MEETING OF THE FINANCE COMMITTEE
OF THE BOARD OF TRUSTEES
HOUSTON COMMUNITY COLLEGE SYSTEM
July 19, 2001
Minutes
The Board of Trustees of the Houston Community College System held a Meeting of the
Finance Committee on July 19, 2001, at the System Administration Building,
Chancellor’s Conference Room, 12th Floor, 3100 Main, Houston, Texas.
Members Present
Herman Litt
Jay K. Aiyer
Member Absent
Michael P. Williams, D.Min, Chair
Other Board Members Present
Bruce Austin, Ex-Officio
Administration
Bruce Leslie, Chancellor;
Charles Cook, Vice Chancellor, Educational Development
Jose Villarreal, Vice Chancellor, Economic Development
Pat Williamson, Vice Chancellor, Institutional Development
Sue Cox, President, Southwest College
Jack Daniels, President, Central College
Margaret Ford, President, Northeast College
Gloria Walker, Executive Director, Accounting Operations
Nat Campos, Executive Director, Human Resources
Others Present
Arturo Michel, System Counsel, Bracewell & Patterson
Lola Slater, Risk Management Advisor
Other administrators, citizens and representatives from the news media
Call to Order
Mr. Litt called the meeting to order at 5:05 p.m. and declared the meeting convened to
consider matters pertaining to the Houston Community College System as listed on the
duly posted meeting notice.
Renewal of Property/Casualty Insurance
Ms. Walker explained that property and casualty insurance was renewed annually. The
current contract was bid three years ago, this being the third year. Lola Slater, risk
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Finance Committee – July 19, 2001 – Page 2
management advisor, acknowledged that although premiums had escalated
dramatically this year, she was able to negotiate favorable terms for educator’s legal
liability, professional and general liability.
Proposed Budget for FY 2001-2002
Dr. Leslie explained that the budget development process was initiated in response to
directives given to him by the Board at their December 2000 retreat. He was asked to
ensure a strategic budget process, identifying critical priorities and implementing a
management system to more effectively administer and manage the budget. Members
of Dr. Leslie’s executive team presented the budget development process, the various
components and priorities. They also responded to questions and comments from the
Trustees.
Recruitment and Retention
Dr. Charles Cook advised that HCCS needed an annual growth rate in enrollment of
approximately 5%. Retention rates must be increased by 5% over the next three years.
The nursing program will be a major focus in conjunction with the state to increase
number of registered nurses.
He then directed the Board’s attention to a major Coordinating Board initiative called
“Closing the Gaps by 2015.” According to this plan Texas lags behind the national
average in the number of students enrolled and graduated from higher education,
especially in Hispanic and African American populations, which are also the fastest
growing. If this trend continues, by 2030 Texas will have a less skilled workforce,
diminishing competitiveness and diminishing social stability. To meet the plan’s goals
HCCS will need to enroll 30,000 students by 2015, a 91.7% growth rate. A 200%
growth rate is necessary for Hispanic students, 58.3% for African Americans and lesser
rates for Asian/Pacific Islanders and whites. Dr. Cook pointed out we must increase
awards by 75% to catch up and meet state goals in terms of the number of certificates
and Associate degrees awarded. Part-time retention must be increased by 6%.
Improving learner services is a critical priority. There are plans to launch an aggressive
marketing and outreach effort, particularly in underserved communities, with emphasis
on the central, southeast and northeast quadrants. Dr. Cook also discussed factors
necessary to improve student retention. Students need assistance in identifying goals,
declaring a major and monitoring their success. At the institutional level, students must
be engaged academically and socially to foster a sense of belonging. External factors
must be addressed as well. Students must have assistance and information about
financial aid, childcare, transportation, employment assistance and general support.
The Trustees agreed on the need for an aggressive recruitment and outreach program
and felt grant monies should be sought. Dr. Leslie advised he would seek a firm to
assist in marketing efforts.
The proposed budget includes $800,000 for recruitment and retention activities, $1
million for targeted marketing activities and $300,000 for new programs including
Histology at Southeast College, Environmental Technology at Northwest College,
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Finance Committee – July 19, 2001 – Page 3
Biotechnology at Northeast and carpentry at Central College. Mr. Litt asked the team to
ensure that counseling resources were adequate to need student needs.
