HARTNELL COMMUNITY COLLEGE DISTRICT Board of Trustees –Annual Organizational and Regular Meeting November 29, 2011 TIME/PLACE 411 Central Avenue, Salinas - CALL Building, Room 208 5:00 p.m. – PUBLIC HEARING ON 50% LAW ANNUAL ORGANIZATIONAL, REGULAR MEETING, AND CLOSED SESSION TO FOLLOW Board of Trustees Erica Padilla-Chavez, President Kevin Healy, Vice President Candi DePauw, Patricia Donohue, Bill Freeman, Elia Gonzalez-Castro, Ray Montemayor Juan M. Gutierrez, Student Trustee Dr. Phoebe Helm, Superintendent/President, Secretary to the Board The Board of Trustees welcomes you to its meetings. The agenda and supporting documents are on the college’s website at www.hartnell.edu/board. Contracts requiring approval of the Board on this agenda are available to view in the President’s Office. Typically, the agenda consists of the following: A. CONSENT AGENDA: These matters include routine administrative and financial actions and normally approved by a single majority vote. B. REGULAR AGENDA: Action Items: These items include significant administrative and financial actions classified by departmental areas and approved by majority vote for each item. Information Items: These items include presentations to the Board and items for discussion prior to Board action, normally taken at the next meeting. C. CLOSED SESSION: In accordance with Government Code Sections, 3549.1, 54956.9, 54957 and/or 54957.6, the Board of Trustees may meet in Closed Session to consider legal, personnel, labor, and/or contract matters. INDIVIDUALS DESIRING TO ADDRESS THE BOARD: Any member of the audience desiring to address the Board should complete and submit to the Clerk prior to the meeting, if possible, a Speaker Request Form, available at the door. When the item PUBLIC COMMENTS is taken, the Board President will recognize those who have filled out a Speaker Request Form in the order in which they are received. The Board President may limit the time of presentation to three minutes per speaker, and a maximum of fifteen minutes. Pursuant to Board Policy 1025, members of the public shall also be able to address the Governing Board regarding items on the agenda as those items are taken up. Following public comment, the Board President will limit discussion to the Board only. MISSION STATEMENT: Hartnell College provides the leadership and resources to ensure that all students shall have equal access to a quality education and the opportunity to pursue and achieve their goals. We are responsive to the learning needs of our community and dedicated to a diverse educational and cultural campus environment that prepares our students for productive participation in a changing world. ACCOMMODATIONS: All meeting locations are wheelchair accessible. The following services are available when requests made by 4:00 p.m. of the Wednesday before the Board meeting: American Sign Language interpreters or use of a reader during a meeting; large print agenda or minutes; assistive listening devices. Please contact, the Office of the President at (831) 755-6900, if you need assistance in order to participate in a public meeting or if you need the agenda and public documents modified as required by Section 202 of the Americans with Disabilities Act. HCCD – ANNUAL ORGANIZATIONAL AND REGULAR MEETING OF THE BOARD – NOVEMBER 29, 2011 Page 1 of 5 I. PUBLIC HEARING ON 50% LAW Action A. CALL TO ORDER B. PLEDGE OF ALLEGIANCE C. ROLL CALL D. OPEN PUBLIC HEARING E. PRESENTATION ON 50% LAW – C. M. Brahmbhatt F. PUBLIC COMMENTS ON 50% LAW – (Three minutes maximum per person) G. CLOSE PUBLIC HEARING H. APRROVE REQUEST FOR EXEMPTION I. RECOGNIZE THE 2011 LIVING BREATH FOUNDATION BOWL CHAMPIONS J. PUBLIC COMMENTS (3 minutes maximum person) II. AUDIT REPORTS FOR FISCAL YEAR ENDING JUNE 30, 2011 Action A. PRESENTATION - Gema M. Ptasinski, CPA – Vicenti, Lloyd, & Stutzman LLP B. ACCEPT INDEPENDENT AUDITOR’S REPORT FOR YEAR ENDING JUNE 30, 2011 Accept the Independent Auditor’s Report for the year ending June 30, 2011. The reports for 20102011 include all funds: 1) General (restricted and unrestricted), 2) Hartnell College Foundation, 3) Measure H Capital Bond Funds, and four (4) Performance Audits. III. ANNUAL ORGANIZATION – BOARD OF TRUSTEES A. SWEARING IN OF TRUSTEES Administer Oath of Office to recently elected Trustees to serve four-year terms, effective December 2, 2011 in accordance with Education Code 72000, et.seq. (10 minutes) Action Action Action Roll-call Roll-call BREAK B. ELECTION OF OFFICERS Elect officers to the Board of Trustees for the 2012 calendar year. C. APPOINTMENT OF REPRESENTATIVES TO STANDING ORGANIZATIONS Appoint one representative to the Sunrise House and one representative to the Monterey County School Boards Association for calendar year 2012. D. DESIGNATION OF 2012 BOARD MEETING DATES AND TIMES Set dates and times of Board meetings for the 2012 calendar year. E. RESOLUTION 11:13, AUTHORIZING SIGNATURE OF BOARD SECRETARY Adopt Resolution 11:13, Authorizing Signature of Board Secretary to sign all appropriate documents. F. RESOLUTION 11:14, INAPPRECIATION OF OUTSTANDING PUBLIC SERVICE Adopt Resolution 11:14, In appreciation of outstanding public service for Trustee Healy. HCCD – ANNUAL ORGANIZATIONAL AND REGULAR MEETING OF THE BOARD – NOVEMBER 29, 2011 Page 2 of 5 IV. REGULAR SESSION PUBLIC COMMENTS Fifteen minutes (three-minute maximum per person) set aside to receive public comments on closed session and public session, or items not on the public session agenda, but within the jurisdiction of the Board. V. CONSENT AGENDA A. MINUTES Adopt minutes of Regular Meeting of November 1, 2011 and Special Meeting of November 15, 2011. B. DISBURSEMENTS Ratify disbursements from any or all of the following funds: general; debt service; bookstore; child development; capital outlay projects; scheduled maintenance; property acquisition; bond projects; cafeteria; self-insurance; retirees health benefits; associated student body; scholarship, loan, and trust; and intercollegiate athletics. C. CURRICULUM Ratify the recommendations from Curriculum Committee actions for the period of October 6 through October 20, 2011. D. LETTER OF AGREEMENT WITH SAN FRANCISCO COMMUNITY COLLEGE DISTRICT Ratify the 2011-2012 Letter of Agreement between Hartnell College and San Francisco Community College District for the California Early Childhood Mentor Program. This agreement will connect Hartnell College early childhood education students with high quality, experienced early childhood professionals. There are no budget implications. Participants are paid directly from San Francisco Community College District. E. AGRICULTURAL LEASE AGREEMENT WITH FRANSCIONI BROTHERS, INC. Approve to amend the agricultural lease agreement between Hartnell College and Franscioni Brothers, Inc. for Alisal Campus farmland, beginning December 3, 2011 through December 2, 2012. There is no impact to the general fund. Annual rental revenues from property must be placed in the restricted Property Acquisition Fund. F. CONTRACT BETWEEN INDEPENDENT AUDITING FIRM VICENTI, LLOYD, STUTZMAN, LLP AND HARTNELL COLLEGE Approve to amend the contract by one year with the independent auditing firm Vicenti, Lloyd, and Stutzman, LLP, for financial auditing services through the end of fiscal year 2012. This amendment brings the total contract cost to a not to exceed amount of $122,560 and extends the end date through December 31, 2012 for the audit of all funds for 2011-12. G. CONTRACT WITH UNIVERSAL PROTECTION SERVICES Approve to amend the term of the agreement with Universal Protection Services through June 30, 2013, for security services at the Main and Alisal Campuses and at the King City Education Center. The annual cost for these services is not to exceed $560,000 paid from the general fund. HCCD – ANNUAL ORGANIZATIONAL AND REGULAR MEETING OF THE BOARD – NOVEMBER 29, 2011 Page 3 of 5 H. AWARD BID AND AUTHORIZE ADMINISTRATION TO ENTER INTO AGREEMENT WITH KIS GROUP, MOST QUALIFIED BIDDER Award bid and authorize administration to enter into agreement with KIS Group, most qualified bidder, for campus wide Virtualization and Network Administrative Software Modernization project at a cost of $631,607 over three phrases, paid from multiple funds. I. AWARD BID AND AUTHORIZE ADMINISTRATION TO ENTER INTO A CONTRACT FOR THE ALISAL CAMPUS PARKING LOT PROJECT Award bid and authorize administration to enter into a contract with Perma Green Hyrdoseeding, lowest responsive bidder, for the Alisal Campus Parking Lot Project. The cost of this project is $831,700, and paid from Measure H funds. J. STUDENT TRUSTEE TRAVEL Ratify travel for Student Trustee to attend Statewide Student Trustee Meeting on November 4, 2011 at the San Jose Fairmont Hotel. Reimbursement included one night’s lodging, mileage reimbursement, and meals. K. PERSONNEL ACTIONS Approve and/or ratify Personnel Actions (included in packet). VI. ACTION ITEMS A. BUDGET REVISIONS Approve the budget revisions numbered 9493 to 9525. B. AWARD EMPLOYEES A ONE-TIME STIPEND Award employees a one-time stipend of 2%. C. AWARD A PROFESSIONAL SERVICES CONTRACT Award a Professional Services Contract to conduct a national search. VII. INFORMATION ITEMS A. UPDATE ON CURRENT CONSTRUCTION PROJECTS Receive the written report on current construction projects. B. FINANCIAL STATEMENTS Receive financial statements for period ending October 31, 2011. C. FIRST READING – BOARD POLICY Review first reading of revised Board Policy 1010, Annual Organizational Meeting and Officers of the Board. D. REPORTS FROM SENATES Receive oral reports from Student, Academic, and Classified Senates on matters of interest to the college. E. REPORT FROM SUPERINTENDENT/PRESIDENT F. REPORTS FROM BOARD OF TRUSTEES HCCD – ANNUAL ORGANIZATIONAL AND REGULAR MEETING OF THE BOARD – NOVEMBER 29, 2011 Page 4 of 5 VIII. CLOSED SESSION Items discussed in Closed Session may include, legal, personnel, labor, and/or contract matters authorized for Closed Session per Government Code Sections, 3549.1, 54956.9, 54957, and/or 54957.6. 1. Conference with Legal Counsel - Anticipated Litigation - Significant exposure to litigation pursuant to Section 54956.9(b): One case IX. RECONVENE PUBLIC SESSION A. REPORT OUT FROM CLOSED SESSION, IF ANY B. ANNOUNCEMENT OF NEXT MEETINGS 1. Board Development Meeting – December 6, 2011, 5 p.m., CALL, Room 208 2. Board Development Meeting – December 13, 2011, 5 p.m., CALL, Room 208 3. Regular Board Meeting – January 24, 2012, 5 p.m., CALL, Room 208 X. ADJOURNMENT Adjourn the meeting. HCCD – ANNUAL ORGANIZATIONAL AND REGULAR MEETING OF THE BOARD – NOVEMBER 29, 2011 Page 5 of 5 PUBLIC HEARING AGENDA ITEM FOR BOARD MEETING OF: November 29, 2011 Title Public Hearing and Request for an Exemption from the 50% Law Number Area Superintendent/President Prepared by: Dr. Phoebe K. Helm Status Action I.H. Recommendation It is recommended that the Board of Trustees holds a Public Hearing on the Request for an Exemption from the 50% law and approve a request for an exemption. Background: In 1958, legislation passed in California to require that 50% of all general funds be spent in the classroom. The only items that count as being spent “in the classroom” are basically the salaries and benefits of faculty while teaching. That means that counselors, librarians, and non-teaching faculty (reassigned to other duties such as Academic Senate President, Union President, etc) do not count as “in the classroom” expenditures. Despite this limited definition and despite the fact that “smart classrooms” today require far more than the “sage at the front of the stage” that was typical of the classroom in 1958, California Community Colleges, including Hartnell, have managed to stay above the 50% requirement. The recent rapid decrease in State funding of Categorical Programs as well as General Operations has begun to threaten that ability across the system. And, this is the specific reason why Hartnell is requesting an exemption for FY 2010-11. First, let us look at how the calculations work. Categorical Funds do not count in the formula. General fund expenditures fall into either the numerator (above the line) or denominator (below the line) in determining the ratio of 50%. Salaries and benefits of teaching faculty count in the numerator and all other salaries and benefits (CSEA, confidential, L-39, administrators, supervisors, student tutors, trustees, and others) utilities, contracts, fees, trustee elections, travel, equipment, supplies, and etc. count in the denominator. In recognition of the fact that community college students need support outside the classroom to be successful, the State began funding categorical programs, namely, Extended Opportunity Programs and Services (EOPS) and Disabled Students Programs and Services (DSPS) and Matriculation. Matriculation is defined as student success and includes such expenditures as counseling, counseling support services, transfer services, tutoring and basic skills. The creation of these services as Categorically Funded Programs enabled colleges to provide these services outside of the General Fund and thus, outside of the formula for calculating the 50% law. Second, let us look at the specific reasons why the expenditure of General Funds fell below the 50% line in FY 2010-11. State reductions in both Categorical and General Funds led the college to make two decisions that account for the need for an exception: 1. Categorical Funds from the State were reduced by $1,055,905. The college chose to maintain a substantive portion of these services using General Funds and did so by providing $753,053 in excess of the required match. 2. Because 700 or more FTES were unfunded and general State reserves were decreasing; the college chose not to hold Summer School in 2010, which saved approximately $1 million in teaching salaries in General Fund expenditures. Summary While these two decisions were good for students and good for our current financial health, they changed the distribution of expenditures of General Funds in FY 2010-11 by decreasing the numerator by $1 million and increasing the denominator by $753,053. Had the college not provided the excess match in general funds, $200,361 would not have been available in basic skills support and $552,692 would not have been available in counseling, outreach, counseling support, and transfer services. As a result, the college expended 48.79% on teaching salaries and benefits in FY 2010-11, which necessitates this request for an exemption. AGENDA ITEM FOR BOARD MEETING OF: Title November 29, 2011 Number Accept the Independent Auditor’s Reports for the fiscal year ended June 30, 2011 II. B. Area Status Office of Support Operations Prepared by: Alfred Muñoz Action Recommendation It is recommended that the Board of Trustees accepts the annual Audit Reports for fiscal year ended June 30, 2011. Summary The attached Audit Reports for the fiscal year ended June 30, 2011 was reviewed by the Ad hoc Board Committee, the Audit Committee of the Foundation, and the Bond Oversight Committee. Auditors will be available to answer questions, also. The Audit Reports for 2010-2011 include all funds: 1) General (restricted and unrestricted) 2) Hartnell College Foundation, and 3) Measure H Capital Bond Funds. In addition to the financial audits, a Performance Audit of Measure H was conducted and reported in compliance with Article 13 (A) Section 1 (C) of the California Constitution. The audit reports will be submitted to the Chancellors Office, the Accrediting Commission, and placed on the college’s website. The Financial and Performance Audits for Measure H funds will be placed on the website for the Bond Oversight Committee, as well. Budget Implications None DRAFT for Discussion Purposes Only HARTNELL COMMUNITY COLLEGE DISTRICT MONTEREY COUNTY REPORT ON AUDIT OF FINANCIAL STATEMENTS AND SUPPLEMENTARY INFORMATION INCLUDING REPORTS ON COMPLIANCE June 30, 2011 DRAFT for Discussion Purposes Only HARTNELL COMMUNITY COLLEGE DISTRICT AUDIT REPORT June 30, 2011 CONTENTS Page INDEPENDENT AUDITOR’S REPORT MANAGEMENT’S DISCUSSION AND ANALYSIS ............................................... i-vii BASIC FINANCIAL STATEMENTS: Statements of Net Assets............................................................................................. Statements of Revenues, Expenses and Changes in Net Assets ................................. Statements of Cash Flows ........................................................................................... Statements of Fiduciary Net Assets – Agency Funds ................................................. Statements of Fiduciary Net Assets – Trust Funds ..................................................... Statements of Changes in Fiduciary Net Assets – Trust Funds .................................. 1 2 3-4 5 6 7 DISCRETELY PRESENTED COMPONENT UNIT – HARTNELL COLLEGE FOUNDATION: Statements of Financial Position ................................................................................. Statements of Activities .............................................................................................. Statements of Cash Flows ........................................................................................... 8 9-10 11 NOTES TO FINANCIAL STATEMENTS ................................................................. 12-41 REQUIRED SUPPLEMENTARY INFORMATION: Schedule of Postemployment Healthcare Benefits Funding progress ........................ Notes to Required Supplementary Information .......................................................... 42 43 SUPPLEMENTARY INFORMATION: History and Organization ............................................................................................ Schedule of Expenditures of Federal Awards ............................................................. Schedule of State Financial Assistance - Grants ......................................................... Schedule of Workload Measures for State General Apportionment Annual (Actual) Attendance ............................................................................................... Reconciliation of Annual Financial and Budget Report with Audited Fund Balances ........................................................................................................ Schedule of Financial Trends and Analysis ................................................................ Notes to Supplementary Information .......................................................................... 44 45-47 48 49 50 51 52-53 DRAFT for Discussion Purposes Only HARTNELL COMMUNITY COLLEGE DISTRICT AUDIT REPORT June 30, 2011 CONTENTS Page OTHER INDEPENDENT AUDITOR’S REPORTS: Report on Internal Control over Financial Reporting and on Compliance and Other Matters Based on an Audit of Financial Statements Performed in Accordance With Government Auditing Standards ................................................................... Independent Auditor’s Report on Compliance with Requirements That Could Have a Direct and Material Effect on Each Major Program and on Internal Control Over Compliance in Accordance with OMB Circular A-133................... Independent Auditor’s Report on State Compliance .................................................. FINDINGS AND QUESTIONED COSTS: Schedule of Findings and Questioned Costs – Summary of Auditor Results ............. Schedule of Findings and Questioned Costs Related to Financial Statements ........... Schedule of Findings and Questioned Costs Related to Federal Awards ................... Status of Prior Year Findings and Questioned Costs .................................................. 54-55 56-57 58-60 61 62-68 69 70 DRAFT for Discussion Purposes Only INDEPENDENT AUDITOR’S REPORT The Board of Trustees Hartnell Community College District 411 Central Avenue Salinas, California 93901 We have audited the accompanying basic financial statements of the Hartnell Community College District, including its discretely presented component unit, as of and for the year ended June 30, 2011 and 2010 as listed in the table of contents. These financial statements are the responsibility of the District's management. Our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits in accordance with auditing standards generally accepted in the United States of America and the standards applicable to financial audits contained in Government Auditing Standards issued by the Comptroller General of the United States. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the basic financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall basic financial statement presentation. We believe that our audits provide a reasonable basis for our opinion. In our opinion, the financial statements listed in the aforementioned table of contents present fairly, in all material respects, the financial position of the Hartnell Community College District as of June 30, 2011 and 2010, and the results of its operations, changes in net assets and cash flows for the fiscal years then ended in conformity with accounting principles generally accepted in the United States of America. In accordance with Government Auditing Standards, we have also issued our report dated November 16, 2011 on our consideration of the Hartnell Community College District's internal control over financial reporting and our tests of its compliance with certain provisions of laws, regulations, contracts and grant agreements and other matters. The purpose of that report is to describe the scope of our testing of internal control over financial reporting and compliance and the results of that testing, and not to provide an opinion on the internal control over financial reporting or on compliance. That report is an integral part of an audit performed in accordance with Government Auditing Standards and should be considered in assessing the results of our audit. DRAFT for Discussion Purposes Only Board of Trustees Hartnell Community College District Accounting principles generally accepted in the United States of America require that the required supplementary information, such as management’s discussion and analysis and the schedule of postemployment healthcare benefits funding progress be presented to supplement the basic financial statements. Such information, although not a part of the basic financial statements, is required by the Governmental Accounting Standards Board, who considers it to be an essential part of financial reporting for placing the basic financial statements in an appropriate operational, economic, or historical context. We have applied certain limited procedures to the required supplementary information in accordance with auditing standards generally accepted in the United States of America, which consisted of inquiries of management about the methods of preparing the information and comparing the information for consistency with management’s responses to our inquiries, the basic financial statements, and other knowledge we obtained during our audit of the basic financial statements. We do not express an opinion or provide any assurance on the information because the limited procedures do not provide us with sufficient evidence to express an opinion or provide any assurance. Our audits were conducted for the purpose of forming an opinion on the Hartnell Community College District’s financial statements as a whole. The supplementary schedules are presented for purposes of additional analysis and are not a required part of the financial statements. The accompanying schedule of expenditures of federal awards is presented for purposes of additional analysis as required by U.S. Office of Management and Budget Circular A-133, Audits of States, Local Governments, and Non-Profit Organizations, and is also not a required part of the financial statements of Hartnell Community College District. The supplementary section, including the schedule of expenditures of federal awards, is the responsibility of management and was derived from and relate directly to the underlying accounting and other records used to prepare the financial statements. The information has been subjected to the auditing procedures applied in the audit of the financial statements and certain additional procedures, including comparing and reconciling such information directly to the underlying accounting and other records used to prepare the financial statements or to the financial statements themselves, and other additional procedures in accordance with auditing standards generally accepted in the United States of America. In our opinion, the information is fairly stated in all material respects in relation to the financial statements as a whole. VICENTI, LLOYD & STUTZMAN LLP November 16, 2011 DRAFT for Discussion Purposes Only HARTNELL COMMUNITY COLLEGE DISTRICT MANAGEMENT’S DISCUSSION AND ANALYSIS Fiscal Year Ending June 30, 2011 USING THIS ANNUAL REPORT In accordance with generally accepted accounting principles, the annual report consists of three basic financial statements that provide information on Hartnell Community College District's (the District) activities as a whole: the Statement of Net Assets; the Statement of Revenues, Expenses, and Changes in Net Assets; and the Statement of Cash Flows. The focus of the Statement of Net Assets is designed to show the financial position of the District. This statement combines and consolidates current financial resources (net short-term spendable resources) with capital assets and long-term obligations. The Statement of Revenues, Expenses, and Changes in Net Assets focuses on the costs of the District's operational activities, which are supported mainly by property taxes and State revenues. This approach is intended to summarize and simplify the user's analysis of the costs of various District services to students and the public. The Statement of Cash Flows provides an analysis of the sources and uses of cash within the operations of the District. Responsibility for the completeness and accuracy of this information rests with the District management. FINANCIAL HIGHLIGHTS The District's primary funding source is based upon apportionment received from the State of California. The primary basis of this apportionment is the calculation of Full-Time Equivalent Students (FTES). During the 2010-11 fiscal year, final recalculated FTES at November 2011 were 7,000 as compared to 7,373 in the 2009-10 fiscal year. Of the total FTES generated, 6,493 were funded in 2010-11 based on P2 FTES and any additional funding for the recalculated FTES of 7,000 will be received in February 2012. 6,819 FTES were funded in 2009-10. During the 2010-11 fiscal year, the District provided over $15 million in financial aid to students. This aid was provided in the form of grants, scholarships, loans, and tuition discounts funded through the Federal government, State Chancellor's Office, and local funding. The District passed $131 million in general obligation bonds in November 2002 for the construction and renovation of buildings and equipment throughout the District. These projects were approved by the voters within the District's boundaries and will be completed over the next ten years or so. The first series of $35 million was issued in April 2003. The second series of $35 million was issued in June 2006. The third series of $12.6 million was issued in May 2009, proceeds were received in June 2009. The fourth series of $48.4 million was issued in August 2009. Proceeds were received in October 2009. -i- DRAFT for Discussion Purposes Only HARTNELL COMMUNITY COLLEGE DISTRICT MANAGEMENT’S DISCUSSION AND ANALYSIS Fiscal Year Ending June 30, 2011 FINANCIAL ANALYSIS OF THE DISTRICT AS A WHOLE NET ASSETS as of June 30, (Amounts in thousands) 2011 2010 ASSETS Current Assets Cash and investments Accounts receivable, net Other current assets $ 12,803 12,222 90 Total Current Assets Restricted cash and other non-current assets Capital Assets, net $ 25,115 57,088 138,635 Total Assets LIABILITIES Current Liabilities Accounts payable, accrued liabilities and other current liabilities Current portion of long-term obligations Total Current Liabilities Long-Term Obligations 13,273 9,653 72 22,998 71,496 124,911 $ 220,838 $ 219,405 $ $ 9,184 1,908 8,334 2,101 10,435 134,835 11,092 131,782 145,270 142,874 NET ASSETS Invested in capital assets Restricted Unrestricted 48,227 12,179 15,162 54,272 11,159 11,100 Total Net Assets 75,568 76,531 Total Liabilities Total Liabilities and Net Assets $ 220,838 $ 219,405 This schedule has been prepared from the District's Statement of Net Assets (page 1), which is presented on an accrual basis of accounting whereby assets are capitalized and depreciated. Cash and short-term investments consist primarily of funds held in the Monterey County Treasury. The changes in the cash position are explained in the Statement of Cash Flows (pages 3-4). Unrestricted net assets are composed of reserves for self-insurance, retiree health benefits, bookstore and cafeteria reserves, and general reserves for the ongoing financial health of the District. -ii- DRAFT for Discussion Purposes Only HARTNELL COMMUNITY COLLEGE DISTRICT MANAGEMENT’S DISCUSSION AND ANALYSIS Fiscal Year Ending June 30, 2011 There were substantial changes in ending balances from prior fiscal year to current fiscal year. Accounts receivable, net increased by $2.5 million. This increase was primarily due to increases in apportionment deferral, grants, and increase in student receivables for summer session enrollment. The District did not have a summer session in fiscal year 2009-10. Capital assets, net increased due to the completion of various construction projects. A large part of the increase was due to completion of the Center for Advanced Technology (CAT) building. Operating Results for the Year Ended June 30, (Amounts in thousands) 2011 2010 Operating Revenues Tuition and fees Grants and contracts Sales and charges $ Total Operating Revenues Operating Expenses Salaries and benefits Supplies, other operating expenses, and financial aid Depreciation Total Operating Expenses Loss on Operations Nonoperating Revenues and (Expenses) State apportionments Property taxes State revenues Interest income Other nonoperating revenues and (expenses) Total Nonoperating Revenue and (Expenses) Other Revenues, Expenses, Gains and Losses State and local capital income Interest income, Capital Interest expenses and losses Total Revenues, Expenses, Gains and Losses Increase in Net Assets $ 1,963 23,824 504 $ 2,300 19,856 536 26,291 22,692 32,109 24,585 3,954 30,648 18,759 3,395 60,648 52,802 (34,357) (30,110) 16,315 22,445 1,253 11 14,991 22,880 972 208 77 2 40,101 39,053 1,044 95 (7,846) 2,717 1,013 (5,262) (6,707) (1,532) (963) $ 7,411 This schedule has been prepared from the Statement of Revenues, Expenses, and Changes in Net Assets presented on page 2. Sales and charges consist of cafeteria revenues. The operations are self-supporting. -iii- DRAFT for Discussion Purposes Only HARTNELL COMMUNITY COLLEGE DISTRICT MANAGEMENT’S DISCUSSION AND ANALYSIS Fiscal Year Ending June 30, 2011 Grant and contract revenues relate to student financial aid, as well as specific Federal and State grants received for programs serving the students of the District. These grant and program revenues are restricted as to the allowable expenses related to the programs. Operating expenses increased primarily due to increases in financial aid awarded to students. Nonoperating interest expense relates directly to debt service requirements of the general obligation bonds. In 2008-09 the District had a negative balance in interest income. This was the result of the write-off of Washington Mutual and Lehman Brothers Investments held by Monterey County Treasurer. A portion of this loss was recovered in fiscal years 2009-10 and 2010-11. The District recovered $274,837 in fiscal year 2009-10 and $101,328 in fiscal year 2010-11. The District is recording the depreciation expense related to capital assets. The detail of the changes in capital assets for the year is included in the notes to the financial statements as Note 5. The Statement of Cash Flows provides information about cash receipts and payments during the year. This statement also assists users in assessing the District's ability to meet its obligations as they come due and its need for external financing. Statement of Cash Flows for the Year Ended June 30, (Amounts in thousands) 2011 2010 Cash Provided by (Used in) Operating activities Noncapital financing activities Capital financing activities Investing activities Net (Decrease) in Cash Cash, Beginning of Year Cash, End of Year $ (31,083) 38,523 (23,384) 1,142 (14,802) 82,882 $ 68,080 $ (28,746) 35,952 33,607 (1,810) 39,003 43,878 $ 82,881 The primary operating receipts are student tuition and fees and Federal, State, and local grants and contracts. The primary operating expense of the District is the payment of salaries and benefits to faculty and staff. While State apportionment and property taxes are the primary sources of noncapital related revenue, GASB accounting standards require that this source of revenue is shown as non-operating revenue because it comes from the general resources of the State and not from the primary users of the District’s programs and services. The District depends upon this funding as the primary source of funds to continue the current level of operations. Fiscal year 2009-10 reflects the general obligation bond issue, Series D, of approximately $48.4 million as indicated in capital financing activities. -iv- DRAFT for Discussion Purposes Only HARTNELL COMMUNITY COLLEGE DISTRICT MANAGEMENT’S DISCUSSION AND ANALYSIS Fiscal Year Ending June 30, 2011 CAPITAL ASSET AND DEBT ADMINISTRATION Capital Assets At June 30, 2011, the District had $138.6 million in a broad range of capital assets, including land, buildings, and furniture and equipment, net of depreciation. At June 30, 2010, net capital assets were $124.9 million. The District is currently in the middle of a major capital improvement project with construction ongoing throughout the District. These projects are funded primarily through local and state general obligation bonds. The majority of our West campus property was purchased in 1936 and 1954 from the U.S. Government. The Alisal campus property was purchased for $1 from the U.S. Government in 1948. Capital assets reported within these financial statements reflect the cost at the time of purchase. Current market values of our property are not reflected in the financial statements. Capital projects are planned for the 2011-12 year with funding through the general obligation bonds and the State of California. Land and construction in progress Buildings and improvements Furniture and equipment $ Subtotal Accumulated depreciation (Amounts in thousands) 2011 2010 35,209 $ 39,614 131,792 110,398 9,502 8,813 176,503 37,868 Totals $ -v- 138,635 158,825 33,914 $ 124,911 DRAFT for Discussion Purposes Only HARTNELL COMMUNITY COLLEGE DISTRICT MANAGEMENT’S DISCUSSION AND ANALYSIS Fiscal Year Ending June 30, 2011 Long-Term Obligations At the end of the 2010-11 fiscal year, the District had $137 million in bonds outstanding from the voter approved general obligation bonds and other long-term obligations. These bonds will be repaid annually through property taxes on assessed property within the Hartnell Community College District boundaries. General obligation bonds Premium on obligations Early retirement incentive Other post employment benefits $ Totals $ (Amounts in thousands) 2011 2010 131,625 $ 128,227 4,418 4,729 517 601 133 376 136,936 $ 133,690 District bond ratings have changed as more debt has been issued and property values have declined in recent years. The rating from Moody’s Investors Service has been downgraded from a rating of Aaa in 2006 to a rating of A1 Standard in August 2010 for Series A, B, C, and D. The Standard & Poor’s rating has also been downgraded from AAA to AA- during the same period for Series A, C, and D. Series B was downgraded to AA+ Watch Negative. -vi- DRAFT for Discussion Purposes Only HARTNELL COMMUNITY COLLEGE DISTRICT MANAGEMENT’S DISCUSSION AND ANALYSIS Fiscal Year Ending June 30, 2011 ECONOMIC FACTORS AFFECTING THE FUTURE OF HARTNELL COMMUNITY COLLEGE DISTRICT The economic position of Hartnell Community College District is closely tied to the State of California as State apportionments and property taxes allocated to the District represent approximately 55 percent of the total sources of revenues received by the District. The District is aligning its course offerings with the reduction of workload measures as issued by the Chancellor’s Office. The State of California is still currently in a precarious financial condition due to the nationwide recession and the mortgage, real estate, banking and unemployment crisis. The State budget for fiscal year 2009-10 provided a reduction for California community colleges of over $800 million by reducing categorical programs funding levels and reducing FTES base funding. In fiscal year 2010-11 the State funding level did not change from prior fiscal year. In fiscal year 2011-12 the State funding level was reduced by $400 million from the prior fiscal year. The District issued general obligation bonds in April 2003 to fund various construction projects throughout the District. The District issued a second series of general obligation bonds in June 2006, a third series in June 2009, and a fourth series in September 2009. All bonds, related to the 2002 Measure H election, have been issued as of September 2009. The major projects outstanding are the Technology Building, the Classroom Administration Building renovation, and the Science Building. At the time the budget was developed, the following assumptions were made: The 2011-12 State budget for community colleges contains no Cost of Living Allowance (COLA) increase. The 2011-12 State budget for community colleges contains no increase in funding for student growth. The 2011-12 State budget for community colleges contains no change in categorical funding from the previous year. The Districts 2011-12 adopted budget reflects a State apportionment deficit of 5% over previous year in anticipation of continued State revenue shortfall. CONTACTING THE DISTRICT'S FINANCIAL MANAGEMENT This financial report is designed to provide our citizens, taxpayers, students, and investors and creditors with a general overview of the District's finances and to show the District's accountability for the money it receives. Questions may be directed to the Vice President for Support Operations, Hartnell Community College District, 411 Central Avenue, Salinas, CA 93901. -vii- DRAFT for Discussion Purposes Only BASIC FINANCIAL STATEMENTS DRAFT for Discussion Purposes Only HARTNELL COMMUNITY COLLEGE DISTRICT STATEMENTS OF NET ASSETS June 30, 2011 and 2010 2011 ASSETS Current Assets: Cash and cash equivalents Investments in local agency investment fund Accounts receivable, net Inventory Prepaid expenses Total Current Assets $ Non-Current Assets: Restricted cash and cash equivalents Capitalized fees Capital assets, net of accumulated depreciation Total Non-Current Assets TOTAL ASSETS 12,564,411 238,533 12,221,723 15,588 74,997 25,115,252 2010 $ 13,035,537 237,340 9,653,203 14,202 57,252 22,997,534 55,515,429 1,571,956 138,635,171 195,722,556 69,846,201 1,650,318 124,910,699 196,407,218 $ 220,837,808 $ 219,404,752 $ $ LIABILITIES Current Liabilities: Short-term borrowing Accounts payable Accrued liabilities Accrued interest payable Due to fiduciary funds, net Deferred revenue Early retirement incentive Bonds payable Total Current Liabilities 1,299,809 1,795,963 1,328,694 648,698 16,757 3,243,746 80,974 2,020,000 10,434,641 106,919 4,753,575 1,065,463 654,895 112,562 2,490,230 83,335 1,825,000 11,091,979 Non-Current Liabilities: Other postemployment benefits other than pensions (OPEB) Early retirement incentive Bonds payable Total Non-Current Liabilities 376,073 436,242 134,023,366 134,835,681 132,820 517,216 131,131,502 131,781,538 TOTAL LIABILITIES 145,270,322 142,873,517 NET ASSETS Invested in capital assets, net of related debt Restricted for: Capital projects Debt service Other special purposes Unrestricted 48,227,138 54,272,506 8,160,085 3,541,296 477,420 15,161,547 6,964,736 3,410,882 783,424 11,099,687 TOTAL NET ASSETS 75,567,486 76,531,235 $ 220,837,808 $ 219,404,752 TOTAL LIABILITIES AND NET ASSETS See the accompanying notes to the financial statements. -1- DRAFT for Discussion Purposes Only HARTNELL COMMUNITY COLLEGE DISTRICT STATEMENTS OF REVENUES, EXPENSES AND CHANGES