March 31, 2015 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 Tuesday, March 31, 2015 in the Board Room (C307) at Illinois Valley Community College.

Committee Members Physically Present

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

Other Board Members Physically Present

Melissa Olivero

Others Physically Present

Jerry Corcoran, President
Cheryl Roelfsema, Vice President for Business Services and Finance
Deborah Anderson, Vice President for Academic Affairs
Mark Grzybowski, Associate Vice President for Student Services
Kathy Ross, Controller
Matt Suerth, Director of Institutional Research
Emily Vescogni, Director of Learning Technologies
Renee Prine, Counselor
Stephen Alvin, Instructor
Kim Koehler, Program Manager-Continuing Education Center

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

REQUEST FOR PROPOSALS – EXTERNAL AUDITING SERVICES

Request for proposals were sent out for auditing services and five firms responded.  All five proposals indicated that the firms have the necessary credentials and experience to perform a financial audit for the College.  Dr. Huffman, Cheryl Roelfsema, and Kathy Ross reviewed the proposals.  There was a unanimous agreement to recommend to the full Board the firm of Wipfli, LLP.  Wipfli’s professional staff retention rate for the non-profit and government group was 94 percent in 2014, which is well ahead of the industry average.  Wipfli has performed audits at several other community colleges that are similar to IVCC.  Other services are available by Wipfli should IVCC request them.  Wipfli proposed the lowest fees for the next three years – 2015-$35,000; 2016-$35,750; 2017-$36,500.  Dr. Huffman also noted that Wipfli included more hours for the first year than the second and third; thus spending the most time in the first year.  The second and third choices were Clifton Larson Allen, LLP and Sikich, LLP, respectively.  Cheryl received three or four references from other community colleges and also reached out to the Chief Financial Officers at those colleges.  Dr. Driscoll asked what the concerns were with the other two firms, Baker & Tilly and Rehman.  Baker & Tilly did not have as much experience with community colleges and with the Comprehensive Annual Financial Report.  Rehman was hoping to have all their staff licensed in Illinois to do the audit.  There was consensus among the Committee to recommend Wipfli to the whole Board at the April board meeting.

BOARD UPDATE – MARCH 2015

The preliminary equalized assessed valuation (EAV) number from the county clerks show a decline in EAV of $33 million; however, the rate has increased from .36503 to .37081 due to statewide average (equalization) tax rate increasing.  The total levy for tax year 2013 was $11,024,993 and the estimated total levy for tax year 2014 is $11,073.840.  State funding is subject to the governor’s 2.25 percent reduction for the FY2015 base operating grant and equalization grant and a reduction to special appropriations.  For FY2015 these grants totaled $2,672,772 and will be reduced to $2,619,881, a reduction of $52,891.  The base operating grant and equalization grant are reduced by $51,391, the special appropriations, $300,000 for phase 3 and $88,700 for veterans’ grants were reduced by $1,500.  Tuition and fee revenue is down 7.4 percent, or $666,848, from the budgeted amount for FY2015.  Expenditures for the operating funds were budgeted at $22,643,869 and as of March 31 are at $16,995,061, or 75 percent, of budget which is on target for meeting budgeted expenditures.  One-time payments have already been made.  Faculty overload was paid and the annual health savings account deposits have been made.  The College is not anticipating a large deficit in the operating funds for FY2015.  Budget worksheets from the budget officers for the FY2016 budget are due back to the accounting office in late April.  The Budget Council is made up of representation by two faculty members, vice presidents, associate vice presidents, the Director of Information Technology and the Director of Continuing Education.  Their goal will be to arrive at a balanced operating budget for FY2016.  Assumptions for FY2016 are EAV will remain level, or drop less than one percent (Exelon will drop a little more in value), state funding will remain at the FY2015 level, credit hours will be budgeted at FY2015 levels but with the $8 tuition increase included.  Average salary increases are at 2.5 percent, benefit increases at 3.5 percent which includes deposits to the health savings accounts at $2,500 for single coverage and $5,000 for employee plus one and family coverage.  The health savings account deposits at this level of funding were included in the five-year forecast in January which covered fiscal years 2016-2020.

The College will need to hold expenses for the remainder of FY2015 to offset the decrease in funds from the state.  The question was asked about any programs that have helped to increase enrollment.  The health fields are the strongest and the wind program and truck driver training enrollments are positive.  Dr. Huffman noted the Board felt it was a priority to work on the enrollment situation.  If there is a program that requires start-up costs with the justification of increasing enrollment in the future, the Board was willing to support the money to be spent on these programs.  Deborah Anderson indicated there is a list of programs that her department is looking at including a sustainable agriculture program.  The College is also applying to the Higher Learning Commission for approval to offer 100 percent of its programs online.  This will allow the College to turn around and apply to the state to allow out-of-state students to enroll in the College’s online courses.  The question was asked if the College should be targeting high schools to increase enrollment.  The high school penetration is high; it is others who have exhausted their unemployment or lost their jobs that the College would like to focus on.  The College let go of its agriculture program a few years ago.  The College is now reaching out to the high schools that have robust agriculture programs that lead to jobs.  The College has a strong network for transferring on to the University of Illinois College of ACES and is promoting this heavily as well as scholarship opportunities for students to move on to a senior university.  The administration believes there is potential to grow in this area.  The College also has strong CTE connections at the high school levels and the automotive program continues to be strong.  The College is very optimistic of the governor’s budget in which the community colleges are a priority.  Looking at the five-year forecast, Dr. Huffman was pleased to see the estimates on the salary increases and the contributions to health savings accounts will continue for all staff and the plan is to do this with a balanced budget.  Dr. Corcoran is very appreciative of the Board for their commitment to the High Deductible Health Plan and to the Health Savings Account.