PERALTA RECOVERY TEAM
UPDATE
April 27, 2010
2008-09 Financial Closure and Audit
At the last Audit and Finance Subcommittee meeting, members of the Audit and Finance
Subcommittee and Recovery Team received an update from the VTD Auditors regarding
the status of the financial audit report. There was some confusion regarding the expected
timeline for the closure of the 2008-09 audit report and closure of the 2008-09 financial
books.
In the Board update dated April 13th, the Recovery Team communicated the estimated
timeline for the closure of the financial books and completion of the 2008-09 audit report.
Essentially, those timelines have not changed and are consistent with prior updates on
this matter. The dates are also contingent on the recovery effort going well without any
unexpected surprises. As a reminder, the Recovery Team is hopeful that the financial
books for 2008-09 can be closed in May and that the audit report completed subsequent
to closure of the financial books.
It must be emphasized that the Recovery Team is making every effort to provide the
VTD auditors with all requests and to close the financial books in order to be able to
communicate that effort prior to the June 10th/11th ACCJC Hearing. However, the
timeline is very short, a great deal of work remains, and fiscal/operational surprises occur
often. At this point, it is more important for the closure of the 2008-09 financial books
to be accurate as it impacts the 2009-10 financial closure and the development of the
2010-11 budget. The Peralta Community College District (PCCD) did not adopt a 200910 budget in a timely manner, did not submit State reports in a timely manner, and did
not close its 2008-09 financial books in a timely manner. We cannot change those facts.
What is most important for the PCCD, is to acknowledge those facts and to correct the
deficiencies going forward.
The Recovery Team will review the timeline and status on a weekly basis. Progress
regarding the audit report and financial closure will be communicated through the
regularly scheduled meetings and through the Chancellor’s Office. Regardless of the
ultimate completion date, PCCD will be able to communicate to ACCJC and the State
Chancellor’s Office progress to-date, prior to and at the June ACCJC hearing.
ACCJC Team Visit
Members of the ACCJC team visited the PCCD on Monday, April 19, 2010. Team
members interviewed individuals representing the Board, administration, Recovery
Team, auditors, staff and others. The general focus of the visit centered on three distinct
areas:
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Governance/Leadership
Fiscal Stability
Technology/Management Systems
While the recent visit and comments by ACCJC are important, it is equally important for
PCCD to revisit past ACCJC recommendations as well. In 2003, ACCJC provided a
district recommendation that focused on the role of the Board of Trustees. The ACCJC
Team at that time recommended that the Board of Trustees adhere to its appropriate
functions and policy orientation, and rely upon the district Chancellor for
recommendations affecting the organization of the district as well as the hiring, retention,
and termination of all categories of district and college staff. The Team further
recommended that the Board of Trustees clearly identify and widely disseminate the roles
and responsibilities assigned to the district administration and those assigned to the
college administration so that the appropriate responsibility and authority and related
accountability standards are established.
This past recommendation addresses a major current accreditation standard (IV.B.1.J)
that has the focus of the Accreditation Team. Essentially, this standard provides that the
Governing Board delegate full responsibility and authority to the Chancellor to
implement and administer board policy without board interference and holds the
Chancellor accountable for the operation of the district.
It is clear that the PCCD will have the opportunity to continue its effort up to the June
ACCJC hearing in addressing outstanding issues stated in previous ACCJC
correspondence as well as recent recommendations. It was suggested that any progress in
the three focus areas could be communicated in monthly progress reports as well as
testimony at the June 2010 hearing.
As the Fiscal Adviser, I am urging the PCCD to re-evaluate the status of all prior ACCJC
recommendations as well as focusing on any recent recommendations coming out of the
recent ACCJC visit. In terms of the June 2010 ACCJC hearing, it will be very important
to demonstrate evidence regarding progress relative to past and current recommendations.
In addition, to further assist the PCCD in preparing for the June ACCJC hearing, as
Fiscal Adviser, I am recommending to the PCCD Chancellor that the PCCD Board
consider the suggestions under the following sections:
GOVERNANCE
Place on the Board agenda, for future Board meetings, the following items for discussion
and potential actions:
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A re-visitation, affirmation, and re-adoption of a Governing Board “Code of
Conduct”. The roles and responsibilities of community college Governing Boards
are spelled out in the Education Code, in Title 5 and in Board Policy. The Board
of Trustees needs to understand and endorse that these responsibilities are
essential to effective trusteeship.