IN NET ASSETS For the Fiscal Years Ended June 30, 2011 and 2010 2011 OPERATING REVENUES Tuition and fees (gross) Less: Scholarship discounts and allowances Net tuition and fees Grants and contracts, non-capital: Federal State Local Sales $ 4,545,537 (2,582,943) 1,962,594 2010 $ 4,308,296 (2,007,884) 2,300,412 17,896,110 4,434,897 1,492,730 504,299 13,771,207 4,504,259 1,580,499 535,716 26,290,630 22,692,093 24,330,404 7,779,035 22,966,059 7,682,398 10,812,258 12,423,604 1,348,305 3,954,176 8,557,994 8,987,127 1,213,935 3,394,757 60,647,782 52,802,270 (34,357,152) (30,110,177) NON-OPERATING REVENUES (EXPENSES) State apportionments, non-capital Local property taxes State taxes and other revenue Interest and investment income (loss), non-capital Other non-operating revenues Transfer to agency fund 16,315,268 22,444,956 1,252,950 10,805 87,754 (10,753) 14,991,470 22,880,276 972,127 208,109 113,564 (111,965) TOTAL NON-OPERATING REVENUES (EXPENSES) 40,100,980 39,053,581 5,743,828 8,943,404 OTHER REVENUES, EXPENSES, GAINS AND LOSSES State apportionments, capital Interest and investment income (loss), capital Interest expense on capital asset-related debt 1,043,899 94,656 (7,846,132) 2,717,185 1,012,650 (5,262,318) TOTAL OTHER REVENUES, EXPENSES, GAINS AND (LOSSES) (6,707,577) (1,532,483) TOTAL OPERATING REVENUES OPERATING EXPENSES Salaries Employee benefits Supplies, materials, and other operating expenses and services Financial aid Utilities Depreciation TOTAL OPERATING EXPENSES OPERATING LOSS INCOME BEFORE OTHER REVENUES, EXPENSES, GAINS AND (LOSSES) INCREASE (DECREASE) IN NET ASSETS (963,749) 7,410,921 76,531,235 NET ASSETS, BEGINNING OF YEAR NET ASSETS, END OF YEAR $ See the accompanying notes to the financial statements. -2- 75,567,486 69,120,314 $ 76,531,235 DRAFT for Discussion Purposes Only HARTNELL COMMUNITY COLLEGE DISTRICT STATEMENTS OF CASH FLOWS For the Fiscal Years Ended June 30, 2011 and 2010 2011 CASH FLOWS FROM OPERATING ACTIVITIES Tuition and fees Federal grants and contracts State grants and contracts Local grants and contracts Sales Payments to suppliers Payments to/on-behalf of employees Payments to/on-behalf of students Net amounts due to (from) fiduciary funds $ Net cash used by operating activities CASH FLOWS FROM NON-CAPITAL FINANCING ACTIVITIES State apportionments and receipts Property taxes State tax and other revenues Net cash provided by non-capital financing activities CASH FLOWS FROM CAPITAL AND RELATED FINANCING ACTIVITIES Interest received on capital debt State apportionment for capital purposes Purchases of capital assets Issuance of capital debt Principal and interest paid on capital debt Net cash provided (used) by capital and related financing activities CASH FLOWS FROM INVESTING ACTIVITIES Net investment activity Net change in short-term borrowings 1,267,689 17,499,630 4,369,041 1,844,928 619,504 (12,466,788) (31,687,146) (12,423,604) (106,558) 2010 $ 2,940,783 13,664,638 3,698,208 1,059,637 695,791 (11,327,738) (30,478,287) (8,987,127) (12,045) (31,083,304) (28,746,140) 14,769,019 22,483,033 1,271,220 11,714,562 22,903,301 1,334,629 38,523,272 35,952,492 119,470 1,532,337 (20,348,309) (4,687,104) 931,746 10,740,254 (21,935,854) 48,405,079 (4,534,716) (23,383,606) 33,606,509 (51,150) 1,192,890 200,805 (2,010,499) Net cash provided (used) by investing activities 1,141,740 (1,809,694) NET CHANGE IN CASH AND CASH EQUIVALENTS (14,801,898) 39,003,167 82,881,738 43,878,571 CASH BALANCE, BEGINNING OF YEAR CASH BALANCE - END OF YEAR Cash balances at June 30, 2011 and 2010 consisted of the following: Cash and cash equivalents Restricted cash and cash equivalents Total cash balances $ 68,079,840 $ 82,881,738 $ 12,564,411 55,515,429 68,079,840 $ 13,035,537 69,846,201 82,881,738 $ See the accompanying notes to the financial statements. -3- $ DRAFT for Discussion Purposes Only HARTNELL COMMUNITY COLLEGE DISTRICT STATEMENTS OF CASH FLOWS For the Fiscal Years Ended June 30, 2011 and 2010 RECONCILIATION OF OPERATING LOSS TO NET CASH USED BY OPERATING ACTIVITIES 2011 2010 $ (34,357,152) $ (30,110,177) CASH USED BY OPERATING ACTIVITIES Operating loss Adjustments to reconcile operating loss to net cash used by operating activities: Depreciation expense Provision for doubtful accounts Changes in assets and liabilities: Accounts receivable, net Inventory Prepaid expense Accounts payable and accrued liabilities Due to fiduciary funds, net Deferred revenue Early retirement incentive Other postemployment benefits other than pensions (OPEB) Net cash used by operating activities 3,954,176 116,277 3,394,757 262,025 (1,559,730) (1,385) (17,745) (35,373) (95,806) 753,516 (83,335) 243,253 (730,592) 3,832 58,358 (1,643,759) 99,920 (98,307) $ (31,083,304) $ (28,746,140) See the accompanying notes to the financial statements. -4- 17,803 DRAFT for Discussion Purposes Only HARTNELL COMMUNITY COLLEGE DISTRICT STATEMENTS OF FIDUCIARY NET ASSETS - AGENCY FUND June 30, 2011 and June 30, 2010 2011 ASSETS Cash and cash equivalents Investments in local agency investment fund Accounts receivable: Miscellaneous Due from District $ 430,827 158,885 2010 $ 431,056 158,082 493 17,095 553 12,101 TOTAL ASSETS 607,300 601,792 LIABILITIES Accounts payable Funds held in trust 2,506 604,794 3,815 597,977 $ TOTAL LIABILITIES 607,300 See the accompanying notes to the financial statements. -5- $ 601,792 DRAFT for Discussion Purposes Only HARTNELL COMMUNITY COLLEGE DISTRICT STATEMENTS OF FIDUCIARY NET ASSETS - TRUST FUNDS June 30, 2011 and June 30, 2010 2011 ASSETS Cash and cash equivalents Investments in local agency investment fund Accounts receivable: Miscellaneous Due from District $ 2010 179,691 67,682 $ 41,081 117,086 168 20 100,461 247,541 258,648 40,371 338 60,806 9,810 10,303 TOTAL LIABILITIES 101,515 20,113 NET ASSETS Restricted for scholarships Unrestricted TOTAL NET ASSETS 94,615 51,411 146,026 121,998 116,537 238,535 TOTAL ASSETS LIABILITIES Accounts payable Due to District Funds held in trust $ See the accompanying notes to the financial statements. -6- $ DRAFT for Discussion Purposes Only HARTNELL COMMUNITY COLLEGE DISTRICT STATEMENTS OF CHANGES IN FIDUCIARY NET ASSETS - TRUST FUNDS For the Fiscal Years Ended June 30, 2011 and 2010 2011 ADDITIONS Local revenues Transfer from District Interest and investment income $ 2010 1,125 10,890 100,000 5,049 15,610 115,939 Operating expenses 108,119 32,909 TOTAL DEDUCTIONS 108,119 32,909 (92,509) 83,030 238,535 155,505 TOTAL ADDITIONS 14,485 $ DEDUCTIONS CHANGE IN NET ASSETS NET ASSETS, BEGINNING OF YEAR $ NET ASSETS, ENDING OF YEAR 146,026 See the accompanying notes to the financial statements. -7- $ 238,535 DRAFT for Discussion Purposes Only DISCRETELY PRESENTED COMPONENT UNIT – HARTNELL COLLEGE FOUNDATION -8- DRAFT for Discussion Purposes Only HARTNELL COMMUNITY COLLEGE DISTRICT DISCRETELY PRESENTED COMPONENT UNIT HARTNELL COLLEGE FOUNDATION STATEMENTS OF FINANCIAL POSITION June 30, 2011 and 2010 2011 ASSETS Current Assets Cash and cash equivalents - unrestricted Cash and cash equivalents - restricted Pledges receivable, current Note receivable, current Prepaid expenses Total current assets $ Noncurrent Assets Investments - restricted Investments with FCCC Pledges receivable Note receivable Property and equipment, net Total noncurrent assets Total assets LIABILITIES AND NET ASSETS Liabilities Accounts payable Scholarships payable Deferred revenue Total Liabilities Net Assets Unrestricted Temporarily restricted Permanently restricted Total net assets Total liabilities and net assets 115,990 3,582,103 507,837 6,341 17,866 4,230,137 $ 198,763 2,453,577 672,302 6,033 22,330 3,353,005 5,395,580 320,731 55,214 95,133 325,849 6,192,507 $ 10,422,644 4,322,111 204,173 149,501 101,465 326,183 5,103,433 $ 8,456,438 $ $ 640,044 241,180 50,901 932,125 499,111 4,513,497 4,477,911 9,490,519 $ 10,422,644 See the accompanying notes to the financial statements. -8- 2010 566,544 168,192 65,999 800,735 65,765 3,134,865 4,455,073 7,655,703 $ 8,456,438 DRAFT for Discussion Purposes Only HARTNELL COMMUNITY COLLEGE DISTRICT DISCRETELY PRESENTED COMPONENT UNIT HARTNELL COLLEGE FOUNDATION STATEMENT OF ACTIVITIES For the Fiscal Year Ended June 30, 2011 REVENUE Donations Special events In-kind donations Miscellaneous revenue Assets released from restrictions Total revenues Unrestricted Temporarily Restricted Permanently Restricted $ $ $ EXPENSES Operating expenses Program expenses Fundraising expenses Total expenses 9,701 171,223 122,190 285,872 1,523,505 2,112,491 319,160 1,815,043 93,595 2,227,798 OPERATING INCOME 2,004,079 32,599 59,531 21,948 (1,523,505) 594,652 594,652 OTHER INCOME Interest and dividends Realized gain on sale of investments Unrealized gain on investments Total other income 15,790 31,770 472,671 520,231 106,482 452,250 196,901 755,633 CHANGE IN NET ASSETS BEFORE TRANSFERS 404,924 1,350,285 TRANSFERS Change in donor designation Transfer to Endowment - FCCC Foundation Total transfers 28,422 NET ASSETS Net Assets, Beginning of year Net Assets, End of Year $ 79,607 56,578 (28,231) 28,347 28,422 CHANGE IN NET ASSETS AFTER TRANSFERS 79,607 - (115,307) 79,607 Total $ 2,093,387 203,822 181,721 307,820 2,786,750 319,160 1,815,043 93,595 2,227,798 558,952 - 122,272 484,020 669,572 1,275,864 79,607 1,834,816 (85,000) 28,231 (56,769) - 433,346 1,378,632 22,838 1,834,816 65,765 3,134,865 4,455,073 7,655,703 4,477,911 $ 9,490,519 499,111 $ 4,513,497 $ See the accompanying notes to the financial statements. -9- DRAFT for Discussion Purposes Only HARTNELL COMMUNITY COLLEGE DISTRICT DISCRETELY PRESENTED COMPONENT UNIT HARTNELL COLLEGE FOUNDATION STATEMENT OF ACTIVITIES For the Fiscal Year Ended June 30, 2010 REVENUE Donations Special events In-kind donations Miscellaneous revenue Assets released from restrictions Total revenues Unrestricted Temporarily Restricted Permanently Restricted $ $ $ EXPENSES Operating expenses Program expenses Fundraising expenses Total expenses 29,061 166,411 161,864 218,580 1,378,371 1,954,287 273,537 1,543,729 86,608 1,903,874 OPERATING INCOME 1,539,581 59,707 16,282 13,082 (1,378,371) 250,281 19,200 19,200 - - Total $ 1,587,842 226,118 178,146 231,662 2,223,768 273,537 1,543,729 86,608 1,903,874 50,413 250,281 19,200 319,894 OTHER INCOME(LOSS) Interest and dividends Realized gain on sale of investments Unrealized gain (loss) on investments Total other income(loss) 18,972 4,144 148,926 172,042 93,645 58,741 182,199 334,585 1,876 (5,703) (3,827) 114,493 62,885 325,422 502,800 CHANGE IN NET ASSETS BEFORE TRANSFERS 222,455 584,866 15,373 822,694 33,777 (188,800) (155,023) (33,777) 188,800 155,023 429,843 170,396 822,694 2,705,022 4,284,677 6,833,009 4,455,073 $ 7,655,703 TRANSFERS Change in donor designation Transfer to Endowment - FCCC Foundation Total transfers - CHANGE IN NET ASSETS AFTER TRANSFERS 222,455 NET ASSETS Net Assets, Beginning of year Net Assets, End of Year (156,690) $ 65,765 $ 3,134,865 $ See the accompanying notes to the financial statements. -10- - DRAFT for Discussion Purposes Only HARTNELL COMMUNITY COLLEGE DISTRICT DISCRETELY PRESENTED COMPONENT UNIT HARTNELL COLLEGE FOUNDATION STATEMENTS OF CASH FLOWS For the Fiscal Year Ended June 30, 2011 and 2010 2011 2010 Cash flows from operating activities Change in net assets $ Adjustment to reconcile changes in net assets to net cash provided for operations Unrealized gain on investments Depreciation Changes in operating assets and liabilities: Receivables Prepaid expenses Payables Deferred revenue Net cash provided by operating activities 1,834,816 $ 822,694 (669,572) 334 (325,422) 192 264,776 4,464 146,488 (15,098) 94,558 (22,330) (107,320) 49,852 1,566,208 512,224 Cash flows from investing activities Purchase of investments Proceeds from the sale of investments Net cash used by investing activities (4,087,189) 3,566,734 (3,218,675) 2,481,093 (520,455) (737,582) Net increase(decrease) in cash and cash equivalents 1,045,753 Cash and cash equivalents, beginning of year 2,652,340 (225,358) 2,877,698 Cash and cash equivalents, end of year $ 3,698,093 $ 2,652,340 Supplemental Disclosure: Noncash financing transaction: Collection items contributed $ - $ 4,600 See the accompanying notes to the financial statements. -11- DRAFT for Discussion Purposes Only HARTNELL COMMUNITY COLLEGE DISTRICT NOTES TO FINANCIAL STATEMENTS June 30, 2011 and 2010 NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES: A. REPORTING ENTITY The District is the level of government primarily accountable for activities related to public education. The governing authority consists of elected officials who, together, constitute the Board of Trustees. The District considered its financial and operational relationships with potential component units under the reporting entity definition of GASB Statement No. 14, The Financial Reporting Entity. The basic, but not the only, criterion for including another organization in the District’s reporting entity for financial reports is the ability of the District’s elected officials to exercise oversight responsibility over such agencies. Oversight responsibility implies that one entity is dependent on another and that the dependent unit should be reported as part of the other. Oversight responsibility is derived from the District’s power and includes, but is not limited to: financial interdependency; selection of governing authority; designation of management; ability to significantly influence operations; and accountability for fiscal matters. Based upon the requirements of GASB Statement No. 14, and as amended by GASB Statement No. 39, Determining Whether Certain Organizations are Component Units, certain organizations warrant inclusion as part of the financial reporting entity because of the nature and significance of their relationship with the District, including their ongoing financial support of the District or its other component units. A legally separate, tax-exempt organization should be reported as a component unit of the District if all of the following criteria are met: 1. The economic resources received or held by the separate organization are entirely or almost entirely for the direct benefit of the District, its component units, or its constituents. 2. The District, or its component units, is entitled to, or has the ability to otherwise access, a majority of the economic resources received or held by the separate organization. 3. The economic resources received or held by an individual organization that the District, or its component units, is entitled to, or has the ability to otherwise access, are significant to the District. -12- DRAFT for Discussion Purposes Only HARTNELL COMMUNITY COLLEGE DISTRICT NOTES TO FINANCIAL STATEMENTS June 30, 2011 and 2010 NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES: (continued) A. REPORTING ENTITY (continued) Based upon the application of the criteria listed above, the following potential component units have been included in the District’s reporting entity: The Hartnell College Foundation (the Foundation) – The Foundation is a separate not-for-profit corporation formed to promote and assist the educational programs of the District. The Board of Directors is comprised of up to 35 members including the President of the College, a member of the Board of Trustees selected by the President and the Executive Director of the Foundation. In addition, the Foundation does not carry on any activities not approved by the Superintendent of the District. The financial activities of the Foundation have been discretely presented. Financial statements for the Foundation may be obtained through the District. B. FINANCIAL STATEMENT PRESENTATION The accompanying financial statements have been prepared in conformity with generally accepted accounting principles as prescribed by the Governmental Accounting Standards Board (GASB), including Statement No. 34, Basic Financial Statements and Management’s Discussion and Analysis – for State and Local Governments and including Statement No. 35, Basic Financial Statements and Management’s Discussion and Analysis of Public Colleges and Universities, issued in June and November 1999 and Audits of State and Local Governmental Units issued by the American Institute of Certified Public Accountants. The financial statement presentation required by GASB No. 34 and No. 35 provides a comprehensive, entity-wide perspective of the District’s financial activities. The entity-wide perspective replaces the fund-group perspective previously required. Fiduciary activities are excluded from the basic financial statements. -13- DRAFT for Discussion Purposes Only HARTNELL COMMUNITY COLLEGE DISTRICT NOTES TO FINANCIAL STATEMENTS June 30, 2011 and 2010 NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES: (continued) C. BASIS OF ACCOUNTING Basis of accounting refers to when revenues and expenditures or expenses are recognized in the accounts and reported in the financial statements. Basis of accounting relates to the timing of measurement made, regardless of the measurement focus applied. For financial reporting purposes, the District is considered a special-purpose government agency engaged in business-type activities. Accordingly, the District’s basic financial statements have been presented using the economic resources measurement focus and the accrual basis of accounting. Under the accrual basis, revenues are recognized when earned, and expenses are recorded when an obligation has been incurred. All significant intra-agency transactions have been eliminated. For internal accounting purposes, the budgetary and financial accounts of the District have been recorded and maintained in accordance with the California Community Colleges System Office’s Budget and Accounting Manual. To ensure compliance with the California Education Code, the financial resources of the District are divided into separate funds for which separate accounts are maintained for recording cash, other resources and all related liabilities, obligations and equities. By state law, the District's Governing Board must approve a budget no later than September 15. A public hearing must be conducted to receive comments prior to adoption. The District's Governing Board satisfied these requirements. Budgets for all governmental funds were adopted on a basis consistent with generally accepted accounting principles (GAAP). These budgets are revised by the District's Governing Board during the year to give consideration to unanticipated income and expenditures. Formal budgetary integration was employed as a management control device during the year for all budgeted funds. Expenditures cannot legally exceed appropriations by major object account. -14- DRAFT for Discussion Purposes Only HARTNELL COMMUNITY COLLEGE DISTRICT NOTES TO FINANCIAL STATEMENTS June 30, 2011 and 2010 NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES: (continued) C. BASIS OF ACCOUNTING (continued) In accordance with GASB Statement No. 20, the District follows all GASB statements issued prior to November 30, 1989 until subsequently amended, superceded or rescinded. The District has the option to apply all Financial Accounting Standards Board (FASB) pronouncements issued after November 30, 1989 unless FASB conflicts with GASB. The District has elected to not apply FASB pronouncements issued after the applicable date. 1. Cash and Cash Equivalents The District’s cash and cash equivalents are considered to be cash on hand, demand deposits and short-term investments with original maturities of three months or less from the date of acquisition. Cash in the County treasury is recorded at cost, which approximates fair value, in accordance with the requirements of GASB Statement No. 31. 2. Accounts Receivable Accounts receivable consists primarily of amounts due from the Federal government, state and local governments, or private sources, in connection with reimbursement of allowable expenditures made pursuant to the District’s grants and contracts. All material receivables are considered fully collectible. The District recognized for budgetary and financial reporting purposes any amount of state appropriations deferred from the current fiscal year and appropriated from the subsequent fiscal year for payment of current year costs as a receivable in the current year. Accounts receivable from students for tuition and fees is recorded net of a provision for uncollectible amounts. 3. Inventories Inventories are presented at cost, on the weighted average method and are expensed when used. Inventory consists of cafeteria food and supplies held for resale to the students, faculty and staff of the College. -15- DRAFT for Discussion Purposes Only HARTNELL COMMUNITY COLLEGE DISTRICT NOTES TO FINANCIAL STATEMENTS June 30, 2011 and 2010 NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES: (continued) C. BASIS OF ACCOUNTING (continued) 4. Prepaid Expenses Payments made to vendors for goods or services that will benefit periods beyond June 30, 2011, are recorded as prepaid items using the consumption method. A current asset for the prepaid amount is recorded at the time of the purchase and an expenditure/expense is reported in the year in which goods or services are consumed. 5. Capitalized Fees Amounts paid for fees and underwriting costs associated with long-term debt are capitalized and amortized to interest expense over the life of the liability. These costs are amortized using the straight-line method. 6. Restricted Cash and Cash Equivalents Restricted cash and cash equivalents are those amounts externally restricted as to use pursuant to the requirements of the District’s grants, contracts, and debt service requirements. 7. Capital Assets Capital assets are recorded at cost at the date of acquisition. Donated capital assets are recorded at their estimated fair value at the date of donation. For equipment, the District’s capitalization policy includes all items with a unit cost of $5,000 or more and an estimated useful life of greater than one year. Buildings as well as renovations to buildings, infrastructure, and land improvements that significantly increase the value or extend the useful life of the structure are capitalized. Interest incurred during construction is not capitalized. The cost of normal maintenance and repairs that does not add to the value of the asset or materially extend the asset's life is recorded in operating expense in the year in which the expense was incurred. Depreciation is computed using the straight-line method over the estimated useful lives of the assets, generally 50 years for buildings, 10 years for building and land improvements, 3-8 years for equipment and vehicles. Land and construction in progress are not depreciated. -16- DRAFT for Discussion Purposes Only HARTNELL COMMUNITY COLLEGE DISTRICT NOTES TO FINANCIAL STATEMENTS June 30, 2011 and 2010 NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES: (continued) C. BASIS OF ACCOUNTING (continued) 8. Accounts Payable and Accrued Liabilities Accounts payable consists of amounts due to vendors for goods and services received prior to June 30. Accrued liabilities consist of salaries and benefits payable and deferred summer pay. 9. Short-Term Borrowing Negative balances in the cash in county account generally result from timing differences between expenditures and reimbursements from the state or other sources. These negative balances have been recorded as short-term borrowings in the statement of net assets. Restricted General Fund 10. 2011 2010 $1,299,809 $ 106,919 Deferred Revenue Deferred revenue arises when potential revenue does not meet both the “measurable” and “available” criteria for recognition in the current period or when resources are received by the District prior to the incurrence of qualifying expenditures. In subsequent periods, when both revenue recognition criteria are met, or when the District has a legal claim to the resources, the liability for deferred revenue is removed from the combined balance sheet and revenue is recognized. Deferred revenues include (1) amounts received for tuition and fees prior to the end of the fiscal year that are related to the subsequent fiscal year and (2) amounts received from Federal and State grants before the eligibility requirements are met. 11. Compensated Absences In accordance with GASB Statement No. 16, accumulated unpaid employee vacation benefits are recognized as a liability of the District as accrued liabilities in the statement of net assets. Sick leave benefits are accumulated without limit for each employee. The employees do not gain a vested right to accumulated sick leave. -17- DRAFT for Discussion Purposes Only HARTNELL COMMUNITY COLLEGE DISTRICT NOTES TO FINANCIAL STATEMENTS June 30, 2011 and 2010 NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES: (continued) C. BASIS OF ACCOUNTING (continued) 11. Compensated Absences (continued) Accumulated employee sick leave benefits are not recognized as a liability of the District. The District's policy is to record sick leave as an operating expense in the period taken since such benefits do not vest nor is payment probable; however, unused sick leave is added to the creditable service period for calculation of retirement benefits when the employee retires and within the constraints of the appropriate retirement systems. 12. Net Assets Invested in capital assets, net of related debt: This represents the District’s total investment in capital assets, net of outstanding debt obligations related to those capital assets. To the extent debt has been incurred but not yet expended for capital assets, such amounts are not included as a component of invested in capital assets, net of related debt. Restricted net assets – expendable: Restricted expendable net assets include resources in which the District is legally or contractually obligated to spend resources in accordance with restrictions imposed by external third parties or by enabling legislation adopted by the District. The District first applies restricted resources when an expense is incurred for purposes for which both restricted and unrestricted net assets are available. Restricted net assets – nonexpendable: Nonexpendable restricted net assets consist of endowment and similar type funds in which donors or other outside sources have stipulated, as a condition of the gift instrument, that the principal is to be maintained inviolate and in perpetuity, and invested for the purpose of producing present and future income, which may either be expended or added to principal. The District had no restricted net assets – nonexpendable. -18- DRAFT for Discussion Purposes Only HARTNELL COMMUNITY COLLEGE DISTRICT NOTES TO FINANCIAL STATEMENTS June 30, 2011 and 2010 NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES: (continued) C. BASIS OF ACCOUNTING (continued) 12. Net Assets (continued) Unrestricted net assets: Unrestricted net assets represent resources available to be used for transactions relating to the general operations of the District, and may be used at the discretion of the governing board, as designated, to meet current expenses for specific future purposes. Of the unrestricted net assets, the following amounts have been Board assigned for the following: Assigned for Bookstore Fund Assigned for Child Development Fund Assigned for Cafeteria Fund Assigned for Self Insurance Fund Assigned for Retiree Benefits 13. 2011 2010 $1,143,284 219,838 306,225 1,099,471 4,124,012 $1,135,361 255,662 360,697 1,142,839 3,398,886 State Apportionments Certain current year apportionments from the state are based upon various financial and statistical information of the previous year. Any prior year corrections due to the recalculation in February of 2012 will be recorded in the year computed by the State. 14. Property Taxes Secured property taxes attach as an enforceable lien on property as of March 1. Taxes are payable in two installments on November 15 and March 15. Unsecured property taxes are payable in one installment on or before August 31. Real and personal property tax revenues are reported in the same manner in which the County auditor records and reports actual property tax receipts to the Monterey County Office of Education. This is generally on a cash basis. A receivable has not been accrued in these financial statements because it is not material. Property taxes for debt service purposes cannot be estimated and have therefore not been accrued in the basic financial statements. -19- DRAFT for Discussion Purposes Only HARTNELL COMMUNITY COLLEGE DISTRICT NOTES TO FINANCIAL STATEMENTS June 30, 2011 and 2010 NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES: (continued) C. BASIS OF ACCOUNTING (continued) 14. Property Taxes (continued) The District sold delinquent ad valorem property tax receivables to the Monterey County Delinquent Tax Finance Authority. For the fiscal years ending June 30, 2011 and 2010, $72,902 and $78,245 was received, respectively. 15. On-Behalf Payments GASB Statement No. 24 requires that direct on-behalf payments for fringe benefits and salaries made by one entity to a third party recipient for the employees of another, legally separate entity be recognized as revenue and expenditures by the employer government. The State of California makes direct on-behalf payments for retirement benefits to the State Teachers and Public Employees’ Retirement Systems on behalf of all Community Colleges in California. However, a fiscal advisory was issued by the California Department of Education instructing districts not to record revenue and expenditures for these on-behalf payments. The amount of on-behalf payments made for the District is estimated at $235,000 and $205,000 for STRS at June 30, 2011 and 2010, respectively. 16. Classification of Revenues The District has classified its revenues as either operating or non-operating revenues according to the following criteria: Operating revenues: Operating revenues include activities that have the characteristics of exchange transactions, such as student fees, net of scholarship discounts and allowances, and Federal and most state and local grants and contracts. Non-operating revenues: Non-operating revenues include activities that have the characteristics of nonexchange transactions, such as State apportionments, taxes, and other revenue sources that are defined as nonoperating revenues by GASB No. 9, Reporting Cash Flows of Proprietary and Nonexpendable Trust Funds and Governmental Entities that use Proprietary Fund Accounting, and GASB No. 33, Accounting and Financial Reporting for Nonexchange Transactions. -20- DRAFT for Discussion Purposes Only HARTNELL COMMUNITY COLLEGE DISTRICT NOTES TO FINANCIAL STATEMENTS June 30, 2011 and 2010 NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES: (continued) C. BASIS OF ACCOUNTING (continued) 17. Scholarship Discounts and Allowances Student tuition and fee revenues, and certain other revenues from students, are reported net of scholarship discounts and allowances in the statement of revenues, expenses, and changes in net assets. Scholarship discounts and allowances are the difference between the stated charge for goods and services provided by the District, and the amount that is paid by students and/or third parties making payments on the students’ behalf. Certain governmental grants, such as Board of Governors’ grants are recorded as operating revenues in the District’s financial statements. To the extent that revenues from such programs are used to satisfy tuition and fees and other student charges, the District has recorded a scholarship discount and allowance. 18. Estimates The preparation of the financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the amounts reported in the financial statements and accompanying notes. Actual results may differ from those estimates. 19. Reclassifications Certain reclassifications have been made to the 2010 financial statements to conform to the 2011 presentation. -21- DRAFT for Discussion Purposes Only HARTNELL COMMUNITY COLLEGE DISTRICT NOTES TO FINANCIAL STATEMENTS June 30, 2011 and 2010 NOTE 2 - DEPOSITS AND INVESTMENTS: A. Deposits Custodial Credit Risk Custodial credit risk is the risk that in the event of a bank failure, the District’s deposits may not be returned to it. Although the District does not have a specific deposit policy for custodial risk, the California Government Code requires California banks and savings and loan associations to receive a local agencies’ deposits by pledging government securities with a value of 110% of a local agencies’ deposits. As of June 30, 2011 and 2010, respectively, $1,582,555 and $1,795,202 of the District’s bank balance of $1,848,169 and $2,122,877 was exposed to credit risk as follows: Uninsured and collateral held by pledging bank’s trust department not in the District’s name 2011 2010 $1,582,555 $1,795,202 Cash in County In accordance with Education Code Section 41001, the District maintains substantially all of its cash in the Monterey County Treasury as part of the common investment pool. These pooled funds are carried at unamortized cost which approximates fair value. The fair market value of the District’s deposits in this pool as of June 30, 2011 and 2010, as provided by the pool sponsor, was $62,208,639 and $77,539,879, respectively. The County is authorized to deposit cash and invest excess funds by California Government Code Section 53648 et. seq. The county is restricted by Government Code Section 53635 pursuant to Section 53601 to invest in time deposits, U.S. government securities, state registered warrants, notes or bonds, State Treasurer’s investment pool, bankers’ acceptances, commercial paper, negotiable certificates of deposit, and repurchase or reverse repurchase agreements. The funds maintained by the County are either secured by federal depository insurance or are collateralized. -22- DRAFT for Discussion Purposes Only HARTNELL COMMUNITY COLLEGE DISTRICT NOTES TO FINANCIAL STATEMENTS June 30, 2011 and 2010 NOTE 2 - DEPOSITS AND INVESTMENTS: A. Deposits (continued) Cash in County (continued) The County investment pool is not required to be rated. Interest earned is deposited quarterly into participating funds. The investment losses were proportionately shared by all funds in the pool. The District suffered a loss of earnings in the 200809 fiscal year due to its investments in Lehman Brothers and Washington Mutual of approximately ($1,400,000). $274,830 was recovered and recorded to interest earned for the 2009-10 year. $101,328 was recovered and recorded to interest earned for the 2010-11 year. B. Investments The District maintains investments with the State of California Local Agency Investment Fund (LAIF) amounting to $465,100 and $512,508 as of June 30, 2011 and 2010, respectively, including amounts invested by Fiduciary Funds. LAIF pools these funds with other governmental agencies and invests in various investment vehicles. These pooled funds approximate fair value. Regulatory oversight is provided by the State Pooled Money Investment Board and the Local Investment Advisory Board. LAIF is not subject to categorization as prescribed by GASB Statement No. 3 to indicate the level of custodial credit risk assumed by the District at year end. NOTE 3 - ACCOUNTS RECEIVABLE: The accounts receivable balance consists of the following: Federal and State Student receivable (net of allowance for doubtful accounts of $1,268,280 and $1,152,003 as of June 30, 2011 and 2010, respectively) Miscellaneous -23- 2011 2010 $ 8,615,594 $ 7,737,663 2,032,526 1,573,603 1,197,547 717,993 $12,221,723 $ 9,653,203 DRAFT for Discussion Purposes Only HARTNELL COMMUNITY COLLEGE DISTRICT NOTES TO FINANCIAL STATEMENTS June 30, 2011 and 2010 NOTE 4 - INTERFUND TRANSACTIONS: Interfund transfers consist of operating transfers from funds receiving resources to funds through which the resources are to be expended. Interfund receivables and payables result when the interfund transfer is transacted after the close of the fiscal year. Interfund activity has been eliminated in the basic financial statements, except for transactions occurring between governmental and fiduciary funds. NOTE 5 - CAPITAL ASSETS: The following provides a summary of changes in capital assets for the year ended June 30, 2011: Balance June 30, 2010 Non-depreciable assets: Land Construction in progress Total non-depreciated assets: Depreciable assets: Site and site improvements Equipment Total depreciable assets: Less accumulated depreciation for: Site and site improvements Equipment Total accumulated depreciation: Total depreciable assets, net Governmental capital assets, net $ 590,992 39,022,793 39,613,785 Additions $ Retirements $ 17,384,609 17,384,609 Balance June 30, 2011 21,789,226 21,789,226 $ 590,992 34,618,176 35,209,168 - 131,792,482 9,501,607 141,294,089 110,397,542 8,813,282 119,210,824 21,394,940 688,325 22,083,265 27,336,457 6,577,453 33,913,910 3,427,439 526,737 3,954,176 - 30,763,896 7,104,190 37,868,086 85,296,914 18,129,089 - 103,426,003 $ 124,910,699 $ 35,513,698 $ 21,789,226 $ 138,635,171 -24- DRAFT for Discussion Purposes Only HARTNELL COMMUNITY COLLEGE DISTRICT NOTES TO FINANCIAL STATEMENTS June 30, 2011 and 2010 NOTE 5 - CAPITAL ASSETS: (continued) The following provides a summary of changes in capital assets for the year ended June 30, 2010: Balance June 30, 2009 Non-depreciable assets: Land Construction in progress Total non-depreciated assets: Depreciable assets: Site and site improvements Equipment Total depreciable assets: Less accumulated depreciation for: Site and site improvements Equipment Total accumulated depreciation: Total depreciable assets, net Governmental capital assets, net $ 590,992 31,779,264 32,370,256 Additions $ Retirements $ 23,257,668 23,257,668 Balance June 30, 2010 16,014,139 16,014,139 $ 590,992 39,022,793 39,613,785 - 110,397,542 8,813,282 119,210,824 94,383,403 8,553,383 102,936,786 16,014,139 259,899 16,274,038 24,461,169 6,057,984 30,519,153 2,875,288 519,469 3,394,757 - 27,336,457 6,577,453 33,913,910 72,417,633 12,879,281 - 85,296,914 $ 104,787,889 $ 36,136,949 $ 16,014,139 $ 124,910,699 NOTE 6 - TAX REVENUE ANTICIPATION NOTES (TRANS): During the fiscal year ended June 30, 2010, the District issued $2,815,000 of Tax Revenue Anticipation Notes dated July 8, 2009 through the California Community College Financing Authority’s Tax and Revenue Anticipation Note Program (Series 2010A). The notes matured on June 30, 2010 and yielded .95% interest. The notes were sold by the District to supplement its cash flow. The funds were held in a Guaranteed Investment Contract. Repayment requirements were that $2,815,000 be deposited in June 2010, inclusive of interest. All repayment requirements were met as of June 30, 2010. The notes were considered in-substance defeased on June 30, 2010 and were not reflected as a liability in these financial statements. The District did not issue tax Revenue Anticipation Notes during the 2010-11 fiscal year. -25- DRAFT for Discussion Purposes Only HARTNELL COMMUNITY COLLEGE DISTRICT NOTES TO FINANCIAL STATEMENTS June 30, 2011 and 2010 NOTE 7 - GENERAL OBLIGATION BONDS: On November 5, 2002, the District voters authorized the issuance and sale of general obligation bonds totaling $131,000,000. Proceeds from the sale of the bonds will be used to finance the construction, acquisition, and modernization of certain property and District facilities. On April 15, 2003, the District issued General Obligation Bonds, Election of 2002, Series A of $35,000,000 of current interest bonds. Interest ranges from 2.0% to 5.0% payable semiannually on February 1 and August 1. At June 30, 2011 and 2010 the principal balance outstanding was $1,840,000 and $2,265,000, respectively. On March 23, 2005, the District issued 2005 General Obligation Refunding Bonds of $23,500,000 of current interest bonds and $5,562,042 of capital appreciation bonds. Interest rates range from 4.50% to 5.25% payable semiannually on February 1 and August 1. At June 30, 2011 and 2010, the principal balance outstanding (including accreted interest to date) was $27,999,932 and $28,587,300, respectively. Unamortized premium costs at June 30, 2011 and 2010 were $2,591,330 and $2,823,389, respectively. Unamortized issue costs at June 30, 2011 and 2010 were $334,482 and $364,436, respectively. Premium and issuance costs are amortized over the life of the bonds as a component of interest expense on the bonds. On June 6, 2006, the District issued the General Obligation Bonds, Election 2002, Series B of $32,815,000 of current interest bonds and $2,180,518 of capital appreciation bonds. Interest ranges from 4.10% to 