Human Resources
Mr. Campos reviewed components of the Human Resources plan.
Position Control Plan (PCP) – this plan serves as a management tool to maintain
staffing levels and determine needs. The PCP identifies and tracks approved budgeted
positions and provides insight into actual expenditures for positions that have been
filled, monies that have not been spent and positions that have not been filled
throughout the year. Unnecessary positions would be eliminated; however, Mr. Campos
noted that no reduction in force was planned.
An increase in class size from an average of 19 to 21.5 was proposed. Dr. Leslie
pointed out that we need a class size model. Small classes are sometimes necessary;
however, they are often made available due to poor management or the lack of
collaboration among colleges, requiring the hiring of additional adjunct faculty. The
larger class size reduces the dependency on adjunct instructors and reduces costs.
Compensation Plan – the compensation plan would identify efficiencies, personnel
costs, and prioritize wants and needs. The lab/lecture ratio would be increased, making
it easier to recruit part-time faculty. It would cost approximately $1.5 million to
implement the plan in September 2001. Mr. Campos reported that the Buck Market
Study, which evaluated all jobs in comparison with market standards, was virtually
complete but needed some refinement as well as a plan to communicate the results to
faculty and staff. He proposed postponing implementation until January 2002. Under
this study, 300 of 963 staff members would be brought up to market standards and
about one-third of 734 faculty members. Mr. Campos explained that the consultants
would provide Human Resources with software to perform internal market analyses on
a periodic basis.
A 4% across the board cost of living increase would be implemented in September at a
cost of $3.1 million. Part-time/hourly support staff and adjunct faculty would also
receive an increase. Adjunct salaries must be increased in order to remain competitive.
A total of $6.4 million has been budged for implementation. A 5% personnel reduction
is expected through attrition, saving approximately $21 million. A savings of $4.5 million
is anticipated from unfilled positions and by pro-rating salaries of people hired
throughout the year.
The Committee wanted to know how the faculty had reacted to the market study. Mary
Page, Faculty Association President, replied that faculty was included in the process,
but had some concerns with the Buck Study. She added they were appreciative of the
salary increases, especially for adjuncts and lab/lecture.
Mr. Aiyer initiated a discussion on the possibility of outsourcing or privatizing some
departments to alleviate administrative functions and concentrate on learning and
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Finance Committee – July 19, 2001 – Page 4
teaching. The Trustees felt it was necessary to address this issue in terms of policy.
Dr. Leslie added he had looked into outsourcing, but only on a small scale.
Performance Management Plan – Mr. Campos discussed the final component of the HR
plan, which proposed rewarding higher performing employees with additional
compensation. Mr. Litt recommended investigating other innovative compensation
models and asked for salary comparisons with comparable community college systems
in Texas.
Facilities Assessment Plan
Dr. Williamson presented an operational plan for evaluating facilities maintenance and
building infrastructure. For 2002 she proposed holding to the base budget for the 3100
Main budget, reapportioning 22% of 3100 Main operations to auxiliary funds to be
covered by tenant rental, outsourcing the tenant portion of the management;
outsourcing moving and filling four key management positions. The cost of filling the
four positions would be $250,000. HVAC operations have been outsourced and she
proposed doing the same for major electrical, plumbing and life safety maintenance
repairs. A maintenance supervisor would be hired at each college to monitor contracts.
Emphasis would be placed on controlling energy costs and implementing an energy
monitoring and conservation program. Central monitoring capabilities would be added
for Codwell Hall, Roland Smith Truck Driving School and Stafford Campus. Energy
growth would be limited to a 20% increase and an improvement program would be
implemented at Central College. The cost of adding controls would be $400,000 spread
over 3 years, with first year costs of $150,000 coming from the operating budget. She
indicated we want to improve operational efficiency and infrastructure, since our
operational costs are high compared to other similar institutions. Maintenance and
operational activities would be benchmarked and compared with other institutions to see
how we can bring our costs down. Deregulation will also present opportunities for
savings. The cost of the new systems was estimated at $350,000.
