENTER EQUIPMENT LIST

Mr. Reed Wilson noted the College has great expectations for the new Peter Miller Community Technology Center (CTC), but the building needs to be filled with cutting-edge equipment and done in a timely matter.  The equipment needs to be delivered and installed when the building is ready to open.  Cheryl Roelfsema and Sue Isermann compiled a list of the equipment in various categories and a description of each for the rationale.  A general timeline and the funding of the equipment were presented.  Dr. Driscoll noted the expense of the wind/renewable energy equipment and wondered if the College is covering the expense through lab fees and is the estimated enrollment large enough.  Mr. Wilson responded that the space in the new CTC is allowable for the College to increase enrollments.  The new equipment will attract new students because there is not enough room in the current classrooms.  A lot of the equipment in the current classrooms will be moved to the CTC.   Dr. Corcoran plans to be more aggressive in asking potential donors to help with the purchase of equipment.  Also, reimbursement from the State is higher for these types of programs than it was before.  Dr. Corcoran will be approaching companies that have benefited in the past and those that will benefit from the new programs in the CTC.  Dr. Huffman has concerns with sole providers, but in this case where the College needs to match other equipment he understands.  As the College goes through this process, he suggested looking at the cost of previous equipment and if the company is quoting a higher price, this needs to be pointed out to them.  Harold Barnes and Emily Vescogni are putting together the technology needs of the offices.  They will bring the list to the board when all the information is ready.  Sue Isermann prepared a list of technology equipment needed for the student labs and classrooms.

AFFORDABLE HEALTH CARE ACT

IVCC is considered a large employer in regard to the Affordable Health Care Act (AHCA).  There are three components to the Act:  1) Insurance – minimal essential coverage; 2) Affordable; and 3) Full-time employees.  Any employee who is employed on average at least 30 hours of service per week is considered a full-time employee.  There is a penalty of $2,000 per year, per full-time employee for failure to offer all full-time employees insurance.  If just one employee averages over 30 hours and is not offered insurance, IVCC’s annual penalty would be over $500,000.  The College must strictly monitor and manage work hours.  Employers may use a look-back measurement period of up to 12 months when calculating average hours.  If IVCC uses a 12-month look-back period, those employees averaging over 30 hours per week in 2013 must be offered insurance for all of 2014.  For part-time faculty there is currently no official guidance on converting credit hours to hours of service.  Until official guidance is issued, IVCC will use the formula of one credit hour = 3 hours worked per week.  This limits part-time faculty to three classes per semester or 27 hours of service per week.  IVCC’s policy on combined hourly work and credit hour classes cannot exceed 29 hours per week.  This means approximately 15 part-time employees will need to reduce combined hours.  Because IVCC’s current health plan’s total premium per coverage level exceeds federal thresholds, it will be subject to a Cadillac tax of 40 percent starting in 2018 which will amount to an estimated $300,000 per year.  There are many unknowns to the Affordable Health Act, but the administration will stay current with forthcoming regulations.  Dr. Driscoll does not feel the College has to reduce positions to pay for the excise tax.  He suggested lobbying.  Mr. Reed Wilson encouraged board members to write to Congress because the legislators need to know this.  It was also suggested to adopt a resolution on this matter and present it to the legislators.  It was noted that ICCTA was designed to help community colleges with these issues.