5.25% payable semiannually June 1 and December 1. At June 30, 2011 and 2010 the principal balance outstanding (including accreted interest to date) was $34,596,494 and $34,783,347, respectively. Unamortized premium costs at June 30, 2011 and 2010 were $1,058,670 and $1,114,635, respectively. Unamortized issue costs at June 30, 2011 and 2010 were $469,468 and $494,285, respectively. Premium and issuance costs are amortized over the life of the bonds as a component of interest expense on the bonds. On May 27, 2009, the District issued the General Obligation Bonds, Election 2002, Series C of $3,366,499 of capital appreciation bonds and $9,231,389 of convertible capital appreciation bonds. Interest ranges from 6.13% to 11.50% payable semiannually February 1 and August 1. At June 30, 2011 and 2010 the principal balance outstanding (including accreted interest to date), was $13,917,995 and $13,096,645, respectively. Unamortized premium and issue costs at June 30, 2011 and 2010 were $179,996 each and $188,147 each, respectively. Premium and issuance costs are amortized over the life of the bonds as a component of interest expense on the bonds. -26- DRAFT for Discussion Purposes Only HARTNELL COMMUNITY COLLEGE DISTRICT NOTES TO FINANCIAL STATEMENTS June 30, 2011 and 2010 NOTE 7 - GENERAL OBLIGATION BONDS: (continued) On August 27, 2009, the District issued the General Obligation Bonds, Election 2002, Series D of $2,516,428 of capital appreciation bonds, $32,590,041 of capital appreciation term bonds, and $13,298,610 of convertible capital appreciation bonds. Interest ranges from 6.43% to 11.50% payable semiannually February 1 and August 1. At June 30, 2011 and 2010 the principal balance outstanding (including accreted interest to date) was $53,560,938 and $49,810,952. Unamortized premium and issue costs at June 30, 2011 and 2010 were $588,010 each and $603,450 each, respectively. Premium and issuance costs are amortized over the life of the bonds as a component of interest expense on the bonds. Capital appreciation bonds have maturity dates for: Series B from June 1, 2008 through June 1, 2016; Series C from August 1, 2023 through August 1, 2033; Series D from August 1, 2023 through August 1, 2049 and the Refunded Bonds from August 1, 2005 through August 1, 2014. Prior to the applicable maturity date, each bond will accrete interest on the principal component. The refunding bonds were issued to advance refund a portion of the outstanding Series A general obligation bonds. $28,554,555 in refunding proceeds were placed into an irrevocable escrow account and will be used to fund the future required principal and interest payments of the refunded bonds. The amount of refunded debt to be paid from the escrow account at June 30, 2011 and 2010 for Series A is $27,240,000. The refunded portions of the bonds are considered in-substance defeased and are not recorded in the financial statements. Amounts paid to the refunded debt escrow agent, in excess of outstanding debt at the time of payment, are recorded as deferred charges on the statement of net assets and are amortized to interest expense over the life of the liability. At June 30, 2011 and 2010, unamortized deferred charges were $289,999 and $316,363, respectively. -27- DRAFT for Discussion Purposes Only HARTNELL COMMUNITY COLLEGE DISTRICT NOTES TO FINANCIAL STATEMENTS June 30, 2011 and 2010 NOTE 7 - GENERAL OBLIGATION BONDS: (continued) The outstanding bonded debt for Hartnell Community College District at June 30, 2011 is: Series Series A Refunding Bond Accreted Interest Series B Accreted Interest Series C Accreted Interest Series D Accreted Interest Amount of Original Issue Date of Issue Interest Rate % Maturity Date 4/15/2003 3/23/2005 2.00-5.00% 4.50-5.25% 8/1/2013 8/1/2022 6/06/2006 4.10 - 5.25% 6/1/2031 34,995,518 5/27/2009 6.13 - 11.50% 8/1/2033 12,597,888 9/16/2009 6.43 - 11.50% 8/1/2049 48,405,079 (1) $ 35,000,000 29,062,042 $ 2,265,000 26,366,192 2,221,108 34,408,837 374,510 12,597,888 498,757 48,405,079 1,405,873 $128,543,244 $ 160,060,527 (1) Issued Current Year Outstanding July 1, 2010 Interest Accreted Current Year $ $ 552,632 73,147 Redeemed Current Year Outstanding June 30, 2011 $ $ 425,000 613,502 526,498 213,512 46,488 821,350 $ - $ 3,749,986 5,197,115 $ 1,825,000 1,840,000 25,752,690 2,247,242 34,195,325 401,169 12,597,888 1,320,107 48,405,079 5,155,859 $ 131,915,359 The maturity date has been revised from the original date of August 1, 2027 to reflect the final maturity date on the remaining non-refunded bonds. The annual requirements to amortize all bonds payable, outstanding as of June 30, 2011, are as follows: Series A Year Ended June 30, 2012 2013 2014 Principal Interest Total $ 515,000 610,000 715,000 $ 59,725 39,656 14,300 $ 574,725 649,656 729,300 $ 1,840,000 $ 113,681 $ 1,953,681 -28- DRAFT for Discussion Purposes Only HARTNELL COMMUNITY COLLEGE DISTRICT NOTES TO FINANCIAL STATEMENTS June 30, 2011 and 2010 NOTE 7 - GENERAL OBLIGATION BONDS: (continued) Refunding Bond Year Ended June 30, 2012 2013 2014 2015 2016 2017-2021 2022-2023 Principal $ Accreted Interest Component Interest Total 574,752 537,100 502,679 638,159 2,015,000 13,840,000 7,645,000 $ 1,163,688 1,163,688 1,163,688 1,163,688 1,118,350 3,703,138 371,093 $ 625,248 722,900 822,321 1,251,841 $ 2,363,688 2,423,688 2,488,688 3,053,688 3,133,350 17,543,138 8,016,093 $ 25,752,690 $ 9,847,333 $ 3,422,310 $ 39,022,333 Series B Year Ended June 30, 2012 2013 2014 2015 2016 2017-2021 2022-2026 2027-2031 Principal $ 239,391 239,635 263,895 308,540 328,864 3,955,000 12,010,000 16,850,000 $ 34,195,325 Interest $ 1,622,241 1,622,241 1,622,241 1,622,241 1,622,241 7,829,755 6,264,913 2,610,000 $ 24,815,873 -29- Accreted Interest Component Total $ 65,609 80,365 106,105 146,460 181,137 $ $ 579,676 $ 1,927,241 1,942,241 1,992,241 2,077,241 2,132,242 11,784,755 18,274,913 19,460,000 59,590,874 DRAFT for Discussion Purposes Only HARTNELL COMMUNITY COLLEGE DISTRICT NOTES TO FINANCIAL STATEMENTS June 30, 2011 and 2010 NOTE 7 - GENERAL OBLIGATION BONDS: (continued) Series C Year Ended June 30, 2012 2013 2014 2015 2016 2017-2021 2022-2026 2027-2031 2032-2034 Principal Interest Accreted Interest Component Total $ $ $ $ 1,195,731 5,101,547 6,300,610 $ 12,597,888 4,372,178 5,867,597 1,080,144 $ 11,319,919 2,154,269 7,888,453 7,619,390 $ 17,662,112 $ 7,722,178 18,857,597 15,000,144 41,579,919 Series D Year Ended June 30, 2012 2013 2014 2015 2016 2017-2021 2022-2026 2027-2031 2032-2036 2037-2041 2042-2046 2047-2050 Principal $ 483,460 1,868,094 15,876,647 12,229,492 10,802,583 7,144,803 $ 48,405,079 Accreted Interest Component Interest $ $ 7,901,250 11,287,500 6,178,900 $ 25,367,650 -30- 801,539 5,076,906 33,356,982 89,193,888 124,801,679 133,564,632 $ 386,795,626 Total $ 9,186,249 18,232,500 55,412,529 101,423,380 135,604,262 140,709,435 $ 460,568,355 DRAFT for Discussion Purposes Only HARTNELL COMMUNITY COLLEGE DISTRICT NOTES TO FINANCIAL STATEMENTS June 30, 2011 and 2010 NOTE 8 - LONG-TERM DEBT: A schedule of changes in long-term debt for the year ended June 30, 2011 is shown below: Beginning Balance July 1, 2010 Additions Deductions Ending Balance June 30, 2011 $ $ Amount Due in One Year General obligation bond: Series A Refunding bond Refunding bond - bond premium Deferred liability on refunding Series B Series B - bond premium Series C Series C - bond premium Series D Series D - bond premium Total general obligation bonds payable Other postemployment benefits other than pension (OPEB) Early retirement incentive Total long-term debt $ 2,265,000 28,587,300 2,823,389 (316,363) 34,783,347 1,114,635 13,096,645 188,147 49,810,952 603,450 132,956,502 132,820 600,551 $ 133,689,873 $ 552,632 73,147 425,000 1,140,000 232,059 (26,364) 260,000 55,965 821,350 8,151 3,749,986 5,197,115 15,440 2,110,251 243,253 $ 5,440,368 83,335 $ 2,193,586 1,840,000 27,999,932 2,591,330 (289,999) 34,596,494 1,058,670 13,917,995 179,996 53,560,938 588,010 136,043,366 376,073 517,216 $ 136,936,655 $ 515,000 1,200,000 305,000 2,020,000 80,974 $ 2,100,974 Liabilities are liquidated by the General Fund for governmental activities, including net OPEB obligations and supplemental employee retirement plans. General obligation bond liabilities are liquidated through property tax collections as administered by the County Controller’s office through the Bond Interest and Redemption Fund. -31- DRAFT for Discussion Purposes Only HARTNELL COMMUNITY COLLEGE DISTRICT NOTES TO FINANCIAL STATEMENTS June 30, 2011 and 2010 NOTE 8 - LONG-TERM DEBT: (continued) A schedule of changes in long-term debt for the year ended June 30, 2010 is shown below: Beginning Balance July 1, 2009 Additions Deductions Ending Balance June 30, 2010 $ $ Amount Due in One Year General obligation bond: Series A Refunding bond Refunding bond - bond premium Deferred liability on refunding Series B Series B - bond premium Series C Series C - bond premium Series D Series D - bond premium Total general obligation bonds payable Other postemployment benefits other than pension (OPEB) Early retirement incentive Total long-term debt $ 2,610,000 29,053,453 3,055,448 (342,726) 34,938,019 1,170,600 12,597,888 196,295 83,278,977 115,017 600,551 $ 83,994,545 -32- $ 613,847 80,328 345,000 1,080,000 232,059 (26,363) 235,000 55,965 498,757 8,148 49,810,952 615,030 51,618,914 11,580 1,941,389 17,803 $ 51,636,717 $ 1,941,389 2,265,000 28,587,300 2,823,389 (316,363) 34,783,347 1,114,635 13,096,645 188,147 49,810,952 603,450 132,956,502 132,820 600,551 $ 133,689,873 $ 425,000 1,140,000 260,000 1,825,000 83,335 $ 1,908,335 DRAFT for Discussion Purposes Only HARTNELL COMMUNITY COLLEGE DISTRICT NOTES TO FINANCIAL STATEMENTS June 30, 2011 and 2010 NOTE 9 - EMPLOYEE RETIREMENT PLANS: Qualified employees are covered under multiple-employer defined benefit pension plans maintained by agencies of the State of California. Academic employees are members of the State Teachers’ Retirement System (STRS) and classified employees are members of the Public Employees’ Retirement System (PERS) and part-time, seasonal and temporary employees and employees not covered by STRS or PERS are members of the Public Agency Retirement System (PARS). State Teachers’ Retirement System (STRS) Plan Description The District contributes to the State Teachers’ Retirement System (STRS), a cost-sharing multiple-employer public employee retirement system defined benefit pension plan administered by STRS. The plan provides retirement, disability and survivor benefits to beneficiaries. Benefit provisions are established by State statutes, as legislatively amended, within the State Teachers’ Retirement Law. STRS issues a separate comprehensive annual financial report that includes financial statements and required supplementary information. Copies of the STRS annual financial report may be obtained from STRS, 7667 Folsom Boulevard, Sacramento, CA 95826. Funding Policy Active plan members are required to contribute 8.0% of their salary and the District is required to contribute an actuarially determined rate. The actuarial methods and assumptions used for determining the rate are those adopted by the STRS Teachers’ Retirement Board. The required employer contribution rate for fiscal years 2010-11 and 2009-10 was 8.25% of annual payroll. The contribution requirements of the plan members are established and may be amended by State statute. -33- DRAFT for Discussion Purposes Only HARTNELL COMMUNITY COLLEGE DISTRICT NOTES TO FINANCIAL STATEMENTS June 30, 2011 and 2010 NOTE 9 - EMPLOYEE RETIREMENT PLANS: (continued) Public Employees’ Retirement System (PERS) Plan Description The District contributes to the School Employer Pool under the California Public Employees’ Retirement System (CalPERS), a cost-sharing multiple-employer public employee retirement system defined benefit pension plan administered by CalPERS. The plan provides retirement and disability benefits, annual cost-of-living adjustments, and death benefits to plan members and beneficiaries. Benefit provisions are established by State statutes, as legislatively amended, within the Public Employees’ Retirement Law. CalPERS issues a separate comprehensive annual financial report that includes required supplementary information. Copies of the CalPERS annual financial report may be obtained from the CalPERS Executive Office, 400 P Street, Sacramento, CA 95814. Funding Policy Active plan members are required to contribute 7.0% of their salary; currently the District contributes the employees’ portion for California School Employees Association and Local 39 bargaining unit members. The District is required to contribute an actuarially determined rate. The actuarial methods and assumptions used for determining the rate are those adopted by the CalPERS Board of Administration. The required employer contribution was 10.707% of annual payroll for fiscal year 2010-11 and 9.709% of annual payroll for fiscal year 2009-10. The contribution requirements of the plan members are established and may be amended by State statute. Contributions to STRS and PERS The District’s contributions to STRS and PERS for each of the last three fiscal years are as follows: Year Ended June 30, 2009 2010 2011 STRS Required Percent Contribution Contributed $ 934,307 836,813 964,542 100% 100% 100% -34- PERS Required Percent Contribution Contributed $1,033,971 917,282 1,274,324 100% 100% 100% DRAFT for Discussion Purposes Only HARTNELL COMMUNITY COLLEGE DISTRICT NOTES TO FINANCIAL STATEMENTS June 30, 2011 and 2010 NOTE 10 - EARLY RETIREMENT INCENTIVE: On April 14, 2009, the Board of Trustees adopted a resolution for the implementation of an Early Retirement Incentive for full-time faculty. A total of seven full-time faculty are participating. The District will pay benefits totaling $600,551. A payment of $83,335 was made during the 2010-11 fiscal year. A payment of $80,974 is due during the 2011-12 fiscal year with subsequent payment amounts varying through 2017-18. The total remaining liability has been reflected in these financial statements. The net savings for the life of the plan is estimated at $945,000. NOTE 11 – POSTEMPLOYMENT HEALTH CARE BENEFITS: Plan Description The District administers two single-employer defined benefit healthcare plans: the Retiree Health Plan (RHP) and beginning in the fiscal year 2010-11, the Retiree Health Plan – Faculty Post-65 (RHPF). The District provides medical, dental, and vision insurance coverage, as prescribed in the various employee union contracts, to retirees meeting plan eligibility requirements. Eligible employees retiring from the District may become eligible for these benefits when the requirements are met. The eligibility requirements for employees who are members of the California School Employees Association or International Union of Operating Engineers Stationary Local Number 39 are a minimum age of 60 and have a minimum of ten years of continuous service with the District. These employees receive one year of benefits for each two years with the District not to exceed five years. Additional age and service criteria may be required. The eligibility requirement for members of the Hartnell College Faculty Association is a minimum age of 58 with ten years of full-time service. These employees receive one year of benefits for each two years with the District not to exceed seven years. Additional age and service criteria may be required. The eligibility requirement for managers, supervisors, and confidential employees are: to be of eligible age to retire from STRS or PERS, whichever is appropriate and have five years of full-time employment with the District. Benefits will be granted for a maximum of ten years. -35- DRAFT for Discussion Purposes Only HARTNELL COMMUNITY COLLEGE DISTRICT NOTES TO FINANCIAL STATEMENTS June 30, 2011 and 2010 NOTE 11 - POSTEMPLOYMENT HEALTH CARE BENEFITS: (continued) Plan Description (continued) The District-paid health benefits for all retirees, except medical coverage for members of the Hartnell College Faculty Association beginning in the 2010-11 fiscal year, terminates at age 65. Retiree members of the Hartnell College Faculty Association receive lifetime District-paid medical coverage for themselves and their dependents. The retiree health plans do not issue a separate financial reports. Funding Policy The District currently finances benefits on a pay-as-you-go basis. The District contributes 100 percent of the cost of current year premiums for eligible retired plan members and their dependents as applicable. The District contributed $380,178 to the plans for fiscal year ended 2011 and $527,694 for fiscal year ended 2010. Annual OPEB Cost and Net OPEB Obligation The District’s annual other post employment benefit (OPEB) cost (expense) is calculated based on the annual required contribution of the employer (ARC), an amount actuarially determined in accordance with the parameters of GASB Statement 45. The ARC represents a level of funding that, if paid on an ongoing basis, is projected to cover normal cost each year and amortize any unfunded actuarial liabilities (or funding excess) over a period not to exceed thirty years. The following table shows the components of the District’s annual OPEB cost for the year, the amount actually contributed, and changes in the OPEB obligation: 2010 RHP 2011 RHP Annual required contribution (ARC) $ Interest on net OPEB obligation Adjustment to annual required contribution Annual OPEB cost (expense) 537,958 RHPF $ 85,057 $ 544,841 6,641 5,751 (6,225) (5,095) 538,374 85,057 545,497 (378,458) (1,720) (527,694) Change in net OPEB obligation 159,916 83,337 17,803 Net OPEB obligation – Beginning of Year 132,820 - 115,017 Contributions made Net OPEB obligation - End of Year $ -36- 292,736 $ 83,337 $ 132,820 DRAFT for Discussion Purposes Only HARTNELL COMMUNITY COLLEGE DISTRICT NOTES TO FINANCIAL STATEMENTS June 30, 2011 and 2010 NOTE 11 - POSTEMPLOYMENT HEALTH CARE BENEFITS: (continued) The District’s annual OPEB cost for the year, the percentage of annual OPEB cost contributed, and the net OPEB obligation for the fiscal year was as follows: Retiree Health Plan: Fiscal Year Ended 6/30/2009 6/30/2010 6/30/2011 Annual OPEB Cost $ Percentage of Annual OPEB Cost Contributed 535,232 545,497 538,374 96.7% 61.0% 70.3% Net OPEB Obligation $ 115,017 132,820 292,736 Retiree Health Plan - Faculty Post-65: Fiscal Year Ended 6/30/2011 Annual OPEB Cost $ 85,057 Percentage of Annual OPEB Cost Contributed 2.0% Net OPEB Obligation $ 83,337 Funding Status and Funding Progress As of October 1, 2010, the most recent actuarial valuation date, the plan was deemed unfunded because the District is using an assigned fund rather than an irrevocable trust to set aside resources for retiree health care costs. For the Retiree Health Plan, the actuarial accrued liability for benefits as well as the unfunded actuarial accrued liability (UAAL) was $4,221,464. The covered payroll (annual payroll of active employees covered by the plan) was $14,917,763, and the ratio of the UAAL to the covered payroll was 28.30%. For the Retiree Health Plan – Faculty Post-65, the actuarial accrued liability for benefits as well as the unfunded actuarial accrued liability (UAAL) was $701,178. The covered payroll (annual payroll of active employees covered the plan) was $6,006,163, and the ratio of the UAAL to the covered payroll was 11.67%. Although the plans have no segregated assets, the District does maintain a retiree benefits fund to assign resources for retiree health care costs. The fund’s assigned balance was $4,142,012 and $3,398,886 at June 30, 2011 and 2010, respectively. Actuarial valuations of an ongoing benefit plan involve estimates of the value of reported amounts and assumptions about the probability of occurrence of events far into the future. Examples include assumptions about future employment, mortality, and the healthcare cost trend. Amounts determined regarding the funded status of the plan and the annual required contributions of the employer are subject to continual revision as actual results are compared with past expectations and new estimates are made about the future. The schedule of postemployment healthcare benefits funding progress, presented as required supplementary information following the notes to the financial statements, presents multiyear trend information about whether the actuarial value of plan assets, if any, is increasing or decreasing over time relative to the actuarial accrued liabilities for benefits. -37- DRAFT for Discussion Purposes Only HARTNELL COMMUNITY COLLEGE DISTRICT NOTES TO FINANCIAL STATEMENTS June 30, 2011 and 2010 NOTE 11 - POSTEMPLOYMENT HEALTH CARE BENEFITS: (continued) Actuarial Methods and Assumptions Projections of benefits for financial reporting purposes are based on the substantive plan (the plan as understood by the employer and the plan members) and include the types of benefits provided at the time of each valuation and the historical pattern of sharing of benefit costs between the employer and plan members to that point. The actuarial methods and assumptions used include techniques that are designed to reduce the effects of short-term volatility in actuarial accrued liabilities and the actuarial value of assets, if any, consistent with the long-term perspective of the calculations. In the October 1, 2010 actuarial valuation reports for both the RHP and RHPF plans, the entry age normal actuarial cost method was used. The actuarial assumptions included a 5.0 percent investment rate of return (net of administrative expenses) which is a blended rate of the expected long-term investment returns on plan assets and on the employers own investments calculated based on the funded level of the plan at the valuation date, and an annual healthcare cost trend rate of 4 percent. For the RHP plan, the initial UAAL is being amortized as a level percentage of projected payroll using a closed amortization period of 30 years. The remaining amortization period at June 30, 2011 is twenty-seven years. The remaining UAAL is being amortized as a level percentage of projected payroll using an open amortization period of 30 years. For the RHPF plan, the UAAL is being amortized as a level percentage of projected payroll using a closed amortization period of 20 years. NOTE 12 - JOINT VENTURES (JOINT POWERS AGREEMENTS): The District participates in six joint Powers Agreements (JPA) entities, Monterey County Schools Insurance Group (MCSIG), Bay Area Community College Districts, School Association for Excess Risk (SAFER), the Statewide Association of Community Colleges (SWACC), Protected Insurance Program for Schools (PIPS), and the South Bay Regional Public Safety Training Consortium. Monterey County Schools Insurance Group administers medical, dental and vision benefit programs for its member districts. -38- DRAFT for Discussion Purposes Only HARTNELL COMMUNITY COLLEGE DISTRICT NOTES TO FINANCIAL STATEMENTS June 30, 2011 and 2010 NOTE 12 - JOINT VENTURES (JOINT POWERS AGREEMENTS): (continued) Bay Area Community College Districts administers a cooperative insurance program for member districts. Under this program, member districts are insured under certain liability and property insurance policies purchased by the Agency. The Agency is governed by a board comprised of one representative for each member district. Coverages under current policies provide for the member districts to pay for the first $10,000 and the Agency to pay for the next $240,000 on each property claim and the next $90,000 for each liability claim. Claims over the $250,000 and $100,000 self-insured retention are covered by excess insurance pools. SAFER provides excess property and liability program protection for its member agencies. SAFER is governed by a board which is comprised of one or two members, determined based on ADA (Average Daily Attendance) or FTES, for each participating district. Each member’s contribution is determined based on its respective total insurable values, loss history, unusual exposures and other information relative to providing coverage. The base contribution rate may be subject to modification based on each member’s claim experience. SWACC provides liability and property insurance for approximately nineteen community colleges. SWACC is governed by a Board comprised of a member of each of the participating districts. The board controls the operations of SWACC, including selection of management and approval of members beyond their representation on the Board. Each member shares surpluses and deficits proportionately to its participation in SWACC. PIPS provides workers’ compensation insurance protection to its membership for public schools and community colleges throughout California. This is a finite risk sharing pool that transfers risk away from the members. Premiums are determined based on payroll expense and additional premiums may be required in subsequent years. The South Bay Regional Public Safety Training Consortium provides education and training to public safety students of participating community colleges. -39- DRAFT for Discussion Purposes Only HARTNELL COMMUNITY COLLEGE DISTRICT NOTES TO FINANCIAL STATEMENTS June 30, 2011 and 2010 NOTE 12 - JOINT VENTURES (JOINT POWERS AGREEMENTS): (continued) Each JPA is governed by a board consisting of a representative from each member district. Each governing board controls the operations of its JPA independent of any influence by the Hartnell Community College District beyond the District’s representation on the governing boards. Each JPA is independently accountable for its fiscal matters. All JPAs maintain their own accounting records. Budgets are not subject to any approval other than that of the respective governing boards. Member districts share surpluses and deficits proportionately to their participation in the JPA. The relationships between the Hartnell Community College District and the JPAs are such that the JPA is not a component unit of the District for financial reporting purposes. Separate financial statements for each JPA may be obtained from the respective entity. Condensed financial information for the most current information available is as follows: Bay Area CCD 6/30/2010 (Audited) MCSIG 6/30/2010 (Audited) SBRPSTC 6/30/2011 (Audited) 147,570 6,200 $ 7,163,229 2,751,849 $ 23,309,084 16,545,285 $ 4,175,392 1,742,003 141,370 $ 4,411,380 $ 6,763,799 $ 2,433,389 5,305,101 596,363 $ 39,295,919 39,284,942 $ 3,591,909 4,221,030 $ 78,833,498 78,934,901 $ 7,930,842 8,405,022 4,708,738 $ $ (629,121) $ $ SWACC 6/30/2010 (Audited) PIPS 6/30/2010 (Audited) Total assets Total liabilities $ 46,019,292 21,417,925 $ 117,734,937 69,742,511 $ Net assets $ 24,601,367 $ 47,992,426 $ Total revenues Total expenditures $ 11,118,079 12,547,315 $ Change in net assets $ (1,429,236) $ -40- SAFER 6/30/2010 (Audited) 10,977 (101,403) (474,180) DRAFT for Discussion Purposes Only HARTNELL COMMUNITY COLLEGE DISTRICT NOTES TO FINANCIAL STATEMENTS June 30, 2011 and 2010 NOTE 13 - RISK MANAGEMENT: The District is exposed to various risks of loss related to torts; theft of, damage to, and destruction of assets; errors and omissions; injuries to employees; natural disasters; and medical claims. The District contracts with the Statewide Association of Community Colleges (SWACC), School Association of Excess Risk (SAFER) and Bay Area Community College District Joint Powers Authority for property and liability insurance coverage. Settled claims have not exceeded the coverage provided by the JPA in any of the past three fiscal years. The District participated in the Protected Insurance Program for Schools (PIPS), an insurance purchasing pool. The intent of PIPS is to achieve the benefit of a reduced premium for the District by virtue of its grouping and representation with other participants in the PIPS. The workers’ compensation experience of the participating districts is calculated as one experience, and a common premium rate is applied to all districts in the PIPS. Each participant pays its workers’ compensation premium based on its individual rate. Total savings are then calculated and each participant’s individual performance is compared to the overall saving. A participant will then either receive money from or be required to contribute to the “equity-pooling fund.” This “equity pooling” arrangement ensures that each participant shares equally in the overall performance of the PIPS. Participation in the PIPS is limited to community college districts that can meet the PIPS’s selection criteria. NOTE 14 - COMMITMENTS AND CONTINGENCIES: A. Litigation The District is involved in various claims and legal actions arising in the ordinary course of business. In the opinion of management, the ultimate disposition of these matters will not have a material adverse effect on the District’s financial statements. B. State and Federal Allowances, Awards and Grants The District has received state and Federal funds for specific purposes that are subject to review and audit by the grantor agencies. Although such audits could generate expenditure disallowances under terms of the grants, it is believed that any required reimbursement will not be material. C. Purchase Commitments As of June 30, 2011 and 2010, the District was committed under various capital expenditure purchase agreements for construction and modernization projects totaling $7,960,000 and $26,000,000, respectively. Projects will be funded through bond proceeds and state funds. -41- DRAFT for Discussion Purposes Only REQUIRED SUPPLEMENTARY INFORMATION DRAFT for Discussion Purposes Only HARTNELL COMMUNITY COLLEGE DISTRICT SCHEDULE OF POSTEMPLOYMENT HEALTHCARE BENEFITS FUNDING PROGRESS For the Fiscal Year Ended June 30, 2011 Retiree Health Plan: Actuarial Valuation Date 6/1/2009 10/1/2010 Actuarial Value of Assets (AVA) Actuarial Accrued Liability (Unit Cost Method) (AAL) $ $ - 4,852,364 4,221,464 Unfunded Actuarial Accrued Liability (UAAL) $ 4,852,364 4,221,464 Funding Ratio 0.0% 0.0% Covered Payroll $ UAAL as a Percentage of Covered Payroll 16,251,014 14,917,763 29.86% 28.30% Retiree Health Plan - Faculty Post-65: Actuarial Valuation Date 10/1/2010 Actuarial Value of Assets (AVA) Actuarial Accrued Liability (Unit Cost Method) (AAL) $ $ - 701,178 Unfunded Actuarial Accrued Liability (UAAL) $ 701,178 Funding Ratio 0.0% Covered Payroll $ UAAL as a Percentage of Covered Payroll 6,006,163 Note: Fiscal year 2008-09 was the year of implementation of GASB Statement No. 45 and the District elected to implement prospectively, therefore, prior year comparative data is not available. In future years, three year trend actuarial information will be presented. Although the plan has no segregated assets, the District does maintain a retiree benefits fund to designate resources for retiree health care costs. At June 30, 2011, the funds assigned balance was $4,124,012. See the accompanying notes to the required supplementary information. -42- 11.67% DRAFT for Discussion Purposes Only HARTNELL COMMUNITY COLLEGE DISTRICT NOTES TO REQUIRED SUPPLEMENTARY INFORMATION For the Fiscal Year Ended June 30, 2011 NOTE 1 - PURPOSE OF SCHEDULES: Schedule of Postemployment Healthcare Benefits Funding Progress This schedule is prepared to show information for the most recent actuarial valuation and in future years, the information from the three most recent actuarial valuations in accordance with Statement No. 45 of the Governmental Accounting Standards Board, Accounting and Financial Reporting by Employers for Postemployment Benefits Other Than Pensions. The schedule is intended to show trends about the funding progress of the District’s actuarially determined liability for postemployment benefits other than pensions. -43- DRAFT for Discussion Purposes Only SUPPLEMENTARY INFORMATION DRAFT for Discussion Purposes Only HARTNELL COMMUNITY COLLEGE DISTRICT HISTORY AND ORGANIZATION June 30, 2011 The Hartnell Community College District was established in 1949 and serves communities in both Monterey and San Benito counties. The District currently operates one college. BOARD OF TRUSTEES Member Office Term Expiration Erica Padilla-Chavez President November 2013 Kevin Healy Vice President November 2011 William Freeman Member November 2011 Elia Gonzalez-Castro Member November 2011 Patricia Donohue Member November 2011 Candi DePauw Member November 2013 Ray Montemayor Member November 2013 Juan M. Guitierrez Student Trustee, Hartnell College June 2012 DISTRICT EXECUTIVE OFFICERS Dr. Phoebe K. Helm Superintendent/President Dr. Suzanne Flannigan Vice President for Academic Affairs and Accreditation Mr. Kent Stephens Vice President for Support Operations Ms. Terri Pyer Associate Vice President for Human Resources Vacant Vice President for Student Affairs Ms. Beverly Grova Vice President for Advancement -44- DRAFT for Discussion Purposes Only HARTNELL COMMUNITY COLLEGE DISTRICT SCHEDULE OF EXPENDITURES OF FEDERAL AWARDS For the Fiscal Year Ended June 30, 2011 Federal Grantor/Pass-Through Grantor/Program or Cluster Title U. S. DEPARTMENT OF EDUCATION Direct: Financial Aid Cluster: PELL Grant Financial Aid Administration Allowance Direct Loan Academic Competitiveness Grant Federal Work Study Supplemental Educational Opportunity Grants (S.E.O.G.) Total Financial Aid Cluster College Cost Reduction and Access Act - Math & Science Child Care Access Grant GEAR UP (East Salinas) Title V - STEM Title V - Gavilan College Student Support Services Program Migrant Ed - High School Equivalency Program CFDA Number Pass-Through Entity Identifying Number Program Expenditures 84.063 84.000 84.268 84.375 84.033 84.007 N/A N/A N/A N/A N/A N/A $ 10,651,723 13,545 395,886 147,485 138,929 150,465 11,498,033 84.031C 84.335A 84.334A 84.334S 84.031S 84.042A 84.141N N/A N/A N/A N/A N/A N/A N/A 143,175 34,811 1,335,389 638,999 656,541 230,518 497,940 Total direct from U.S. Department of Education 15,035,406 Passed through from California Community Colleges Chancellor's Office Carl D. Perkins Career and Technical Education (CTE) Act CTE - Title I, Part C CTE - Title II, Tech Prep 84.048 84.243 07-C01-021 N/A 294,932 69,708 Passed through from the California Department of Education Carl D. Perkins Career and Technical Education (CTE) Act Tech Prep Demonstration Site American Reinvestment Recovery Act: State Fiscal Stabilization Fund 84.243 84.394 N/A N/A 100,000 24,841 Passed through from the California State Department of Rehabilitation Workability III Department of Rehabilitation 84.126A 26014 140,233 Passed through from the Foundation of California State University, Monterey Bay College Cost Reduction and Access Act - Math & Science 84.031C 5024701A-081120-S-A 115,925 Total passed through from U.S. Department of Education 745,639 See the accompanying notes to the supplementary information. -45- DRAFT for Discussion Purposes Only HARTNELL COMMUNITY COLLEGE DISTRICT SCHEDULE OF EXPENDITURES OF FEDERAL AWARDS For the Fiscal Year Ended June 30, 2011 Federal Grantor/Pass-Through Grantor/Program or Cluster Title CFDA Number Pass-Through Entity Identifying Number 93.375 S0180631 14,995 Passed through from California Community Colleges Chancellor's Office Temporary Assistance for Needy Families (TANF) Foster Care - Title IV-E 93.558 93.658 N/A N/A 55,532 141,514 Passed through from the County of Monterey, Department of Social and Employee Services Foster Care - Title IV-E (DSES) 93.658 N/A 378,761 Passed through from Yosemite Community College District Child Development Training Consortium 93.575 N/A 11,760 DEPARTMENT OF HEALTH AND HUMAN SERVICES Passed through from the University of California, Santa Cruz National Institute of Health Total passed through from Department of Health and Human Services NATIONAL SCIENCE FOUNDATION Direct: Improving Women and Latino Enrollment in STEM Program Advanced Technological Education STEM Scholarship Program Program Expenditures 602,562 47.076 47.076 47.076 N/A N/A N/A Total direct from National Science Foundation 126,849 12,600 76,234 215,683 Passed through from the University of California, Santa Cruz CCLI - A Web-Enabled, Interactive Remote Laboratory for Renewable Energy 47.076 S0182827 19,326 47.076 5027501A-120409-C-A 29,279 Passed through from the University Corporation at California State University, Monterey Bay Monterey Bay Advanced Networking Education Consortium Total passed through from the National Science Foundation 48,605 CORPORATION FOR NATIONAL AND COMMUNITY SERVICE Direct: National Service Award for Scholarships 94.006 Total direct from the Corporation for National and Community Service See the accompanying notes to the supplementary information. -46- N/A 42,752 42,752 DRAFT for Discussion Purposes Only HARTNELL COMMUNITY COLLEGE DISTRICT SCHEDULE OF EXPENDITURES OF FEDERAL AWARDS For the Fiscal Year Ended June 30, 2011 Federal Grantor/Pass-Through Grantor/Program or Cluster Title U.S. DEPARTMENT OF AGRICULTURE Passed through from the California Department of Education Forest Reserve Funds Child Care Food Program CFDA Number Pass-Through Entity Identifying Number 10.665 10.558 10044 2850-6A Total pass through from the U.S. Department of Agriculture Program Expenditures 3,112 10,218 13,330 Department of Commerce Passed through from the Monterey County Office of Education American Reinvestment Recovery Act: Broadband Technology Opportunities Program N/A 11.557 Total passed through from the Department of Commerce 529,061 529,061 U.S. Department of Labor Passed through from the Employment Development Department (EDD) American Reinvestment Recovery Act: Workforce Investment Act Green Building and Clean Energy Project 17.258 AA-17110-08-55-A-6 Total passed through from the U.S. Department of Labor 249,442 249,442 Department of Energy Passed through from the Employment Development Department (EDD) American Reinvestment Recovery Act: Green Building and Clean Energy Project 81.041 N/A Total passed through from the Employment Development Department: Department of National Aeronautics & Space Administration Direct: Science, Engineering, Mathematics and Aerospace Academy 381,682 381,682 43.000 Total direct from National Aeronautics & Space Administration N/A 31,948 31,948 Total Federal Awards $ 17,896,110 N/A- Pass-through entity identifying number is either not available or not applicable See the accompanying notes to the supplementary information. -47- DRAFT for Discussion Purposes Only HARTNELL COMMUNITY COLLEGE DISTRICT SCHEDULE OF EXPENDITURES OF STATE AWARDS For the year ended June 30, 2011 Cash Received Program GENERAL FUND Block Grant Basic Skills California State Grants (CAL Grants) CalWorks Career Technical Education Growth & Enrollment Retention for Nursing Career Technical Regional Occupation Partner #2 Career Technical Regional Occupation Partner #3 Career Technical Regional Occupation Partner #4 Career Technical Education Linking After School Employment Cooperative Agency Resource Education (CARE) Disabled Students Programs and Services (DSP&S) Extended Opportunity Program and Services (EOPS) Faculty and Staff Development Faculty and Staff Diversity (Equal Employment Opportunity) First 5 Contract Foster & Kinship Care Education (FKCE) 25% Industry Driven Regional Collaborative Media Industry Driven Regional Collaborative Sustainable Construction Industry Driven Regional Collaborative Sustainable Design Mathematics-Engineering-Science-Achievement (MESA) Mathematics-Engineering-Science-Achievement (MESA) Supplemental Matriculation Office of Statewide Health Planning and Development - Song Brown Grant Renovation and Repair Grant Student Financial Aid Administration (SFAA) Youth Empowerment Strategies for Success-Independent Living Program (YESS-ILP) Subtotal CHILD DEVELOPMENT Child Care Tax Bailout to Community College Districts State Preschool Subtotal Total $ 196,762 158,361 512,385 181,259 115,398 272,580 303,701 400,000 78,811 109,449 360,990 485,958 8,145 47,023 Program Revenues Accounts Deferred Receivable Revenue $ $ 295,606 12,011 4,230,875 10,488 201,402 687,279 174,960 89,725 509,661 178,175 99,518 272,580 214,087 18,304 78,811 106,939 360,990 482,457 5,829 8,760 47,171 179,124 75,099 125,641 50,500 309,135 61,158 18,762 255,113 22,499 3,744,998 35,537 494,399 529,936 $ 4,760,811 159,203 159,203 360,605 21,347 21,347 708,626 35,537 632,255 667,792 $ 4,412,790 89,614 381,696 2,510 3,501 8,145 41,194 8,760 18,004 56,124 29,167 123,000 75,099 110,160 37,875 8,000 309,135 15,481 12,625 8,000 61,158 18,762 40,493 $ See the accompanying notes to the supplementary information. -48- 21,802 68,636 2,724 3,084 15,880 Total Revenue $ $ Program Expenditures $ $ 174,960 89,725 509,661 178,175 99,518 272,580 214,087 