January 29, 2019 Audit Finance Committee Meeting

Committee Members Physically Present

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

Board Members Present

Jane E. Goetz, Board Chair

Others Physically Present

Jerry Corcoran, President
Cheryl Roelfsema, Vice President for Business Services and Finance
Deborah Anderson, Vice President for Academic Affairs
Mark Grzybowski, Vice President for Student Services
Bonnie Campbell, Associate Vice President for Academic Affairs
Fran Brolley, Director of Community Relations and Development
Kathy Ross, Controller

Mr. Solon called the meeting to order at 5:30 p.m.

THREE-YEAR FINANCIAL PLAN (FY2020 – FY2022)

Cheryl Roelfsema presented the three-year financial plan covering the fiscal years 2020 through 2022. Ms. Roelfsema informed that the financial plan is intended to be a guide in developing the FY2020 budget and carrying out the college’s strategic plan. The goal is to present a balanced operating budget and the changes in all funds except Restricted for the next three years. The assumption is that Restricted Fund revenues will equal Restricted Fund expenditures. Ms. Roelfsema noted that this plan is optimistic about enrollment growth and cautious on state funding. She reported that the district’s equalized assessed valuation (EAV) is projected to increase 1.5 percent each year.  Over the last ten years the average annual increase has been 1.7 percent.  The EAV of the Exelon Generating Station will increase to $460 million from $435 million in tax year 2019 which affects fiscal year 2020 and 2021.  Credit hours are projected to decline to 56,000 in FY2020 and then increase by one percent each year for FY2021 and FY2022.  Ms. Roelfsema noted that budgeted credit hours for FY2019 were 58,000.  Annual salary increases average 2.5 percent for all three years. The plan includes adding four faculty members: Agriculture, Cybersecurity, Medical Assistant, and Industrial Maintenance/Electronics. There are no anticipated retirements.  Ms. Roelfsema reported that three of the positions, Cybersecurity, Medical Assistant and Industrial Maintenance/Electronics were include in the FY2019 budget but the positions were not filled.  Benefits are projected to increase by 5.0 percent each year.  Ms. Roelfsema added that overall health care cost increases are driving this.  Contract services and materials and supplies include a two percent annual inflation rate.  Professional development and travel costs are budgeted at FY2018 actual costs.  The American Federation of Teachers Local 1810 contract provides $1,000 annually per faculty member for professional development funds starting with FY2020. Assuming for 80 faculty members, the cost would be $80,000 with the projected travel budget for each of the three years at $120,000.  Capital expenditures in the operating funds are projected to range from $120,000 to $220,000 which is an increase from recent years.  This will cover upgrades to IT infrastructure and minor facility upgrades.  The Protection, Health and Safety levy will cover the costs to replace air handlers and chillers in Building C in FY2020.  Caulking the exterior envelop of Buildings A through E is a potential project for FY2021 and FY2022. A $10,000 match for Project Success is included in each year of the plan.  Interest monies from the working cash fund will be used as a contingency and transferred as needed.  There is approximately $225,000 in interest earning in the working cash fund.  In summary, Ms. Roelfsema noted that the struggle to maintain enrollments is the highest priority of the college.  Over the next three years it will be important to match personnel with enrollments.  Ms. Roelfsema added that new programs will need to be considered and current programs evaluated for viability.

TUITION UPDATE

Ms. Roelfsema informed that the administration is recommending no tuition increase at Illinois Valley Community College in 2019-2020. Dr. Corcoran added that there will not be many community colleges in the state that will make that statement.  IVCC’s $133 rate compares to a peer average of other community colleges of similar size, location and resources of $133.68 and a state average of $144.36.  The committee recommended that the tuition update be shared with the whole Board.

COURSE FEES/ADJUSTMENTS

Course fees are reviewed annually by program coordinators and deans using approved course fee guidelines.  We currently have 365 active courses with approved course fees. The recommendation is to change 86 course fees for FY2020: 62 increases, 2 new courses, 15 decreases, plus the assignment of a course fee to 7 existing courses. A list of 86 courses were reviewed by the committee members. Dr. Corcoran noted that some courses have additional fees because of consumables, software needed, guest speakers and materials unique to the course.  Ms. Campbell added that the assignment of fees to existing courses is predominately for Dental Assisting courses to cover increased cost of materials. The committee recommended that the fee changes and adjustments be presented to the whole Board.

CAPITAL DEVELOPMENT BOARD TRUST ACCOUNT

The Capital Development Board (CDB) approved project #810-046-018 for construction of an agriculture program equipment storage building in September 2018.  The CDB approved $164,790 in deferred maintenance funds with a match from the college of $60,201.  On November 13, 2018 the CDB awarded a contract for design to Demonica Kemper Architects, LLC. Dominick Demonica met with college employees including agriculture program faculty to help determine the needs for equipment storage.  An orientation meeting was held with the CDB project manager, Steve Halm, on January 7.  With input from both Steve Halm and Dominick Demonica it was determined that for the size building that is needed the budget should be $675,000.  The design work cannot progress until the college has committed these funds to the project.  In FY2001 monies were transferred from operating funds to the restricted operations and maintenance fund for future building projects which were undetermined at that time.  The Administration is requesting IVCC Board authorization to transfer $450,000 to the Capital Development Board trust account at Midland States Bank from the restricted operations and maintenance fund so that design work can continue. This will bring the trust account balance to $460,910.  The transfer does not authorize the project to go beyond the design stage.  Dr. Corcoran noted that the building design will require IVCC Board approval before it can proceed.  The committee was in agreement that the request for transfer of funds be presented to the whole Board.

OTTAWA DOWNTOWN TIF EXTENSION - IGA

The City of Ottawa is asking the college to support extending the life of the Downtown TIF District for an additional twelve years.  The TIF is scheduled to expire in 2022.  The college does not have an intergovernmental agreement (IGA) with the City of Ottawa to share in the tax increment revenues.  In return for support of the TIF district extension, the city has proposed an IGA which would provide for the following items:

1. The city would declare as “surplus funds” fifty percent (50%) of the gross real estate tax increment which would be distributed by LaSalle County based on each taxing bodies’ tax rate.
2. The tax increment from any increased assessment resulting from new construction, expansion, or rehabilitation/renovation projects pursuant to a redevelopment agreement approved by the city after January 1, 2019 would be exempt from the fifty percent (50%) surplus funds.  The city would reimburse the Community College District a sum equal to three percent (3%) of the annual gross real estate tax increment from the properties.

The committee recommended that the proposed intergovernmental agreement for the Ottawa Downtown TIF Extension be presented to the whole Board.

OTHER

None

ADJOURNMENT

Mr. Solon declared the meeting adjourned at 6:05 p.m.