Hermes Reed, 3DI and a team of architects conducted a Level I assessment of all
buildings and the detailed findings will be presented to the Board in August. The
assessment was conducted in order to determine the budget implications for the year.
In addition to the assessment, preliminary master planning was conducted at each of
the colleges. From this data, decisions can be made concerning the condition of
existing buildings for master planning purposes. Certain buildings were identified as
beyond repair and would be declared as surplus. These included three small buildings
located at Central College and the Tuttle Building. The Board had already declared
Clara Road as surplus.
The Level I Assessment identified about $67 million in deferred maintenance, primarily
for Central College. Deferred maintenance was divided into five priorities, the highest
being life safety issues. Priority measures are needed for buildings we plan to occupy
long-term. For next year $835,000 was recommended for specified projects, to be
moved from the operating budget into the plant fund. The remainder of Priority I and II
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Finance Committee – July 19, 2001 – Page 5
projects included buildings we do not plan to occupy long-term or are marked for gutting
and renovation, i.e. San Jacinto Memorial Building. She proposed the creation of a
contingency fund of $1.7 million for emergency repairs, the majority of which would be
used for Central Campus. Out of the operating budget for next year, a total of $1.2
million was proposed in the operating budget for positions, outsourcing maintenance
contracts, and implementing energy efficiency measures; in the plant fund for
implementing monitoring controls, addressing critical priorities; and a contingency fund
of $2.6 from the plant fund, for a total of $3.8 million.
Dr. Leslie will implement a quarterly evaluation of expenditures in order to reallocate
funds as needed. He will present these items to the Board periodically in a series of
reports. The Executive Team will regularly evaluate budget management for better
efficiency. A program review process will also be implemented. A review of advisory
committees will be led by Dr. Cook to ensure they are structured properly and operating
effectively. The hub process will also be reviewed in light of concerns over
effectiveness. The basic hub concept is sound, but needs improvement.
The Chancellor also mentioned additional priorities for the year including the elimination
of duplications across the System, implementing College to Standards, and reviewing
aggregate funds to identify training, marketing, technology and equipment funds for
more effective use of resources.
Michael Kyme will assess and improve Purchasing operations and look into various
purchasing consortiums, such as the one offered by the Texas Association of
Community Colleges. Mr. Austin suggested looking into replacement pools.
Dr. Leslie spoke briefly on the remaining priority items:
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Centralizing appropriate System wide materials services
Program Assessment
Improving the Registration Process
Expanding Continuing Education
Establishing College Incentive Model
Creating Profit Centers
Revenue and Expense
Ms. Walker presented a balanced budget of $179 million, with no increase in tuition,
fees or ad valorem taxes. Appropriations and increases in valuations and enrollment
were expected to yield revenue of $179 million, compared to 169 million last year.
Appropriations were estimated at $66.7 million based on a 6.7% enrollment growth.
Dr. Leslie was asked to provide the Trustees with a summary of critical issues, a copy of
the proposed budget and to contact those Trustees not present to schedule a briefing.
A shortened budget presentation will be made at the July board meeting and a public
hearing will be scheduled prior to the August board meeting.
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Finance Committee – July 19, 2001 – Page 6
Financial Stability Policy
Dr. Leslie proposed a policy for a range of 8-10% of the fund balance being held as a
basis of resources in case it was needed. The Trustees had previously raised the
question of why a range was necessary. After further research it was determined that a
range would allow flexibility without triggering an internal audit exception. In addition, as
the budget increases it may not be able to grow the fund balance as quickly.
Taxation Calendar
Since the Board must approve a tax rate by October 1st, Dr. Leslie proposed a
September 25 board meeting. A public hearing will be held prior to that meeting and
Ms. Walker advised that a quorum of Trustees would be required at that hearing.
Adjournment
With no further business to come before the Committee, the meeting was adjourned at
7:51 p.m.
Minutes Prepared by:
Reliable Transcription Services
Reviewed, Finalized and Submitted by:
Herman Litt, Secretary
Board of Trustees
Minutes Approved as Submitted:
August 25, 2005