October 11, 2016 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, October 11, 2016 in the Board Room (C307) at Illinois Valley Community College.

Committee Members Physically Present

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

Other Board members Physically Present

Others Physically Present

Jerry Corcoran, President
Cheryl Roelfsema, Vice President for Business Services and Finance
Deborah Anderson, Vice President for Academic Affairs
Kathy Ross, Controller
Glenna Jones, Director of Human Resources
Diann Jabusch, Director of Information Technology

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

FY2016 AUDIT

A draft of the comprehensive annual financial report for fiscal year ending June 30, 2016, was reviewed by Mr. Dick Wells of Wipfli, LLP of Sterling. The auditors’ opinion is “unmodified” meaning the audit is “clean.”  The combined balance sheet noted a net loss of $2.9 million.   A major portion of the loss is due to the lack of state funding and many community colleges throughout the state are struggling with this.  Dr. Corcoran noted there are not many community colleges that are debt free like IVCC.  He believes the College has done a very good job of managing its assets by a team that works well together and is working with Interact to face the challenges the College is facing.  Ms. Sara McKenna reviewed two letters – Communication with Those Charged with Governance and the Business Advice Letter.  The auditing firm identified certain deficiencies in internal control that were considered to be significant deficiencies.  The fixed asset subledger and the general ledger do not agree.  It was recommended that the College continue to look into the difference and reconcile on a routine basis.  The second significant deficiency was two prior year encumbrances (totaling $2,464) in the Career and Technical Education Program Improvement Grant that were not paid before August 31.  The Grant Administration Standards state that grant funds shall be expended or obligated prior to June 30, and shall be received and paid for prior to August 31.  Failure to comply with the Standards may result in improper payment being returned to the Illinois Community College Board.  The Business Advice Letter included two constructive suggestions to be considered as part of the ongoing process of modifying and improving the College’s practices and procedures.  During the audit it was discovered there was no formal policy as to how to pay salaried employees over the year.  The recommendation was to establish a policy that documents whether salaried employees are paid behind, current, or in advance.  The other constructive suggestion was to review collateral levels throughout the year to make sure sufficient collateral is being held in the College’s name to cover its deposits.  The audit will be submitted to the Illinois Community College Board.

Mr. Wells and Ms. McKenna left the meeting at 6:02 p.m.

2016 TAX LEVY

It is the College’s custom and practice to adopt a tentative tax levy in November and finalize it in December.  The proposed tax levy was presented to the Board to make sure they were comfortable in the direction the administration is proceeding.  In order to capture all of the revenue available in property taxes, the administration is recommending an $11.6 million tax levy for 2016, up less than five percent over the 2015 tax levy of $11 million.   ICCB has approved an increase in IVCC’s additional tax rate from 12.63 to 12.97.  This tax levy supplements the educational fund.  An increase in equalized assessed valuation is unlikely.  The overall suggested tax rate will drop by approximately .91 cents.  There was consensus among the Committee to proceed as presented. 

OTHER

Cash Farm Lease Renewal – the administration was approached by Mr. Chris Kolodziej to consider lowering the rent due to low commodity prices.  The administration’s recommended rate to lower the rent is still higher than the second highest bid.  The lease has no out clause and it was suggested to consider less than a four-year contract in the future.  There was consensus among the Committee to proceed as presented.

Update on Adult Ed students using the Ottawa Center – a memo from Sara Escatel, Director of Adult Education, was presented to the Committee on the overview of Adult Education classes at the Ottawa Center this fall.  The enrollment has increased dramatically over the last two years. 

An update on number of dual credit students eligible for free/reduced lunch benefits was distributed. Jerry reported the figures from the dual credit pilot program reaching out to the students on free and reduced lunch programs - 80 students enrolled in dual credit courses, 105 classes, 323 credit hours, and 13 high schools with a total cost of assistance received from free and reduced lunch students - $28,246 ($353 per student). 

Health Insurance – the College has belonged to the Community College Insurance Consortium (CCIC) since July 2003.  In 2016 premiums increased by more than 15 percent and will again in 2017.  A final figure on the increase in premiums is expected tomorrow from CCIC.  An alternate option for IVCC would be to switch to Community College Health Consortium (CCHC) where premiums would increase by 10 percent in 2017.  CCHC has more than twice the member headcount than CCIC to spread risk and better stop-loss carrier rates, but CCHC is a three-year commitment.  If the College has a year of large claims, premiums could be higher to re-establish the reserves.