February 1, 2016 Audit/Finance Committee Meeting

The Audit/Finance Committee of the Board of Trustees of Illinois Valley Community College District No. 513 met at 6:30 p.m. on Monday, February 1 in the Board Room (C307) at Illinois Valley Community College.

Committee Members Physically Present

Larry D. Huffman, Chair
Jane E. Goetz
Everett J. Solon

Board Members Present

Austin M. Burnette, Student Trustee

Others Physically Present

Jerry Corcoran, President
Cheryl Roelfsema, Vice President for Business Services and Finance
Deborah Anderson, Vice President for Academic Affairs
Sue Isermann, Associate Vice President for Academic Affairs
Mark Grzybowski, Associate Vice President for Student Services
Kathy Ross, Controller
Renee Prine, Counselor
Missy Killian, Counselor
Vince Brolley, Instructor
Mike Phillips, Instructor
Sue Caley-Opsal, Instructor
Stephen Alvin, Instructor
Reed Wilson, Special Projects Assistant to the President

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

THREE-YEAR FINANCIAL P LAN (FY2017 – FY2019)

With all of the uncertainty the College is experiencing in state funding and enrollments, a five-year financial plan is unrealistic; therefore, a three-year financial plan was presented.  Cheryl Roelfsema presented a balanced Operating Fund.  The Operating Fund includes the Education and Operation & Maintenance Funds.  It is important that the Operating Fund is balanced.   IVCC has three sources of revenue – property taxes, tuition, and state funding.  Property taxes are flat.  The levy rates are limited on four of the eight funds and there is no growth in equalized assessed valuation (EAV).  The value of the College’s farmland has offset the decrease in the value of the Exelon plant for the past few years.  There are no appropriations in place for state funding for FY 2016.  Projections for the FY 2017 budget are based on 75 percent of the FY 2015 budget – a reduction of $545,000 a year.  The increase in tuition and fees assumes the following: projected for FY 2017 is a $5 per credit hour which brings the total to $124 per credit hour, a 4.2 percent increase; in FY 2018, a $6 per credit hour increase (4.8 percent); and in FY 2019 a $6 per credit hour increase (4.6 percent).  This might be on the low side across the state as discussions are taking place at other community colleges in the range of $9 and $10 per credit hour increases.  IVCC remains eligible for the equity tax and the 2015 tax levy request was $3.8 million, an $800,000 increase.  This increase will help the College through the lack of state funding and keep the tuition at a reasonable rate.  Salaries and benefits are 78 percent of the College’s expenses.   Assumptions used for salaries are 2 percent for all three years and an eight percent increase for benefits for all three years. There will be seven retirements this year and all will be replaced with one position being added.  Healthcare costs are increasing and the administration continues to look for other alternatives such as other co-operatives.  The projected budget includes a 2 percent increase for contractual, materials and supplies, and conferences/training for each of the three years.  Fixed costs, which include the Ottawa Center and the Truck Driver Training leases, will not increase for FY 2017.  The Ottawa Center rent will increase by 8.3 percent in FY 2018 and 7.7 percent in FY 2019.  A new five-year contract for the lease of trucks for the Truck Driver Training program was recently approved at a lower rental cost. A one percent contingency was projected for each of the three years.  There will be no increase for capital expenditures and utilities.  The College has a policy of a balanced operating budget - where revenues are greater than or equal to expenditures.  The College also maintains a working cash fund of $4.5 million to be used to pay expenses when awaiting property tax receipts or state funding but must be paid back within a year.  The Education Fund balance is projected to fall below 25 percent at the end of FY 2016.  The Board Policy requiring 25 percent of annual operating expenses for a fund balance in operating fund includes the Operations and Maintenance Fund also.  The fund balance of the combined funds is projected to be 34.1 percent at the end of FY2016.  The Auxiliary Fund is projected to be depleted by FY 2021.  The major source of revenue for this fund is the Bookstore which provides funding for the athletic program, approximately $200,000 a year.  The fund balance also includes approximately $1 million in reserves from Information Technology contracts that were discontinued a number of years ago.  These reserves are being used for technology improvements and will be completely expended by the end of FY 2017.  In 2022, the college will need to find another way to fund athletics.  There has been no tax levy for the Liability, Protection and Settlement fund since 2006.  In tax year 2015, a levy of $315,000 was requested and is included each fiscal year of the three-year projections.  Even with this levy, the fund balance will be expended at the end of FY 2019.  Starting in tax year 2017, the levy will need to be increased to approximately $1 million per year, or approximately four cents per $100 of equalized assessed valuation.  The projections presented are based on flat enrollments.  The College will have difficulty balancing the operating funds.  It has been a struggle for the past few years.  The administration has cut materials and supplies and there is always a need to upgrade technology or repair the facility.  The only areas left are salaries and benefits.  The College needs to match personnel with enrollments.  If there is no growth in enrollments, it is hard to look for an increase in the budget lines.  Dr. Huffman noted other community colleges are cutting back on travel and reducing staff when IVCC has not had to do this yet.  The equity tax is approximately 18 percent ($3.8 million) of IVCC’s revenue and if there was a time that IVCC became ineligible, it would mean 40 to 50 full-time positions.  Dr. Corcoran noted the administration is always looking at its expenditures and looking for ways to increase enrollments. 