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The Board is a corporate body. It governs as a unit, with one voice. This
principle means that individual trustees have authority only when they are acting
as a board. They have no power or authority to act or to direct district or college
employees or operations. Governing Boards establish policies that provide
direction and guidance to the Chancellor. It is important relative to accreditation
that the Chancellor, in concert with the Board of Trustees, schedules a training
session as soon as possible on Board leadership and governance as part of
Accreditation Standard IV. A thorough understanding and implementation of
Standard IV.B.I.J is vital to accreditation.
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The Chancellor and Board need to collectively evaluate the number and focus of
Board subcommittees’ as it relates to Standard IV and Eligibility Requirement
Three (3). A good measurement to evaluate Board subcommittees’ is the
following:
Does the committee promote the college in the community?
Does the committee advance partnerships with other entities in the
community?
Does the committee support the foundation and fundraising effort within
the community?
Does the committee refrain from operational and direct intervention into
the day-to-day responsibilities of the CEO?
Does the committee refrain from inappropriate influence in decision
making by the CEO?
Does the committee take a policy orientation?
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The Board needs to conduct a “How do we Rate Checklist”. Questions could
include the following:
Have we created an environment in which the Chancellor has the power to
lead the PCCD?
Have we delegated authority to the Chancellor to lead and administer?
Are we keeping the Chancellor informed, adhering to the rule of “no
surprises”?
Are we honoring the Chancellor as the point of contact for the district?
Do we fully consider information and recommendations offered by the
Chancellor?
Are we supporting professional development for the Chancellor?
Are we adhering to the standards of Board ethics and ACCJC Standard IV
relative to governance?
Are we ensuring that the Chancellor has the resources needed to do the
job?
Do we respect and support the Chancellor?
Does the Chancellor always ask the Board to make major decisions with
advance preparation?
Do we alert the Chancellor and Board about our concerns prior to going
public with them?
Do all Board members receive the same communications from the
Chancellor?
Do we make it a practice to share information and questions with other
Board members and the Chancellor?
Do we keep the Chancellor informed about our contacts in the community,
discussions with employees, policymakers and any visits to the Colleges
related to college business?
Do we help the Chancellor in being effective by not making unnecessary
demands on him?
Do we provide guidance, support, dialogue, information and feedback to
the Chancellor?
Do we rely on the Chancellor for leadership and have confidence in his
recommendations?
Is our time spent in governance and policy making, not managing, the
institution?
Do we honor the professionalism of the colleges (faculty, staff and
administration) by allowing them to perform their duties?
As Trustees, do we monitor ourselves carefully to ensure that offering
opinions to the Chancellor and employees is not constructed as directions?
When issues arise, do we question whether the decision or action we are
about to take reinforce our policy role, or is it an administrative decision?
Do the Board President and the Chancellor emphasize that individual
Trustees’ opinions are simply opinion and that the only legitimate
direction to the Chancellor comes form the Board as a whole?
Do we recognize that the Board (not a single Trustee) has the legal right to
give direction relative to the day-to-day operation and mission of the
PCCD, to only one employee, the Chancellor?
Have we done anything this fiscal year to foster trust?
Do we acknowledge that the Chancellor directs the faculty, staff and
administration?
Are we willing to invest time in planning meetings to ensure success?
Do we model the behaviors that the Board values? (consensus building,
starting and finishing on time, moving the agenda forward)
Do the Chancellor, Board President and other Trustees have a cooperative
relationship?
Do we provide fair, consistent, and constructive feedback to the
Chancellor?
LEADERSHIP
It will be important that the PCCD provide a timely update on the status of vacant
administrative and key positions. I have had the opportunity to review the applications
for the VC/CFO and believe there are a number of qualified candidates for that position.
As Fiscal Adviser, I recommend that the process for filling that position move forward as
soon as possible. The PCCD will need to indicate in the update to the ACCJC that the
Chancellor’s position has been filled on an interim basis for one-year with Dr. Wise
Allen and that the HR Director’s position has been filled on an interim basis for one-year
with Dr. Trudy Largent. PCCD will need to provide a status report for all other vacant
administrative positions.
