January 11, 2012 Audit/Finance Committee Meeting Minutes

The Audit/Finance Committee of the Board of Trustees of Illinois Valley Community College District No. 513 met at 5:15 p.m. on Wednesday, January 11, 2012 in the Board Room (C307) at Illinois Valley Community College.

Committee Members Physically Present

Larry D. Huffman
Michael C. Driscoll

Committee Members Absent

Melissa M. Olivero  

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 5:15 p.m. by Dr. Huffman.

FINANCIAL FORECAST FOR FY2013-2017

Pat Berry reviewed the financial forecast starting with revenue income. The district’s EAV is projected to remain flat for all five years and Exelon’s EAV is held constant at $525,000,000.  The total tax rate is held constant.  The current bond issue will come off the tax rolls in tax-year 2015 and the levy for the Liability, Protection, and Settlement Fund will resume in tax-year 2015.  The College has not levied for the Liability, Protection and Settlement Fund in order to lower the fund balance and in 2016 the levy will be brought back and kept level.  There has been a strong effort by the College to increase enrollments.  Credit hours have been projected to decrease at a rate of 5 percent in 2013, 2 percent in 2014 and will flatten out after that.  The College would rather respond to an increase in credit hours than have to respond to greater-than-anticipated decrease.  Tuition is projected to increase by $8.25 each year for the next five years.  State funding is forecasted to remain flat for all five years.  The allocation of revenues will remain the same with 89 percent to Fund 1 and 11 percent to Fund 2. For expenditures, salary rates increase 3 percent each year for all five years.  There is a 17 percent drop in part-time instructional wages to align with the credit hours generated.  There will be no projected full-time position changes.  Benefits will only increase by 2 percent in 2013 hoping to realize the savings from the health insurance network change.  The remaining years will increase by 5 percent.  Contract services, materials and supplies, and travel will be cut substantially in 2012 to keep spending within the revenues.  However, in 2013-2017 these categories will increase by 2 percent each year to a more reasonable level.  Capital equipment varies from year to year but is constantly below historic levels.  Utilities are increased by 7 percent in 2014 and 2015 with the addition of the Community Technology Center.  A $200,000 contingency is included for the Operations and Maintenance Fund each year for all five years.  The historical $400,000 transfer has not been budgeted.  The administration is optimistic farm land will continue to increase by 10 percent per year, but farmland is only 15 percent of the EAV and residential property makes up 50 percent of the EAV.  The administration does not see the residential values increasing.  Home sales are increasing, but the value of the homes is not increasing.  The College has received several notices from the Board of Review for objections to property tax.  Three TIF districts will be expiring which may bring dollars back into the EAV.  Dr. Huffman noted that if enrollments decrease enough in certain areas, the administration may be forced to look at programs and services that may have to discontinue and reallocate the resources to serve other areas of growth.  Cheryl Roelfsema noted that the Board’s fund policy requires fund balances to remain at 25 percent and at no time does the forecast go below this. 

TUITION ADJUSTMENT

The administration recommended increasing the tuition from $76.13 to $84.38 per credit hour, effective the summer 2012 semester.  The universal fee of $7.39 would remain the same.  The combined tuition and universal fee would rise to $91.77 per credit hour, a 9.9 percent increase over FY2012.  The State average combined tuition and universal fee is $103.89 for FY2012.  For ICCB Peer Group II, the average FY2012 tuition and fees is $100.67.  Students taking Early Entry College (E²C) courses pay one-half of the standard rate and no universal fees.  The rate would increase from $38.07 in FY2012 to $42.19 in FY2013.  With state funding as low as it is, the only increase in the revenue stream is through a tuition increase.  According to ICCB, the state contributes 21.3 percent of the cost of operating the community college system rather than 33.3 percent; students contribute 34.6 percent; and local funding accounts for 44.1 percent.  There has been a drop in state funding of $600,000 over the last four years.  The committee was in consensus to approve the recommended increase in tuition.

COURSE FEES/ADJUSTMENTS

Course fees are reviewed annually by program coordinators and deans using the approved course fee guidelines.  IVCC currently has 363 courses with approved course fees.  The recommendation is to add or change 220 course fees:  154 increases, 54 decreases, add course fees to two existing courses, and add course fees for ten new courses.  The formula for calculating the fees works well, is fair, and the fees are based on actual costs.  Dr. Driscoll suggested entering into long-term agreements for software to avoid large increases in fees.  Sue Isermann noted that significant increases were due to adding software to a new program which was not in existence.  Sue Isermann will look into pursuing the cost of a license for three years.  Dr. Huffman noted reviewing course fees each year is a good practice to ensure the College is charging the students the appropriate fees.   He wishes financial aid would cover lab fees because for some programs this is a significant cost.  The committee supported the recommendation of the course fee adjustments.

WIND TURBINE GRANT APPLICATION

Reed Wilson reported on the benefits, challenges, and current status of the wind turbine project. The benefits of the wind turbine would strengthen the academic program, bolster IVCC’s public image as an institution committed to the use of renewable energy, build relationships with major industries for employment opportunities for IVCC graduates, and strengthen the IVCC budget by reducing electric power costs and increasing revenue by increasing the number of students registering for wind energy courses.  A preliminary cash flow analysis based on a 1.5 MW turbine was provided to the committee.  The cost to construct a 1.5 MW turbine is approximately $5 million.  IVCC has an excellent chance of obtaining a $900,000 grant from the Illinois Clean Energy Community (ICEC) Foundation.  The (ICEC) Foundation had already provided a grant to cover a major portion of the cost of the MET tower.   The results are yet to be submitted but the College has enough wind to generate the power.  Ameresco has located a surplus 1.5 MW turbine with full warranty at a $1 million savings and an additional $650,000 is being sought through the Community Technology Center capital campaign.  Mr. Wilson is also seeking funds from the Illinois Department of Commerce and Economic Opportunity.  In order to keep the project moving forward the grant application from the Illinois Clean Energy Community Foundation needs to be filed in January and Ameresco has offered to file the application without charge.  Also a Request For Proposals (RFP) process needs to be conducted by IVCC in the near future in order to select a company to handle the wind turbine project.  The selected company would be expected to underwrite the cost of the upfront environmental studies needed to obtain the support of the Illinois Department of Natural Resources (IDNR) even if the Board decided not to proceed with the wind turbine project.  The cost of these studies may be as much as $50,000.  The RFP will provide the College with additional information to make an informed decision on the wind turbine project. Consensus of the committee members was to move ahead with the ICEC Foundation grant application and the RFP process, with the understanding such activities do not commit the college to acquisition of a wind turbine.

FUND TRANSFER AGREEMENT

With the capital campaign in progress, an agreement was needed for the transfer of restricted gifts from the IVCC Foundation to IVCC and to assure that the property transferred is managed, allocated or expended by the College in accordance with the restrictions and intentions of the donors.  This agreement has been reviewed by Walt Zukowski and Jack Cantlin.  This agreement will be presented to the IVCC Foundation in January for approval and then placed on the IVCC Board agenda in February for approval.  It basically outlines the relationship between the Foundation and the College. 

OTHER

The Board Financial Policy requires changing auditors every six years.  The auditing firm of Gordon, Stockman & Waugh was awarded a contract which expired with the FY2008 audit and the three-year extension expired with the FY2011 audit.  The College will solicit RFPs for auditing services for the FY2012 audit.  The administration asked the Audit/Finance committee to help score the submittals.

ADJOURNMENT

It was moved by Dr. Driscoll, seconded by Dr. Huffman, and carried unanimously to adjourn the meeting at 6:05 p.m.  Motion passed by voice vote.