TUITION ADJUSTMENT

The administration is recommending a 4.2 percent increase ($5 per credit hour) in tuition, increasing tuition and fees to $124 per credit hour.  IVCC’s tuition has been below the state average and if increased by only $5, it will move even further below the state average.  In some situations, community colleges are looking to increase both the tuition and universal fees.  The $5 increase will mean an increase of $150 for the year based on 30 credit hours.  Austin Burnette was pleased as the recommended increase was below what he was expecting and well below what other community colleges are considering.  There was consensus among the committee to recommend the $5 increase to the whole Board.

COURSE FEES/ADJUSTMENTS

A list of 57 courses with proposed fee changes for FY 2017 was reviewed by the Board.  The list is significantly shorter from the number of course fee changes in the past.  All significant changes (more than a $10 increase) have a brief rationale listed after the proposed fee.  The committee was in consensus that the fee changes all seemed reasonable and should be recommended to the whole Board.

AGRICULTURE PROGRAM INSTRUCTOR/COORDINATOR POSITION

A salary range and job description were provided to give an idea of the agriculture instructor costs associated with the proposed program.  A great deal of success to the agriculture program will be contingent on recruiting a top-notch agriculture instructor with dynamic energy and a great ambassador for the College.  In cooperation with the high school agriculture instructors in the district providing an electronic survey to their agriculture students, 37 percent were interested in attending IVCC for two years and then transferring to a university for a degree in agriculture. The opinion of students currently enrolled in high school agriculture programs is a very valuable source of information.  The administration is doing everything they can to grow enrollments.  Waiting much longer, the College could miss out on an individual that could take this program to the next level, a person to teach transfer courses and put together attractive AAS and certificate options.  The high schools that do well with agriculture programs are largely due to the culture and personality of the instructors.  The question was asked what capital needs would be required for this program.  The College’s ability to grow the program will depend on the instructor building the enrollments.  The instructor needs to acquire the loyalty of the high school instructors to encourage their students to attend IVCC.  The high school instructors are very excited about this.  It was encouraging from the survey that more than 44 students provided their emails so they would be kept informed on the progress of IVCC’s agriculture program. The recommendation from the committee was to place this position on the agenda for the February board meeting.  Reed Wilson noted the University of Illinois Extension has been a strong partner – pulling together the steering committee and finding the right people with the expertise to share information with the College.  They are very excited about the direction of the program and are very valuable in moving it forward.

DUAL CREDIT/DUAL ENROLLMENT INCENTIVE PROGRAM

Dr. Corcoran noted that Promise programs have not always been successful at community colleges across the nation, where the program was launched and rolled out faster than everyone would have liked.  Dr. Corcoran has a different approach.  High performing high school graduates who have 30 college credit hours (dual credit/dual enrollment) would be eligible to enroll tuition-free at IVCC in pursuit of an associate’s degree.  This could be rolled out on a pilot basis.  The College offers dual credit at 17 or 18 high schools in the district.  The number of students who would be eligible for the dual enrollment incentive program would be 20 or less.  All eligible students would be required to complete a FAFSA.  Out of 20 students some would definitely qualify for financial aid and the cost to the College would not be as severe.  Dr. Corcoran would like these students to attend IVCC and work towards an associate degree before transferring to a four-year university.  He thinks it would be a wise investment to grow enrollments.  This could inspire more students to take dual credit/dual enrollment.  In return the College would receive state reimbursement. Dr. Huffman suggested exploring the idea of offering a free course to students registered for 12 credit hours which is the minimum to receive a Pell grant.  The students might be willing to take another course, if free, and this would help IVCC’s FTE factor.