It is critically important that the Board and administrative leadership are able to
communicate that the Governing Board is focused on the institution’s major issues and
questions of policy. The Governing Board will need to delegate full responsibility and
authority to the Chancellor to implement and administer Board policies and the operation
of the colleges. The administrative leaders should likewise foster empowerment,
innovation, and institutional excellence through dialogue that builds trust and increases
focus on student learning and assessment of learning outcomes, institutional
effectiveness, and integrity.
FISCAL STABILITY
As it relates to ACCJC Standard III (Fiscal Integrity and Stability), the administration
needs to develop a detailed plan with a timeline and fixed responsibilities to address both
short and long term fiscal concerns, including obligations, debt retirement, reserves, and
the State’s fiscal crisis and its impact on PCCD. As part of that process, the following
key points need immediate attention:
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2009-10 adopted budget
Closing of financial books for 2008-09 and preparation for closing of financial
books for 2009-10.
Acceptance of 2008-09 fiscal audit
Preparation and adoption of the 2010-11 budget
Submission of all State and Federal reports consistent with statutory guidelines
Reconciliation of cash in all bank accounts
Development of fiscal policies, regulations, and procedures to ensure appropriate
management of the district’s fiscal resources.
Clarification of roles, responsibilities and increased accountability; distribution of
financial information to users; training on financial reporting and preparation of
budget and financial audit.
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An analysis of the district Finance Office relative to current and needed positions.
Districts the size of PCCD typically have staff serving in the following positions:
internal auditor, bond accountant, budget analyst and accounting analysts
(revenue, categorical and construction accounting). These positions are missing
at PCCD and are necessary for total recovery.
TECHNOLOGY/MANAGEMENT SYSTEMS
The PCCD is experiencing technology and management systems issues that are
impacting its accreditation status, fiscal stability and state reporting. In prior ACCJC
visits, a specific recommendation read that the District needed to immediately resolve the
functional issues associated with the implementation of the district-wide adopted
software management systems for student, human resources, and financial aid. This June
2009 recommendation focused on certain modules in PeopleSoft that were not fully
functional and impacting the end-user being able to accomplish his/her day-to-day job
responsibilities. There are several items contributing to this situation, but the following
key items are of major concern:
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The PeopleSoft software used to process financial, human resources and student
information is not configured or utilized properly. As such, reports produced by
the system have not been accurate, timely, or reliable. In the past, data from this
system could not be used for decision making. Staff is not utilizing the system
properly for effective internal controls and financial reporting.
Staff members continue to need both technical and procedural training in data
entry, retrieval and analysis.
Leadership is moving forward in developing solutions to the known issues.
Key functional/operational positions within district IT and the district Finance
Office are still vacant. Specifically, there needs to be consideration for hiring or
assigning dedicated programmers for the Student Administration and Human
Resources Modules.
The PCCD’s frustration and current experiences with the financial closure, adopted
budget, state/federal reporting, financial aid reporting and past and current audit findings,
can be directly related to the system’s and/or staff’s inability to produce timely and
accurate data.
In addition to the data concerns, there are numerous human resource issues related to the
PCCD’s current status. It is speculation at this juncture, but one could surmise that
inadequate training with PeopleSoft, coupled with ineffective and/or inadequate staffing
have attributed to the dysfuntionality. CIBER provides consulting services for clients
who purchase and implement products from Oracle/PeopleSoft. CIBER has been
engaged with the PCCD since July, 2005-06. Initially, the PCCD conducted a “lab
implementation”, and as such, there was no trial system. This meant that PCCD did not
run a parallel system in H.R., Finance and Student modules. The CIBER consultant
assigned on-site since July, 2007 provided expertise in the financial system.
Until recently, the District had not contracted with CIBER to assign someone on the
functional student system side of the house. It seems clear that there is a lack of
programmers on both the student and HR side of the house that will need to be addressed.
As Fiscal Adviser, I recommend that the PCCD evaluate the current use of the CIBER
consultants as well as the needed or unfilled positions within district IT. A restructuring
of district IT is merited. The PCCD also needs to examine the reporting of the Chief
Information Officer to the Chancellor. Once fully examined, this position would be more
suited in reporting to the Vice Chancellor/Chief Fiscal Officer.