PERALTA COMMUNITY COLLEGE DISTRICT
AUDIT AND FINANCE COMMITTEE MEETING
MINUTES
Date:
Location:
Start time:
End time:
October 3, 2007
Chancellor’s Conference Room, District Office
5:00 p.m.
7:11 p.m.
PRESENT:
Bill Withrow, Chair
William Riley, Trustee
Abel Guillén, Trustee
Gail Waiters, Inspector General
Tom Smith, Vice Chancellor for Finance and Administration
Sadiq Ikharo, Vice Chancellor for General Services
Joseph Bielanski, President, District Academic Senate
John Banisadr, Purchasing Compliance Manager
AGENDA:
1.
2.
3.
4.
5.
6.
7.
8.
9.
Review and approve the agenda.
Review and approve the minutes of the July 12, 2007 meeting.
Status of contract with the Pineapple Group and Dale Scott & Co.
Review action plan for sale of $100 million of General Obligation
Bonds
Review status of the “management letter” from external auditors
Status of budget and current financial condition.
Report by the Inspector General.
Discussion and recommended actions deemed appropriate for the
Inspector General to establish an audit routine relative to the
Accreditation Process.
Review status of the audit of the purchasing role from the standpoint of quality control and communications.
Chair Withrow opened the meeting at 5:00 p.m. Agenda was approved by both Trustees
Riley and Guillén. Item #2, approval of July 12, 2007 minutes, was tabled until the
following meeting as neither Trustee Riley nor Guillén was present at the July 12
meeting.
Vice Chancellor Smith was participating in a conference call and would be late, so Chair
Withrow began with agenda Item #9.
Review status of the audit of the purchasing role from the standpoint of quality control
and communications. (IG Waiters)
Ms. Waiters requested committee input on which area was most critical to focus on
since there are so many different variables. Ms. Waiters identified the two most critical
areas as contract administration and purchasing. With quality control and
communications, there is a standard checklist on how to do this. IG Waiters thought it
would be helpful to have John [Banisadr] identify specific areas of concern. The
Trustees concurred that they do not want to start the audit without a specific direction.
October 3, 2007
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VC Smith arrived, so Item #9 was tabled.
Status of contract with the Pineapple Group and Dale Scott & Co.
VC Smith distributed copies of the contracts with Dale Scott and the Pineapple Group;
plus a comparison sheet regarding fees of other districts that issued bonds. He
indicated that an analysis of cost of issuance was in line with three other districts
issuing comparable amounts of bonds. He also provided Exhibit A which provided a
cost of issuance for Peralta Community College District.
Trustee Guillén questioned the process for how Peralta chose these services and if
procedures are in place for procuring contracts and working with vendors. He believed
it was the policy of the Board to use competitive procedures when using consultant and
if we are not going through competitive procedures what are we doing to set up the
waivers. VC Smith stated that Dale Scott came in 2000 for Measure E bond.
Trustee Guillén asked what did the District go through to select others to be allowed to
do some of this work, if District, for any reason doesn’t need process to be competitive,
then what is the process.
VC Smith stated this is professional services; Dale Scott had worked for two chancellors
at Peralta. The District brought Mark Harris in when it was decided there was a very
large OPEB problem. Mr. Harris is very bright and has worked with Chancellor Harris
before and worked with pension bonds for the City of Oakland. If you look at service we
receive from them, we are ahead of other areas in the state.
Trustee Guillén’s concern is that the District is following our procedures and if we are
following our own guidelines, i.e., was an RFP actually prepared after Measure E;
Measure A is new proposal, did we follow the same procedures.
VC Smith indicated that the Chancellor wanted a second firm, this was when the
Pineapple Group was brought in, and the contract was extended in 2006.
At this point, discussion ensued regarding Peralta’s policies and procedures for
professional services. There is a policy for professional services, it is not a competitive
process, the District can request proposal from professional services companies, but
price is not the only factor. It is an “open” process, where the District receives
proposals and whether the District accepts or not is based on the criteria.
Trustee Guillén expressed concern that we are not following our procedures by putting
certain professional services contracts out to bid, i.e., selling the bonds. He stated that
taxpayers paying into the District should be able to compete for business. Chair
Withrow indicated that Board looks at policy to see if it has been implemented and if
District is conforming with policy, but procedures come under the Chancellor and the
Chancellor can override because he implements the procedures.
IG Waiters mentioned that this would be one of the areas she will be looking into. She
believes the Board policy needs to have more direction for the administration of
purchasing.
