Peralta Community College District
Audit and Finance Committee Meeting
Minutes
Date:March 22, 2007
Location:Chancellor’s Conference Room,District Office
Start time:4:05 p.m.
End time:5:10 p.m.
PRESENT:Bill Withrow, Chair
William Riley, Trustee
Gail Waiters, Inspector General
Tom Smith, Vice Chancellor for Finance and Administration
ABSENT:Abel Guillen, Trustee
GUESTS:Joseph Bielanski, District Academic Senate
Yvonne Dorrough, Associate Vice Chancellor, Budget and Finance
AGENDA:
- Review and approve the agenda.
- Review and approve the minutes of February 22, 2007 and March 15, 2007 meeting.
- Presentation on final external audit report for fiscal year 2005-06.
- Report on the status of student fees collected for the International Program and all other students that register via the Internet.
- Discussion of engagement letter from Mark Harris, the Pineapple Group.
- Agenda content for April 12, 2007 committee meeting.
Chair Withrow opened the meeting at 4:05 p.m. with review of agenda.
VC Smith will be bringing in the Neuberger Berman group on Tuesday, April 24th to do a short review presentation on the OPEB investment results in front of the full Board.
Agenda Content of 4/12/07
Heidi White will participate in a conference call on April 12th regarding thefinal audit. A rough draft of the management letter will be provided to the committee.
We may want the Audit committee to approve what we’re going to do with the Pineapple Group to be able to take to the Board. Trustee Guillen had a few concerns. First, 10 years is a long time, VC Smith discussed this with the Chancellor. They wanted some continuity to stretch out beyond Chancellor and VC Smith contracts on why things were done in a certain way. No one else in the District knows about how the bonds were established. Trustee Riley also mentioned we received a compromise on the price. Trustee Guillen also had a concern with price.
VC Smith stated we are paying Neuberger Berman 50 to manage the bonds, so 8 seems reasonable. He also wants to adjust in agreement because the District may not always take the cash and leave it in the trust. Mark Harris (Pineapple Group) should not be compensated for the money that should be coming out. It could be $5 or $7 million dollars. Don’t want to be forced to pull the money out, want it to continue working.
VC Smith 8 base points not out of line, his revenue will increase as the fund increases. Initial contract was on the low end, VC Smith said yes, but he has not really done a lot this year. Chair Withrow will brief Board on April 24th for their approval. When this goes to the board, it will show up on the agenda that the Audit and Finance Committee has reviewed and approved. We should have an Executive brief that goes along with it.
Approval of Minutes from February 22, 2007
Ms. Waiters had some clarifications regarding her portion of the minutes. On page 3, there was a clarification in paragraph 3, shedid find a prior emergency disaster plan and is not presenting anything to Board. On the 3rd paragraph from bottom of page, on rabbit control, relating to pesticides comment,“if there was any property that was City of Oakland, that property was subject to their ordinance”.
Chair Withrow indicated the District should be get copy of City of Oaklandordinance to have as our policy. Ms. Waiters will see if she can obtain a copy of the policy.
On page 4, 4th paragraph down, closed session, quarterly reports. Clarification quarterly report comes out quarterly to Audit & Finance Committee and there is more than one management report outstanding.
ACTION:Upon a motion by Trustee Riley, seconded by Chair Withrow, the committee voted unanimously to approve the minutes from the February 22, 2007 meeting with above noted clarifications.
Chair Withrow asked if risk management comes out of this committee since Risk Manager reports to General Counsel. He brought up the elevator at COA, what if we have disabled students on 3rd floor and elevator doesn’t work. Should the students even be on the 3rd floor; need Risk Manager to look into. Internal controls part of audit process.
Audit Report
VC Smith reviewed the audit report. There were a total of 18,443 FTEs, which includes credit and non credit. There were 17,775 FTEs the previous fiscal year.
General Fund $7.56 million. Decrease in fund balance leaves reserve of 8.1%, spending more money this year than we planned. Feel reserves should be 9% not 5%.
$62.2 million unfunded liability for active; medical benefits at 4.5%, $135.9 million for active employees, for retirees $73.3 million. In December of 2005, the District issued the OPEB bonds, placed in retirement trust. Pays District or pays health benefits directly; currently going to pay District directly for retirees. Bond proceeds mirrors CalPERS, fund earned 10.81%.
In June 2006, Measure A approved. Net assets of District increase $25.3 million. In June 30, 2006, there was $208.2 million in capital assets. During the year we added $1.6 million in capital assets. There is a lot of construction in process at all campuses. No cash flow yet. Not finished.
For General Fund we had anticipatedin adopted budget a deficit of $1.2 million, it was actually $370,000 because we received more money than anticipated from the state.
Discussion around Reserve Fund, during fiscal year we paid $1.85 million into PERS and $2.5 million into STRS.
Last fiscal year state apportionments and property taxes allocated to District represented 91% of revenues. District received $39.7 million in property taxes almost 40%. The increase was due to one time monies that we will not get next year.
Effect January 1, 2007 enrollment fees reduced to $20 from $27. Due to current state budget and health and welfare, we may not be able to maintain the recommended reserve.
There is a two billion deficit in reserve at State level. Due to Proposition 13, we are going to hurt in property taxes due to housing issues in California. Governors over-estimated the property taxes and they overstate the budget; they then backfill.
Lastly, we did interest rate swap in December that locked in our interest rates for the bonds, like fixed mortgage rate and LIBOR swap now making money; curve no longer inverted could produce lots of revenue.
VC Smith has been invited to be guest speaker at conference May 1 in San Francisco at Ritz Carlton. Chair Withrow asked how many others on ARCC, do they show financial stats by District? Are there many with 8% reserves? Yes, some have 20%. You can be on watch list even if you are over 5%. The state’s is 3%.
Student Fees Collected for International Students
VC Smith has fees list. Letter goes out to all students to pay, most do all the time. 10% goes down to 4% which is what our write offs had been or about $138,000. Non-resident includes international. We can not break out regular and non-resident. District wrote off $148,000 for residents.
Residents know that we will go to COTOP. District doesn’t want students harassed by collection agency. Explain fees if they don’t pay them. Magnetic files goes to state, anything owed by state, i.e. state tax refund, is then garnished. The state takes 25% of fees received.
Down about 50% than what is was two to three years ago. For international students, they are usually waiting for wire transfers from overseas. We get $8.2 million in enrollment fees, about 4.2%, further reduced by COTOP payments. We are very conservative; Contra Costa Colleges lets students register with $250.00 deficit. $348,000 is about $10 per student for entire year.
Chair Withrow asked what percent of students are registering via the internet? VC Smith does not have that number. Registration runs through Wells Fargo account.
One half of fees are paid by financial aid. Total feeslast year were $14.1 million; Districtprovided $6 million in scholarships, fee waivers, and financial aid. We are much higher, same category as Compton, Fresno. When you have poor inner city you have a lot more financial aid. DeAnza would waive $200,000.
Other
Discussion returned to Pineapple Group and Mark Harris. Chair Withrow and Trustee Riley are okay with 10 year agreement. Trustee Guillen had issues with the length of agreement.
VC Smith says he has done good job for us.
Meeting adjourned 5:10 p.m.
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