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Financial Information Subcommittee

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Hartnell College Library - Study Room 232
November 18, 2010 at 3:00PM

Kent G. Stephens

Kent Stephens, Admin/Board
Sequoia Lewis, Student Senate
Beverly Grova, Advancement
Joanne Trevino, Classified Senate

Al Muñoz, Controller

Laura Warren


4:00 p.m.,

Agenda #1

Topic:Introductions and New Business
Presenter:Kent Stephens
Summary of Agenda Item:Kent Stephens began the meeting by thanking all present for their attendance and asked for a motion to approve the agenda. Joanne Trevino motioned for approval. Kent then asked if there were any changes to be made to the agenda. Discussion ensued regarding the FIS membership. Kent pointed out the official voting committee members present at the meeting were Beverly Grova, Joanne Trevino, and himself. No further discussion; agenda was approved.

Kent then informed the committee there were no minutes to approve and assured the committee that in the future meeting minutes would be done in a thorough and timely manner.

Beverly expressed concern that faculty committee members were not present and whether they would be available on the third Thursday of each month at 3:00 p.m. Kent explained proper contact methods were used and all members had been informed of the meeting. All members will be contacted again to determine if the current meeting schedule meets their needs.

Kent then gave a brief history of the Financial Information Subcommittee and the reason for its existence: the FIS is organized to gather information and report information to the Resource Allocation Committee (RAC), a committee that has global organizational responsibility.

Periodically, RAC will request that the FIS gather information and report back to them. FIS is a resource committee which was originally organized to help handle a crisis two years ago. The guidelines state that FIS should meet once a month and the committee decided last year that the meetings would be held on the third Thursday of every month at 3:00 p.m. unless members deemed it unnecessary. Unless the members feel this time is not optimal, FIS will retain the meeting time.

Discussion regarding whether the committee wishes to utilize a single chair person or co-chair persons. Kent pointed out that there are no particular rules regarding the selection of chair or co-chairs but historically the Chief Business Officer has been a co-chair and a committee member has acted as co-chair. Discussion on the matter ensued. Beverly stated her belief that the committee was not large enough to need co-chairs and Kent explained that co-chairs would be helpful in terms of communication. Beverly then agreed with Kent’s statement and discussion regarding who should act as co-chairs ensued. Kent then asked the committee if they wished to make the decision today or table the decision until the next meeting. Beverly suggested the committee vote on it and at the next meeting discuss the decision with those present to ensure all members are agreeable. Three out of six FIS members were in attendance; a quorum was present. Kent then moved that Joanne Trevino be elected as co-chair during the current school year. Beverly seconded. All in favor; none opposed. Kent thanked the members.

Kent then referred to the handouts provided to each member upon entrance to the meeting. Information in the handouts related to the role of the committee, the make up of the committee, the reasons the committee was formed, the function of the committee, and what the outcome should be. No questions were asked. Materials included the Professional Code of Ethics as well as the terms of the committee members. Beverly recommended a term rotation. Kent asked if members should declare how long they wish to serve. Beverly stated her belief that members would serve on a rotation and then after that time, members would serve for two or three years. Joanne agreed and stated her belief that one year is too short for a term. Beverly then said that it was possible for members to serve two years after the first rotation and recommended that the FIS finish the current three year term and the next members will serve for a two or three year term. Kent agreed with Beverly’s strategy and asked for any other questions regarding the committee’s existence or what the role is. Beverly asked for confirmation that the term explanation was properly noted; Kent reiterated that FIS will have two year terms and that those members who served last year are finishing their second year.

Joanne reintroduced the meeting schedule and asked the committee if faculty schedules should be consulted. Joanne offered to confirm with all members and work with Laura on the meeting schedule.