Chair Withrow indicated that the Audit and Finance Committee had interviewed five
firms for financial advisors. They chose Goldman Sachs based on what they could offer
us as a whole. He also indicated that it may not be good business to rotate financial
advisors. He believes the District has a lot of confidence in this group and they have
saved the taxpayers money in the long run. He is aware that the issue is the process,
October 3, 2007
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not necessarily the qualifications. VC Smith followed up that one of the key roles of the
financial advisors is monitoring all of the performance plans and giving advice on how
we should be handling the investments.
Trustee Guillén is concerned with the fees the District is paying for this financial advice.
He believes we should be more competitive in the process prior to selling the bonds. VC
Ikharo stated that state laws and vocational code defines legislative intent to have a
process that is open and do a formal bid for expenditure of tax dollars; yet professional
services is exempt. He further mentioned that we do due diligence by requesting
proposals, but it is contingent on Board Policy and application of that policy under the
public contract code that is lacking.
Chair Withrow said that as a Board we need to do a better job of defining the Policy and
make it more conclusive in giving direction to the District. When Board is looking at
procedures, it is not fair to Chancellor, because this area reports into him. At this
point, in regards to Dale Scott and Mark Harris, we are in the middle of the second year
of a five year contract, and they will continue as our financial advisors. Chair Withrow
suggested drafting a policy that addresses all of the issues going into the capital
markets and what is delegated to the Chancellor and what should be coming back to
the Board specifically. He would not support holding up on the $100 million bond sale.
Trustee Guillén reiterated that he believes this should be an open process and the
District has the best deal to this point because he can’t say there is a substantial
process that we went through.
VC Smith distributed Income Statement to committee and left for another meeting.
Review status of the audit of the purchasing role from the standpoint of quality control
and communications (IG Waiters).
Mr. Banisadr explained that the District has purchasing policies and procedures and
for quality control we try to educate people in the do’s and don’ts for purchasing.
Currently, Merritt, Laney and Berkeley have received training in purchasing policies
and procedures. Alameda is next. Each year a sample of contracts is pulled and
audited by the external auditors.
Chair Withrow requested copies of Purchasing manual for committee members.
Part of the problem with bidding is that some companies do not like to do government
work based on the fact that they need to provide a bid and it is a slow process. This is
the reason that we may only have one bidder. Sometimes we may have up to nine
bidders if contract work is in a slow period. This issue is not peculiar to Peralta, it goes
across the board in the public sector.
Another issue is on the required bond, some vendors max out on their bond. VC Ikharo
mentioned that his department is working with Thuy Nguyen (General Counsel) to see if
District could waive a bond or insurance while still holding the contractor responsible.
IG Waiters stated when you have a professional services contract, there is a list of
deliverables and the dates and percentage of dollars that go along with that. She said it
seems to be unclear answer as to whether deliverables have been met.
VC Ikharo said if construction, the project manager signs off when work is done; with
professional services the contract manager signs off. IG Waiters indicated this makes
it difficult for purchasing because they get things after the fact.
October 3, 2007
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Report by the Inspector General (IG Waiters)
Follow up on international education, it was IG Waiters understanding that there was
going to be some next steps to Standards and Management Committee. One trustee
asked to review strategic plan and she thought there would be some direction. Her
initial concern is that she has not received a response, it went to Board.
Chair Withrow will follow up to ensure IG Waiters and Joseph Bielanski receive status.
The report initiated under Audit and Finance, but follow up action should be
operational management.
Discussion and recommended actions deemed appropriate for the Inspector General to
establish an audit routine review relative to the Accreditation Process. (IG Waiters)
IG Waiters distributed a document she prepared by taking the accreditation standards
from WASC and putting them in a table with categories and definitions where you can
make comment of disposition for each item.
Chair Withrow wanted a project management tool for the Board’s use with a scale of 1
to 10 to keep track of what is okay and what needs improvement. The intent was to
have IG look into accreditation to ensure that we have a process to indicate if we have a
serious problem so that we can fix it prior to it becoming a warning.
VC Ikharo indicated that the VP of Instruction should be doing this on behalf of each of
the colleges. He indicated that the District is already working on this.
Joseph Bielanski, President of the Academic Senate, suggested that IG Waiters attend
an accreditation meeting and bring in the VP’s to review the tool.
Meeting adjourned at 7:11 pm
October 3, 2007
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