18,304 78,811 106,939 360,990 482,457 5,829 8,760 47,171 179,124 75,099 125,641 50,500 309,135 61,158 18,762 255,113 22,499 3,744,998 35,537 632,255 667,792 4,412,790 DRAFT for Discussion Purposes Only HARTNELL COMMUNITY COLLEGE DISTRICT SCHEDULE OF WORKLOAD MEASURES FOR STATE GENERAL APPORTIONMENT ANNUAL (ACTUAL) ATTENDANCE For the Fiscal Year Ended June 30, 2011 ReCalc Period Data Categories A. Summer Intersession (Summer 2009 only) 1 1. Noncredit 2. Credit B. Summer Intersession (Summer 2010 - Prior to July 1, 2010) 1 1. Noncredit 2. Credit C. Primary Terms (Exclusive of Summer Intersession) 1. Census Procedure Courses (a) Weekly Census Contact Hours (b) Daily Census Contact Hours 2. Actual Hours of Attendance Procedure Courses 1 (a) Noncredit (b) Credit 3. Independent Study/Work Experience (a) Weekly Census Contact Hours (b) Daily Census Contact Hours (c) Noncredit Independent Study/Distance Education Courses D. Total FTES 3.63 3.63 354.36 4,807.91 280.80 4,807.91 280.80 24.15 969.11 24.15 969.11 325.35 234.69 325.35 234.69 - - 7,000.00 701.63 H. Basic Skills courses and Immigrant Education 1 (a) Noncredit (b) Credit 2.37 750.19 CCFS 320 Addendum CDCP Noncredit FTES 0.86 Centers FTES 1 (a) Noncredit (b) Credit 426.11 Including Career Development and College Preparation (CDCP) FTES See the accompanying notes to the supplementary information. -49- Audited Data 354.36 Supplemental Information (subset of above information) E. In-Service Training Courses (FTES) 1 Audit Adjustments - 7,000.00 DRAFT for Discussion Purposes Only HARTNELL COMMUNITY COLLEGE DISTRICT RECONCILIATION OF ANNUAL FINANCIAL AND BUDGET REPORT WITH AUDITED FUND BALANCES For the Fiscal Year Ended June 30, 2011 The audit resulted in no adjustment to the fund balances reported on the June 30, 2011 Annual Financial and Budget Report (CCFS-311) based upon governmental accounting principles. Additional entries were made to comply with the GASB 34/35 reporting requirements. These entries are not considered audit adjustments for purposes of this reconciliation. See the accompanying notes to the supplementary information. -50- DRAFT for Discussion Purposes Only HARTNELL COMMUNITY COLLEGE DISTRICT SCHEDULE OF FINANCIAL TRENDS AND ANALYSIS For the Fiscal Year Ended June 30, (Budget) 2012 Amount % 2011 Amount 2010 % Amount % 2009 Amount % 13,629 15,217,146 22,603,328 - 0.04 40.87 60.71 101.62 UNRESTRICTED GENERAL FUND: Revenue Federal State County and Local Other Financing sources $ Total Revenue Expenditures Academic Salaries Classified Salaries Employee Benefits Supplies and Materials Other Operating Expenses and Services Capital Outlay Other Uses Total Expenditures Change in Fund Balance $ Ending Fund Balance $ Full-Time Equivalent Students (Factored) Full-Time Equivalent Students (Funded) Total Long-Term Debt 17,000 14,835,155 19,684,802 470,000 0.05 41.93 55.63 1.33 35,006,957 16,657 17,388,320 20,130,651 0.05 51.37 59.48 98.94 37,535,628 13,309,089 7,629,488 6,950,871 511,550 6,247,900 242,500 489,800 37.62 21.56 19.65 1.45 17.66 0.69 1.38 35,381,198 100.00 (374,241) 7,872,367 $ $ 17,483 15,925,613 20,715,920 100,000 0.05 44.55 57.95 0.28 $ 110.90 36,759,016 102.83 37,834,103 12,526,814 6,974,553 6,433,726 403,577 5,604,740 203,901 1,700,000 37.01 20.61 19.01 1.19 16.56 0.60 5.02 12,502,786 6,117,644 6,289,008 385,594 3,634,696 177,680 6,642,836 34.97 17.11 17.59 1.08 10.17 0.50 18.58 13,700,149 7,249,762 7,328,482 346,252 8,881,502 111,236 (386,093) 33,847,311 100.00 35,750,244 100.00 37,231,290 100.00 36.80 19.47 19.68 0.93 23.86 0.30 (1.04) (1.06) $ 3,688,317 10.90 $ 1,008,772 2.83 $ 602,813 1.62 22.25 $ 8,246,608 24.36 $ 4,558,291 12.75 $ 3,549,519 9.53 * 7,000 7,373 7,624 6,634 6,493 6,819 7,083 $ 139,995,260 $ 136,936,239 $ 133,689,873 $ 83,994,545 IMPORTANT NOTES: The California Community College Chancellor's Office has provided guidelines that recommend an ending fund balance of 3% of expenditures as a minimum, with a prudent ending fund balance being 5% of expenditures. Full-time Equivalent Students (FTES) includes resident and nonresident factored FTES. All percentages are of total expenditures. The 2012 Budget was adopted by the Board of Trustees on September 13, 2011. Factored FTES represent actual FTES as reported on page 49. Funded FTES represent the FTES used by the California Community College Chancellor's Office to determine apportionment funding. * The District has not determined Full-Time Equivalent Students (Factored) for the 2012 Budget year. See the accompanying notes to the supplementary information. -51- DRAFT for Discussion Purposes Only HARTNELL COMMUNITY COLLEGE DISTRICT NOTES TO SUPPLEMENTARY INFORMATION For the Fiscal Year Ended June 30, 2011 NOTE 1 - PURPOSE OF SCHEDULES: A. Schedules of Expenditures of Federal Awards and State Financial Assistance The audit of the Hartnell Community College District for the year ended June 30, 2011 was conducted in accordance with OMB Circular A-133, which requires a disclosure of the financial activities of all federally funded programs. The Schedule of Expenditures of Federal Awards and the Schedule of State Financial Assistance was prepared for the Hartnell Community College District on the modified accrual basis of accounting. Subrecipients Of the Federal expenditures presented in the Schedule of Federal Awards, the District provided Federal awards to subrecipients as follows: Federal Grantor/Pass-Through Grantor/Program CFDA Number Amount Provided to Subrecipients U.S. Department of Education GEAR-UP - Salinas Union High School District Title V - Gavilan College 84.334A 84.031S U.S. Department of Labor American Recovery and Reinvestment Act: Workforce Investment Act: Green Building and Clean Energy Project - Cabrillo College 17.258 98,970 U.S. Department of Energy American Recovery and Reinvestment Act: Green Building and Clean Energy Project - Cabrillo College 81.041 151,439 $ $ B. 857,759 273,311 1,381,479 Schedule of Workload Measures for State General Apportionment The Schedule of Workload Measures for State General Apportionment represents the basis of apportionment of the Hartnell Community College District's annual source of funding. -52- DRAFT for Discussion Purposes Only HARTNELL COMMUNITY COLLEGE DISTRICT NOTES TO SUPPLEMENTARY INFORMATION For the Fiscal Year Ended June 30, 2011 NOTE 1 - PURPOSE OF SCHEDULES: C. Reconciliation of Annual Financial and Budget Report with Audited Fund Balances This schedule reports any audit adjustments made to the fund balances of all funds as reported on the Form CCFS-311. D. Schedule of General Fund Financial Trends and Analysis This report is prepared to show financial trends of the Unrestricted General Fund over the past three fiscal years as well as the current year budget. This schedule is intended to identify if the District faces potential fiscal problems and if they have met the recommended available reserve percentages. -53- DRAFT for Discussion Purposes Only OTHER INDEPENDENT AUDITOR’S REPORTS DRAFT for Discussion Purposes Only REPORT ON INTERNAL CONTROL OVER FINANCIAL REPORTING AND ON COMPLIANCE AND OTHER MATTERS BASED ON AN AUDIT OF FINANCIAL STATEMENTS PERFORMED IN ACCORDANCE WITH GOVERNMENT AUDITING STANDARDS The Board of Trustees Hartnell Community College District 411 Central Avenue Salinas, California 93901 We have audited the basic financial statements of Hartnell Community College District (the District) as of and for the year ended June 30, 2011 which collectively comprise the District’s basic financial statements, and have issued our report thereon dated November 16, 2011. We conducted our audit in accordance with auditing standards generally accepted in the United States of America and the standards applicable to financial audits contained in Government Auditing Standards, issued by the Comptroller General of the United States. Internal Control Over Financial Reporting In planning and performing our audit, we considered Hartnell Community College District’s internal control over financial reporting as a basis for designing our auditing procedures for the purpose of expressing our opinion on the financial statements, but not for the purpose of expressing an opinion on the effectiveness of Hartnell Community College District’s internal control over financial reporting. Accordingly, we do not express an opinion on the effectiveness of Hartnell Community College District’s internal control over financial reporting. A deficiency in internal control exists when the design or operation of a control does not allow management or employees, in the normal course of performing their assigned functions, to prevent, or detect and correct misstatements on a timely basis. A material weakness is a deficiency, or a combination of deficiencies, in internal control such that there is a reasonable possibility that a material misstatement of the entity’s financial statements will not be prevented, or detected and corrected on a timely basis. -54- DRAFT for Discussion Purposes Only REPORT ON INTERNAL CONTROL OVER FINANCIAL REPORTING AND ON COMPLIANCE AND OTHER MATTERS BASED ON AN AUDIT OF FINANCIAL STATEMENTS PERFORMED IN ACCORDANCE WITH GOVERNMENT AUDITING STANDARDS Our consideration of internal control over financial reporting was for the limited purpose described in the first paragraph of this section and was not designed to identify all deficiencies in internal control over financial reporting that might be deficiencies, significant deficiencies, or material weaknesses. We did not identify any deficiencies in internal control over financial reporting that we consider to be material weaknesses, as defined above. Compliance and Other Matters As part of obtaining reasonable assurance about whether Hartnell Community College District’s financial statements are free of material misstatement, we performed tests of its compliance with certain provisions of laws, regulations, contracts and grant agreements, noncompliance with which could have a direct and material effect on the determination of financial statement amounts. However, providing an opinion on compliance with those provisions was not an objective of our audit and, accordingly, we do not express such an opinion. The results of our tests disclosed instances of noncompliance or other matters that are required to be reported under Government Auditing Standards and which are described in the accompanying schedule of findings and questioned costs as items 11-01, 11-02, 11-03, 11-04, 11-05, 11-06 and 11-07. Hartnell Community College District’s responses to the findings identified in our audit are described in the accompanying schedule of findings and questioned costs. We did not audit the District’s responses and, accordingly, we express no opinion on them. This report is intended solely for the information and use of management, the audit committee, Board of Trustees, the California Department of Finance, the State Chancellor’s Office and federal awarding agencies and pass-through entities and is not intended to be and should not be used by anyone other than these specified parties. VICENTI, LLOYD & STUTZMAN LLP November 16, 2011 -55- DRAFT for Discussion Purposes Only INDEPENDENT AUDITOR’S REPORT ON COMPLIANCE WITH REQUIREMENTS THAT COULD HAVE A DIRECT AND MATERIAL EFFECT ON EACH MAJOR PROGRAM AND ON INTERNAL CONTROL OVER COMPLIANCE IN ACCORDANCE WITH OMB CIRCULAR A-133 The Board of Trustees Hartnell Community College District 411 Central Avenue Salinas, California 93901 Compliance We have audited the compliance of Hartnell Community College District (the District) with the types of compliance requirements described in the U.S. Office of Management and Budget (OMB) Circular A-133 Compliance Supplement that could have a direct and material effect on each of its major federal programs for the year ended June 30, 2011. The District’s major federal programs are identified in the summary of auditor’s results section of the accompanying schedule of findings and questioned costs. Compliance with the requirements of laws, regulations, contracts and grants applicable to each of its major federal programs is the responsibility of the District’s management. Our responsibility is to express an opinion on the District’s compliance based on our audit. We conducted our audit of compliance in accordance with auditing standards generally accepted in the United States of America; the standards applicable to financial audits contained in Government Auditing Standards, issued by the Comptroller General of the United States; and OMB Circular A-133, Audits of States, Local Governments, and Non-Profit Organizations. Those standards and OMB Circular A-133 require that we plan and perform the audit to obtain reasonable assurance about whether noncompliance with the types of compliance requirements referred to above that could have a direct and material effect on a major federal program occurred. An audit includes examining, on a test basis, evidence about the District’s compliance with those requirements and performing such other procedures as we considered necessary in the circumstances. We believe that our audit provides a reasonable basis for our opinion. Our audit does not provide a legal determination of the District's compliance with those requirements. -56- DRAFT for Discussion Purposes Only INDEPENDENT AUDITOR’S REPORT ON COMPLIANCE WITH REQUIREMENTS THAT COULD HAVE A DIRECT AND MATERIAL EFFECT ON EACH MAJOR PROGRAM AND ON INTERNAL CONTROL OVER COMPLIANCE IN ACCORDANCE WITH OMB CIRCULAR A-133 In our opinion, the District complied, in all material respects, with the requirements referred to above that could have a direct and material effect on each of its major federal programs for the year ended June 30, 2011. Internal Control Over Compliance The management of the District is responsible for establishing and maintaining effective internal control over compliance with requirements of laws, regulations, contracts and grants applicable to federal programs. In planning and performing our audit, we considered the District’s internal control over compliance with requirements that could have a direct and material effect on a major federal program in order to determine our auditing procedures for the purpose of expressing our opinion on compliance, and to test and report on internal control over compliance in accordance with OMB Circular A-133, but not for the purpose of expressing an opinion on the effectiveness of internal control over compliance. Accordingly, we do not express an opinion on the effectiveness of the District’s internal control over compliance. A deficiency in internal control over compliance exists when the design or operation of a control over compliance does not allow management or employees in the normal course of performing their assigned functions to prevent or detect and correct noncompliance with a type of compliance requirement of a federal program on a timely basis. A material weakness in internal control over compliance is a deficiency, or combination of deficiencies in internal control over compliance such that there is a reasonable possibility, that material noncompliance with a type of compliance requirement of a federal program will not be prevented or detected and corrected on a timely basis. Our consideration of internal control over compliance was for the limited purpose described in the first paragraph of this section and was not designed to identify all deficiencies in internal control over compliance that might be deficiencies, significant deficiencies or material weaknesses. We did not identify any deficiencies in internal control over compliance that we consider to be material weaknesses, as defined above. This report is intended solely for the information and use of management, the audit committee, Board of Trustees, the California Department of Finance, the State Chancellor’s Office and federal awarding agencies and pass-through entities and is not intended to be and should not be used by anyone other than these specified parties. VICENTI, LLOYD & STUTZMAN LLP November 16, 2011 -57- DRAFT for Discussion Purposes Only INDEPENDENT AUDITOR’S REPORT ON STATE COMPLIANCE The Board of Trustees Hartnell Community College District 411 Central Avenue Salinas, California 93901 We have audited the compliance of the Hartnell Community College District (the District) with the types of compliance requirements described in the 2010-11 Contracted District Audit Manual, published by the California Community Colleges Chancellor’s Office for the year ended June 30, 2011. The District’s State compliance requirements are identified below. Compliance with the State laws and regulations as identified below is the responsibility of the District’s management. Our responsibility is to express an opinion on the District’s compliance based on our audit. We conducted our audit in accordance with auditing standards generally accepted in the United States of America, the standards applicable to financial audits contained in Government Auditing Standards, issued by the Comptroller General of the United States, and the 2010-11 Contracted District Audit Manual, published by the California Community Colleges Chancellor’s Office. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether noncompliance with the specific areas listed below has occurred. An audit includes examining, on a test basis, evidence about the District’s compliance with those requirements and performing such other procedures as we considered necessary in the circumstances. We believe that our audit provides a reasonable basis for our opinion. Our audit does not provide a legal determination of the District’s compliance with those requirements. In connection with our audit referred to above, we selected and tested transactions and records to determine the District’s compliance with the following items: Whether the District's salaries of classroom instructors equal or exceed 50 percent of the District's current expense of education in accordance with Education Code Section 84362. Whether the District complied with all requirements necessary to claim FTES for instruction under instructional service agreements/contracts. Whether the District has the ability to support timely accurate and complete information for workload measures used in the calculation of State General Apportionment. -58- DRAFT for Discussion Purposes Only INDEPENDENT AUDITOR’S REPORT ON STATE COMPLIANCE Whether the District acted to ensure that the residency of each student is properly classified and that only the attendance of California residents, specifically student-athletes, is claimed for apportionment purposes. Whether the District claimed for apportionment purposes only the attendance of students actively enrolled in a course section as of the census date. Whether the District complied with all requirements necessary to claim FTES for the attendance of concurrently enrolled K-12 pupils. Whether the Gann Limit Calculation was properly calculated and supported by adequate documentation. Whether the District reported the full amount of fees charged, regardless of whether the fees are collected, for the purpose of determining the District’s share of annual apportionment. Whether the District expended CalWORKS and TANF funds to provide specialized student support services, curriculum development, or instruction to eligible CalWORKS students. Whether all District courses that qualify for State apportionment are open to enrollment by the general public unless specifically exempted by statute. Whether the District adopted policies or regulations regarding the authority of the District to require students to provide various types of instructional materials and whether the District has advised students of the exemptions from payment of health fees and established a process to ensure that students may claim the exemptions. Whether the District expended Economic and Workforce Development (EWD) funds to develop and deliver services to meet the needs identified in regional economic development plans and that state laws and regulations regarding subcontracts or grant amendments and operation of an EWD program center or an industry driven regional collaborative were complied with. Whether the District expended Extended Opportunity Programs and Services (EOPS) funds to provide services specifically designed to supplement existing support programs and to help EOPS eligible students complete their educational goal. Whether the District expended Disabled Student Programs and Services (DSPS) funds on students with exceptional needs because of a verified disability to facilitate measureable progress towards their educational goals. -59- DRAFT for Discussion Purposes Only INDEPENDENT AUDITOR’S REPORT ON STATE COMPLIANCE Whether the District expended Cooperative Agencies Resources for Education (CARE) funds to provide educational support services and activities for the academically under-prepared, welfaredependent, single head-of-household student population. Whether the District provided eligible persons under the federal Jobs for Veterans Act preference (priority of service) and information regarding benefits and services obtainable through entities and service providers and to ensure eligible persons are informed of their employment-related rights and benefits. Whether the District lists To Be Arranged Hours (TBA) in the schedule of classes and describes them in the course outline and that student participation is carefully tracked to ensure apportionment is not claimed for TBA hours for students with documented zero hours as of the census point for a particular course. In our opinion, we found that, for the items tested, the Hartnell Community College District complied with the laws and regulations of the state programs referred to above, except as described in the Schedule of Findings and Questioned Costs Related to the Financial Statements section of this report as items 11-01, 11-02, 11-03, 11-04, 11-05, 11-06 and 11-07. Further, based on our audit, for items not tested, nothing came to our attention to indicate that the Hartnell Community College District had not complied with the laws and regulations of state programs and requirements, except as noted in the Schedule of Findings and Questioned Costs Related to the Financial Statements section of this report. The Hartnell Community College District’s responses to the findings identified in our audit are described in the accompanying Schedule of Findings and Questioned Costs Related to the Financial Statements. We did not audit the District’s responses and, accordingly, we express no opinion on them. This report is intended solely for the information and use of management, the audit committee, the Board of Trustees, the California Department of Finance, the State Chancellor’s Office and federal awarding agencies and pass-through entities and is not intended to be and should not be used by anyone other than these specified parties. VICENTI, LLOYD & STUTZMAN LLP November 16, 2011 -60- DRAFT for Discussion Purposes Only FINDINGS AND QUESTIONED COSTS DRAFT for Discussion Purposes Only HARTNELL COMMUNITY COLLEGE DISTRICT SCHEDULE OF FINDINGS AND QUESTIONED COSTS SUMMARY OF AUDITOR RESULTS June 30, 2011 Financial Statements Type of auditor’s report issued: Unqualified Internal control over financial reporting: Material weakness(es) identified? Significant deficiency(ies) identified not considered to be material weaknesses? Noncompliance material to financial statements noted? Yes X No Yes X None reported Yes X No Yes X No Yes X None reported X No Federal Awards Internal control over major programs: Material weakness(es) identified? Significant deficiency(ies) identified not considered to be material weaknesses? Type of auditor’s report issued on compliance for major programs: Unqualified Any audit findings disclosed that are required to be Reported in accordance with Circular A-133, Section .510(a) Yes Identification of major programs tested CFDA Number(s) Name of Federal Program or Cluster 84.000, 84.007, 84.033, 84.063, 84.268 and 84.375 11.557 Financial Aid Cluster 84.141N 84.334A 84.334S 17.258 81.041 American Recovery and Reinvestment Act: Broadband Technology Opportunities Program Migrant Ed – High School Equivalency Program GEAR UP (East Salinas) Title V – STEM American Reinvestment Recovery Act: Workforce Investment Act - Green Building and Clean Energy Project American Reinvestment Recovery Act: Green Building and Clean Energy Project Dollar threshold used to distinguish between Type A and Type B programs: Auditee qualified as low-risk auditee? $ 300,000 Yes -61- X No DRAFT for Discussion Purposes Only HARTNELL COMMUNITY COLLEGE DISTRICT SCHEDULE OF FINDINGS AND QUESTIONED COSTS RELATED TO FINANCIAL STATEMENTS June 30, 2011 FINDING 11-01 – STATE COMPLIANCE: INSTRUCTIONAL SERVICE AGREEMENTS Original Finding 10-2 Finding: Colleges may have agreements with public and private entities to provide instruction, known as “instructional service agreements”. The courses must be open to all admitted students that meet approved prerequisites for the course. The District is required to publish the course in the official general college catalog and/or the schedule of classes and/or addenda. During our audit of instructional service agreements, we noted that the courses were not advertised in the official general college catalog or schedule of classes. The number of FTES claimed for those agreements was approximately 600. Recommendation: The District should include in their course catalog or schedule of classes all courses that are taught by the District as well as those offered through the instructional service agreements. District Response: The South Bay Regional Public Safety Training Consortium is explained on p. 171 of the Hartnell College Catalog/2011-12, and the courses are listed on pages 171-175. Future class schedules will include an announcement that states that “Hartnell offers JAJ courses throughout the semester” with appropriate contact information. -62- DRAFT for Discussion Purposes Only HARTNELL COMMUNITY COLLEGE DISTRICT SCHEDULE OF FINDINGS AND QUESTIONED COSTS RELATED TO FINANCIAL STATEMENTS June 30, 2011 FINDING 11-02 – STATE COMPLIANCE: SALARIES OF CLASSROOM INSTRUCTORS (50 PERCENT LAW) Finding: Education Code Section 84362, commonly known as the 50 Percent Law, requires that a minimum of 50 percent of the District’s Current Expense of Education (CEE) be expended during each fiscal year for salaries of classroom instructors. The District expended 48.79% of the District’s current expense of education for payment of salaries of classroom instructors during the 2010-11 fiscal year. Total expenditures were $342,955 short of the minimum required. The District has submitted the Application for Exemption from the Fifty Percent Law (CCFS-350A). Recommendation: The District should continue its efforts to monitor compliance with the percentage of expenditure requirements throughout the year. Any fiscal decisions should consider the impact to compliance with this regulation. District Response: The specific reasons why the expenditure of General Funds fell below the 50% line in fiscal year 2010-11 were; 1. Categorical Funds from the State were reduced by $1,055,905. The college chose to maintain a substantive portion of these services using General Funds and did so by providing $753,053 in excess of the required match. 2. The college chose not to hold Summer School in 2010, which saved approximately $1 million in teaching salaries in General Fund expenditures. These two decisions were good for students and good for our current financial health; they changed the distribution of expenditures of General Funds in fiscal year 2010-11 by decreasing the numerator by $1 million and increasing the denominator by $753,053. Had the college not provided the excess match in general funds, $200,361 would not have been available in basic skills support and $552,692 would not have been available in counseling, outreach, counseling support, and transfer services. As a result, the college expended 48.7% on teaching salaries and benefits in fiscal year 2010-11. -63- DRAFT for Discussion Purposes Only HARTNELL COMMUNITY COLLEGE DISTRICT SCHEDULE OF FINDINGS AND QUESTIONED COSTS RELATED TO FINANCIAL STATEMENTS June 30, 2011 FINDING 11-03 – STATE COMPLIANCE: OPEN ENROLLMENT Finding: According to CCR, Title 5, Section 51006, “the governing board of each community college district shall adopt by resolution a policy related to open courses. In addition, a statement of this policy shall be published in the official catalog, schedule of classes, and any addenda to the schedule of classes for which full-time equivalent students (FTES) is reported for state apportionment”. During our review of the course catalog and class schedule for the 2010-11 academic year, we identified that the District’s open enrollment policy adopted by the board was not published in the Spring 2011 schedule of classes. Recommendation: The District should include in their schedule of classes a statement of the adopted policy related to open enrollment. District Response: The statement of open enrollment will appear in the Spring 2012 class schedule and in the fiscal year 2012-13 catalog. -64- DRAFT for Discussion Purposes Only HARTNELL COMMUNITY COLLEGE DISTRICT SCHEDULE OF FINDINGS AND QUESTIONED COSTS RELATED TO FINANCIAL STATEMENTS June 30, 2011 FINDING 11-04 – STATE COMPLIANCE: TO BE ARRANGED HOURS (TBA) Finding: Per the criteria noted in the Contracted District Audit Manual (CDAM) Districts are required to list TBA hours in the schedule of classes, and describe them in the course outline. Districts also need to track TBA hour student participation carefully and make sure that they do not claim apportionment for TBA hours for students who have documented zero hours as of the census point for the particular course. During our audit of to TBA hours, we noted that the following deficiencies: 1. Although there is a description that TBA hours are required, the number of required TBA hours were not posted in the official general catalog or in the official schedule of classes for all five courses tested. 2. For two courses tested, the course syllabus did not indicate specific instructional activities that would be performed during the TBA hours. 3. For one course tested the TBA hours did not follow the scheduled course meetings for daily or weekly census types, but rather was scheduled at the end of the instructional term. 4. For two of the courses tested, the District was unable to provide substantive documentation of the students’ attendance. For the classes noted above, 6.57 FTES are in question. Recommendation: 1. The District should include in their schedule of classes or course catalog a clear description of TBA hours, including the requirement and amount of hours needed to complete the course. 2. The course syllabus or other documentation should indicate specific instructional activities to be performed during the TBA hours. 3. TBA hours should follow the instructional schedule of the course. For example, for daily course types, the Student Attendance Accounting Manual states, “TBA contact hours shall be scheduled for the same number of hours as each scheduled day of the course or as a portion of hours the course is regularly scheduled for each day it meets.” 4. The District should track students attendance in the TBA courses, for each class meeting. District Response: The District misclassified courses as TBA courses. The FTES have been corrected for courses in fiscal year 2010-11 that were incorrectly identified as TBA. Administrative reviews and staff training are in place to ensure that all courses are classified correctly. -65- DRAFT for Discussion Purposes Only HARTNELL COMMUNITY COLLEGE DISTRICT SCHEDULE OF FINDINGS AND QUESTIONED COSTS RELATED TO FINANCIAL STATEMENTS June 30, 2011 FINDING 11-05 – STATE COMPLIANCE: RESIDENCY Finding: During our audit of Residency Determination for Credit Courses, we noted that for 3 out of 10 of the applications tested the District was unable to locate the student’s application. We were therefore unable to verify the students’ residency. It was also noted for 2 students that the residency code was revised during the 2010-11 fiscal year for student updated applications related to the subsequent term. The change was input into the system and the most recent information was used which incorrectly reported the student as a resident on the annual 320. For the students tested, 2.42 FTES were inappropriately claimed. Recommendation: The District should be able to provide the necessary applications to support the residency claimed for a student on the 320 report. Additionally, any changes to the student’s residency should be applied to the appropriate term prospectively. The District should contact the Chancellor’s Office to determine what if any action the District should take to correct the FTES reported. District Response: The Admissions & Records Office will scan all paper Admissions Applications into its existing document imaging system (Matrix) every week to ensure that all paper applications can be filed and retrieved easily. Since we use CCCApply, we also have the Admissions Application stored electronically and therefore easily retrievable. The Admissions & Records Office will develop a Change of Residency Questionnaire that will be used to document a student’s change of residency. The Change of Residency forms will only be updated on the following dates for the upcoming semester/year to ensure that the College’s 320 reports as well as the student’s enrollment fees for the current year are not altered. For Spring Semester – Residency updated after January 15th For Summer Session – Residency updated after July 15th For Fall Semester – Residency updated after July 15th -66- DRAFT for Discussion Purposes Only HARTNELL COMMUNITY COLLEGE DISTRICT SCHEDULE OF FINDINGS AND QUESTIONED COSTS RELATED TO FINANCIAL STATEMENTS June 30, 2011 FINDING 11-06 – STATE COMPLIANCE: STUDENTS ACTIVELY ENROLLED – CENSUS DATE Finding: According to the Student Attendance Accounting Manual (SAAM) the census date is the course meeting date 20% into the term. For daily census courses, including independent study, only those days for which a course is actually scheduled to meet are counted for attendance purposes (excludes holidays and includes the day of the final examination if one is scheduled). The results of our testing identified three independent study daily classes and three daily classes that had incorrectly calculated census dates. During our audit of this area, we also noted that one of the classes selected was not appropriately classified. To be a Daily Census type the course must meet five or more days; meet the same number of hours each scheduled day; and not be coterminous with the primary term. For the Frame and Unibody Repair course held in Summer 2010, the District reported the course as a Daily census type, however, the course did not meet the same number of hours for each scheduled day. The number of FTES claimed in error is .26 FTES. Recommendation: The District should contact the Chancellor’s Office to determine what if any action the District should take to correct the FTES reported. The District should review course classifications to ensure they have been properly determined. In addition, the District should evaluate the capabilities of the Student Information System to determine if the calculation of census date can be automated. Whether calculated manually or through an automated system the census dates should be reviewed for accuracy. District Response: New procedures have been implemented to identify the correct census date for each Daily section. Census dates for fiscal year 2010-11 were recalculated and updated. There was an error in reporting the Frame and Unibody Repair course held in Summer 2010. The class was reported as a Daily census type when it should have been reported as a Positive Attendance Course (PAC) section. After attending recent webinars presented by the Chancellor’s Office, which has further clarified our understanding, the District will now report any sections of this type correctly. -67- DRAFT for Discussion Purposes Only HARTNELL COMMUNITY COLLEGE DISTRICT SCHEDULE OF FINDINGS AND QUESTIONED COSTS RELATED TO FINANCIAL STATEMENTS June 30, 2011 FINDING 11-07 – STATE COMPLIANCE: STATE GENERAL APPORTIONMENT FUNDING SYSTEMCALCULATED STUDENT CONTACT HOURS Finding: Our audit of student contact hours identified 6 out of 9 courses in our sample where the contact hours calculated by the District used for apportionment purposes and our recalculation did not agree. 1. One course was reported as a daily census type, when it should have been reported as an alternative accounting method. Daily census courses must meet the same number of hours for each scheduled day. This course met each scheduled Friday for 4 ½ hours and each scheduled Saturday for 12 hours. 2. Three courses, independent daily census, were calculated using the wrong term length multiplier. The District used 18 weeks instead of the approved term length multiplier of 17.5 weeks. 3. For two courses, it was noted that our recalculation did not agree with the contact hours reported by the District. The number of FTES claimed in error is 5.88 FTES. Recommendation: The District was advised to revise the 320 report and did such. The adjustments made are notated on the Schedule of Workload measures. It is our understanding that the District manually calculates contact hours. The District should research the capabilities of their student attendance system to possibly alleviate the manual calculation of contact hours. District Response: Hartnell corrected the courses in error and has implemented using the multiplier of 17.5 weeks. Administrative reviews and staff tracking are in place to correct errors prior to publication. Hartnell staff will continue to attend webinars so that the District remains in compliance with all current and new requirements. -68- DRAFT for Discussion Purposes Only HARTNELL COMMUNITY COLLEGE DISTRICT SCHEDULE OF FINDINGS AND QUESTIONED COSTS RELATED TO FEDERAL AWARDS June 30, 2011 There were no findings and questioned costs related to federal awards for the fiscal year ended June 30, 2011. -69- DRAFT for Discussion Purposes Only HARTNELL COMMUNITY COLLEGE DISTRICT STATUS OF PRIOR YEAR FINDINGS AND QUESTIONED COSTS June 30, 2011 FINDING 10-1 – CLOSING PROCEDURES Finding: The calculation of accruals for construction projects funded by the State should be determined using the latest State certified allocation, and accrued up to the level of expenditures incurred and adjusted for previous reimbursements received. During our audit we noted a postclosing entry of $904,827 to reduce the State receivable for project reimbursement. Based on discussions with District staff it appears that the error was the result of both a lack of established procedures to properly reconcile the accrual and due to a decrease in the State allocation which had not been resolved prior to the closing process. Recommendation: We recommend that the District establish procedures for regular monitoring of the reconciliation process. In particular, procedures for the year-end closing process should be established to ensure accurate accruals for reimbursements due from the State. Current Status: Implemented. FINDING 10-2 – INSTRUCTIONAL SERVICE AGREEMENTS Finding: Colleges are allowed to have agreements with public and private entities to provide instruction, known as “instructional service agreements”. The courses must be open to all admitted students that meet approved prerequisites for the course. The District is required to publish the course in the official general college catalog and/or the schedule of classes and/or addenda. During our audit of instructional service agreements, we noted that the courses were not advertised in the official general college catalog or schedule of classes. The number of FTES claimed for those agreements was approximately 600. Recommendation: The District should include in their course catalog or schedule of classes all courses that are taught by the District as well as those offered through the instructional service agreements. Current Status: Not implemented. See Finding 11-01. -70- DRAFT for Discussion Purposes Only HARTNELL COLLEGE FOUNDATION (A Component Unit of the Hartnell Community College District) Financial Statements and Independent Auditor’s Report For the Fiscal Years Ended June 30, 2011 and 2010 DRAFT for Discussion Purposes Only HARTNELL COLLEGE FOUNDATION FINANCIAL STATEMENTS For the Fiscal Years Ended June 30, 2011 and 2010 TABLE OF CONTENTS Page Independent Auditor’s Report....................................................................................... 