February 3, 2011 Audit/Finance Committee Meeting

The Audit/Finance Committee of the Board of Trustees of Illinois Valley Community College District No. 513 met at 5 p.m. on Thursday, February 3, 2011 in the Board Room (C307) at Illinois Valley Community College.

Committee Members Physically Present

Michael C. Driscoll
Melissa M. Olivero

Committee Members Absent

Thomas C. Setchell, Chair

Other Board Members Physically Present

Dennis N. Thompson
Larry D. Huffman

Others Physically Present

Jerry Corcoran, President
Cheryl Roelfsema, Vice President for Business Services and Finance
Rick Pearce, Vice President for Learning and Student Development
Lori Scroggs, Vice President for Planning and Institutional Effectiveness
Patrick Berry, Controller

The meeting was called to order at 5 p.m. by Mr. Thompson.

FINANCIAL FORECAST FOR FY 2012-2016

Cheryl Roelfsema and Patrick Berry prepared the five-year financial forecast using conservative estimates for tax and tuition revenues.  They continue to be optimistic in regards to state funding and project state revenues to be flat for the next five years.  Even in tough times, IVCC continues to maintain a healthy financial position.  The forecast assumes a balanced budget for the Operating Fund which includes the Education and Operations and Maintenance Funds.  The current fund balances in the Operating Fund exceeds the target of 25 percent.  At the end of the forecast the fund balances still exceed the 25 percent target.  Fund balance is a term used to describe net assets and serves as a measure of the financial resources available to the College.  The Government Finance Officers Association recommends a minimum fund balance for operating funds to be no less than two months of regular operating expenditures.  At 25 percent, IVCC is well over this minimum. The fund balances are projected to decrease in the Operations & Maintenance Restricted Fund due to the construction of the Community Technology Center and in the Liability, Protection, and Settlement Fund due to a decrease in the tax levy.  Both reductions are part of the College’s plan.  The forecast also includes a bond issue for the Community Technology Center which could be issued in the future.  This will have no effect on the current tax rate or the fund balances. Mr. Pat Berry reviewed the five-year financial forecast covering fiscal years 2012 through 2016.  The following factors, assumptions, and findings were included in the forecast:

  • 2010 EAV projected to increase by 4.9 percent and then remain flat
  • Exelon’s EAV constant at $525,000,000 for all five years.
  • Tax levy constant for all funds except the Bond and Interest levy and the Liability, Protection and Settlement levy.
  • Bond and Interest levy will continue for tax year 2010 at $1,265,000 and then change to $1,250,000 for the new Community Technology Center bond payments.
  • Credit hours were projected to decrease at a rate of one percent.
  • Tuition will increase by $7.77 in FY2012 in order to quality for an equalization grant and additional tax levy.  Tuition will then increase by $8.00 in FY2013, $9.50 in FY2014, and $8.50 in FY2015 and FY2016.  These increases may be necessary to balance the operating funds.
  • State funding is forecasted to remain flat for all five years.
  • Salaries to increase 3.5 percent for all five years – two new positions being added in FY2014.
  • Benefits to increase 7.5 percent for all five years.
  • Total salaries and benefits in FY2016 are approximately 23 percent higher than the FY2011 budget.
  • Capital equipment approximately $400,000 per year between Fund 01 and Fund 02 in order to satisfy capital investment requirements for TIF agreements.
  • Utilities increased by $125,000 annually for the Community Technology Center beginning in FY2013.
  • Payments for the CTC were planned as $1,000,000 in FY2011 and FY2012 with the final payment of $3,000,000 in FY2013.
  • A $200,000 contingency is included for the Operations and Maintenance Fund each year for all five years.
  • Remaining expenditures are adjusted each year in order to balance the budget.  Compared to the FY2011 budget, the overall five-year average for contractual services increased 0.7 percent, materials and supplies decreased 1.0 percent, and travel and conferences decreased 8.7 percent.
  • The historical $400,000 transfer from the operating funds to the Operation and Maintenance Restricted Fund is not included for any of the five years projected.
  • Interest from the Working Cash Fund is transferred to the operating funds each year.

The question was asked how the increase of $125,000 in utilities was determined.  This is a very rough estimate and is based on the current square footage.  Energy savings could reduce this amount.  It was also asked if there are any concerns regarding the assumptions made.  State funding is a concern, but the administration is hopeful that the increase in state income tax will provide for level state funding.  Mr. Thompson noted that IVCC has the lowest tuition and universal fee rate of all community colleges in the State and the increases have been tied to qualifying for equalization.  Another question was asked about the rationale for leaving the EAV flat.  The College received an increase in EAV this year from the new wind farms.  It is not anticipated that there will be much development outside of the TIF districts or much increase in residential property.  Farm land is anticipated to continue to increase, but this is a small part of IVCC’s tax base. There has been an increase in property tax objections, but a lot of commercial property is in TIF districts and does not affect the College.  Grand Bear will not have a big


impact on IVCC.   There was a question on the bullet point of remaining expenditures adjusted each year in order to balance the budget.  It was explained that this was the average the expenditures increased or decreased each year.  It was then asked how travel and conferences could decrease by 8.7 percent.  This is not what the administration would like, but this would be the least harmful to the overall operation of the College if cuts were needed.

TUITION RATE ADJUSTMENT

The administration recommended increasing tuition from $68.36 to $76.13 per credit hour.  The College had received a letter from the Illinois Community College Board stating that IVCC must set its tuition and universal fee rate at 85 percent of the statewide average in order to qualify for equalization.  Qualifying for equalization means approximately $2,600,000 to IVCC.  Other concerns for raising tuition included the anticipation of State funding being reduced by at least two percent for fiscal year 2012 and grant payments are not being made in a timely fashion, which may create a cash flow problem. By raising the standard tuition rate to $76.13, high school students in the E2C program in fiscal year 2012 would pay $38.07 per credit hour.  The Audit/Finance Committee was in support of the increase.

COURSE FEES/ADJUSTMENTS

Course fee guidelines were established in October 2005 based on the supplies used and course- specific software and licenses needed. Courses taught in a dedicated instructional computer lab have a technical support fee included in the final course fee.  The ITS Department recalculated this fee and determined that it should decrease by $2 per credit hour.  This change was factored into the fees presented. All significant changes (more than a $5 increase) had a brief rational listed after the proposed new fee.  Based on these guidelines, the administration recommended adjusting course fees for 252 courses.  This included adding course fees for 12 new courses and 12 existing courses, increased fees for 199 courses, and reduced fees for 29 courses.  Dr. Driscoll wanted to discuss the quality process of identifying the method of calculating the course fees.   Dr. Pearce noted that during the most recent review of fees, it became evident that fees related to some courses were out of line with the actual cost of supplies and had not be adjusted in some time.  As a safeguard in the future, Dr. Pearce is asking the Institutional Research department to run a report as part of the Program Review that will compare revenue from fees to expenditures on instructional supplies.  When a disparity is found, this will automatically trigger a review of that course’s fee structure. Dr. Driscoll liked the idea of the formula because it gives the students an accurate account of the cost.  Dr. Driscoll asked for a copy of the course fee guidelines for the February board meeting.  The Audit/Finance Committee was in support of the course fee adjustments.

ADJOURNMENT

The meeting adjourned at 5:24 p.m.