May 23, 2017 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, May 23, 2017 in the Board Room (C307) at Illinois Valley Community College.

Committee Members Physically Present

Everett J. Solon, Chair
David O. Mallery
Jay K. McCracken

Committee Members Absent

Board Members Physically Present

Amy L. Sipovic
Matthew F. Pehoski, Student Trustee

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

The meeting was called to order at 5:30 p.m. by Mr. Solon.

FY2018 TENTATIVE BUDGET

The Committee was presented with a draft of the FY2018 Operating Funds budget.  The budget numbers were still in draft stage but not likely to change before the tentative budget is presented to the Board of Trustees at the July 13, 2017 meeting.  Cheryl Roelfsema reported on the revenues:  1) An increase in equalization tax levy resulted in a $204,400 increase in tax revenues for the Education Fund.  2) Budgeted credit hours were reduced to 57,000 with a 4.8 percent increase in the tuition rate which results in a decrease in tuition revenue of $126,800.  3) State funding is based on 50 percent of the FY2015 appropriation (FY2015 funding level - $2.7 million; 50 percent - approximately $1.3 million.)  All purchases are closely scrutinized and only essential personnel positions will be filled at this time.  Cheryl then reported on the expenditures:  1) Salaries and benefits are the majority of the budget.  Salary increases range from 2.0 to 3.1 percent.  There are no new personnel positions budgeted except for four positions that are essential to the operation of the College: Director of Information Technology Services, Dean of Workforce Development, Business Training Specialist, and Criminal Justice Instructor.  2) Benefits are budgeted to increase by eight percent.  IVCC will receive the renewal rate in July.  The College has a commitment of three years to the health insurance consortium that it joined in January 2017.  The operating budget is balanced by using Information Technology Services (ITS) reserves from the Auxiliary Fund in the amount of $87,000 to cover ITS capital purchases.  The FY2018 operating expenditures are 3.7 percent lower than the FY2017 budget.  Over the past five years, 33 full-time positions have not been filled due to resignations or retirements.  The personnel reductions over this time period amount to approximately $1.5 million annually.  Six positions have been reduced from full- to part-time.  Only one new faculty position has been added, Dental Assisting and the Ag instructor position is offset by the retirement of Doug Stockley, former ag and computer instructor.  Mr. Mallery noted on page 27 of the tentative budget that IVCC was the third highest compared to peer and similar Illinois community colleges of tax dollars per FTE and the 3^rd highest of tax and state grants per FTE.  He asked what the other schools are doing right or what can IVCC do better.  Mr. McCracken was appreciative of what the administration has done with the budget.

FY2017 FINANCIAL UPDATE

Cheryl Roelfsema reported on projections for FY2017 year end for the Operating Funds.  The projected deficit is $305,849, assuming there is no further funding from the State either for operating grants and MAP funding.  Revenues are $1,422,122 below budgeted revenues (a large amount due to state funding) and expenditures are $1,403,007 below budgeted expenditures.  The projected operating fund balance for June 30, 2017 is $6,207,000, or 29 percent of the FY2018 expenditures.  The minimum requirement per board policy is 25 percent.  At this time, the cash projection for the remainder of FY2017 is positive and no borrowing from the working cash fund will be necessary.  If the College did borrow from the working cash fund it is required to pay it back in one year.  If it is not paid back in one year, the College would have to abolish the working cash fund and start over.  Mr. McCracken congratulated the administration for a job well done.

INFORMATION TECHNOLOGY SERVICES STRATEGIC PLAN FY2017 – F72020

The difference in this plan from previous plans is that it is not just built around projects that cost money.  It includes initiatives that take manpower but little to no funding.  Information Technology enhances student learning and helps capture information that is needed.  The College budgets for it annually and makes changes when necessary so that IVCC is in the front seat when it comes to Information Technology.  The Information Technology Services Strategic Plan was presented because of the impact it has on the overall budget.  Community colleges are not allowed to levy for technology as K-12 schools.   Mr. Mallery asked what kind of strategies the administration will take when the Auxiliary fund for Information Technology projects is drained.  It was noted that virtual technology extends the life of computers for six to seven years and saves on manpower.  The administration is looking for ways to make everyone more efficient and making the processes as smooth and efficient as they can.

MIDWEST ENERGY INC. PROPOSAL OF ELECTRICITY PURCHASE

Gary Gauger of Midwest Energy, Inc. identified areas of potential savings for IVCC on the purchase of electricity.  If IVCC were to enter into a contract with MidAmerican or Constellation Energy, the services available would be Day-Ahead Locational Marginal Price (LMP) rates for electricity and capacity coincident peak notification and transmission coincident peak notification.  Gary would help the College determine the timing of the annual measurement by the utility company and identify changes IVCC can make to reduce its load during the measurement period. 

Mr. Mallery left the meeting at 6:25 p.m.