1 Statements of Financial Position................................................................................... 2 Statements of Activities ................................................................................................ 3-4 Statements of Functional Expenses .............................................................................. 5-6 Statements of Cash Flows ............................................................................................. 7 Notes to the Financial Statements ................................................................................. 8-26 DRAFT for Discussion Purposes Only INDEPENDENT AUDITOR’S REPORT To the Board of Directors Hartnell College Foundation Salinas, CA 93901 We have audited the accompanying statements of financial position of the Hartnell College Foundation (A Component Unit of the Hartnell Community College District) as of June 30, 2011 and 2010, and the related statements of activities, functional expenses, and cash flows for the years then ended. These financial statements are the responsibility of the Hartnell College Foundation’s management. Our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits in accordance with auditing standards generally accepted in the United States of America. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion. In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of the Hartnell College Foundation as of June 30, 2011 and 2010, and the changes in its net assets and its cash flows for the years then ended, in conformity with accounting principles generally accepted in the United States of America. VICENTI, LLOYD & STUTZMAN LLP November 8, 2011 -1- DRAFT for Discussion Purposes Only HARTNELL COLLEGE FOUNDATION STATEMENTS OF FINANCIAL POSITION June 30, 2011 and 2010 2011 ASSETS Current Assets Cash and cash equivalents - unrestricted Cash and cash equivalents - restricted Pledges receivable, current Note receivable, current Prepaid expenses Total current assets $ Noncurrent Assets Investments - restricted Investments with FCCC Pledges receivable Note receivable Property and equipment, net Total noncurrent assets Total assets LIABILITIES AND NET ASSETS Liabilities Accounts payable Scholarships payable Deferred revenue Total liabilities Net Assets Unrestricted Temporarily restricted Permanently restricted Total net assets Total liabilities and net assets 115,990 3,582,103 507,837 6,341 17,866 4,230,137 2010 $ 198,763 2,453,577 672,302 6,033 22,330 3,353,005 5,395,580 320,731 55,214 95,133 325,849 6,192,507 $ 10,422,644 4,322,111 204,173 149,501 101,465 326,183 5,103,433 $ 8,456,438 $ $ 640,044 241,180 50,901 932,125 499,111 4,513,497 4,477,911 9,490,519 $ 10,422,644 566,544 168,192 65,999 800,735 65,765 3,134,865 4,455,073 7,655,703 $ 8,456,438 The accompanying notes are an integral part of these financial statements. -2- DRAFT for Discussion Purposes Only HARTNELL COLLEGE FOUNDATION STATEMENT OF ACTIVITIES For the Fiscal Year Ended June 30, 2011 REVENUE Donations Special events In-kind donations Miscellaneous revenue Assets released from restrictions Total revenues Unrestricted Temporarily Restricted Permanently Restricted $ $ $ 79,607 $ 2,093,387 203,822 181,721 307,820 2,786,750 - - 319,160 1,815,043 93,595 2,227,798 (115,307) 594,652 79,607 558,952 OTHER INCOME Interest and dividends Realized gain on sale of investments Unrealized gain on investments Total other income 15,790 31,770 472,671 520,231 106,482 452,250 196,901 755,633 - 122,272 484,020 669,572 1,275,864 CHANGE IN NET ASSETS BEFORE TRANSFERS 404,924 1,350,285 79,607 1,834,816 EXPENSES Operating expenses Program expenses Fundraising expenses Total expenses 319,160 1,815,043 93,595 2,227,798 OPERATING INCOME TRANSFERS Change in donor designation Transfer to Endowment - FCCC Foundation Total transfers 28,422 NET ASSETS Net Assets, Beginning of year $ 2,004,079 32,599 59,531 21,948 (1,523,505) 594,652 56,578 (28,231) 28,347 28,422 CHANGE IN NET ASSETS AFTER TRANSFERS Net Assets, End of year 9,701 171,223 122,190 285,872 1,523,505 2,112,491 79,607 Total (85,000) 28,231 (56,769) - 433,346 1,378,632 22,838 1,834,816 65,765 3,134,865 4,455,073 7,655,703 4,477,911 $ 9,490,519 499,111 $ 4,513,497 $ The accompanying notes are an integral part of these financial statements. -3- DRAFT for Discussion Purposes Only HARTNELL COLLEGE FOUNDATION STATEMENT OF ACTIVITIES For the Fiscal Year Ended June 30, 2010 REVENUE Donations Special events In-kind donations Miscellaneous revenue Assets released from restrictions Total revenues Unrestricted Temporarily Restricted Permanently Restricted $ $ $ EXPENSES Operating expenses Program expenses Fundraising expenses Total expenses 29,061 166,411 161,864 218,580 1,378,371 1,954,287 273,537 1,543,729 86,608 1,903,874 OPERATING INCOME 1,539,581 59,707 16,282 13,082 (1,378,371) 250,281 19,200 19,200 - - Total $ 1,587,842 226,118 178,146 231,662 2,223,768 273,537 1,543,729 86,608 1,903,874 50,413 250,281 19,200 319,894 OTHER INCOME (LOSS) Interest and dividends Realized loss on sale of investments Unrealized gain (loss) on investments Total other income (loss) 18,972 4,144 148,926 172,042 93,645 58,741 182,199 334,585 1,876 (5,703) (3,827) 114,493 62,885 325,422 502,800 CHANGE IN NET ASSETS BEFORE TRANSFERS 222,455 584,866 15,373 822,694 33,777 (188,800) (155,023) (33,777) 188,800 155,023 429,843 170,396 822,694 2,705,022 4,284,677 6,833,009 4,455,073 $ 7,655,703 TRANSFERS Change in donor designation Transfer to Endowment - FCCC Foundation Total transfers - CHANGE IN NET ASSETS AFTER TRANSFERS 222,455 NET ASSETS Net Assets, Beginning of year Net Assets, End of year (156,690) $ 65,765 $ 3,134,865 $ The accompanying notes are an integral part of these financial statements. -4- - DRAFT for Discussion Purposes Only HARTNELL COLLEGE FOUNDATION STATEMENT OF FUNCTIONAL EXPENSES For the Fiscal Year Ended June 30, 2011 Operating Salaries Employee benefits Consulting and marketing Accounting fees Management/investment fees Campus area expenses Conferences, conventions, and meetings Memberships Depreciation Equipment rental and maintenance In-kind Planned giving Postage, printing, and publications Scholarships Special events Supplies Taxes and licenses Telephone Other Total functional expenses $ 200,501 54,470 568 16,850 Program $ 298,722 69,438 15,032 Fundraising $ 123,247 672,120 2,630 5,613 2,820 6,560 334 2,979 10,000 1,209 2,812 20,309 11,450 10,464 5,294 437,687 1,268 6,117 2,099 4,130 $ 319,160 115,661 $ 226 37,614 1,815,043 12,035 3,992 1,277 1,965 4,485 64,378 543 899 $ 93,595 Total $ 511,258 127,900 15,600 16,850 123,247 672,120 6,659 14,985 334 24,565 21,450 1,965 20,243 437,687 64,378 117,472 6,117 3,224 41,744 $ 2,227,798 The accompanying notes are an integral part of these financial statements. -5- DRAFT for Discussion Purposes Only HARTNELL COLLEGE FOUNDATION STATEMENT OF FUNCTIONAL EXPENSES For the Fiscal Year Ended June 30, 2010 Salaries Employee benefits Consulting and marketing Accounting fees Management/investment fees Campus area expenses Conferences, conventions, and meetings Memberships Depreciation Equipment rental and maintenance In-kind Other project expenses Planned giving Postage, printing, and publications Scholarships Special events Donor recognition Supplies Taxes and licenses Telephone Other Total functional expenses Operating Program $ 170,133 52,910 460 10,203 $ 211,043 30,509 5,097 1,739 3,363 192 2,213 11,000 10,382 979 4,476 2,108 3,379 $ 273,537 Fundraising $ 125,518 576,462 3,553 3,063 11,480 3,606 745 1,442 1,883 16,082 24,420 948 1,871 4,449 3,504 396,203 56,245 4,500 419 65,448 25 903 80,919 $ 1,543,729 $ 86,608 Total $ 392,656 87,025 5,557 10,203 125,518 576,462 6,037 7,868 192 5,044 27,082 24,420 1,871 18,335 396,203 56,245 4,500 66,846 4,501 3,011 84,298 $ 1,903,874 The accompanying notes are an integral part of these financial statements. -6- DRAFT for Discussion Purposes Only HARTNELL COLLEGE FOUNDATION STATEMENTS OF CASH FLOWS For the Fiscal Years Ended June 30, 2011 and 2010 2011 2010 Cash flows from operating activities Change in net assets $ Adjustment to reconcile changes in net assets to net cash provided for operations Unrealized gain on investments Depreciation Changes in operating assets and liabilities: Receivables Prepaid Expenses Payables Deferred revenue Net cash provided by operating activities 1,834,816 $ 822,694 (669,572) 334 (325,422) 192 264,776 4,464 146,488 (15,098) 94,558 (22,330) (107,320) 49,852 1,566,208 512,224 Cash flows from investing activities Purchase of investments Proceeds from the sale of investments Net cash used for investing activities (4,087,189) 3,566,734 (3,218,675) 2,481,093 (520,455) (737,582) Net increase (decrease) in cash and cash equivalents 1,045,753 Cash and cash equivalents, beginning of year 2,652,340 $ Cash and cash equivalents, end of year 3,698,093 (225,358) 2,877,698 $ 2,652,340 The accompanying notes are an integral part of these financial statements. -7- DRAFT for Discussion Purposes Only HARTNELL COLLEGE FOUNDATION NOTES TO THE FINANCIAL STATEMENTS June 30, 2011 and 2010 NOTE 1 – ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES: The Hartnell College Foundation (the Foundation) is a California nonprofit corporation incorporated on December 18, 1979. The Foundation was formed to assist in the following: to render assistance to the Hartnell Community College District (the District) in providing for the expansion, modification, and addition to the college facilities of the District; to provide financial support for the District; to carry out activities intended to support the District as may be requested by the Board of Trustees of the District from time to time; to encourage, obtain, and administer donations of funds, properties, bequests, annuities, and other instruments of properties of value in the interest of the District; to support bond elections and other programs as designed to support the dayto-day and long range financial needs of the District as may be requested from time to time by the Board of Trustees of the District; to provide assistance to and develop programs for the educational needs of students; and to advise the District as requested by the Board of Trustees of the District from time to time concerning the investment of personal property, securities, and real property derived from other than taxes or local, State, or Federal apportioned sources. Based upon the relationship described above, the Hartnell College Foundation is considered a component unit of the Hartnell Community College District. Mission Statement “The Hartnell College Foundation will actively support and advise the College in developing its activities, programs, and facilities; will cultivate bequests and donations; and will responsibly administer funds, properties, bequests, annuities, and other instruments in the best interest of the College, the District, and the Foundation.” -8- DRAFT for Discussion Purposes Only HARTNELL COLLEGE FOUNDATION NOTES TO THE FINANCIAL STATEMENTS June 30, 2011 and 2010 NOTE 1 – ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES: (continued) Basis of Accounting The financial statements of the Foundation have been prepared on the accrual basis of accounting in accordance with U.S. generally accepted accounting principles. The statement of activities is a statement of financial activities related to the current reporting period. Using this method, revenues are recognized when earned, and expenses are recognized when incurred. Revenue and Public Support Revenues are reported as increases in unrestricted net assets unless use of the related asset is limited by donor-imposed restrictions. Expenses are reported as decreases in unrestricted net assets. Realized gains/losses and unrealized gains/losses on investments and other assets or liabilities are reported as increases or decreases in unrestricted net assets unless their use is restricted by explicit donor stipulation or by law. Expiration of restrictions on net assets (i.e., the donor-stipulated purpose has been fulfilled and/or the stipulated time period has elapsed) is reported as assets released from restriction between the applicable classes of net assets. Contributions, including unconditional promises to give, are recognized as revenues in the period received. Conditional promises to give are not recognized until they become unconditional, that is, when the conditions on which they depend are substantially met. Contributions of assets other than cash are recorded at their estimated fair value at the time of the gift. Use of Estimates The preparation of financial statements, in conformity with U.S. generally accepted accounting principles, requires management to make estimates and assumptions that affect reported amounts of assets and liabilities at the reporting date, and revenues and expenses during the reporting period. Actual results could differ from those estimates. -9- DRAFT for Discussion Purposes Only HARTNELL COLLEGE FOUNDATION NOTES TO THE FINANCIAL STATEMENTS June 30, 2011 and 2010 NOTE 1 – ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES: (continued) Income Taxes The Foundation is a charitable, not-for-profit, tax-exempt organization qualified under provisions of Section 501(c)(3) of the Internal Revenue Code and corresponding California provisions. Accordingly, no provision for income taxes has been provided in the financial statements. The Foundation has also been classified as an entity that is not a private foundation within the meaning of Section 509(a). The Foundation annually files information returns, Forms 990, 199, and RRF-1, with the appropriate agencies. The Foundation has evaluated its tax positions and the certainty as to whether those positions will be sustained in the event of an audit by taxing authorities at the federal and state levels. The primary tax positions evaluated are related to the Foundation’s continued qualification as a tax-exempt organization and whether there is unrelated business income activities conducted that would be taxable. Management has determined that all income tax positions are more likely than not of being sustained upon potential audit or examination; therefore, no disclosures of uncertain income tax positions are required. The Foundation files informational returns in the U.S. federal jurisdiction and the state of California. With few exceptions, the Foundation is no longer subject to U.S. federal and state examinations by tax authorities for years before 2006. Cash Equivalents for Statements of Cash Flows For purposes of the statements of cash flows, the Foundation considers all highly liquid investments purchased with an initial maturity of three months or less to be cash equivalents. Restricted cash and cash equivalents are limited in use to payment of program costs and scholarships. Investments Investments in marketable securities with readily determinable fair values are presented at their fair values in the statement of financial position. Unrealized gains and losses are included in the change in net assets. -10- DRAFT for Discussion Purposes Only HARTNELL COLLEGE FOUNDATION NOTES TO THE FINANCIAL STATEMENTS June 30, 2011 and 2010 NOTE 1 – ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES: (continued) Pledges Receivable Pledges are recorded at the stated gift value which approximates fair value, in accordance with the requirements of U.S. generally accepted accounting principles for fair value measurement. Based on management’s review of the accounts receivable, all amounts are deemed collectable; therefore no allowance for doubtful accounts is considered necessary. Any uncollectible pledges are written off when collection efforts have been exhausted. Property and Equipment Equipment is capitalized at cost. It is the Foundation’s policy to capitalize all equipment purchased with a cost over $5,000. Lesser amounts are expensed. Equipment is depreciated over its estimated useful life of three to twenty years utilizing the straightline method. Art Collections The Foundation has a collection of artwork that is on public display at the Art Gallery. The display is rotated for public viewing, and all items remain as part of the Gallery’s permanent collections depending on the terms of the deed of gift. The Foundation has capitalized its collections since its inception. Donated works of art are stated at appraised value or estimated fair market value at the time of donation and are not subject to depreciation. Scholarships Payable Scholarships payable consist of awards made to students for the subsequent school year. A payable and expense is recognized when the recipient is notified. Compensated Absences Employees of the Foundation are entitled to paid vacation, depending on job classification, length of service, and other factors. No liability has been recorded in the accompanying financial statements. The Foundation’s policy is to recognize the costs of compensated absences when actually paid to employees. Management’s estimate of compensation for future absences will not materially affect the financial statement balances. -11- DRAFT for Discussion Purposes Only HARTNELL COLLEGE FOUNDATION NOTES TO THE FINANCIAL STATEMENTS June 30, 2011 and 2010 NOTE 1 – ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES: (continued) Deferred Revenue Revenues received which are not earned until the subsequent year are recorded as deferred revenue. The Foundation’s deferred revenue is primarily related to Western Stage season ticket sales for future productions. Net Asset Classes The Foundation classifies its net assets into three categories: unrestricted, temporarily restricted and permanently restricted. Unrestricted net assets generally result from revenues from providing services, receiving unrestricted contributions, and receiving dividend and interest income, less expenses incurred in providing services, raising contributions, and performing administrative functions. The only limits on the use of unrestricted net assets are the broad limits resulting from the Foundation’s mission as defined in its articles of incorporation and bylaws. Temporarily restricted net assets are those whose use by the Foundation has been limited by donors to a specific time period or purpose. Permanently Restricted Net Assets are those that have been restricted by donors to investment in perpetuity. Functional Allocations of Expenses The costs of providing various programs and activities have been summarized on a functional basis. Accordingly, based upon management’s estimates, certain costs have been allocated among the programs, support services, and fundraising activities. Donated Assets, Service, and Facilities The Foundation records the value of donated assets, services, and facilities when there is an objective basis available to measure their value. Donated assets are capitalized at the stated donated value and depreciated in accordance with Foundation policies, unless they are passed through to the District. The Foundation recognizes contributed services when services received (a) create or enhance long-lived assets, or (b) require specialized skills, are provided by individuals possessing those skills, and would typically need to be purchased if not provided by donation. -12- DRAFT for Discussion Purposes Only HARTNELL COLLEGE FOUNDATION NOTES TO THE FINANCIAL STATEMENTS June 30, 2011 and 2010 NOTE 1 – ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES: (continued) Reclassifications Accounts receivable previously reported in the 2010 financial statements have been reclassified to pledges receivable to conform to the 2011 presentation. Subsequent Events The Foundation has evaluated subsequent events through November 8, 2011, which is the date these financial statements were available to be issued. Subsequent events are as follows: In September 2011, the Foundation entered into an agreement with the First 5 Monterey County Commission to provide a Workforce Development Incentive Program to support incentives to students of the District who have declared Early Childhood Education/Child Development majors and complete specific coursework. The Foundation was awarded $667,000 to be received for qualified reimbursable expenses over a four year period not to exceed $166,750 in any fiscal year. The grant agreement is effective July 1, 2011 through June 30, 2015. NOTE 2 – CONCENTRATION OF RISK: A. Cash Cash accounts maintained by the Foundation are insured by the Federal Deposit Insurance Corporation (FDIC) up to $250,000 per institution. Cash balances in excess of insured amounts were $1,975,553 at June 30, 2011. At June 30, 2010, all of the Foundation’s cash balances were fully insured under the FDIC’s Voluntary Transaction Account Guarantee Program which expired in December 2010. Effective October 2011, the Foundation has transferred non-insured cash balances to accounts fully insured under the FDIC’s Dodd-Frank Program. B. Investments Investments with brokers are insured by the Securities Investor Protection Corporation (SIPC) up to $500,000 of which $250,000 may be cash. Insurance protects assets in the case of broker-dealer insolvency and not against decline in market values. As of June 30, 2011 and 2010 the Foundation had investments in excess of the SIPC insurance amount. -13- DRAFT for Discussion Purposes Only HARTNELL COLLEGE FOUNDATION NOTES TO THE FINANCIAL STATEMENTS June 30, 2011 and 2010 NOTE 2 – CONCENTRATION OF RISK: B. Investments (continued) Investments with brokers at June 30, are as follows: Cash investments Long term investments Total 2011 2010 $ 400,667 5,716,311 $6,116,978 $ 492,266 4,526,284 $5,018,550 NOTE 3 –PLEDGES RECEIVABLE: A. Unconditional Pledges Unconditional promises to give at June 30, are as follows: 2011 Agriculture Program Nursing Construction - Faculty Support Construction Technology Operating SVMH Service League Scholarship General Endowed Trust Planetarium Western Stage Young Company Athletics Foundation for FCC Other $ $ -14- 154,668 189,575 93,575 2,000 28,340 10,000 1,000 3,000 64,834 7,000 9,059 563,051 2010 $ $ 290,501 223,844 129,600 2,000 8,750 10,000 1,000 3,000 25,000 45,100 83,008 821,803 DRAFT for Discussion Purposes Only HARTNELL COLLEGE FOUNDATION NOTES TO THE FINANCIAL STATEMENTS June 30, 2011 and 2010 NOTE 3 –PLEDGES RECEIVABLE: (continued) A. Unconditional Pledges (continued) Pledges are expected to be realized in the following periods: Due within 1 year Due within 1 to 5 years Total B. 2011 2010 $ 507,837 55,214 $ 563,051 $ 672,302 149,501 $ 821,803 Conditional Pledges In December 2010 the Foundation was awarded a multi-year grant from the Monterey Peninsula Foundation totaling $250,000. The grant requires the Foundation to raise a match of $250,000 in cash donations from other sources to receive payment. The Foundation secured two awards in July 2011 totaling $350,000 meeting the conditional requirements of the grant. In June 2011, the Foundation was awarded a multi-year pledge from the Nancy Eccles and Homer M. Hayward Family Foundation totaling $300,000. $100,000 was received in fiscal year 2010-11. The remainder of the pledge will be received in equal installments for the 2012 and 2013 fiscal years on the condition that a faculty member is hired to teach sustainable design. The Foundation has commenced the process for hiring faculty for the 2012 fiscal year to meet the conditional grant requirements. -15- DRAFT for Discussion Purposes Only HARTNELL COLLEGE FOUNDATION NOTES TO THE FINANCIAL STATEMENTS June 30, 2011 and 2010 NOTE 4 – NOTE RECEIVABLE: In June 2003, the foundation received a bequest of a remainder interest in a residential real property in Marina, California. The bequest included a life estate interest in that property which the holder wished to purchase from the Foundation. In July 2003, the Foundation entered into a long-term note receivable with a total carrying amount of $142,198. The note bears interest of five percent and is secured by the Marina property. The term of the note is from July 14, 2003 through June 15, 2023. Note receivable at June 30 is due within the following schedule: 2011 Due in 1 year Long-term portion Total $ 6,341 95,133 $ 101,474 2010 $ 6,033 101,465 $ 107,498 NOTE 5 – INVESTMENTS: Investments are presented at fair value in the financial statements and are composed of the following at June 30: 2011 Level 1 Common stocks Corporate bonds Exchange Traded and Closed End Funds Government bonds Mutual funds 2010 Adjusted Cost Fair Value Adjusted Cost Fair Value $ 3,711,000 568,060 6,359 434,976 529,692 $ 5,250,087 $ 4,141,525 588,909 10,884 455,033 519,960 $ 5,716,311 $ 3,222,965 523,094 6,458 340,257 596,193 $ 4,688,967 $ 3,121,691 556,151 9,136 362,246 477,060 $ 4,526,284 -16- DRAFT for Discussion Purposes Only HARTNELL COLLEGE FOUNDATION NOTES TO THE FINANCIAL STATEMENTS June 30, 2011 and 2010 NOTE 5 – INVESTMENTS: (continued) In accordance with U.S. generally accepted accounting principles, levels 1 through 3 have been assigned to the fair value measurement of investments. The fair value level of measurement is determined as follows: Level 1 – quoted prices in an active market for identical assets. Level 2 – quoted prices for similar assets and market-corroborated inputs. Level 3– the organization’s own assumptions about market participation, including assumptions about risk, developed based on the best information available in the circumstances. The following schedule summarizes the investment return and its classifications in the statement of activities for the year ended June 30, 2011: Interest and dividends Realized gain on sale of investments Unrealized gain on investments Total investment income Less: Investment fees Net investment income Unrestricted Temporarily Restricted Permanently Restricted $ $ $ $ 15,790 31,770 472,671 520,231 (2,813) 517,418 $ 106,482 452,250 196,901 755,633 (39,991) 715,642 $ $ Total - 122,272 484,020 669,572 1,275,864 (42,804) $ 1,233,060 The following schedule summarizes the investment return and its classifications in the statement of activities for the year ended June 30, 2010: Interest and dividends Realized gain on sale of investments Unrealized loss on investments Total investment income Less: Investment fees Net investment income(loss) Unrestricted Temporarily Restricted Permanently Restricted $ $ $ $ 18,972 4,144 148,926 172,042 (3,566) 168,476 -17- $ 93,645 58,741 182,199 334,585 (50,436) 284,149 1,876 Total $ (5,703) (3,827) $ (3,827) $ 114,493 62,885 325,422 502,800 (54,002) 448,798 DRAFT for Discussion Purposes Only HARTNELL COLLEGE FOUNDATION NOTES TO THE FINANCIAL STATEMENTS June 30, 2011 and 2010 NOTE 6 – INVESTMENTS WITH FOUNDATION FOR CALIFORNIA COMMUNITY COLLEGES (FCCC): The Foundation has entered into a partnership arrangement with the California Community Colleges Scholarship Endowment (Endowment) through the Foundation for California Community Colleges (FCCC). The Foundation contributed $91,431 and $208,000 during the fiscal years ended June 30, 2011 and June 30, 2010, respectively, to the FCCC Endowment. These funds will be invested in a pooled investment fund held by the FCCC. At June 30, 2011 and June 30, 2010 the fair value of this investment was $320,731 and $204,173, respectively. The FCCC has assembled an investment advisory committee charged with the responsibility for directing and monitoring the investment management of the Endowment’s assets. The Endowment has been set up to provide matching scholarships funds for California community colleges. The endowment was formed through a generous $50 million matching commitment from the Bernard Osher Foundation and an initial contribution of $25 million. The California Community Colleges and the Foundation for California Community Colleges had until June 2011 to raise an additional $50 million, for which the Osher Foundation will provide a 50 percent match up to $25 million. In the 2009-10 year, the Endowment began to distribute scholarship funding from the initial $25 million gift to each participating community college. The allocation will be based on each colleges FTES and each scholarship will be valued at $1,000 for a school year. The Foundation received $8,000 during fiscal year ended June 30, 2011 and $15,000 during fiscal year ended June 30, 2010 for scholarships. -18- DRAFT for Discussion Purposes Only HARTNELL COLLEGE FOUNDATION NOTES TO THE FINANCIAL STATEMENTS June 30, 2011 and 2010 NOTE 7 – PROPERTY AND EQUIPMENT: At June 30, 2011, property and equipment owned by the Foundation consist of the following: Balance June 30, 2010 Non-depreciable capital assets: Land and land improvements Art Collections $ Total nondepreciable capital assets 70,000 255,182 $ 325,182 Depreciable capital assets: Buildings and building improvements Furniture and equipment Balance June 30, 2011 Deletions $ $ - - 20,000 21,856 41,856 367,038 Less accumulated depreciation: Buildings and building improvements Furniture and equipment Total accumulated depreciation - (20,000) (20,855) (40,855) $ 326,183 70,000 255,182 325,182 20,000 21,856 Total depreciable capital assets Total capital assets Net property and equipment Additions (334) (334) $ (334) $ - - 41,856 367,038 - (20,000) (21,189) (41,189) $ 325,849 At June 30, 2010, property and equipment owned by the Foundation consist of the following: Balance June 30, 2009 Non-depreciable capital assets: Land and land improvements Art Collections $ Total nondepreciable capital assets 70,000 255,182 $ 325,182 Depreciable capital assets: Buildings and building improvements Furniture and equipment Total depreciable capital assets Total capital assets Less accumulated depreciation: Buildings and building improvements Furniture and equipment Total accumulated depreciation Net property and equipment Additions $ - Balance June 30, 2010 $ 70,000 255,182 - 325,182 20,000 21,856 41,856 - - 20,000 21,856 41,856 367,038 - - 367,038 - (20,000) (20,855) (40,855) (20,000) (20,663) (40,663) $ Deletions 326,375 -19- (192) (192) $ (192) $ - $ 326,183 DRAFT for Discussion Purposes Only HARTNELL COLLEGE FOUNDATION NOTES TO THE FINANCIAL STATEMENTS June 30, 2011 and 2010 NOTE 8 – RESTRICTION ON NET ASSETS: All contributions are reported as unrestricted unless specifically restricted by donor stipulations. When a donor restriction expires, either by the passage of time or an event, the assets are reclassified to unrestricted funds through the “assets released from restriction” account. Temporarily restricted net assets consist of the following at June 30: 2011 Federal Gear Up Grant Scholarships – FCCC Scholarships Academic and student support $ 58,992 21,300 1,043,690 3,389,515 $4,513,497 2010 $ 53,042 582,113 2,499,710 $3,134,865 Permanently restricted net assets consist of the following at June 30: Endowed scholarships – FCCC Endowed scholarships Endowed academic and student support -20- 2011 2010 $ 299,431 3,888,937 289,543 $ 204,173 3,961,357 289,543 $4,477,911 $4,455,073 DRAFT for Discussion Purposes Only HARTNELL COLLEGE FOUNDATION NOTES TO THE FINANCIAL STATEMENTS June 30, 2011 and 2010 NOTE 9 – ENDOWMENT: The Foundation’s endowment consists of approximately 55 individual funds established for a variety of purposes. Its endowment includes both donor-restricted endowment funds and funds designated by the Board of Directors to function as endowments. As required by U.S. generally accepted accounting principles, net assets associated with endowment funds, including funds designated by the Board of Directors to function as endowments, are classified and reported based on the existence or absence of donorimposed restrictions. The Board of Directors has designated amounts in its endowment for support of the Library and Foundation operations. Interpretation of relevant law The Board of Directors of the Foundation has interpreted the Uniform Prudent Management of Institutional Funds Act (UPMIFA) as requiring the preservation of the fair value of the original gift as of the gift date of the donor-restricted endowment funds absent explicit donor stipulations to the contrary. As a result of this interpretation, the Foundation classifies as permanently restricted net assets (a) the original value of gifts donated to the permanent endowment, (b) the original value of subsequent gifts to the permanent endowment, and (c) accumulations to the permanent endowment made in accordance with the direction of the applicable donor gift instrument at the time the accumulation is added to the fund. The remaining portion of the donor-restricted endowment fund that is not classified in permanently restricted net assets is classified as temporarily restricted net assets until those amounts are appropriated for expenditure by the Foundation in a manner consistent with the standard of prudence prescribed by UPMIFA. In accordance with UPMIFA, the Foundation considers the following factors in making a determination to appropriate or accumulate donor-restricted endowment funds: (1) (2) (3) (4) (5) (6) (7) The duration and preservation of the fund The purposes of the Foundation and the donor-restricted endowment fund General economic conditions The possible effect of inflation and deflation The expected total return from income and the appreciation of investments Other resources of the Foundation The investment policies of the Foundation -21- DRAFT for Discussion Purposes Only HARTNELL COLLEGE FOUNDATION NOTES TO THE FINANCIAL STATEMENTS June 30, 2011 and 2010 NOTE 9 – ENDOWMENT: (continued) Interpretation of relevant law (continued) Endowment net asset composition by type of fund as of June 30, 2011: Unrestricted Donor-restricted endowment funds $ (108,636) Board-designated endowment funds 446,885 Total $ 338,249 Temporarily Restricted Permanently Restricted $ 950,922 $ 4,477,911 $ 950,922 $ 4,477,911 Total $ 5,320,197 446,885 $ 5,767,082 Changes in endowment net assets for the fiscal year June 30, 2011: Endowment net assets, July 1 Unrestricted Temporarily Restricted Permanently Restricted Total $ (163,782) $ $ 4,455,073 $ 4,755,818 464,527 Investment return: Investment income, net of management and investment fees Net realized and unrealized appreciation(depreciation) 3,997 65,518 69,515 74,345 1,061,270 1,135,615 Total investment return 78,342 1,126,788 Contributions - 1,205,130 79,607 79,607 Appropriation of endowment assets for expenditure (6,407) Other changes: Transfer for change in donor designation Transfer to FCCC Foundation Transfer of underwater endowment balances Endowment net assets, June 30 (210,297) 28,422 (85,000) 28,231 401,674 $ -22- 338,249 (216,704) (430,096) $ 950,922 (56,578) 28,231 (28,422) $ 4,477,911 $ 5,767,082 DRAFT for Discussion Purposes Only HARTNELL COLLEGE FOUNDATION NOTES TO THE FINANCIAL STATEMENTS June 30, 2011 and 2010 NOTE 9 – ENDOWMENT: (continued) Endowment net asset composition by type of fund as of June 30, 2010: Unrestricted Donor-restricted endowment funds $ (538,732) Board-designated endowment funds 374,950 Total $ (163,782) Temporarily Restricted Permanently Restricted $ 464,527 $ 4,455,073 $ 464,527 $ 4,455,073 Total $ 4,380,868 374,950 $ 4,755,818 Changes in endowment net assets for the fiscal year June 30, 2010: Endowment net assets, July 1 Unrestricted Temporarily Restricted Permanently Restricted Total $ (306,772) $ 437,498 $ 4,284,677 $ 4,415,403 Investment return: Investment income, net of management and investment fees Net realized and unrealized appreciation(depreciation) 2,651 43,616 1,876 48,143 26,138 356,058 (5,703) 376,493 Net investment return 28,789 399,674 (3,827) 424,636 32,690 19,200 51,890 Contributions Appropriation of endowment assets for expenditure Other changes: Transfer for change in donor designation Transfer to FCCC Foundation Transfer of underwater endowment balances Endowment net assets, June 30 (12,728) (136,812) 33,777 (175,371) 126,929 $ (163,782) -23- (149,540) (33,777) 188,800 13,429 (126,929) $ 464,527 $ 4,455,073 $ 4,755,818 DRAFT for Discussion Purposes Only HARTNELL COLLEGE FOUNDATION NOTES TO THE FINANCIAL STATEMENTS June 30, 2011 and 2010 NOTE 9 – ENDOWMENT: (continued) Description of amounts classified as permanently restricted net assets and temporarily restricted net assets (endowment only): 2011 2010 Permanently Restricted Net Assets Portion of perpetual endowment funds that is required to be retained permanently either by explicit donor stipulation or by UPMIFA $ 4,477,911 Total endowment funds classifed as permanently restricted net assets $ 4,477,911 $ 4,455,073 $ 4,455,073 Temporarily Restricted Net Assets Purpose restricted endowment funds $ Total endowment funds classifed as temporarily restricted net assets $ $ $ 950,922 950,922 464,527 464,527 Funds with deficiencies From time to time, the fair value of assets associated with individual donor-restricted endowment funds may fall below the level that the donor or UPMIFA required the Foundation to retain as a fund of perpetual duration. In accordance with U.S. generally accepted accounting principles, deficiencies of this nature that are reported in unrestricted net assets were $(108,636) and $(538,732) as of June 30, 2011 and June 30, 2010, respectively. These deficiencies resulted from unfavorable market fluctuations that occurred and continued appropriation for certain programs that was deemed prudent by the Board of Directors. Return objectives and risk parameters The Foundation has adopted investment and spending policies for endowment assets that attempt to provide a predictable stream of funding to programs supported by its endowment while seeking to maintain the purchasing power of the endowment assets. Endowment assets include those assets of donor-restricted funds that the Foundation must hold in perpetuity or for a donor-specified period(s) as well as board-designated funds. Under this policy, as approved by the Board of Directors, the endowment assets are invested in a manner that is intended to produce results that exceed the price and yield results of the S&P 500 index while assuming a moderate level of investment risk. The Foundation expects its endowment funds, over time, to provide an average rate of return of 7 to 9 percent annually. Actual returns in any given year may vary from this amount. Endowments held in partnership with the Foundation for California Community Colleges (FCCC) are managed and follow policies established by the FCCC’s investment advisory committee which may differ from those of the Foundation. -24- DRAFT for Discussion Purposes Only HARTNELL COLLEGE FOUNDATION NOTES TO THE FINANCIAL STATEMENTS June 30, 2011 and 2010 NOTE 9 – ENDOWMENT: (continued) Strategies employed for achieving objectives To satisfy its long-term rate-of-return objectives, the Foundation relies on a total return strategy in which investment returns are achieved through both capital appreciation (realized and unrealized) and current yield (interest and dividends). The Foundation targets a diversified asset allocation that places a greater emphasis on quality-based investments to achieve its long-term return objectives within prudent risk constraints. Spending policy and how the investment objectives relate to spending policy The Foundation has a policy of appropriating for distribution each year no more than 5 percent of the endowment funds’ average fair value over the prior 12 quarters through the calendar year-end preceding the fiscal year in which the distribution is planned. In establishing this policy, the Foundation considered the long-term expected return on its endowment. Accordingly, over the long term, the Foundation expects the current spending policy to allow its endowment to grow at an average of 7 to 9 percent annually. This is consistent with the Foundation’s objective to maintain the purchasing power of the endowment assets held in perpetuity or for a specified term as well as to provide additional real growth through new gifts and investment return. NOTE 10 – CONTRIBUTED ASSETS AND SERVICES: The value of contributed equipment and services totaled $21,450 and $27,082 for the years ended June 30, 2011 and 2010, respectively. These amounts have been reflected in the statement of activities as in-kind contributions and as operating or program expenses as appropriate. -25- DRAFT for Discussion Purposes Only HARTNELL COLLEGE FOUNDATION NOTES TO THE FINANCIAL STATEMENTS June 30, 2011 and 2010 NOTE 11 – RELATED PARTY TRANSACTIONS: The Foundation provides various levels of monetary support and service to the District. The transactions are recorded within the financial statements within program expense and campus area programs, and scholarship expense. They consist primarily of salaries and benefits, campus area expenses and scholarship payments totaling $1,415,961 for year ended June 30, 2011 and $1,168,957 for year ended June 30, 2010. To assist the Foundation in carrying out its purpose, the District provides administrative services to the Foundation. The District pays salaries and benefits of the executive director and the executive assistant which totaled $160,271 and $151,064 for years ended June 30, 2011 and 2010, respectively. These donated services have been reflected in the statement of activities as in-kind donations and as operating, program, or fundraising expenses as appropriate. Working space for employees who perform administrative services for the Foundation is provided by the District at no charge. The value of donated facilities has not been determined and is therefore not included in the financial statements; however, management does not believe the amount to be material. -26- DRAFT for Discussion Purposes Only HARTNELL COMMUNITY COLLEGE DISTRICT PROPOSITION 39 GENERAL OBLIGATION BONDS BOND PROJECTS FUND MEASURE H FINANCIAL AUDIT June 30, 2011 DRAFT for Discussion Purposes Only HARTNELL COMMUNITY COLLEGE DISTRICT PROPOSITION 39 GENERAL OBLIGATION BONDS BOND PROJECTS FUND MEASURE H FINANCIAL AUDIT June 30, 2011 CONTENTS Page Independent Auditor’s Report.................................................................................... 