January 29, 2014 Audit/Finance Committee Meeting

The Audit/Finance Committee of the Board of Trustees of Illinois Valley Community College District No. 513 met at 6 p.m. on Wednesday, January 29, 2014 in the Board Room (C307) at Illinois Valley Community College.

Committee Members Physically Present

Larry D. Huffman, Chair
Michael C. Driscoll
Everett J. Solon

Others Physically Present

Jerry Corcoran, President
Cheryl Roelfsema, Vice President for Business Services and Finance
Lori Scroggs, Vice President for Learning and Student Development

The meeting was called to order at 6 p.m. by Dr. Huffman.

FINANCIAL FORECAST FOR FY2015 – 2019

Cheryl Roelfsema prepared a financial forecast for FY2015 – 2019 based on specific factors, assumptions, and findings.  Cheryl projected the Equalized Assessed Valuation (EAV) will remain constant for the next five years.  Exelon’s EAV decreased to $485,000,000 in tax year 2013 and with the recent negotiated agreement the value of the plant will decrease to $455,000,000 in 2014; $435,000,000 in 2015; $430,000,000 in 2016 and 2017 and then increase to $435,000,000 in 2018 and $460,000,000 in 2019.  Cheryl was optimistic in projecting the decrease in the value of the Exelon Generating Plant would be offset by an increase in the EAV of farmland.  The total tax rate is estimated at $.3634 which is the current rate and will be held constant for five years.  The bond levy for the debt certificates will cease in 2015 and the Liability, Protection, and Settlement levy will resume.  The College has not levied for this fund since tax year 2007 to deliberately lower the fund balance.  Credit hours were projected to remain level in FY2015 and then increase one percent each year from 2016 through 2019.  Tuition is projected to increase between five and 10 percent annually for the next five years.  State funding is forecasted to decrease by one percent in each of the next five years due to low credit-hour reimbursements.    For expenses, Cheryl projected salary increases to drop to one percent in 2015 and slowly climb back to 2.5 percent by 2019.  This appears to be the only way to control tuition costs.  Health insurance rates increase five percent each year from 2015 through 2019.  She estimated paying a $350,000 Cadillac Tax per year starting in 2018 due to the Affordable Care Act.  The level of benefits on two of the College’s three plans would need to be substantially reduced to avoid this tax.  A high deductible health plan was offered to employees in 2014 as a step toward avoiding the Cadillac Tax.  Contract services, materials and supplies, fixed charges, and capital were increased by two percent each year.  Travel is held at a constant $200,000 annually for employee development.  Utilities were increased by two percent in 2015-2017 and increased by three percent for all remaining years.  Interest from the Working Cash Fund is transferred to the operating funds each year.  An annual transfer of $10,000 is made to Project Success for tuition waivers in 2015 and 2016 and an annual $27,000 transfer is planned to the Small Business Development Center.  Athletics continues to be funded by the Bookstore fund balance.  Cheryl projects this fund balance will be depleted by the year 2021.  An increase in credit hours would increase the revenues and would help keep the tuition increases down.  The question was asked how many credit hours would be needed to help offset the 10 percent increase in tuition.  This number was estimated at a 10 percent increase in credit hours.  It was suggested to highlight the new Community Technology Center (CTC) and the Certified Production Technician (CPT) program.  Jennifer Scheri has been promoting this program through presentations to different organizations. Dr. Huffman noted the financial forecast is a dismal outlook and puts everything on the table for consideration.  He mentioned dual credit tuition which is half of the College’s current tuition rate.  He suggested looking at this rate and possibly raising it to 2/3 or equal to the current tuition rate.  The decline of credit hours has eaten up the increase in tuition.  Finding ways to avoid the Cadillac Tax would free up $350,000 that could be spent somewhere else.  He suggested not making the transfer to athletics every year by going to Division III with no tuition waivers or doing away with athletics all together.  This would mean spending $400,000 somewhere else.  If some of these things have to happen to balance the budget, the administration will have to make these decisions and bring their recommendation to the whole Board.  Dr. Driscoll would like all of the citizens of the IVCC district to see the value of IVCC and how it could improve their quality of life.  Dr. Huffman noted that only 10 to 12 percent of the community is touched.  Many people do not know the College exists and this is a burden to overcome.  Getting the community on campus is the first step in seeing what the College has to offer.  