Kent then transitioned to the next item in the handouts which was a report given to Chief Business Officials at the annual state budget workshop generally provided after the state budget was approved and signed by the governor. This year’s budget was not passed by the legislature or signed by the governor until early October and the state went 100 days into this fiscal year without an approved budget. Kent went on to explain the methods by which the budget was balanced and further explained the obsolescence of the materials he was provided just weeks ago. He further noted that it had been his desire to come to the FIS and announce receipt of $798,000 in growth money that had not been budgeted and to discuss how the group might strategically plan with that money. However, since the budget workshop (and even at the workshop), information regarding the continued deterioration of the state budget has been shared by three very reliable sources: the California Community College League, Mr. Eric Skinner, Deputy Vice Chancellor of the California Community College system, and the independent Legislative Analyst Office. Correspondence from Scott Lay, from the California Community College League was also contained in the handouts as well as briefings from the Legislative Analyst’s Office and Vice Chancellor Skinner. All three sources share a similar story: The $19 billion deficit was solved in ways that were not fiscally responsible. The deficit was solved by overstating revenue, by understating expenses, by borrowing, by selling property, and employing methods that might not be considered sound business practices. For example, federal revenues were overstated by $3.3 billion, the state general fund was overstated it by $447 million, and prison expenses were understated by nearly $1 billion.

Kent further explained that the state primarily receives general fund revenue from state income and sales taxes. Due to the passage of Proposition 22 in November, however, there was a loss of $800 million (Proposition 22 prohibits the state from claiming revenues from county and city governments).

Much discussion ensued regarding the newly passed state budget and the methods by which said budget was balanced, and that this recently passed budget already has a current deficit of an additional $5-$6 billion. Kent spoke of the $126 million that was given to community colleges for growth as well as the additional $6 billion shortfall. He stated that HC’s proportionate share of that shortfall this year could equate to the entire amount allocated for new growth plus an additional $200-400,000. Next year, HC’s proportionate share could be approximately $1.3 million. At this time, Joanne asked about the hiring of faculty and the faculty obligation number which states that if there are a certain number of students, a certain number of full time faculty are needed in order to receive funding. Kent explained that the state Board of Governors met and the faculty obligation number will remain the same for Fall 2011. He further explained that there is a very specific formula to arrive at the number but if adequate funding is not available, then the faculty obligation number can freeze. Joanne asked if, as faculty retires, are they to be replaced. Kent explained that if FTES decreased, the requirement for full time faculty would also decrease. Beverly questioned how the $1.3 million affects HC and how much in real cuts HC might have to realize. Kent responded that it is about 3% of the budget. Kent pointed out that the governor and the legislature tried to protect higher education from cuts and that it is unknown how community colleges will be affected in the next budget cycle; however, the proportionate share of the deficit is about $255 million for the community college system and $1.3 million for Hartnell.

Kent pointed out that HC did not budget for growth and the committee made a recommendation to RAC that HC not budget for growth and prepare for a mid-year 3% percent cut. He added that HC planned conservatively. For next fiscal year, the first step is to determine current costs that are expected to grow, contracts that are going to have escalating indexes, utility costs increasing, employee contract obligations; those are large obligations. Beverly asked if work has begun on next year’s budget. Kent responded that Al Muñoz has already begun looking at what those inflationary costs will be and the costs are believed to be in the neighborhood of $400,000-$500,000. Beverly then asked about salary increases over the next fiscal year. Kent responded with the explanation that it is unlikely the state will have sufficient resources to provide funding for growth or COLA. Beverly pointed out that the method by which this information is communicated is going to be very important. Beverly went on to say that the FIS has to ensure people understand this is a California issue and not a local issue. All need to feel confidence in the way HC is handling money, that HC is doing everything possible, and the state’s budget is beyond HCs control. Kent stressed that information must be communicated effectively. At this point, Kent spoke briefly about Proposition 98 and how that pertains to HC. Kent expressed his gratitude to Beverly and the Development staff for the efforts to raise additional resources which has minimized the budget gap.

By using two graphs contained in the handouts (showing revenues and expenses), Kent explained the District\'s revenue and expense patterns for the current year. He pointed out that due to conservative planning, the District did not have to borrow funds to meet expenses as many districts had to do. Kent told the committee that he would bring these particular reports to each meeting to enable everyone to understand where HC stands relative to revenues and expenses as the graphs provide a good representation of what is going on. Discussion followed.

Kent called for any further questions or comments; there were none. Kent then made a motion to adjourn; Joanne seconded. Meeting adjourned at 4:00 p.m.
Action(s) required:1. Discuss the decision of election of Co-Chairs that took place at November 18th meeting.

2. Determine if current meeting schedule is appropriate.
Responsibilites:1. Kent Stephens and Joanne Trevino, co-chairs

2. Joanne Trevino
Deadline(s):December 16, 2010