1-2 Balance Sheet –Bond Projects Fund .......................................................................... 3 Statement of Revenues, Expenditures and Change in Fund Balance – Bond Projects Fund ................................................................................................ 4 Statement of Revenues, Expenditures and Change in Fund Balance – Bond Projects Fund – Budget and Actual ............................................................ 5 Notes to Financial Statements ..................................................................................... 6-13 Report on Internal Control over Financial Reporting and on Compliance and Other Matters Based on an Audit of Financial Statements Performed in Accordance with Government Auditing Standards ........................................ 14-15 Schedule of Findings and Responses .......................................................................... 16 DRAFT for Discussion Purposes Only INDEPENDENT AUDITOR’S REPORT The Board of Trustees The Measure H Citizens’ Oversight Committee Hartnell Community College District We have audited, in accordance with auditing standards generally accepted in the United States of America, the basic financial statements of the Hartnell Community College District, as of and for the fiscal year ended June 30, 2011, and have issued our report thereon dated November 16, 2011. We have also audited the accompanying Balance Sheet, Statement of Revenues, Expenditures and Change in Fund Balance and Statement of Revenues, Expenditures and Change in Fund Balance – Budget and Actual for the Bond Projects Fund of the Hartnell Community College District as of June 30, 2011 These statements are the responsibility of the District’s management. Our responsibility is to express an opinion on these statements based on our audit. We conducted our audit of the Bond Projects Fund in accordance with auditing standards generally accepted in the United States of America and the standards applicable to financial audits contained in Government Auditing Standards issued by the Comptroller General of the United States. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements for the Bond Projects Fund are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the Bond Projects Fund financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe our audit provides a reasonable basis for our opinion. In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position and results of operations for the Bond Projects Fund of the Hartnell Community College District as of June 30, 2011, in conformity with accounting principles generally accepted in the United States of America. As described in Note 1 to the financial statements, the Hartnell Community College District adopted the provisions of Governmental Accounting Standards Board (GASB) Statement No. 54, Fund Balance Reporting and Governmental Fund Type Definitions, for the year ended June 30, 2011. -1- DRAFT for Discussion Purposes Only In accordance with Government Auditing Standards, we have also issued our report dated November 16, 2011 on our consideration of the Hartnell Community College District’s internal control over the Bond Projects Fund financial reporting and our tests of its compliance with certain provisions of laws, regulations, contracts and grant agreements and other matters. The purpose of that report is to describe the scope of our testing of internal control over the Bond Projects Fund financial reporting and compliance and the results of that testing, and not to provide an opinion on the internal control over financial reporting or on compliance. That report is an integral part of an audit performed in accordance with Government Auditing Standards and should be considered in assessing the results of our audit. VICENTI, LLOYD & STUTZMAN LLP November 16, 2011 -2- DRAFT for Discussion Purposes Only HARTNELL COMMUNITY COLLEGE DISTRICT BALANCE SHEET BOND PROJECTS FUND June 30, 2011 ASSETS Cash in county treasury Accounts receivable Due from other funds TOTAL ASSETS $ 44,445,087 51,529 1,842,371 $ 46,338,987 $ 725,715 725,715 LIABILITIES AND FUND BALANCE LIABILITIES Accounts payable TOTAL LIABILITIES FUND BALANCE Restricted TOTAL FUND BALANCE 45,613,272 45,613,272 TOTAL LIABILITIES AND FUND BALANCE $ See the accompanying notes to the financial statements. -3- 46,338,987 DRAFT for Discussion Purposes Only HARTNELL COMMUNITY COLLEGE DISTRICT STATEMENT OF REVENUES, EXPENDITURES AND CHANGE IN FUND BALANCE BOND PROJECTS FUND For the Fiscal Year Ended June 30, 2011 REVENUES Interest and investment income TOTAL REVENUES $ EXPENDITURES Salaries Benefits Capital outlay TOTAL EXPENDITURES 67,214 67,214 18,595 7,169 16,730,347 16,756,111 Net change in fund balance (16,688,897) 62,302,169 Fund Balance at Beginning of Year $ Fund Balance at End of Year See the accompanying notes to the financial statements. -4- 45,613,272 DRAFT for Discussion Purposes Only HARTNELL COMMUNITY COLLEGE DISTRICT STATEMENT OF REVENUES, EXPENDITURES AND CHANGE IN FUND BALANCE BOND PROJECTS FUND - BUDGET AND ACTUAL For the Fiscal Year Ended June 30, 2011 Budget* REVENUES Interest and investment income TOTAL REVENUES $ EXPENDITURES Salaries (See Note 6 - page 13) Benefits (See Note 6 - page 13) Capital outlay TOTAL EXPENDITURES Net change in fund balance 480,000 480,000 Actual $ 18,500 6,699 81,925,233 81,950,432 67,214 67,214 Variance Favorable (Unfavorable) $ 18,595 7,169 16,730,347 16,756,111 $ (81,470,432) (16,688,897) (412,786) (412,786) (95) (470) 65,194,886 65,194,321 $ 64,781,535 62,302,169 Fund Balance at Beginning of Year $ Fund Balance at End of Year 45,613,272 *Any budgeted revenues reflect estimated amounts to be received in the current year. Any budgeted expenditures reflect amounts remaining and available for multi-year projects and therefore will not necessarily coincide with actual current year expenditures. See the accompanying notes to the financial statements. -5- DRAFT for Discussion Purposes Only HARTNELL COMMUNITY COLLEGE DISTRICT BOND PROJECTS FUND NOTES TO THE FINANCIAL STATEMENTS June 30, 2011 NOTE 1 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES: ACCOUNTING POLICIES The accompanying financial statements have been prepared in conformity with generally accepted accounting principles as prescribed by the Governmental Accounting Standards Board and Audits of State and Local Governmental Units issued by the American Institute of Certified Public Accountants. FUND STRUCTURE The Statement of Revenues, Expenditures, and Change in Fund Balance is a statement of financial activities of the Bond Projects Fund related to the current reporting period. Expenditures frequently include amounts for land, buildings, equipment, retirement of indebtedness, transfers to other funds, etc. Consequently, this statement does not purport to present the result of operations or the net income or loss for the period as would a statement of income for a profit-type organization. BASIS OF ACCOUNTING The Bond Projects Fund of the Hartnell Community College District (the District) is maintained on the modified accrual basis of accounting. As such, revenues are recognized when they become susceptible to accrual, which is to say, when they become both measurable and available to finance expenditures of the current period. Expenditures are recognized in the accounting period in which the liability is incurred (when goods are received or services rendered). During the year, Cash in the County Treasury is recorded at cost, which approximates fair value, in accordance with the requirements of GASB Statement No. 31. BUDGET The Statement of Revenues, Expenditures and Change in Fund Balance – Budget and Actual includes a column entitled “Budget”. The amounts in this column represent the budget adopted by the Board and all amendments throughout the year. -6- DRAFT for Discussion Purposes Only HARTNELL COMMUNITY COLLEGE DISTRICT BOND PROJECTS FUND NOTES TO THE FINANCIAL STATEMENTS June 30, 2011 NOTE 1 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES: (continued) FUND BALANCE CLASSIFICATION During the current fiscal year, the District implemented the reporting model required by GASB statement No. 54. Therefore, the governmental fund financial statements present fund balance classifications that comprise a hierarchy based on the extent to which the District is bound to honor constraints on the specific purposes for which amounts can be spent. Amounts for which constraints have been placed on the use of the resources either (a) externally imposed by creditors, grantors, contributors, or laws or regulations of other governments, or (b) imposed by law through constitutional provisions or enabling legislation are considered restricted. The Bond Projects Fund Balance of the District is therefore classified as restricted. CAPITAL ASSETS AND LONG-TERM DEBT The accounting and reporting treatment applied to the capital assets and long-term liabilities associated with the Bond Projects Fund are determined by its measurement focus. The Fund is accounted for on a spending or “financial flow” measurement focus. This means that only current assets and current liabilities are generally included on the balance sheet. The reported fund balance is considered a measure of “available spendable resources”. Thus, the capital assets and long-term liabilities associated with the Bond Projects Fund are accounted for in the basic financial statements of the District. ESTIMATES The preparation of the financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the amounts reported in the financial statements and accompanying notes. Actual results may differ from those estimates. -7- DRAFT for Discussion Purposes Only HARTNELL COMMUNITY COLLEGE DISTRICT BOND PROJECTS FUND NOTES TO THE FINANCIAL STATEMENTS June 30, 2011 NOTE 2 – DEPOSITS – CASH IN COUNTY TREASURY: In accordance with Education Code Section 41001, the District maintains all of its cash in the Monterey County Treasury as part of the common investment pool. These pooled funds are carried at cost which may differ from fair value. The fair market value of the District’s deposits for the Bond Projects Fund in this pool as of June 30, 2011, as provided by the pool sponsor, was $44,469,045. The County is authorized to deposit cash and invest excess funds by California Government Code Section 53648 et. seq. The county is restricted by Government Code Section 53635 pursuant to Section 53601 to invest in time deposits, U.S. government securities, state registered warrants, notes or bonds, State Treasurer’s investment pool, bankers’ acceptances, commercial paper, negotiable certificates of deposit, and repurchase or reverse repurchase agreements. The funds maintained by the County are either secured by federal depository insurance or are collateralized. Interest earned is deposited quarterly into participating funds. Any investment losses are proportionately shared by all funds in the pool. NOTE 3 – DUE FROM OTHER FUNDS: Interfund receivables represent temporary loans to the Scheduled Maintenance Fund for project costs to be reimbursed by state funds. The District anticipates reimbursement to the fund during the 2011-12 fiscal year. NOTE 4 – BONDED DEBT: On November 5, 2002, the District voters authorized the issuance and sale of general obligation bonds totaling $131,000,000. Proceeds from the sale of the bonds will be used to finance the construction, acquisition, and modernization of certain property and District facilities. On April 15, 2003, the District issued General Obligation Bonds, Election of 2002, Series A of $35,000,000 of current interest bonds. Interest ranges from 2.0% to 5.0% payable semiannually on February 1 and August 1. At June 30, 2011 the principal balance outstanding was $1,840,000. -8- DRAFT for Discussion Purposes Only HARTNELL COMMUNITY COLLEGE DISTRICT BOND PROJECTS FUND NOTES TO THE FINANCIAL STATEMENTS June 30, 2011 NOTE 4 – BONDED DEBT: (continued) On March 23, 2005, the District issued 2005 General Obligation Refunding Bonds of $23,500,000 of current interest bonds and $5,562,042 of capital appreciation bonds. Interest rates range from 4.50% to 5.25% payable semiannually on February 1 and August 1. At June 30, 2011 the principal balance outstanding (including accreted interest to date) was $27,999,932. On June 6, 2006, the District issued General Obligation Bonds, Election 2002, Series B of $32,815,000 of current interest bonds and $2,180,518 of capital appreciation bonds. Interest ranges from 4.10% to 5.25% payable semiannually June 1 and December 1. At June 30, 2011 the principal balance outstanding (including accreted interest to date) was $34,596,494. On May 27, 2009, the District issued General Obligation Bonds, Election 2002, Series C of $3,366,499 of capital appreciation bonds and $9,231,389 of convertible capital appreciation bonds. Interest ranges from 6.13% to 11.50% payable semiannually February 1 and August 1. At June 30, 2011 the principal balance outstanding (including accreted interest to date) was $13,917,995. On September 16, 2009, the District issued General Obligation Bonds, Election 2002, Series D of $2,516,428 of capital appreciation bonds, $32,590,041 of capital appreciation term bonds, and $13,298,610 of convertible capital appreciation bonds. Interest ranges from 6.43% to 11.50% payable semiannually February 1 and August 1. At June 30, 2011 the principal balance outstanding (including accreted interest to date) was $53,560,938. Capital appreciation bonds have maturity dates for: Series B from June 1, 2008 through June 1, 2016; Series C from August 1, 2023 through August 1, 2033; Series D from August 1, 2023 through August 1, 2049 and the Refunded Bonds from August 1, 2005 through August 1, 2014. Prior to the applicable maturity date, each bond will accrete interest on the principal component. The refunding bonds were issued to advance refund a portion of the outstanding Series A general obligation bonds. $28,554,555 in refunding proceeds were placed into an irrevocable escrow account and will be used to fund the future required principal and interest payments of the refunded bonds. The amount of refunded debt to be paid from the escrow account at June 30, 2011 for Series A is $27,240,000. The refunded portions of the bonds are considered in-substance defeased and are not recorded in the financial statements. -9- DRAFT for Discussion Purposes Only HARTNELL COMMUNITY COLLEGE DISTRICT BOND PROJECTS FUND NOTES TO THE FINANCIAL STATEMENTS June 30, 2011 NOTE 4 – BONDED DEBT: (continued) The outstanding bonded debt for Hartnell Community College District at June 30, 2011 is: Series Series A Refunding Bond Accreted Interest Series B Accreted Interest Series C Accreted Interest Series D Accreted Interest Amount of Original Issue Date of Issue Interest Rate % Maturity Date 4/15/2003 3/23/2005 2.00-5.00% 4.50-5.25% 8/1/2013 8/1/2022 6/6/2006 4.10 - 5.25% 6/1/2031 34,995,518 5/27/2009 6.13 - 11.50% 8/1/2033 12,597,888 9/16/2009 6.43 - 11.50% (1) 8/1/2049 $ 35,000,000 29,062,042 48,405,079 $ 160,060,527 (1) Issued Current Year Outstanding July 1, 2010 $ 2,265,000 26,366,192 2,221,108 34,408,837 374,510 12,597,888 498,757 48,405,079 1,405,873 $128,543,244 $ Interest Accreted Current Year $ 552,632 73,147 Redeemed Current Year Outstanding June 30, 2011 $ $ 425,000 613,502 526,498 213,512 46,488 821,350 $ - $ 3,749,986 5,197,115 $ 1,825,000 1,840,000 25,752,690 2,247,242 34,195,325 401,169 12,597,888 1,320,107 48,405,079 5,155,859 $ 131,915,359 The maturity date has been revised from the original date of August 1, 2027 to reflect the final maturity date on the remaining non-refunded bonds. The annual requirements to amortize all bonds payable, outstanding as of June 30, 2011, are as follows: Series A Year Ended June 30, 2012 2013 2014 Principal Interest Total $ 515,000 610,000 715,000 $ 59,725 39,656 14,300 $ 574,725 649,656 729,300 $ 1,840,000 $ 113,681 $ 1,953,681 -10- DRAFT for Discussion Purposes Only HARTNELL COMMUNITY COLLEGE DISTRICT BOND PROJECTS FUND NOTES TO THE FINANCIAL STATEMENTS June 30, 2011 NOTE 4 – BONDED DEBT: (continued) Refunding Bond Year Ended June 30, 2012 2013 2014 2015 2016 2017-2021 2022-2023 Principal $ Accreted Interest Component Interest Total 574,752 537,100 502,679 638,159 2,015,000 13,840,000 7,645,000 $ 1,163,688 1,163,688 1,163,688 1,163,688 1,118,350 3,703,138 371,094 $ 625,248 722,900 822,321 1,251,841 $ 2,363,688 2,423,688 2,488,688 3,053,688 3,133,350 17,543,138 8,016,094 $ 25,752,690 $ 9,847,334 $ 3,422,310 $ 39,022,334 Series B Year Ended June 30, 2012 2013 2014 2015 2016 2017-2021 2022-2026 2027-2031 Principal $ 239,391 239,635 263,895 308,540 328,864 3,955,000 12,010,000 16,850,000 $ 34,195,325 Accreted Interest Component Interest $ 1,622,241 1,622,241 1,622,241 1,622,241 1,622,241 7,829,755 6,264,913 2,610,000 $ 24,815,873 -11- Total $ 65,609 80,365 106,105 146,460 181,137 $ $ 579,676 $ 1,927,241 1,942,241 1,992,241 2,077,241 2,132,242 11,784,755 18,274,913 19,460,000 59,590,874 DRAFT for Discussion Purposes Only HARTNELL COMMUNITY COLLEGE DISTRICT BOND PROJECTS FUND NOTES TO THE FINANCIAL STATEMENTS June 30, 2011 NOTE 4 – BONDED DEBT: (continued) Series C Year Ended June 30, 2012 2013 2014 2015 2016 2017-2021 2022-2026 2027-2031 2032-2034 Principal Accreted Interest Component Interest Total $ $ $ $ 1,195,731 5,101,547 6,300,610 $ 12,597,888 4,372,178 5,867,597 1,080,144 $ 11,319,919 2,154,269 7,888,453 7,619,390 $ 17,662,112 $ 7,722,178 18,857,597 15,000,144 41,579,919 Series D Year Ended June 30, 2012 2013 2014 2015 2016 2017-2021 2022-2026 2027-2031 2032-2036 2037-2041 2042-2046 2047-2050 Principal $ 483,460 1,868,094 15,876,647 12,229,492 10,802,583 7,144,803 $ 48,405,079 Accreted Interest Component Interest $ $ 7,901,250 11,287,500 6,178,900 $ 25,367,650 -12- 801,539 5,076,906 33,356,982 89,193,888 124,801,679 133,564,632 $ 386,795,626 Total $ 9,186,249 18,232,500 55,412,529 101,423,380 135,604,262 140,709,435 $ 460,568,355 DRAFT for Discussion Purposes Only HARTNELL COMMUNITY COLLEGE DISTRICT BOND PROJECTS FUND NOTES TO THE FINANCIAL STATEMENTS June 30, 2011 NOTE 4 – BONDED DEBT: (continued) The repayment of the debt related to the general obligations bonds is accounted for in the District’s Bond Interest and Redemption Fund which is part of the District’s basic financial statements. The recognition of premiums on bonds is recorded as long-term liabilities and the recognition of issuance costs is recognized as capitalized fees in the basic financial statements of the District. Amounts paid to the refunded debt escrow agent, in excess of outstanding debt at the time of payment, are recorded as deferred charges in the basic financial statements of the District. NOTE 5 – PURCHASE COMMITMENTS: As of June 30, 2011, the District was committed under various capital expenditure purchase agreements for bond projects totaling approximately $7,960,000. Projects will be funded through bond proceeds and state funds. NOTE 6 – EXCESS OF EXPENDITURES OVER APPROPRIATIONS: Excesses of expenditures over appropriations, by major object amounts, occurred in the Bond Projects Fund as follows: Salaries Benefits $ -13- 95 470 DRAFT for Discussion Purposes Only REPORT ON INTERNAL CONTROL OVER FINANCIAL REPORTING AND ON COMPLIANCE AND OTHER MATTERS BASED ON AN AUDIT OF FINANCIAL STATEMENTS PERFORMED IN ACCORDANCE WITH GOVERNMENT AUDITING STANDARDS The Board of Trustees The Measure H Citizens’ Oversight Committee Hartnell Community College District We have audited the Bond Projects Fund financial statements of the Hartnell Community College District (the District) as of and for the year ended June 30, 2011 and have issued our report thereon dated November 16, 2011. We conducted our audit in accordance with auditing standards generally accepted in the United States of America and the standards applicable to financial audits contained in Government Auditing Standards, issued by the Comptroller General of the United States. Internal Control Over Financial Reporting In planning and performing our audit, we considered the District’s internal control over the Bond Projects Fund financial reporting as a basis for designing our auditing procedures for the purpose of expressing our opinion on the financial statements, but not for the purpose of expressing an opinion on the effectiveness of the District’s internal control over financial reporting. Accordingly, we do not express an opinion on the effectiveness of the District’s internal control over financial reporting. A deficiency in internal control exists when the design or operation of a control does not allow management or employees, in the normal course of performing their assigned functions, to prevent or detect and correct misstatements on a timely basis. A material weakness is a deficiency or a combination of deficiencies in internal control such that there is a reasonable possibility that a material misstatement of the financial statements will not be prevented or detected and corrected on a timely basis. Our consideration of internal control over fund financial reporting was for the limited purpose described in the first paragraph of this section and was not designed to identify all deficiencies in internal control over financial reporting that might be deficiencies, significant deficiencies or material weaknesses. We did not identify any deficiencies in internal control over financial reporting that we consider to be material weaknesses, as defined above. -14- DRAFT for Discussion Purposes Only REPORT ON INTERNAL CONTROL OVER FINANCIAL REPORTING AND ON COMPLIANCE AND OTHER MATTERS BASED ON AN AUDIT OF FINANCIAL STATEMENTS PERFORMED IN ACCORDANCE WITH GOVERNMENT AUDITING STANDARDS Compliance and Other Matters As part of obtaining reasonable assurance about whether the District’s Bond Projects Fund financial statements are free of material misstatement, we performed tests of its compliance with certain provisions of laws, regulations, contracts and grant agreements, noncompliance with which could have a direct and material effect on the determination of financial statement amounts. However, providing an opinion on compliance with those provisions was not an objective of our audit and, accordingly, we do not express such an opinion. The results of our tests disclosed no instances of non-compliance or other matters that are required to be reported under Government Auditing Standards. This report is intended solely for the information and use of management, the Board of Trustees, and the Citizens’ Oversight Committee and is not intended to be and should not be used by anyone other than these specified parties. VICENTI, LLOYD & STUTZMAN LLP November 16, 2011 -15- DRAFT for Discussion Purposes Only HARTNELL COMMUNITY COLLEGE DISTRICT BOND PROJECTS FUND SCHEDULE OF FINDINGS AND RESPONSES June 30, 2011 There were no findings related to the financial audit of the Bond Projects Fund for fiscal year ended June 30, 2011. In addition, there were no findings related to the financial audit of the Bond Projects Fund for fiscal year ended June 30, 2010. -16- DRAFT for Discussion Purposes Only HARTNELL COMMUNITY COLLEGE DISTRICT PROPOSITION 39 GENERAL OBLIGATION BONDS BOND PROJECTS FUND MEASURE H PERFORMANCE AUDIT Fiscal Year Ending June 30, 2011 -1- DRAFT for Discussion Purposes Only HARTNELL COMMUNITY COLLEGE DISTRICT PROPOSITION 39 GENERAL OBLIGATION BONDS BOND PROJECTS FUND MEASURE H PERFORMANCE AUDIT June 30, 2011 CONTENTS Page Independent Auditor’s Report.................................................................................... 1 Background Information............................................................................................. 2 Objectives...................................................................................................................... 3 Scope of the Audit ........................................................................................................ 3 Procedures Performed ................................................................................................. 4 Conclusion .................................................................................................................... 5 -2- DRAFT for Discussion Purposes Only INDEPENDENT AUDITOR’S REPORT The Board of Trustees The Measure H Citizens’ Oversight Committee Hartnell Community College District We have conducted a performance audit of the Hartnell Community College District (the “District”), Measure H General Obligation Bond funds for the year ended June 30, 2011. We conducted our performance audit in accordance with Government Auditing Standards issued by the Comptroller General of the United States. Those standards require that we plan and perform the audit to obtain sufficient, appropriate evidence to provide a reasonable basis for our conclusion based on our audit objectives. Our audit was limited to the objectives listed on page 3 of this report which includes determining the District’s compliance with the performance requirements for the Proposition 39 Measure H General Obligation Bonds under the applicable provisions of Section 1(b)(3)(C) of Article XIIIA of the California Constitution and Proposition 39 as they apply to the Bonds and the net proceeds thereof. Management is responsible for the District’s compliance with those requirements. Solely to assist us in planning and performing our performance audit, we obtained an understanding of the internal control of the District to determine if internal controls were adequate to help ensure the District’s compliance with the requirements of Proposition 39, as specified by Section 1(b)(3)(C) of Article XIIIA of the California Constitution. Accordingly, we do not express any assurance on the internal control. The results of our tests indicated that, in all significant respects, the District expended Measure H General Obligation Bond funds for the year ended June 30, 2011 only for the specific projects developed by the District’s Board of Trustees and approved by the voters, in accordance with the requirements of Proposition 39, as specified by Section 1(b)(3)(C) of Article XIIIA of the California Constitution. VICENTI, LLOYD & STUTZMAN LLP November 16, 2011 -1- DRAFT for Discussion Purposes Only HARTNELL COMMUNITY COLLEGE DISTRICT PROPOSITION 39 GENERAL OBLIGATION BONDS MEASURE H PERFORMANCE AUDIT June 30, 2011 BACKGROUND INFORMATION In November, 2000, the voters of the State of California approved Proposition 39 authorizing the issuance of general obligation bonds by California public school district’s and community colleges under certain circumstances and subject to certain conditions. On November 5, 2002, a general obligation bond proposition (Measure H) of the Hartnell Community College District was approved by the voters of the District. Measure H authorized the District to issue up to $131,000,000 of general obligation bonds to finance various capital projects, and related costs, as specified in the bond measure provisions of Measure H. Pursuant to the requirements of Proposition 39, and related State legislation, the Board of Trustees of the District established a Citizens’ Oversight Committee and appointed its members. The principal purpose of the Citizens’ Oversight Committee, as set out in State law, is to inform the public as to the expenditures of the proceeds of the bonds issued pursuant to the Measure H bond authorization. The Citizens’ Oversight Committee is required to issue at least one report annually as to its activities and findings. Section 1(b)(3)(C) of Article XIIIA of the California Constitution requires the District to conduct an annual independent performance audit to ensure that the proceeds of the bonds deposited into the Bond Projects Fund have been expended only for the authorized bond projects. -2- DRAFT for Discussion Purposes Only HARTNELL COMMUNITY COLLEGE DISTRICT PROPOSITION 39 GENERAL OBLIGATION BONDS MEASURE H PERFORMANCE AUDIT June 30, 2011 OBJECTIVES The objectives of our performance audit were to: • Document the expenditures charged to the Hartnell Community College District Bond Projects Fund established for the bonds and the net bond proceeds deposited into the Bond Projects Fund. • Determine whether expenditures charged to the Bond Projects Fund have been made in accordance with the bond project list approved by the voters through the approval of Measure H in November 2002. • Note any incongruities, system weaknesses, or non-compliance with specific Education Code sections related to bond oversight and provide recommendations for improvement. • Provide the District Board of Trustees and the Citizens’ Oversight Committee with a performance audit as required under the requirements of the California Constitution and Proposition 39. SCOPE OF THE AUDIT The scope of our performance audit covered the period of July 1, 2010 to June 30, 2011. The expenditures tested included all object and project codes associated with the bond projects. The propriety of expenditures for capital projects and maintenance projects funded through other State or local funding sources, other than the proceeds of the bonds, were not included within the scope of our audit. Expenditures incurred subsequent to June 30, 2011 were not reviewed or included within the scope of our audit or in this report. -3- DRAFT for Discussion Purposes Only HARTNELL COMMUNITY COLLEGE DISTRICT PROPOSITION 39 GENERAL OBLIGATION BONDS MEASURE H PERFORMANCE AUDIT June 30, 2011 PROCEDURES PERFORMED We obtained the general ledger and the project expenditure reports prepared by the District for the fiscal year ended June 30, 2011, for the Bond Projects Fund. Within the fiscal year audited, we obtained the actual invoices and other supporting documentation for expenditures to ensure compliance with the requirements of Proposition 39 and Measure H as to the approved bond projects list. We performed the following procedures: • We reviewed the projects listed to be funded with general obligation bond proceeds as set out in the Measure H election documents. • We selected a sample of expenditures for the fiscal year ended June 30, 2011, and reviewed supporting documentation to ensure that such funds were properly expended on the authorized bond projects. Our sample included 35 transactions totaling $11,647,631. This represents 70% of the total expenditures of $16,756,111. • We verified that funds from the Bond Projects Fund were generally expended for the construction, reconstruction, acquisition, furnishing and equipping of District facilities constituting the authorized bond projects. In addition, we verified that funds held in the Bond Projects Fund were used for salaries of administrators only to the extent they perform administrative oversight work on construction projects as allowable per Opinion 04-110 issued on November 9, 2004 by the State of California Attorney General. -4- DRAFT for Discussion Purposes Only HARTNELL COMMUNITY COLLEGE DISTRICT PROPOSITION 39 GENERAL OBLIGATION BONDS MEASURE H PERFORMANCE AUDIT June 30, 2011 CONCLUSION The results of our tests indicated that, in all significant respects, the District has properly accounted for the expenditures of the funds held in the Bond Projects Fund and that such expenditures were made on authorized bond projects. Further, it was noted that the funds held in the Bond Projects Fund, and expended by the District, were used for salaries of administrators only to the extent they perform administrative oversight work on construction projects as allowable per Opinion 04-110 issued on November 9, 2004 by the State of California Attorney General. -5- ANNUAL ORGANIZATION ANNUAL ORGANIZATIONAL MEETING OF TRUSTEES: Title November 29, 2011 Number Annual Election of Officers for 2012 III. B. Area Status Superintendent/President Action Recommendation It is recommended that the Board of Trustees conducts the annual election of officers. Summary In accordance with Education Code Section 72000, the Hartnell College District Board of Trustees will conduct its annual election of officers for 2011 as follows: Board President Board Vice President In accordance with Board Policy 1010, Annual Organization Meeting and Officers of the Board, the Hartnell College Board of Trustees will appoint as follows: Superintendent/President as Secretary of Board ANNUAL ORGANIZATIONAL MEETING OF TRUSTEES: Title November 29, 2011 Number Annual Appointment of Representatives to Standing Organizations III. C. Area Status Superintendent/President Action Recommendation It is recommended that the Board of Trustees appoint its representatives to standing organizations for calendar year 2012. Summary Each year, the Hartnell College District Board of Trustees appoints its representatives to: Sunrise House Executive Board Monterey County School Boards Association ANNUAL ORGANIZATIONAL MEETING OF TRUSTEES: Title Designation of 2012 Board Meeting Dates and Times Number Area Superintendent/President Status Action November 29, 2011 III. D Recommendation It is recommended that the Board of Trustees adopts the dates and times for regular meetings and for board development for calendar year 2012. Summary Education Code Section 72000 requires that the governing board of each community college district hold regular monthly meetings and Accreditation Standard IV. B.1.f. requires the governing board have an on-going program for board development. The dates of the Board’s regular meetings are recommended the first Tuesday of each month and the development meetings on the third Tuesday of each month, except where noted. The Board will open its regular business meeting at 5:00 p.m., closed session to follow immediately after, if needed. The Board’s development meetings will open at 5:00 p.m. The dates for both meetings are as presented below: 2012 January 24 ...... Regular Board Meeting February 7 ...... Regular Board Meeting February 21 .... Board Development March 6 .......... Regular Board Meeting March 20 ........ Board Development April 10 .......... Regular Board Meeting April 24 .......... Board Development May 1 ............. Regular Board Meeting May 15 ........... Board Development June 5 ............. Regular Board Meeting June 19 ........... Board Development July 10 ........... Regular Board Meeting July 17 ........... Board Development (TBD) August 21 ....... Regular Board Meeting August 28 ....... Board Development September 4 ... Regular Board Meeting September 18 . Board Development October 2 ....... Regular Board Meeting October 16 ..... Board Development November 6 ... Regular Board Meeting November 20 . Board Development December 4 .... Annual Organizational Mtg December 18 .. Board Development 2013 January 22 Regular Board Meeting ANNUAL ORGANIZATIONAL MEETING OF TRUSTEES: Title Adopt Resolution 11:13, Authorizing Signature of Superintendent/President as Secretary of the Board of Trustees Number Area Status Superintendent/President Action (Roll Call) November 29, 2011 III. E. Recommendation It is recommended that the Board of Trustees adopts Resolution 11:13 authorizing the signature on appropriate documents of Dr. Phoebe Helm, Superintendent/President, as Board of Trustees Secretary. Summary Board Policy 1010, Annual Organization Meeting and Officers of the Board, states that the Superintendent/President will serve as Secretary of the Governing Board as such, the Board must adopt a resolution authorizing Dr. Phoebe Helm, Superintendent/President, as Board of Trustee Secretary. HARTNELL COMMUNITY COLLEGE DISTRICT Resolution 11:13 Authorizing the Signature on Appropriate Documents Superintendent/President, as Secretary of the Board of Trustees WHEREAS, Dr. Phoebe Helm has been duly appointed to perform the duties of Secretary of the Board of Trustees (as set forth in the Education Code) of Hartnell College District, NOW, THEREFORE, BE IT RESOLVED, that Dr. Phoebe Helm is hereby authorized to sign all appropriate documents requiring the signature of the Board of Trustees’ Secretary. PASSED AND ADOPTED by the Hartnell Community College District Board of Trustees on November 29, 2011 by the following vote: AYES: NOES: ABSENT: Board President Dr. Phoebe K. Helm Secretary of the Board of Trustees CONSENT AGENDA ITEM FOR BOARD MEETING OF: Title November 29, 2011 Number V. A. Minutes Area Status Superintendent/President Prepared by: Dr. Phoebe K. Helm Consent Recommendation It is recommended that the Board of Trustees reviews, revises as appropriate, and adopts the minutes as presented. Summary Minutes of the Board of Trustees for are submitted for review and approval as follows: Regular Meeting – November 1, 2011 Special Meeting – November 15, 2011 Unadopted HARTNELL COMMUNITY COLLEGE DISTRICT MINUTES Regular Meeting of the Board of Trustees CALL 208, Training Room 411 Central Avenue Salinas, California November 1, 2011 OPEN SESSION Meeting called to order at 5:05 p.m. by Trustee Padilla-Chavez. PLEDGE OF ALLEGIANCE Trustee Gonzalez-Castro led the Pledge of Allegiance. ROLL CALL Erica Padilla Chavez, President Candi DePauw Patricia Donohue Bill Freeman (arrived at 5:20 p.m.) Elia Gonzalez-Castro Ray Montemayor Juan M. Gutierrez, Student Trustee – (advisory vote per Board Policy 1030) Dr. Phoebe K. Helm, Superintendent/President ABSENT Kevin Healy, Vice President OPENED PUBLIC HEARING ENERGY Trustee Padilla-Chavez announced that the Board would conduct a Public Hearing on Redistricting/Trustee Area Maps and the Board opened the public hearing at 5:07 p.m. PRESENTATION BY DEMOGRAPHER Demographers Dr. Shelley Lapkoff presented an overview of the redistricting process and the work of the Redistricting Advisory Committee appointed by the Board of Trustees. The presentation addressed • General Redistricting Principles • Redistricting Legal Requirements, Criteria and Hartnell Trustee Guidelines • Current areas needing adjustments • Plan developed and submitted by the Committee for legal review (Plan B5), which was developed by the demographers based on the opinion of the legal consultant (at least 55% Hispanic Citizen Voting Age Population in each Trustee Area) – Appendix A During Dr. Lapkoff’s presentation, the Board asked for clarification and asked several questions, and made comments specific to the process and maps. Dr. Lapkoff explained the next step is to submit the plan to the Department of Justice (DOJ) for the pre-clearance process. Trustee Padilla-Chavez reminded HCCD – REGULAR MEETING OF THE BOARD OF TRUSTEES – NOVEMBER 1, 2011 Page 1 of 8 the Board that the college has secured an attorney from a firm that has many years of experience with the pre-clearance process, who has worked closely and frequently with the DOJ. The Board held a study session on October 19, 2011 to receive an update on the work of the Redistricting Advisory Committee and to review and discuss the recommended plan, B-4. On October 24, the Redistricting Advisory Committee met and revised Plan B-4, resulting in Plan B-5. PUBLIC COMMENTS ON REDISTRICTING David Serena, who introduced himself as the President of the Coalition for Peace, Justice, and Fairness, and Member of the Monterey County Office of Education Board, and Jose Ibarra, community member, urged the Board to not take action this evening – to wait until after the November elections to allow potential new board members input – similar to what the Monterey County Office of Education Board has done. CLOSED PUBLIC HEARING Trustee Padilla-Chavez closed the public hearing at 6:01 p.m. and opened the discussion to the Board. BOARD’S COMMENTS ON REDISTRICTING Trustee Montemayor stated that he believes East Salinas needs more than one trustee representing the Alisal area in order to ensure critical needs are being met – that more than one trustee representing the Alisal area is best. Student Trustee Gutierrez stated that, this November, he would be voting for a trustee that will no longer represent his area and that more effort should have been made to keep the boundaries similar to what they are now. Trustee DePauw stated that, while she appreciates concerns expressed this evening, the Board identified a process, developed guiding principles, and each individual Trustee designated two representatives from their area to serve on the Advisory Committee. The committee did their work as assigned and she supports that work. Trustee Freeman stated that he cannot support the plans because he believes the process is being rushed, that there needs to be more public input and that the Board has until February/March to finalize this process. Also, since members of the Board may change, the approval should wait until after the elections. Trustee Gonzalez-Castro stated that she agrees with Trustee DePauw – a process was used. Further, she believes that the Trustees of Hartnell College all work toward improving the whole district, not just individual Trustee areas; that the process is not being rushed because of elections. The work of the Committee should be supported. Trustee Donohue thanked the Advisory Committee for their work. She stated that the Board represents the entire district and not just one trustee area. She believes that each Trustee unilaterally supports all of the good work that is being done in the Alisal area and believes each wishes to continue this good work, and she supports taking action this evening. Trustee Padilla-Chavez thanked those who addressed the Board this evening. HCCD – REGULAR MEETING OF THE BOARD OF TRUSTEES – NOVEMBER 1, 2011 Page 2 of 8 She stated that she appreciates all comments because of what she has learned by serving on a redistricting committee for the County of Monterey. Further, Trustee Padilla-Chavez stated that this process has been underway since March 2011, that there is a redistricting website available in English/Spanish; that the advisory committee met multiple times; that each trustee identified two individuals from their respective areas; that the maps fare well – the Latino population is represented well. Further, she stated that redistricting is happening everywhere and that she supports approving the maps and moving forward with the pre-clearance process in order to allow time to address issues, if any. In closing, she stated she is at peace knowing that our legal advisors are experts in the voting rights act and thanked the committee for their work. ACTION OF THE BOARD ON REDISTRICTING On a motion by Trustee DePauw, seconded by Trustee Gonzalez-Castro, and by roll-call vote of 4-2 (Nay: Freeman, Montemayor) and by advisory vote of Nay (Student Trustee Gutierrez), the Board moved to adopt Plan B-5 as recommended by the Redistricting Advisory Committee. PUBLIC COMMENTS ON THE AGENDA AND WITHIN THE JURISDICTION OF THE BOARD Francisco Estrada, Student, stated he believes he continues to be harassed by administration, that he asked for support at last month’s Board meeting and has received none. He asked both Dr. Helm and Trustee Padilla-Chavez to step in or he would go to the media – similar to what he has done in the past. Trustee Freeman called for a point of order and began to address the comments made by Francisco Estrada. Trustee Padilla-Chavez asked that the public be allowed to continue with their comments, but Trustee Freeman continued to express that he is tired of the students being harassed and that it needs to stop – and that when he is re-elected he will stop it - that the school belongs to the students and that they are good people. Jose Ibarra, member of the pubic, stated that there were too many political activities or agendas at Hartnell. STUDENT SENATE REPORT Francisco Estrada, President of the Student Senate asked to give his report early so that he could attend his Tuesday evening class. He reported that the Senate hosted their annual Spooktacular event last evening and that it went well and that that the students have a new Student Life Coordinator, Margaret Ortega. CONSENT AGENDA Trustee Donohue made a motion, seconded by Trustee Gonzalez-Castro to approve and/or ratify the consent items A through I. Trustee Montemayor asked for clarification on the Controller appointment because there was no name inserted. Both Dr. Helm and Terri Pyer explained that when meeting materials were mailed, they had not completed the interviews and thus, had no name to insert, but had hoped one would be available this evening. In addition, Trustee Montemayor asked if this appointment was an internal promotion or candidates outside of the college. Ms. Pyer responded that the top two candidates are from outside Hartnell. The motion was amended to exclude the Controller appointment. HCCD – REGULAR MEETING OF THE BOARD OF TRUSTEES – NOVEMBER 1, 2011 Page 3 of 8 On a motion by Trustee Donohue, seconded by Trustee Gonzalez-Castro, by vote of 6-0 and by advisory vote of Aye (Student Trustee Gutierrez), the Board moved to approve and/or ratified the consent items A through I, excluding the Controller position as stated in Personnel Action. The appointment of the Controller will be brought back to a later meeting. A. MINUTES Adopted minutes of regular meeting of October 4, 2011 and Study Session of October 19, 2011 as submitted. B. DISBURSEMENTS Approve disbursements from any or all of the following funds: general; debt service; bookstore; child development; capital outlay projects; scheduled maintenance; property acquisition; bond projects; cafeteria; self-insurance; retirees health benefits; associated student body; scholarship, loan, and trust; and intercollegiate athletics. C. QUARTERLY FINANCIAL STATUS REPORT Reviewed and accepted the Quarterly Financial Status Report (CCFS-311Q) for the quarter ended September 30, 2011. D. NON CASH DONATIONS Accepted non-cash donations from the Hartnell College Foundation. E. AWARD BID – RANGER PIPELINE INFRASTRUCTURE PROJECT, PHASE II Awarded bid and authorized the administration to enter into a contract with Ranger Pipeline, Inc., lowest responsive bidder, for the Main Campus Infrastructure Project, Phase II. The project consists of the tie in of water, gas and data that were instated as part of Phase I in 2004. In addition, isolator shutoff valves, which are being tied in as part of this project, will be installed at all the buildings. F. AGREEMENT – CLINICAL EXPERIENCE SALINAS VALLEY MEMORIAL Ratified an affiliation agreement with Salinas Valley Healthcare Systems for clinical experience for students enrolled in the nursing program. The agreement is effective October 1, 2011 with a written termination clause of 90 days notice by either party. G. FOSTER AND Accepted funding from the Chancellor’s Office to implement the Foster and KINSHIP CARE Kinship Care Program for academic year 2011-2012. The program allocation, PROGRAM FUNDING effective July 1, 2011 through June 30, 2012 is $194,365. 2011-2012 H. GRANT APPLICATION – CTE TRANSITIONS Ratified the California Community Chancellor’s Office –CTE Transitions grant, accept funds if awarded, and authorize the administration to enter into agreements to implement the grant. CTE Transitions grant aims to provide support for the coordination of work-based learning and similar experiences, including internships. The grant amount is $46,970 for fiscal year 2011-2012. HCCD – REGULAR MEETING OF THE BOARD OF TRUSTEES – NOVEMBER 1, 2011 Page 4 of 8 I. PERSONNEL ACTION Ratified and or approved personnel actions, excluding the controller appointment. (Appendix B) ACTION ITEMS BUDGET REVISIONS On a motion by Trustee Donohue, seconded by Trustee Gonzalez-Castro, by vote of 6-0 and by advisory vote of Aye (Student Trustee Gutierrez), the Board moved to approve the budget revisions numbered 9440 to 9487. SECOND READING – BOARD POLICIES Trustee Montemayor asked for clarification on the CEO Selection policy. Dr. Helm explained the statements removed from the policy are more appropriately placed in the administrative procedure of that policy. At the recommendation of Trustee Padilla-Chavez, the Board reviewed, discussed, and voted on the policies individually. Approved to renumber, rename, revise BP 1100, Meeting Attendance revised to BP, 2725, Board Member Compensation MSC: Donohue/Gonzalez-Castro Vote: 5-1 (Nay: Montemayor) – Advisory Aye: Student Trustee Gutierrez Approved to delete BP 1106, Life Insurance Benefits for the Members of the Governing Board MSC: DePauw, Montemayor Vote: 6-0; Advisory Aye (Student Trustee Gutierrez) Approved to not delete and maintain policy BP 1110, Health Benefits for Members of the Governing Board MSC: Montemayor, DePauw Vote: 4-2 (Nay: Donohue, Padilla-Chavez) – Advisory Aye (Student Trustee Gutierrez) Approved to delete and replace BP 1440, New Member Orientation delete and replace with BP 2740 Board Education MSC: Gonzalez-Castro, DePauw Vote: 6-0; Advisory Aye (Student Trustee Gutierrez) Approved new policy BP 2745 Board Self Evaluation MSC: Gonzalez-Castro, DePauw Vote: 6-0; Advisory Aye (Student Trustee Gutierrez) Approved new policy BP 3200 Accreditation MSC: Gonzalez-Castro, Donohue Vote: 6-0; Advisory Aye (Student Trustee Gutierrez) HCCD – REGULAR MEETING OF THE BOARD OF TRUSTEES – NOVEMBER 1, 2011 Page 5 of 8 Approved new policy BP 2200, Board Duties and Responsibilities MSC: Montemayor, Donohue Vote: 6-0; Advisory Aye (Student Trustee Gutierrez) Approved new policy BP 2431, CEO Selection MSC: Gonzalez-Castro, DePauw Vote: 6-0; Advisory Aye (Student Trustee Gutierrez) Approved new policy BP 2435 Evaluation of CEO MSC: Gonzalez-Castro, Donohue Vote: 6-0; Advisory Aye (Student Trustee Gutierrez) Failed motion to delete and replace BP 1105, Mileage Allowance to BP 2735 Board Member Travel MS: Donohue, Gonzalez-Castro Vote: 3 Aye: Donohue, Gonzalez-Castro, Padilla-Chavez Nay: DePauw, Freeman, Montemayor Advisory Nay: Student Trustee Gutierrez INFORMATION ITEMS CONSTRUCTION PROJECTS – UPDATE The Board received an updated, written report on the current construction projects. The report is on Page 118 of the November 1, 2011 Meeting Agenda Packet housed at: http://www.hartnell.edu/board/packets/November_1_2011_Agenda_Packet.pdf. Trustee Padilla-Chavez asked Joseph Reyes when the Alisal Turnaround would be complete. Joseph responded the project is expected to be completed by midNovember. Trustee Padilla-Chavez thanked everyone for their work on this project and stated that transportation to the Alisal is a wonderful service to our community and students and again, commended students leaders for supporting the Free Fare Zone, which reduces student transportation costs by 50%. FINANCIAL STATEMENTS The Board received the financial statements for the periods ending June 30, 2011 and September 30, 2011. SENATE REPORTS Academic Senate: Nancy Schur reported that the Senate continues to meet regularly; that the Senate adopted its goals and plans to look at the evaluation process, textbook selections, distance education, and that several appointments have been made to committees. Classified Senate: None were present. Student Senate: Francisco Estrada reported on Senate business earlier in the meeting (See Page 3 Public Comments) HCCD – REGULAR MEETING OF THE BOARD OF TRUSTEES – NOVEMBER 1, 2011 Page 6 of 8 PRESIDENT’S REPORT Dr. Helm’s reported on: 1. Auto Collision – Dr. Zahi Atallah, Dean for Applied Technology, has interviewed the auto collision community and the Board received his written report. Industry representatives are uniform in their preference to hire factory trained journeymen if and when the economy supports hiring. Preparatory skills were identified with in existing general education and auto technology courses as being helpful. 2. Counseling – Counseling hours available to students have greatly expanded – actually doubled - this year. Nine full-time counselors provide 228 counseling hours per week (up from 195 last year) and part-time counselors, many of whom are high school counselors during the day, provide an additional 374 hours per week. As a result, the wait time for a student has been reduced to zero in many cases and at busier times to less than 1.5 days for a “non-crisis” event. The Board received a more detail report on this matter. 3. Salary Comparisons – The Board requested and received documents on salary comparisons for faculty that included Cabrillo, Cuesta, Gavilan, MPC, and Hartnell Colleges. These comparisons are computed annually for the CCCCO by the Santa Rosa System. 4. Dr. Helm reported that she has been attending a global transformation conference in Monterey since Saturday and on Thursday she, along with Mayor Donohue, will host a smaller group of foreign dignitaries at the Alisal campus prior to a tour of Agriculture processing, distribution and growing sites in the Valley. 5. Dr. Helm reported that she authorized travel for Student Trustee Gutierrez to attend a Statewide Student Trustee Meeting in San Jose on November 4th and plans to bring the item to the Board for ratification at their next regular meeting. 6. Dr. Helm thanked Lucy Serrano for her serving as the assistant to an accrediting site visit team BOARD REPORTS Trustee Donohue reported she just returned from England where talked about the college’s science programs with other women and she thanked the Redistricting Committee for all of their important work. Student Trustee Gutierrez reported that he heard disabled students find it difficult to get to the second floor of Visual Arts Facility and perhaps funds from Measure H could help support installing an evaluator. Also, he stated that he has witnessed that the Student Senate use their constitution when convenient and that it is not appropriate for them to do so. And, he reported that tomorrow is Transfer Day where several universities will be on campus. Trustee Montemayor reported that the Sunrise House is moving to a less expensive location and plans to report more at the next meeting. Trustee DePauw reported that Farm Day was successful and another one is planned in February 2012. HCCD – REGULAR MEETING OF THE BOARD OF TRUSTEES – NOVEMBER 1, 2011 Page 7 of 8 Trustee Freeman reported he attended the Hartnell football game where they won; that he attended a volleyball game where he purchased 13 cupcakes and ate most of them; that he supports the college purchasing MST bus passes for students who don’t have cars; and he said he’s served as a board member for the last eight years and with the help of North Salinas he hopes to serve another four years. Trustee Gonzalez-Castro thanked the political science club for inviting her to participate in the Candidate’s forum – it was an amazing experience – that her last four years have been great. Trustee Gonzalez-Castro thanked everyone for the opportunity to serve over the past four years and she hopes to continue her dream to serve the college and the community because this is where her heart is. Trustee Padilla-Chavez asked the Board to complete a self-assessment, as required by accreditation, and distributed an evaluation form for each to complete and submit to Lucy by November 10th. A special meeting is scheduled November 15 to discuss the results of that evaluation. She asked for 100% participation. She thanked the Redistricting Committee for their work. CLOSED SESSION The Board of Trustees and Dr. Phoebe K. Helm, Superintendent/President, Terri Pyer, Associate Vice President, Human Resources, and Alison Neufeld, Legal Counsel, Liebert, Cassidy, Whitmore, moved to Closed Session at 7:26 p.m. to consider legal, personnel, labor and/or contract matters authorized for Closed Session per Government Code Sections 3549.1, 54956.9, 54957, and/or 54957.6. 1. Conference with Legal Counsel - Anticipated Litigation Significant exposure to litigation pursuant to Section 54956.9(b): One potential case with regards to a publisher. RECONVENE PUBLIC SESSION AND REPORT OUT FROM CLOSED SESSION Trustee Padilla-Chavez reconvened the public session at 7:58 and reported out the following: ANNOUNCEMENTS 1. 2. 3. 4. ADJOURNMENT On a motion by Trustee Montemayor, seconded by Trustee DePauw, and unanimously carried, the Board moved to adjourn the meeting at 8:00 p.m. On a motion by Trustee Donohue, seconded by Trustee Padilla-Chavez, and by vote of 4 Ayes, 1 No (Freeman); 1 Abstained (Montemayor) the Board moved to reject Claim#456375. Special Meeting – November 15, 2011, 5:45 p.m., CALL 208 Annual Organizational Meeting – November 29, 5 p.m., CALL 208 Study Session – Holiday Social – December 6, 2011, 5 p.m., CALL 208 Study Session – December 13, 2011, 5 p.m., CALL 208 Erica Padilla-Chavez Board of Trustees President Phoebe K. Helm Board Secretary HCCD – REGULAR MEETING OF THE BOARD OF TRUSTEES – NOVEMBER 1, 2011 Page 8 of 8 Lapkoff & Gobalet Demographic Research, Inc. www.Demographers.com 22361 Rolling Hills Road, Saratoga, CA 95070-6560 2120 6th Street #9, Berkeley, CA 94710-2253 Plan B-5 (408) 725-8164 (510) 540-6424 Fax (408) 725-1479 Fax (510) 540-6425 Appendix A October 26, 2011 On October 24, Hartnell’s Redistricting Committee met to review Plan B-4, which had been presented to the Board at its October 19 study session. The Committee members considered four issues: whether Plan B-4 still reflected their recommendation; whether they were concerned about the change in the numbering of Trustee Areas 2 and 4; whether Alisal should be in a single trustee area; and whether the Plan’s deviation could be reduced. The Committee members unanimously agreed that Plan B-4 still reflected their recommendations. While no vote was taken, the discussion indicated that members were not particularly concerned that the numbering had changed; they also thought it best that Alisal should be in a single trustee area. The Committee then worked to reduce the B-4 Plan’s deviation. Several small changes were made to reduce the population of Trustee Area 1, and thereby reduce the plan’s deviation from 9.0 to 7.6 percent, while still maintaining at least a 55 percent Hispanic CVAP in the Salinas trustee areas. The changes were agreed upon, and the plan was renamed B-5. This report discusses Plan B-5, first describing the changes made in Plan B-4, and then explaining why the Committee favors this plan. Several maps of Plan B-5 are provided at the end of this report. Changes made between Plan B-4 and Plan B-5 In Plan B-4, Trustee Area 1 is the most populous, with a deviation of 4.3 percent, and Trustee Area 6 is the least populous, with a deviation of minus 4.6 percent. To reduce the plan’s deviation, we could decrease the population of Trustee Area 1 and/or increase the population in Trustee Area 6. The Committee considered increasing the population of Trustee Area 6, but rejected changes because the boundaries of Trustee Area 6 in Plan B-4 are very logical, following either city or school district boundaries. Also, Trustee Area 6 is likely to see population growth during the decade, so that it is advantageous for it to be one of the lower populated trustee areas, initially. However, the Committee made suggestions for reducing the population of Trustee Area 1 that led to the following changes: In west Salinas, a total of 50 people were moved from Trustee Area 1 to Trustee Area 4, so that Trustee Area 1 follows the city limits. In central Salinas, territory was shifted from Trustee Area 1 to Trustee Area 3, so that the boundary between Trustee Areas 1 and 3 runs along Rossi Road. As a result of these changes, Trustee Area 3 becomes the most populous, with a 3.0 percent deviation. Trustee Area 6 remains the least populous, with a deviation of 4.6 percent. This causes the overall plan deviation to be 7.7 percent (due to rounding). Note that Trustee Areas 2, 5, 6, and 7 are the same as in Plan B-4. 1 Reasons that the Committee Recommends Plan B-5 One of the central features of Plan B-5 (and B-4 and B-3) is the configuration of Trustee Area 5. Trustee Area 5 is a consolidated Alisal trustee area. The Committee felt it was important that Alisal have its own trustee area. Alisal is of great concern, especially educationally, and it is believed that a Hartnell trustee whose exclusive focus was East Salinas would best represent this area. In particular, the Committee noted that: • Alisal is a strong and important community of interest in the Hartnell Community College District; • Alisal has special needs, especially educational ones; • California Department of Education data show that Alisal High School has one of the lowest graduation rates in the state; • Many potential Hartnell students from this area would be the first in their families to attend college; • ESL classes are particularly important in this area; • Hartnell College has opened an Advanced Technology Center in the Alisal, as a specialized campus to serve the entire District; • A trustee from the area could help ensure that there were programs that would help students enroll at Hartnell; • A Hartnell trustee from the East Alisal area might help to increase college attendance and graduation rates in this community. Other Features of Plan B-5 Approved by the Committee Committee members liked the extensive use of city limits and school district boundaries to demarcate the proposed trustee areas. Committee members liked the compact nature of the new Salinas trustee areas. Committee members studied the piece of land west of Natividad in Trustee Area 2 which gives an awkward shape to the trustee areas. This shape is necessary in order to achieve a 55 percent Hispanic CVAP in Area 2. Committee members examined this matter in detail and came to the same conclusion as the demographer. The fact that school district boundaries were used in the boundary between Areas 2 and 4 was applauded. The Committee members noted that all of Creekbridge and Williams Ranch were in one trustee area. 2 Maps of Plan B-5 Four maps are provided for Plan B-5: An overview of the entire District, with the current trustee areas shaded in the background Salinas area detail, with the current trustee areas shaded in the background Salinas area detail, with the K-12 school districts shaded in the background Salinas area detail, with cities/”Census designated places” shaded in the background. The latter two maps show clearly how many of the boundaries follow either school district or city boundaries. 3 Plan B-5 Population Balance Trustee Area 1 2 3 4 5 6 7 Total Population 38,376 36,618 38,620 36,741 38,360 35,751 37,993 262,459 Percent Deviation Deviation 882 2.4% -876 -2.3% 1,126 3.0% -753 -2.0% 866 2.3% -1,743 -4.6% 499 1.3% 7.7% Most populous trustee area Least populous trustee area Difference Ideal Trustee Area Size Plan's Percent Deviation Percent of Trustee Area's Population that was Hispanic/Latino/Spanish Surname Total Population 57% 77% 37% 72% 93% 86% 80% 71% Voting Age Estimated Citizen Population Voting Age Population Registered Voters Nov Voters (VAP) (CVAP) voters 2010 2010 Nov 2008 51% 38% 36% 29% 32% 73% 59% 61% 55% 57% 32% 26% 21% 16% 18% 66% 55% 52% 46% 49% 91% 76% 79% 74% 76% 83% 70% 70% 66% 67% 76% 57% 58% 57% 51% 66% 50% 48% 41% 42% 38,620 35,751 2,869 37,494 7.7% 4 5 6 7 8 APPENDIX B THE FOLLOWING PERSONNEL ACTIONS WERE APPROVED AND/OR RATIFIED AT THE NOVEMBER 1, 2011 REGULAR MEETING OF THE HARTNELL BOARD OF TRUSTEES: I. Retirements, resignations, releases, and leave requests A. Ratify resignation of regular personnel: 1. Andrea Curtis, Division Administrative Assistant (#CC-165), effective October 31, 2011. B. Ratify approved requests for partial leaves of absence: 1. Maria Teutsch, English Instructor, up to 40 percent of load for one and a half years, unpaid leave of absence for professional development, beginning spring semester, January 2012. This is in accordance with Article 7 Section K of the Hartnell College Faculty Association (HCFA) contract. 2. Angelita Lopez, Secretary (#CC-175), Advanced Technology/Community, unpaid leave of absence for “Baby Bonding,” from December 1, 2011 to January 11, 2012, according to the CFRA and FMLA rights. II. Classification and Compensation 1. Approve the reclassification of Director of Facilities, Operations and Asset Management (#A-38) from Management Level VII to Management Level VI, effective October 1, 2011. Reclassification addresses expansion of oversight responsibilities to include food services. III. Appointments A. Ratify appointments to management positions: 1. Controller (#A-12), management range V, effective November 2011. 2. Kristi Lee Andreen, Coordinator of Allied Health and Director of the Respiratory Care Practitioner Program (#A-63), Nursing Department, Range XI, Step E, effective October 17, 2011. This is a grant-funded, half-time management position during the first year, and starting in fall semester 2012, half-time teaching duties will be added. B. Ratify appointment to regular classified position: 1. Margaret Ortega, full-time, 40 hours per week, 10 months per year, Student Life Coordinator (#CC-24), Student Services, Range 31, Step E, effective October 26, 2011. C. Ratify appointment of part-time instructors for fall semester 2011: 1 APPENDIX B THE FOLLOWING PERSONNEL ACTIONS WERE APPROVED AND/OR RATIFIED AT THE NOVEMBER 1, 2011 REGULAR MEETING OF THE HARTNELL BOARD OF TRUSTEES: 1. 2. 3. 4. 5. 6. 7. 8. 9. 10. 11. 12. 13. 14. 15. 16. 17. 18. Eric Becerra, Counseling Katrina Camarena, English LaMar Castaneda, Nursing Daniel Ehrler, Speech Mike Gideon, Computer Information Systems Margaret Heaman, Theatre Arts Stephanie Kever-Frizzell, Nursing Salina Lopez, Psychology Jose Maldonado, Counseling Suzanne Mann, Theatre Arts Joseph Martinez, Counseling Ryan Montgomery, Astronomy Jaeduck Park, English as a Second Language Meagan Plumb, English Yvonne Reed, Physical Education Nancy Saldaña-Pimentel, Counseling William Y. Yanowsky, Physical Education Maximino Zabala, Nursing D. Ratify appointment of donated instructors for fall semester 2011: 1. 2. Jimmie Moore – Electrical apprenticeship Michael Stone – Electrical apprenticeship E. Ratify appointment of Professional Experts: Hartnell’s theater arts program – The Western Stage (TWS) provides students the opportunity to learn their craft within a professional context. Assignment is for 2011 subscription season, which runs January 24 – December 17, 2011: 1. 2. 3. 4. 5. 6. 7. 8. 9. 10. 11. 12. Judy Ataman, $5000 total, Actor, October 1 – December 11, 2011. Lisa Marie Baratta, $3625 total, musician, July 20 – December 11, 2011. Greg Bullock, $1250 total, musician, September 14 – October 15, 2011. Skylar Campbell, $2525 total, musician, May 28 – December 11, 2011. Howard Cespedes, $1250 total, musician, September 14 – October 15, 2011. Rumina Druneva, $1250 total, musician, September 14 – October 15, 2011. Jeffrey Flower, $1200 total, musician, September 14 – October 15, 2011. Nancy Flower, $3525 total, musician, July 20 – October 15, 2011. Jeff Gallaher, $2525 total, musician, September 14 – October 15, 2011. Michelle Galindo, $1200 total, musician, September 14 – October 15, 2011 Margaret Heaman, $700 total, costume design consultant, October 1 – November 19, 2011. Jeff Heyer, $6800 total, program production assistant, September 1 – December 17, 2011. 2 APPENDIX B THE FOLLOWING PERSONNEL ACTIONS WERE APPROVED AND/OR RATIFIED AT THE NOVEMBER 1, 2011 REGULAR MEETING OF THE HARTNELL BOARD OF TRUSTEES: 13. 14. 15. 16. 17. Kevin Jordan, $3375 total, musician, July 20 – December 11, 2011. Kathy Nathan, $1200 total, musician, September 14 – October 15, 2011. Joe Niesen, $4000 total, choreography, October 1 – November 19, 2011. Julian Starks, $4500 total, costume design, September 19 – October 15, 2011. Craig Whitwell, $2525 total, musician, September 14 – December 11, 2011. The Foster Kinship Care Education Program (FKCE) provides advanced training for current and prospective foster, relative, and non-related extended family member caregivers, adoptive parents, and local agency employees; and support for foster home recruitment activities. This grant-funded program is a joint effort of the California Community College Chancellor’s Office and the Department of Social and Employment Services (DSES). Assignments include orientation leaders, trainers, childcare and activity providers, and program coordination. 18. 19. 20. 21. 2011. 22. 23. 24. 25. 26. Carolina Cortez, $50/hr (as needed), FKCE Trainer, September 1, 2011 – June 10, 2013. Michael Davis, $13/hr (as needed), childcare, July 1, 2011 – June 10, 2013. Juana De Jesus Gonzalez, $13/hr (as needed), ILP Youth Mentor, September 1, 2011 – June 10, 2013. Shaylene Duran, $22/hr (as needed), DSES/ILP Trainer, July 1 – October 10, Jason Hall, $40/hr (as needed), Wraparound Trainer, July 1, 2011 – June 10, 2013. Alejandra Moreno, $16/hr (as needed), Training Supervisor, September 1, 2011 – June 10, 2013. Amor Ortiz, $13/hr (as needed), childcare, August 1, 2011 – June 10, 2013. Maryanne L. Rehberg, $100/hr (as needed), DSES Instructor, September 1, 2011 – June 10, 2013. Daniel Salaz, $22/hr (as needed), PEER Recruiter, September 1, 2011 – June 10, 2013. Hartnell College provides Crisis Counseling Services that are completely confidential and free of charge to enrolled Hartnell students. A Marriage & Family Therapist Counseling Intern is available to assist students in crisis. 27. Tara Heller-Berlin, $20/hr (16 hrs/week), intern, September 15, 2011 – June 15, 2013. Supplemental Instruction (SI) is a peer-led academic support program that helps students enrolled in certain historically challenging courses. SI leaders in the Tutorial Center facilitate student learning through out-of-class discussion and study skills support. Grant-funded. 28. Alexander Sigala, $14.42/hr (13 hrs/week), Chem 1A tutor, August 15 – December 16, 2011. 3 APPENDIX B THE FOLLOWING PERSONNEL ACTIONS WERE APPROVED AND/OR RATIFIED AT THE NOVEMBER 1, 2011 REGULAR MEETING OF THE HARTNELL BOARD OF TRUSTEES: The Hartnell College Math Academy was a two-week, not-for-credit, non-graded program designed for incoming freshmen whose placement scores on the Accuplacer diagnostic test do not qualify them for pre-algebra or for elementary algebra. 29. Patricia Garcia, $3589.45 total, instructor, July 6 – August 12, 2011. The WIA Youth CTE grant supports a 15-month program of accelerated instruction in Advanced Technology. Over the course of the program, which runs October 2011 – March 2013, up to 100 students will complete requirements for a Hartnell College Certificate in either Agriculture Industrial Technology or Green Building, in addition to industry-issued certificates in four related skill areas. All students will complete the core Academy for College Excellence courses, along with math, English and career preparation courses. Tutorial, counseling, and job placement support services will be provided. Partnering with Hartnell on supporting grant activities are the Monterey County Workforce Investment Board and Rancho Cielo. 30. Christine Pedersen, $4000/mo., coordinator, September 19, 2011 – September 18, 2012. The High School Equivalency Program (HEP) is funded by the US Department of Education Office of Migrant Education. HEP is a migrant education program designed to assist migrant and seasonal field workers obtain their GED and employment, military service, apprenticeship, Certificate of Skills Acquisition, Certificate of Achievement, or Associate’s Degree. 31. Miguel Zuniga, $30/hr (12 hrs/week), HEP-GED Instructor, October 4, 2011 – June 30, 2012. The vacant counseling data technician position was scheduled to be phased out in the Student Services reorganization. The CSEA and District have agreed to assign this work to a professional expert through the end of the semester, and to find a resolution thereafter. 32. E. Yesenia Carrillo, $13.92/hr (20 hrs/week), technician, September 22 – December 31, 2011. Ratify appointment of substitute position: 1. Esther Vargas, $13.59/hr (25 hrs/week), clerical assistant, August 11 – October 7, 2011. 4 APPENDIX B THE FOLLOWING PERSONNEL ACTIONS WERE APPROVED AND/OR RATIFIED AT THE NOVEMBER 1, 2011 REGULAR MEETING OF THE HARTNELL BOARD OF TRUSTEES: F. Ratify appointment of volunteer position: 1. G. Doreen Remer, Ceramic Lab (10 hrs/wk), August 23, 2011 – June 20, 2012. Ratify appointment of Student Workers for fall semester 2011: 1. 2. 3. 4. 5. 6. 7. 8. 9. 10. 11. 12. 13. 14. 15. 16. 17. 18. 19. 20. 21. 22. 23. 24. 25. 26. 27. 28. 29. 30. 31. 32. 33. 34. 35. 36. 37. 38. Mayra Aguilar, TRIO, Student Worker I Daniela Alcantar, Tutorial Center, Student Worker II Luis Barrera, TRIO, Student Worker II Tenia Bey, Financial Aid, Student Worker I Sandra Castillo, Financial Aid, Student Worker I Alexandria Cordova, ACE, Student Worker II Yesmin Arevalo Deanda, Computer Lab, Student Worker I Liliana Diaz, Human Resources, Student Worker I Mayra Espinoza, HEP, Student Worker I Beatriz Fernandez, Cafeteria, Student Worker I Danielle Galvan, EOPS, Student Worker II Brenda Garcia, Tutorial Center, Student Worker II Rodolfo Garcia, Tutorial Center, Student Worker III Vanessa Garcia, Tutorial Center, Student Worker II David Gopi, Library, Student Worker I Edwin Gonzalez, East Salinas GEARUp, Student Worker III Katia Gonzalez, Chemistry, Student Worker IV Juan Hernandez, Tutorial Center/Alisal Campus, Student Worker II Abigail Irwin, Tutorial Center, Student Worker II Adriana Landeros, MESA, Student Worker III Matthew Lopez, Information Systems, Student Worker III Ignacio Maravilla, MESA, Student Worker IV Vanessa Montano, TRIO, Student Worker II Sosima Morales, MESA, Student Worker IV Teresa Munoz, MESA, Student Worker III Adan Ochoa, MESA, Student Worker III Oscar Ochoa, SSS/TRIO, Student Worker II Leticia Ortega Lopez, HEP, Student Worker I Joseph Pacheco, Physical Education, Student Worker III Vanessa Puga, ACE, Student Worker I Ryan Ramos, Campus Security, Student Worker I Hannelore Rose, Tutorial Center, Student Worker II Chahan Shah, Tutorial Center/Alisal Campus, Student Worker III Francisco Urtiz-Herrera, Art, Student Worker IV Jose Ricardo Urquizo, Maintenance, Student Worker I Kayla Vuong, MESA, Student Worker IV Nicole Woodrow, Library, Student Worker I Mary Rose Yasay, Student Affairs, Student Worker III 5 Unadopted HARTNELL COMMUNITY COLLEGE DISTRICT MINUTES Board of Trustees – Special Meeting CALL 208, Training Room 411 Central Avenue Salinas, California November 15, 2011 OPEN SESSION Meeting called to order at 5:50 p.m. by Trustee Padilla-Chavez. PLEDGE OF ALLEGIANCE Trustee DePauw led the Pledge of Allegiance. ROLL CALL Erica Padilla Chavez, President Kevin Healy, Vice President Candi DePauw Patricia Donohue Bill Freeman (arrived at 6:20 p.m.) Elia Gonzalez-Castro Ray Montemayor Juan Gutierrez, Student Trustee – (advisory vote per Board Policy 1030) Phoebe K. Helm, Board Secretary PUBLIC COMMENTS There were no public comments BOARD SELFEVALUATION Trustee Padilla-Chavez stated that the Board Self-Evaluation is required by Accreditation and that it is important for each member to participate and that this process should be done annually. Year-to-year comparisons help to document the Board’s efforts to engage in continuous improvement. Facilitating the discussion was Alison Neufeld, Liebert, Cassidy, Whitmore. Prior to the meeting, the Board was asked to complete a board evaluation survey (Appendix A) and those results were tallied, summarized, and copies were provided to members of the Board and to the public present. Trustee Padilla-Chavez stated that she received four surveys and that these results would be the basis for this evening’s discussion. Although, she encouraged all members to weigh in on the discussion. Ms. Neufeld stated that the evaluation covered nine areas 1) Board Organization, 2) Policy Role, 3) Community Relations, 4) Policy Direction, 5) Board-CEO Relations, 6) Budget and Finance, 7) Board Leadership, 8) Advocating for the College, and 9) Board Education. In addition, the form included six open ended questions. Ms. Neufeld read aloud each of the questions under each of the identified areas and at the conclusion of this review, Trustee Padilla-Chavez opened the floor for discussion. HCCD – SPECIAL MEETING OF THE BOARD OF TRUSTEES – NOVEMBER 15, 2011 Page 1 of 2 The Board had a lengthy discussion on the survey results (Appendix B) and identified shared governance; the role and relationship with the CEO, and strategic planning (goals for the Board and goals for the college) as areas that should be focused on for Board Development in the coming year. In addition, Trustee Donohue suggested that the Board should not wait to schedule these sessions and recommended an experienced facilitator. Dr. Helm stated that, from an accreditation perspective, the intent of the Board’s selfevaluation is to allow the Board to engage in an open, honest discussion and that the Board decides collectively what it should work on and how will they accomplish this work. MOVED TO CLOSED SESSION The Board of Trustees and legal counsel, Alison Neufeld, moved to Closed Session at 7:05 p.m. to consider legal, personnel, labor and/or contract matters authorized for Closed Session per Government Code Sections 3549.1, 54956.9, 54957, and/or 54957.6. 1. Performance Evaluation and Contract of Superintendent/President Later, Dr. Phoebe Helm joined the Board. REPORT OUT FROM CLOSED SESSION Trustee Padilla-Chavez reconvened the regular session at 7:40 p.m. and reported the following: The Board conducted the evaluation of Superintendent/President. On a motion by Trustee Healy, seconded by Gonzalez-Castro, by vote of 5-2 (No: Freeman, Montemayor), the Board moved to accept Dr. Phoebe Helm’s decision to leave the college (retire) June 30, 2012 (subject to conditions stated in the second motion). On a motion by Trustee Donohue, seconded by Trustee DePauw, by vote of 5-1 -1 (No: Freeman and Abstention: Montemayor) to launch a national search for the next Superintendent/ President and to extend Dr. Helm’s contract to June 30, 2012 or longer if needed to ensure a smooth transition.. ADJOURNMENT It was motioned, seconded, and carried to adjourn the meeting at 7:45 p.m. Erica Padilla-Chavez Board of Trustees President Phoebe K. Helm Board Secretary HCCD – SPECIAL MEETING OF THE BOARD OF TRUSTEES – NOVEMBER 15, 2011 Page 2 of 2 APPENDIX A Board Self-Evaluation Please rate the Board in the following key functional areas. SA (Strongly Agree); A (Agree); N (Neither agree or disagree); D (Disagree) SD (Strong Disagree) Please provide comments to improve the performance of the Board in specific functions of the job. A. BOARD ORGANIZATION SA A N D SD SA A N D SD SA A N D SD SA A N D SD 1. Board officer responsibilities clear. 2. Board President speaks for the Board. COMMENTS: B. POLICY ROLE 1. Board members understand and support the concept that board policy is the primary voice of the board. 2. The board has clarified the difference between its policy role and the roles of the CEO and staff. COMMENTS: C. COMMUNITY RELATIONS 1. Board members demonstrate concern for entire community, not just special interest groups or one trustee area. 2. Board members refer community concerns and complaints to the CEO. COMMENTS: D. POLICY DIRECTION 1. The board is involved in developing and adopting policies. COMMENTS: Page 1 of 3 Board Self-Evaluation APPENDIX A E. BOARD-CEO RELATIONS SA A N D SD SA A N D SD SA A N D SD SA A N D SD 1. A climate of mutual trust and respect exists between the board and the CEO. 2. The board evaluates the CEO in a manner to assure his/her success in leading the college. 3. The board clearly delegates the administration of the college to the CEO. COMMENTS: F. BUDGET AND FINANCE 1. The board works to ensure financial stability and approves annual budgets that reflect college priorities. COMMENTS: G. BOARD LEADERSHIP 1. The board works together in spirit of harmony and cooperation. 2. The board understands its responsibilities. 