TUITION ADJUSTMENT

The administration recommended increasing tuition by $10 per credit hour from $93.60 to $103.60 per credit hour.  This is approximately a 10 percent increase.  IVCC has been behind its ICCB Peer Group average.  With this increase it will be near the Peer Group average and close to the State average.  IVCC is a great value compared to the tuition costs of NIU, SIU, etc.  IVCC’s website is set up to compare the price of four-year universities with IVCC.  The question was asked how the College gets the word out on the value of the community college.  Tracy Morris noted that IVCC has a strong relationship with its district high schools even though in recent years there are fewer high school students to pull from.  From the class of 2012, 38.1 percent of the district graduates enrolled in classes at IVCC. This is the highest percentage of high school penetration in IVCC’s history. It was suggested to expand into the junior high grade schools.  Tracy does not feel the College has the number of staff needed to reach all of the grade schools. Marketing and recruiting by student ambassadors were suggested, but the high schools want them in the morning and the students have classes and the scheduling is very difficult.  IVCC has scheduled preview nights for grade schools at Marquette and this has been successful and they schedule college night for junior and seniors. Dr. Driscoll suggested tying marketing into career days.  The dual credit coordinator attends many of the eighth grade previews for dual credit opportunities and has participated in many career activities.  What speaks best is when the students come on campus.  IVCC hosts a career expo every spring which brings between 600 – 800 eighth grade and freshmen students to campus.  Hall High School has expressed an interest in bringing their students to the CTC.  The local career center will be bringing their students to the campus on February 28.  Mr. Solon asked about continuing education for people in the 25 to 45 age group and have companies cut back on the dollars used for training.  Jamie Gahm noted that the contractual training where IVCC travels to the companies for training is increasing a little.  Continuing Education does a lot of professional training, but Jamie sees a trend of going online for continuing education.   There are a number of companies who pay their employees to continue their education at IVCC.   Admissions is seeing a trend of middle-level students only taking one or two classes because they need the money for living expenses.  It is the next group beyond high school that the College needs to focus on.  There was consensus among the Audit/Finance Committee to recommend increasing the tuition by $10 at the February board meeting.

COURSE FEES/ADJUSTMENTS

Sue Isermann and Harriet Custer developed guidelines many years ago for reviewing course fees on an annual basis.  This has worked well and course fees are reviewed and adjusted, if necessary, at the same time the annual tuition is adjusted.  The recommendation is to change 108 of the 371 course fees: 79 increases, 28 decreases, and elimination of one course fee.  Deans and program coordinators who worked on the course fees tried to keep the cost down and tried to align them properly.  There was consensus to recommend the course fee adjustments, as presented, at the February Board meeting.

CITY OF OTTAWA AGREEMENT

Five years ago the City of Ottawa was willing to purchase a building and customize it for IVCC.  The Ottawa Center has been very effective in providing classes for Ottawa residents as well as the entire eastern portion of the College’s district.  Worksheets on enrollments at the Ottawa Center since its inception were presented.  The current lease agreement with the City of Ottawa for the Ottawa Center building will expire on June 30, 2015.  If the College is going to take action on the agreement, it will have to be in the Fall.  Dr. Corcoran made the Committee aware of the fact that he has had a conversation with the Mayor of Ottawa about the possibility of a continuation of the agreement.  If there is any information that the Board would like in helping them make a decision of extending the agreement, Dr. Corcoran would appreciate knowing.  Dr. Driscoll noted the worksheet on Adult Education and Continuing Education should include a footnote that registration for FY2014 is still in progress.  Statistics that Dr. Huffman would like to know, but knows this would be very difficult to obtain, is how many of these students would not be taking courses if the Ottawa Center did not exist.  Would these students be driving to the campus?  If we had six or ten more students sitting in a class on campus, this would be more cost effective.  The administration conducted surveys for the first three semesters asking these kinds of questions, but the students stopped doing the surveys.  Sue believes the students would not be taking as many courses because of the transportation costs.  When the College was entering into the agreement with the City of Ottawa, letters of support from the high schools on the eastern side of the IVCC district saw this as a wise move by the College and would do everything to steer their students to the Ottawa Center.  IVCC has seen the percentage of high school graduates from Ottawa, Serena, Marquette, Streator, Earlville, and Seneca grow significantly in the last two years.  Overall, the profile of the College has been elevated on the east side of the district.  Marquette, Serena, and Earlville high schools release their students to attend the Ottawa Center.  These students are paying full tuition for these courses because it is on the College’s site.  The question was asked about an extension site on the west side of the district.  The administration was not sure of the volume on the west side that is seen on the east side.  The east side has growth from the suburbs and the Route 71 and 47 corridors.