3. Board members read agenda materials and address any questions to the CEO prior to the meeting. 4. Board members operate ethnically without conflict of interest. 5. Board members support the majority of the board. COMMENTS: H. ADVOCATING FOR THE COLLEGE 1. Board members protect the college from liability and work to improve its image. 2. Board members actively support the foundation’s fund raising efforts. COMMENTS: Page 2 of 3 Board Self-Evaluation APPENDIX A I. BOARD EDUCATION SA A N D SD 1. New members participate in an orientation to the Board and the college. 2. Board members engage in continuous process of training and development. A. What are the Board’s greatest strengths? B. What are the major accomplishments of the Board in the past year? C. What are the areas in which the Board could improve? D. What are the one or two most important change(s) you think we need to make to improve our Board meetings and/or other functions? E. What three issues do you feel the Board should make its priorities for the coming year? F. Name two or three areas in which you personally want to learn more, improve or do more in the next year. Submit the completed form in a sealed envelope no later than November 10, 2011. The results will be tabulated and provided to the board for discussion on November 15, 2011 at a special meeting set for that purpose. Page 3 of 3 Board Self-Evaluation AGENDA ITEM FOR BOARD MEETING OF: November 29, 2011 Title Number V. B. Disbursements of District Funds Area Status Office of Support Operations Prepared by: Alfred Muñoz Consent Recommendation It is recommended that the Board of Trustees ratifies disbursements from District accounts. Summary The attached lists of disbursements from District accounts are presented for ratification. COUNTY WARRANTS Any or all of the following funds: General; Debt Service; Bookstore; Child Development Center; Capital Outlay; Scheduled Maintenance/State-Funded Projects; Property Acquisition; Bond Projects; Cafeteria; SelfInsurance; Retirees’ Health Benefits; Associated Student Body; Scholarship, Loan, and Trust; and Intercollegiate Athletics DATE 10/03/11 10/12/11 10/19/11 10/24/11 WARRANT NUMBER 12890199 12891980 12893307 12894310 NO OF WARRANTS 12890258 12892122 12893571 12894429 60 143 265 120 Subtotal AMOUNT 358,371.56 494,109.92 37,499.26 229,730.82 1,119,711.56 Note: Legal fees in above summary total $2,635.95 CHECKING ACCOUNTS General Fund Revolving DATE Oct 11 Total Budget Implication None WARRANT NUMBER 10344 10351 NO OF WARRANTS 8 AMOUNT 5,446.11 1,125,157.67 Revised AGENDA ITEM FOR BOARD MEETING OF: November 29, 2011 Title Curriculum Committee Number Area Curriculum & Instructional Support Prepared by: Suzanne Flannigan Status Consent V. C. Recommendation It is recommended that the Board of Trustees ratifies the actions taken by the Curriculum Committee from the October 6 and October 20, 2011 meetings. Summary The following actions were reviewed by faculty in the disciplines and approved by the Curriculum Committee which is a standing committee of the Academic Senate: NEW COURSES – 3 Courses ABT-81, Integrated Pest Management Principles in Entomology (3 units) ECE-193, Topics in ECE: Early Childhood Leadership, Advocacy, Parent Relations, and Management (.5 units) ECE-194, Topics in ECE: Early Childhood Philosophies, Curriculum, and Innovative Teaching Methodologies (.5 units) RE-ACTIVATED COURSES – 1 Course THA-3, History of the Theater (3 units) COURSE REVISIONS- 33 Courses ART-75, 3D Modeling for Digital Animation (3 units) Areas of revision: description, content, materials HES-53 Emergency Medical Technician I (Ambulance), (5.5 units) Areas of revision: prerequisite, laboratory content, methods of evaluation, materials, contact hours HIS-17A, United States History A (3 units). Areas of revision: Pass/No Pass, description, objectives, content, methods of evaluation, distance education Page 1 of 4 Revised HIS-17B, United States History B (3 units). Areas of revision: description, objectives, content, distance education NRN-30, Basics of Pharmacology (1 unit). Areas of revision: corequisites; description, materials NRN-41, Nursing Theory (4 units). Areas of revision: corequisites, objectives, content, materials NRN-41.1, Nursing Clinical (4 units). Areas of revision: corequisites; description, objectives, content, materials NRN-41.2, Clinical Reasoning Seminar I (1 unit). Areas of revision: title change, grade only, description, objectives, materials NRN-41.3, Nursing Skills Lab (1 unit). Areas of revision: corequisites; description; objectives; methods of evaluation; materials NRN-42, Nursing Theory II (4 units) Areas of revision: description, content, methods of instruction, methods of evaluation, materials NRN-42.1, Nursing Clinical II (4 units) Areas of revision: description, content, methods of instruction, materials NRN-42.2, Clinical Reasoning Seminar II (1 unit) Areas of revision: title, description, content, methods of instruction, methods of evaluation, materials NRN-42.3, Nursing Skills Lab II (1 unit) Areas of revision: corequisites, description, content, methods of evaluation, materials NRN-43, Nursing Theory III (4 units). Areas of revision: prerequisite; corequisites; description; objectives, content, methods of instruction, materials. NRN-43.1, Nursing Clinical III (4 units). Areas of revision: prerequisite; corequisites; description, objectives, content, methods of instruction, methods of evaluation, materials. NRN-43.2, Clinical Reasoning Seminar III (1 unit). Areas of revision: title; prerequisite, grade only, description, objectives, content, methods of instruction, methods of evaluation, materials. NRN-43.3, Nursing Skills Lab III (1 unit). Areas of revision: prerequisite, description, objectives, content, methods of instruction, methods of evaluation, materials Page 2 of 4 Revised NRN-44, Nursing Theory IV (4 units) Areas of revision: corequisite; description, objectives, content, methods of evaluation, materials. NRN-44.1, Nursing Clinical IV (5 units) Areas of revision: corequisite, description, objectives, content, instructional methods and evaluation, materials. NRN-44.2, Clinical Reasoning Seminar IV (1 unit) Areas of revision: title, grade only, prerequisite; description, objectives, content, methods of instruction , materials. NRN-110, Foundations for Success for Registered Nursing Students (1.5 units) Areas of revision: corequisite, description, objectives, content, materials MUS-2, Music Fundamentals (3 units) Areas of revision: description; content; methods of instruction; materials MUS-10, Applied Music, Voice (1 unit) Areas of revision: materials MUS-19, Music Practicum (1-2 units) Areas of revision: change to 1 unit; contact hours; Pass/No Pass MUS-20, Hartnell College Choir (1 unit) Areas of revision: contact hours; materials MUS-21, Hartnell Chamber Singers (1 unit) Areas of revision: contact hours; materials PEIN-17, Intercollegiate Basketball for Men (2 units) Areas of revision: units, contact hours PEIN-18, Intercollegiate Basketball for Women (2 units) Areas of revision: units, contact hours PEIN-21, Intercollegiate Softball for Women (2 units) Areas of revision: units, contact hours, repeatability PEIN-24, Intercollegiate Track and field (2) Areas of revision: units, contact hours, repeatability PEIN-25, Intercollegiate Sports Conditioning (1.5 units) Areas of revision: units, contact hours, repeatability PEIN-26, Intercollegiate Baseball (2 units) Areas of revision: units, contact hours Page 3 of 4 Revised PETH-5 Sport in Society (3 units) – reported to Board on October 4, 2011 as PE-41 Sport Ethics Areas of revision: course identifier and number, course title COURSE DELETION – 1 Course PEAC-73, Step Aerobic Training (1.5 units) Deletion of Inactive Programs – 15 Programs Construction Management Associate of Science Degree Construction Management Certificate of Achievement Construction Trade Skills Certificate of Achievement Financial Institution Operations Associate of Arts Degree Financial Institution Operations Certificate of Achievement Graphics Certificate of Achievement Human Services Associate of Arts Degree Human Services- Certificate of Achievement Primary Care Associate Program Theatre Arts: Acting Certificate of Achievement Theatre Arts: Acting Associate of Arts Degree Water Technology – Wastewater Management Certificate of Achievement Water Technology – Wastewater Management Associate of Science Water Technology – Water Management Associate of Science Water Technology – Water Management Certificate of Achievement In making sure that the college catalog agrees with the Chancellor’s Office list of programs, the curriculum committee and staff found programs on the Chancellor’s Office list that should have been removed years ago. This action by the Board allows the college to make these corrections. Page 4 of 4 AGENDA ITEM FOR BOARD MEETING OF: Title November 29, 2011 Number Letter of Agreement between Hartnell College and San Francisco Community College District V. D. Area Status Academic Affairs/Accreditation Prepared by: Dr. Suzanne Flannigan Consent Recommendation It is recommended that the Board of Trustees ratifies the Letter of Agreement with San Francisco Community College District-CA Early Childhood Mentor Program. Summary Hartnell College has offered services through the California Early Childhood Mentor Program since August of 1997. The California Department of Education-Child Development Division has contracted with San Francisco Community College District to implement the California Early Childhood Mentor Program in community college campuses across the state. The purpose of the program is to select high quality early childhood teachers and directors in the local communities to serve as mentors to community ECE staff and Hartnell students. Each college program is eligible to access up to $11,000-30,000 depending on usage and student placements. Last year local participants received close to $30,000. The funds are processed directly between the program participants and San Francisco Community College District. This program helps Hartnell ECE students take their supervised student teaching in Mentor sites. Mentor sites give our ECE 12AB lab students more options on places and times to take the lab portion of supervised student teaching at no extra cost to the college and increases enrollment in those classes. Graduating students can receive “one on one” support from the ECE Mentors when they begin employment in local early childhood agencies…at no cost to the agencies. Selected ECE Mentors earn stipends for assisting local agencies and their staff with quality improvement activities and staff training. Mentors receive stipends for assisting Hartnell ECE Instructors with workshops and in class support activities. This program strengthens the community involvement between Hartnell College and Monterey County ECE professionals. Budget Implication Funding from this program is sufficient to cover the direct costs of administering its operations. No impact to the Hartnell budget. Funds are paid directly to the participants from San Francisco Community College District. AGENDA ITEM FOR BOARD MEETING OF: Title November 29, 2011 Number Agricultural Lease Agreement for Alisal Campus Farmland V. E. Area Status Office of Facilities Prepared by: Joseph Reyes Consent Recommendation It is recommended that the Board of Trustees approves to amend the agricultural lease agreement with Franscioni Brothers, Inc. for Alisal Campus farmland. Background Franscioni Brothers, Inc. was awarded the lease for 116.5 acres of farmland in 2006. The amount of land leased was reduced by two-tenths (0.2) of an acre in 2008 and the expiration date was extended one year in each of 2008, 2009, and 2010. Summary This amendment extends the expiration date for one year. The price per acre (1,626) remains the same for a total contract amount of $178,258.38. The contract is invoiced quarterly and paid within 30 days of receipt. Term: December 3, 2011 through December 2, 2012. Budget Implications No impact on the General Fund. Annual rental revenues from property must be placed in the restricted Property Acquisition Fund. AGENDA ITEM FOR BOARD MEETING OF: Title November 29, 2011 Number Amend contract between Vicenti, Lloyd & Stutzman, LLP and Hartnell College V. F. Area Status: Office of Support Operations Prepared by: Alfred Muñoz Consent Recommendation It is recommended that the Board of Trustees amend the contract with Vicenti, Lloyd & Stutzman, LLP, independent auditing firm, for financial auditing services through June 30, 2012. The contract will extend for one year at a cost of $122,560, which represents a 6% increase over the prior year. Background Education Code § 84040 requires that each community college district provide for an independent audit of the books and accounts of the District. The audits must be made by a certified public accountant or a public accountant licensed by the State Board of Accountancy. In fall 2007, after more than 10 years with the prior auditor, the District advertised a Request for Qualifications (RFQ) for an audit firm to conduct district audits in compliance with Education Code § 84040. Proposals were screened and three firms were interviewed by the Audit Committee of the Board, the Superintendent/President, and Controller. Vicenti, Lloyd, & Stutzman, LLP, were selected in 2008 and awarded a three-year contract. Summary This amendment provides for a one-year extension and an increase in fees of approximately six percent (6%). The increase is to cover the costs of the new audit requirements of the California Community College Chancellor’s Office regarding contact hours, census type, DSP&S, and EOPS, etc. Budget Implications Cost for the annual audits is shared among the Foundation, Measure H bond funds, and the general fund for 2011-2012. Budget impact will be in 2012-13 fiscal year for a total expense of $122,560. AGENDA ITEM FOR BOARD MEETING OF: Title November 29, 2011 Number Agreement with Universal Protection Services V. G. Area Status Superintendent/President Prepared by: Dr. Phoebe Helm Consent Recommendation The administration recommends extending the agreement with Universal Protection Services through June 30, 2013. Background Universal Protection Services was selected as a result of a competitive process (RFQ) and began providing services under three year contract in December 2007. Since that time, the contract had been amended to increase the scope of the work t include the Alisal Campus and the King City Education Center. Summary The amendment to the agreement with Universal Protection Services would extend the contract one additional year for a “not to exceed” amount of $560,000 through June 30, 2013. This represents a zero increase over the current year. Budget Implications Budgeted and paid from general funds. AGENDA ITEM FOR BOARD MEETING OF: November 29, 2011 Title Number Award Bid and Authorize the Administration to enter into an Agreement with KIS Group – Area Technology and Information Services Prepared by: Matt Coombs, Vice President V. H. Status Consent Recommendation It is recommended that the Board of Trustees awards bid and authorizes the administration to enter into an agreement with KIS, most qualified bidder, for the campus wide Virtualization and Network Administrative Software Modernization project. Summary The Hartnell College Virtualization and Network Administration Projects consist of changing foundational enterprise servers and software. Servers/Hardware generate many types of costs, including management costs, electrical consumption and heat (which must be dissipated by cooling systems, requiring still more energy). The solution to this problem is to consolidate the functionality of several servers onto one through virtualization. For instance, a single modern server can easily host multiple virtual servers—each a logically separate entity partitioned from the others. As each virtual server is added to the host computer, its software will make demands on the underlying hardware, decreasing idle time and helping to ensure that the hardware is delivering as much business value as possible. Additionally, by deploying multiple virtual servers on one physical server, enterprise-class IT can simplify management, cut costs and increase server flexibility considerably, moving or modifying virtual servers as necessary to meet emerging business goals. Tracking, updating and maintaining one physical server is easier and less expensive than doing the same for several. Virtualization will also allow us to leverage existing hardware for more years and increase access and time on task to all students on and off campus. The Network Administrative Software Modernization project will transition Hartnell’s Novell software to Linux and Microsoft network software, increasing the ability of the college to integrate better with current administrative systems, increasing security, and decrease annual costs. All of this will result in cost savings to the college and increased level of service to students and staff. The transition will allow Hartnell to take advantage of PG&E rebates, leverage grant dollars, and available bond dollars. All of these additional dollars disappear if we do not act now. There were a total of four bidders on this project, two of which were fully responsive. The results are as follows: Contractor KIS Location Fremont, CA Phase 1 $116,719 Phase 2 $119,750 Phase 3 $395,138 Total Amt $631,607 Kanavel Los Gatos, CA $124,600 $115,825 $405,100 $645,525 Term: December 1, 2011 thru December 31, 2012 Budget Implication The approximate amounts budgeted are as follows: $120,000 Measure H; $120,000 BTOP Grant; $200,000 reimbursed by PG&E; and ultimately an impact to the general fund of $191,607. AGENDA ITEM FOR BOARD MEETING OF: November 29, 2011 Title Number Award Bid and Authorize the Administration to Enter into a Contract for the Alisal Campus Parking Lot Project Area Status Office of Facilities Consent V. I. Recommendation It is recommended that the Board of Trustees awards a bid and authorizes the administration to enter into a contract with Perma Green Hydroseeding, Inc, lowest responsive bidder, for the Alisal Campus Parking Lot Project. Background The Hartnell College Alisal Campus Parking Lot project consists of additional parking of 117 stalls. In addition, there will be landscaping and a bio-swale to meet storm water requirements. Summary Hartnell issued bid documents on November 1, 2011. The project was advertised in both the Salinas Californian and the Salinas Builders Exchange. The District conducted two mandatory job walks and the bids opened on November 22, 2011. The project is scheduled to start on December 12, 2011 and be substantially completed by May 15, 2012. There were a total of seven bidders on this project: CONTRACTOR Perma Green Hyrdoseeding MPE Norcal Don Chapin Otto Construction Granite Construction Galedrige LOCATION Gilroy, CA Marina, CA Salinas, CA Salinas, CA Monterey, CA Watsonville, CA Alviso, CA BID AMOUNT $831,700 $857,110 $859,024 $870,464 $971,180 $976,879 NR Term: November 29, 2011 - June 1, 2012 Budget Implication The budget for the above referenced contract is $831,700 and paid by Measure H funds. Source of Funds Local: $ 831,700 AGENDA ITEM FOR BOARD MEETING OF: Title November 29, 2011 Number V. J. Student Trustee Travel Area Status Superintendent/President Prepared by: Dr. Phoebe K. Helm Consent Recommendation It is recommended that the Board of Trustees ratifies travel for Student Trustee Gutierrez to attend a Statewide Student Trustee meeting. Summary Student Trustee Gutierrez attended a Statewide Student Trustee Meeting at the San Jose Fairmont, November 4, 2011. The cost for this travel included one night’s lodging, mileage reimbursement, and meals. Budget Implications The total cost attend this meeting is estimated at $250 and is paid from the general fund for trustee training and travel. AGENDA ITEM FOR BOARD MEETING OF: Title November 29, 2011 Number Personnel Actions V. K. Area Status Human Resources & Equal Employment Opportunity Prepared by: Terri Pyer Consent Recommendation It is recommended that the Board of Trustees approves and/or ratifies the personnel actions as listed below: Summary Approval of: 1 reclassification of management personnel Ratification of: 1 3 2 8 1 5 1 1 7 6 release of regular probationary employee appointments of management personnel appointments of classified to supervisory positions part-time instructor hires for fall session 2011 appointment of donated instructor appointments of professional experts appointment of playground assistant appointment of substitute position appointments of volunteer positions student worker hires for fall semester 2011 Detail I. Retirements, resignations, releases, and leave requests A. Ratify release of regular probationary employee: 1. Raymond Porrez, Utility Custodian (#CL-15), Maintenance Department, effective November 10, 2011, due to failure to complete probationary period. 1 II. Classification and Compensation A. Approve the reclassification of Development Officer, Management (#A-49), from Management Level X to Management Level V, Director of Development (#A-64), effective January 1, 2012. Reclassification addresses increased autonomy of position and expansion of responsibilities to include major gifts. III. Appointments A. Ratify appointment of management personnel: 1. Alfred Muñoz, interim Vice President Support Operations, (#A-46), Management Salary Schedule, Range I(a), Step C, effective November 21, 2011. 2. Mary Dominguez, interim Vice President Student Affairs, (#A-43), Management Salary Schedule, Range I(a), Step B, effective January 3, 2012. B. Ratify appointment of classified employee to management position: 1. Andy Newton, Title V collaborative Grants Director, (#A-64), Management Salary Schedule, Range VII, Step B, effective December 1, 2011. C. Ratify appointment of classified employees to supervisory positions: 1. Jessica Tovar, interim Financial Aid Supervisor, (#S-10), Range 32, Step A, effective January 3, 2012. 2. Irene Haneta, interim Enrollment Services Supervisor, (#S-11), Range 32, Step A, effective January 3, 2012. A. Ratify appointment of part-time instructors for fall semester 2011: 1. 2. 3. 4. 5. 6. 7. 8. Efren Celaya, Agriculture Industrial Technology. Appointment based on equivalency as follows: has adequate coursework for an AA or BS degree and has 17 years of experience in the agriculture industry. Bihn Cheung, Agriculture Industrial Technology Fay Griffin, Mathematics Mary Gustus, Nursing Martin Need, English Andrew Seminario, Construction Maximino Zabala, Nursing Angelica Zanetos, Physical Education B. Ratify appointment of donated instructor for fall semester 2011: 1. Derek Webster, Electric Apprenticeship 2 C. Ratify appointment of Professional Experts: Hartnell’s theater arts program – The Western Stage (TWS) provides students the opportunity to learn their craft within a professional context. Assignment is for 2011 subscription season, which runs January 24 – December 17, 2011: 1. Desma Johnson, $1650 total, musician, November 9 – December 11, 2011. 2. Stephen J. Uccello, $1275 total, musician, November 9 – December 11, 2011. Hartnell College provides Crisis Counseling Services that are completely confidential and free of charge to enrolled Hartnell students. A Marriage & Family Therapist Counseling Intern is available to assist students in crisis: 3. Laurie Lindley-Muender, $20/hr (16 hrs/week), intern, November 1, 2011 – August 1, 2013. Hartnell College is creating 2+2+2 career pathways for technicians, engineers, and engineering designers in two emerging fields of sustainable energy, power engineering and engineering design. The goals of the project are (1) improve the STEM pipeline from two high schools to Hartnell College and to the University of California at Santa Cruz, (2) integrate renewable energy technologies into existing curricula at participating high schools and Hartnell, and (3) prepare students to work in sustainable energy and engineering technologies jobs. The project is forming a consortium of at least 10 partners, including industry, in sustainable energy education: creating and supporting new energy career pathways: increasing student enrollment in high school and bridge program sustainable energy programs; developing and implementing an internship program; and using a newly constructed sustainable energy and research facility. Project deliverables include new courses, research findings from student projects, a model consortium, high school outreach and instructional materials, and project evaluation data. 4. Janice Archuleta, $2210/mo. Project coordinator, October 1, 2011 – September 30, 2012. The Nursing and Health Sciences Department comprises four programs: Registered Nursing, Vocational Nursing, Emergency Medical Technician (EMT), and Certified Nursing Assistant. Lab instruction assistants are required to meet Board of Registered Nursing (BRN) requirements for specific student-to-certified-instructor ratios. 5. D. Ratify appointment of playground assistant: 1. E. Lisa Anne Garcia, $47.86/hr (10 hrs/week), NVN Instructor, September 28 – November 1, 2011. Nubia Patricia Gomez, $12/hr (35 hrs/week), November 1, 2011 – June 30, Ratify appointment of substitute position: 3 2012. 1. F. Tina Cazares, $14.99/hr (20 hrs/week), A& R Technician, October 10 – December 2, 2011. Ratify appointment of volunteer positions: 1. Alejandro Alcaraz, Physical Education, July 1 – December 16, 2011. 2. Phillip Cuevas, Physical Education, October 14, 2011 – May 31, 2012. 3. Rudy Dominguez, Physical Education, September 30, 2011 – May 31, 2012. 4. Kimberly Kouka, Physical Education, July 15 – December 11, 2011. 5. Micah Spane-Wilson, Physical Education, August 15, 2011 – November 15, 2011. 6. Joan Spannagel Rentz, Academic Center, September 19, – December 16, 2011. 7. Levy Zamora Jr., Speech Department, October 24 – December 16, 2011 G. Ratify appointment of Student Workers for fall semester 2011: 1. 2. 3. 4. 5. 6. Liliana Bautista, DSPS, Student Worker II Rusty Guzman, Maintenance, Student Worker I Jasmine Hernandez, Tutorial Center, Student Worker II Carolina Lopez-Romero, Tutorial Center, Student Worker II Lorena Mendoza, ACE, Student Worker I Riley Schofield, East Salinas GEARUp, Student Worker III 4 ACTION ITEMS AGENDA ITEM FOR BOARD MEETING OF: November 29, 2011 Title Number Budget Revisions VI. A. Area Status Office of Support Operations Prepared by: Alfred Muñoz Action Recommendation It is recommended that the Board of Trustees ratifies Budget Revisions for fiscal year 20112012 numbered 9493 to 9525. Background The Board of Trustees recognizes that the annual budget of the District is a financial plan and is subject to adjustments during the fiscal year caused by changes in enrollments, programs, services, and the cost of goods and services. Summary Revisions to the adopted budget are subject to approval by the Board of Trustees. Budget revisions consist of transfers between major object expenditures or from the appropriations for contingencies, as well as budgetary increases for the use of funds not included in the original budget. All budget entry numbers are assigned automatically assuring a complete sequence accounting. Numeric breaks on the attached report are due to the exclusion of budget transfers, which do not require Board approval. The accompanying Budget Journal Entry Detail Report was produced directly from the accounting software. Budget Implication The Unrestricted and Restricted General Fund and Associated Student Body Fund (71) budgets remain unchanged. AGENDA ITEM FOR BOARD MEETING OF: Title November 29, 2011 Number Award One-time Stipend of 2% VI. B. Area Status Superintendent/President Prepared by: Dr. Phoebe K. Helm Action Recommendation The administration recommends that the Board approves a one-time stipend of two percent (2%) of the Base Salary to all full-time employees who were employed at Hartnell on or before July 1, 2009 and are still employed by the college November 1, 2011. Awarding the one-time stipend would be contingent upon acceptance by the bargaining units. Background When the budget was initially presented in May 2011, it was projected that the state’s revenue allocations for community colleges would be reduced by $400 to $520 million. Hartnell designed its budget based on the worst case scenario. In September when the final budget was adopted, the state notified the colleges that revenues were below initial projections. And just this past week, the Chancellor’s Office stated that one or both “triggers” may be pulled. The first trigger would reduce revenues to community colleges by $30 million and the second by $72 million for a cumulative reduction of $102 million. This would raise the total decrease in revenues to $502 million for 2011-12. At the time the budget was adopted in September, it was suggested that the Board give some thought to providing a one-time stipend of 2% in December, if budget reductions did not exceed the $520 million in the mid-year cut, and recommended that up to $400,000 be set aside for that one-time payment. Some asked, at the time, why not give that increase as a permanent increase to the base, and the administration responded by pointing out that the future was too uncertain to take on this increase as a permanent obligation, but felt the increased costs could be managed for one year. This is what some may recall the past Vice President of Business Services describing as “driving with your headlights on” or “not making commitments beyond how far out you can see.” And indeed, recent meetings with representatives on appropriations indicate that they are still considering pushing some or all of the “cuts” from lost revenues into next year (2012-13) instead of pulling both “triggers” now. This leaves the college unable to project whether we will have flat or declining revenue for 2012-13. Numerous authorities, historians, and economists suggest that it will be at least 2015 before revenues begin to climb in any way that might be considered consistent. These projections are consistent with the projected “spend down” of the college’s general fund reserves as explained in the budget hearing and illustrated in the attached chart. Summary A one-time 2% lump sum stipend to full-time employees, who were employed on or before July 1, 2009 and were still employed at the College on November 1, 2011, would cost approximately $325,000 including the obligatory benefits. The stipends would be awarded in December, contingent upon acceptance by the bargaining units. AGENDA ITEM FOR BOARD MEETING OF: Title November 29, 2011 Number Selection of a Search Firm VI. C. Area Status Superintendent/President Prepared by: Dr. Phoebe K. Helm Action Recommendation The administration recommends that the Board approves the selection of a Search Firm and directs the administration to enter into a contract for Professional Services to conduct a national search for the next Superintendent/President. Background Nationally, it appears that 20% or more of all community college president positions are vacant or have interim appointments. There is a natural rhythm to work within the colleges and most who are willing to think about leaving their current employment do so with the expectation that they will relocate during the summer. Searches generally take six months and spring is the busiest season for searches. Thus, the most experienced and qualified firms are quickly snapped up. Board Policy 2431 requires a national search conducted with the guidance of an experienced firm nationally known for its commitment to diversity and success with community colleges. Summary Twenty firms who conduct searches for college presidents were identified and reviewed. The number was reduced by eliminating those whose primary experience was with public and private universities. That number was further reduced by eliminating those that indicated little national experience as well as firms that served individual job seekers in addition to colleges and boards. Telephone interviews were conducted. Reference checks conducted for the finalists. The finalists were: TBA TBA The services provided will include: Board Retreat to determine the values and attributes sought; training of the search committee and management of the advertisement, recruitment, application, screening, and hiring processes. The recommended firm is: TBA Budget Implications General funds not to exceed $TBA INFORMATION ITEMS AGENDA ITEM FOR BOARD MEETING OF: Title November 29, 2011 Number Report on Construction Projects VII. A. Area Status Office of Facilities Prepared by Joseph Reyes, Director Information Recommendation It is recommended that the Board of Trustees receives an updated report on construction projects. Summary Each month, the Board of Trustees receives an oral and written report on current design, planning, and construction projects. Completed projects are removed from the report and current activities are updated monthly. The construction consultant and district manager are available at the meeting to answer questions. HARTNELL COLLEGE Construction Update Prepared by Joseph Reyes, Director, Maintenance CURRENT PROJECTS 1. 2. 3. 4. Campus Infrastructure #2 (830201) – 2011 – Add water and gas isolator valves to enable each building to be turned on/off independent of the other buildings as needed to avoid closing the whole campus when only one area is affected. Additionally, old data lines will be terminated and new lines connected to all of the buildings. May 2010 Board awarded the contract to C-3 Engineering of Monterey for design bid specifications. April 2011 Design and bid specification are being developed by C-3 Engineering. October 11, 2011 Project Bid Date October 1, 2011 Board approved to contract Ranger Pipelines, Inc of San Francisco, CA Keyless Entry and CCTV System (843007) – 2010 – Keyless entry with video surveillance will improve safety for students, staff, and property and will eliminate the problem resulting from lost and stolen keys. April 2010 Board awarded the contract to Aurum Consulting Engineers to design a keyless entry and CCTV system for the main campus and King City Center. March 20, 2011 Keyless portion of the design is complete, CCTV portion currently underway. CAB Chiller and Boiler Replacement/Roof Replacement (811200) –2010 – As part of an energy efficient project on campus the 30 year-old chiller and boiler on the roof of the CAB will be replaced. As part of that project and energy efficient cool roof will be installed, also. April 2010 Board awarded contract to Axiom Engineers to design an energy efficient chiller and boiler. December 2010 Design, bid specifications, securing DSA approval. May 10, 2011 Received DSA approval. May 24, 2011 Project bid date, Chiller/Boiler. June 8, 2011 Board approve to contract the project to Lyles Mechanical of Fresno, CA May 26, 2011 Project bid date, Roof. June 8, 2011 Board approved to contract the project to Progressive Roofing of Manteca, CA Technical Training Building (813028) – 2010 – Hartnell issued a request for qualifications (RFQ) for architectural services related to the design of the Technical Training Building on the Alisal Campus. A total of eight firms submitted an RFQ. A group of faculty and staff (the users of the building) met and shortlisted a total of 5 firms for interviews. The users then interviewed the firms and they selected NTD based off of previous similar project experience and cost. Page 1 of 3 May 2010 5. PE Field House (865003) – 2011 - Locker rooms, restrooms, classroom, training room, and concessions area. Matching funds raised by the Hartnell College Foundation. April 2011 6. 7. Approved NTD architect firm of Salinas. Board awarded contract to Belli Architectural Group Firm of Salinas Alisal Campus Bus Turnaround (843011) Sept 22, 2011 Project bid date October 4, 2011 Board awarded contract to Monterey Peninsula Engineering Alisal Campus (843009) – 2011-Additional Parking November 1, 2011 Project out to Bid Page 2 of 3 OCCUPIED PROJECTS IN FINAL STAGES OF COMPLETION Alisal Campus Center for Applied Technology Pool Renovation Student Center Alisal Campus Landscape Project CALL Building PE Renovation Project City Sidewalk Phase II Alisal Campus Sign COMPLETED PROJECTS* Date Closed Out October 2004 November 2005 June 2006 December 2008 February 2009 September 2010 January 2011 June 2010 September 2010 August 2011 Project Name Campus Infrastructure Phase I Parking Structure Learning Resource Center (LRC) CAB Refresh #1 CAB Refresh #2 CAB Refresh #3 CAB Refresh #4 NE Landscape Project Lighting phase II City Sidewalk Replacement *Completed means that all of the claims and paperwork have been submitted and no further action/claims on this project will be forthcoming from the District. FUTURE PROJECTS CAB Building First Floor Science Building Page 3 of 3 AGENDA ITEM FOR BOARD MEETING OF: Title November 29, 2011 Number Financial Statements for Period Ending October 31, 2011 VII. B. Area Status Office of Support Operations Prepared by: Alfred Muñoz Information Recommendation It is recommended that the Board of Trustees receives and accepts the Financial Statements for the period ending October 31, 2011. Summary Financial Statements of District funds for the period ending October 31, 2011 are attached for information. Budget Implications None AGENDA ITEM FOR BOARD MEETING OF: Title November 29, 2011 Number VII. C. Board Policy Revision – First Reading Area Status Superintendent/President Prepared by: Dr. Phoebe K. Helm Information Recommendation It is recommended that the Board of Trustees reviews the first reading of revised board policy. Background The Board of Trustees approved a service contract with the Community College League of California (CCLC) to provide historical policy updates and best practices as well as annual updates and revisions as required by law, regulation or the Accrediting Commission. Summary Board Policy 1010, Annual Organizational Meeting and Officers of the Board is presented for first reading and discussion. The revisions to this policy are noted in red and include a number change and language to the first paragraph. This policy is provided on the college’s website and provided to the public as part of the Board’s agenda. Comments and/or recommended revisions should be submitted to the Board Secretary. HARTNELL COLLEGE BP 1010 2305 Annual Organizational Meeting and Officers of the Board Reference: Education Code Section 72000(c)(2)(a) Each year, at its December meeting, the Governing Board shall, pursuant to Education Code Section 72000, hold an organizational meeting and swear in new members if applicable. The terms of these officers as well as the term of service of newly elected members shall begin on the first Friday after the first Tuesday in December. At such annual organizational meeting, the Board shall elect from its members the following officers: Annually the Governing Board shall, pursuant to Education Code Section 72000, hold an annual organizational meeting and swear in new trustees if applicable. The term of service for these offices, as well as the term of service for newly elected trustees shall begin on the first Friday in December in accordance with Ed Code 72027(b). Therefore, the Annual Organizational Meeting of the Board shall be held on the Tuesday before the first Friday in December of each year. In certain years, this meeting may fall at the end of November. At this meeting, over which the current board presides, newly elected or re-elected trustees take the Oath of Office, effective the first Friday in December, which coincides with the date of the end of term for outgoing trustees. Annually at the organizational meeting, the Board shall elect from its members the following officers: President Vice President Other officers as the Governing Board may from time to time designate The Superintendent/President shall serve as Secretary to the Board. Secretary will perform the following duties: a. b. c. d. e. f. Prepare Board meeting agendas in consultation with the Board President. Have prepared, for adoption, minutes of Board minutes. Maintain a classified index of minutes and exhibits of documents. Attend all Board meetings or assign a designee. Attend all Board committee meetings, except closed sessions to assess the performance and/or consider the contract of the Superintendent/President. Sign, when legally possible, all documents which would otherwise require the signature of the Superintendent/President and/or Clerk of the Board. Adopted: __________ ADJOURNMENT