PERALTA COMMUNITY COLLEGE DISTRICT
AUDIT AND FINANCE COMMITTEE MEETING
MINUTES
Date:
Location:
Start time:
End time:
January 24, 2008
Chancellor’s Conference Room, District Office
5:10 p.m.
7:00 p.m.
PRESENT:
Bill Withrow, Chair
Cy Gulassa, Trustee
Gail Waiters, Inspector General
Thomas Smith, Vice Chancellor, Finance and Administration
Gary Perkins, Chief Information Officer
Reginald James, Student Trustee
Sadiq Ikharo, Vice Chancellor, General Services
ABSENT:
William Riley, Trustee
Abel Guillén, Trustee
AGENDA:
1. Review and approve the agenda.
2. Review and approve the minutes of the December 13, 2007 meeting
3. Discuss the status of the FY 2006-07 external audit (Tom Smith,
Heidi White)
4. Review the status of the Retiree Healthcare Trust Investments (Tom
Smith, Mark Harris) FIRST
5. Review the Governor’s Budget proposal and discuss impact upon the
Peralta Colleges (Tom Smith)
6. Report by the Inspector General, to include status of the audit of the
Procurement function (Gail Waiters)
7. Review IT Strategic Financial Plan and current financial status (Gary
Perkins)
Chair Withrow opened the meeting at 5:10 p.m.
The committee reviewed the agenda. VC Smith indicated Mark Harris was unavailable,
but he has an update from Lehman Brothers and would like to go through discussion.
There is an appointment with CalPERS on Monday, January 28th at 10:00 a.m. in
Sacramento, Sheraton Palace Hotel. Discussion will be about shift in asset allocation
and logic behind it with the international emerging market down.
Item #2 – Review and approve the minutes of the December 13, 2007 meeting
The December 13, 2007 minutes were reviewed.
ACTION:
Upon a motion by Trustee Gulassa, seconded by Chair Withrow, the
minutes from the December 13, 2007 were approved.
January 24, 2008
Page 1 of 4
Item #3 – Status of the FY 2006-07 external audit (second)
VC Smith indicated cash reconciliation not finished. There are issues outstanding with
financial aid at BCC. Testing auditors did found 20% error rate. Vavrinek, Trine, Day
(VTD, external auditors) asked BCC to go back and review all records. This needs to be
reported to state and feds, other colleges passed. Audit should be wrapped up prior to
March 1st.
Item #4 – Review the status of the Retiree Healthcare Trust Investments (First)
VC Smith reviewed the December 2007 report from Lehman Brothers which was
received today. In international, investments have always been on the high side; fund
has made money, but has underperformed. Since inception we’ve gained $24M or
15.44% - outperformed the market for the month. VC Smith talked about suggestions
he discussed with Lehman today. Lehman would like to recommend 5% private equity,
fund of funds about 60 investments in venture capital, companies going public, etc.
There are benchmarks it can be measured to, best way to expose to private equity.
Chair Withrow thinks private equity reports are more meaningful than market based.
VC Smith wanted to review international companies we are and are not in overseas not in Russia, India, China, Malaysia, Africa, we are in Brazil (but only stock is
Petrobass) and Singapore. China and India markets are very expensive and not kind of
thing that we need.
Item #5 – Governor’s Budget proposal and discuss impact upon The Peralta
Colleges (VC Smith) (third)
VC Smith sent a memorandum to all employees in District to provide information on
what impact will be. The first cut is expected to be $770,000 and the District has
growth to cover the cut, no impact on colleges and will continue to spend 1351 money.
The base is 19,400 FTES and the cut is expected to be $9.2M in FY 2008-09. VC Smith
believes the State produced a budget with no cuts then went back and took out COLA
and growth estimated to be $5.5M. He believes we are not going to get a cut to the base
budget – worse case scenario is about $4M.
The Presidents have been asked to go back and do cuts at 2% and 4%. Chancellor will
have opportunity to say if 4% cut; college’s take 2% cut and 2% out of reserves. No
plan for layoffs. Cuts are in CalWorks, DSPS, EOPS, and Matriculation at about 1011%. We do not have freeze on hiring, but have suspended pending review based on
what budgets will look like. Whatever is cut in DSPS, we will need to make up.
CalWorks less people will be served. At BCC, it is kind of unique, growing up 25%
enrollment in increase of sections at 18%, don’t want to restrict growth have to go
through process of cuts – build out of remaining area is planned for Fall at BCC – some
costs will come out of Measure A. Chair Withrow stated that build out is space the
District was planning to lease and is not going to lease now. Need to do some tenant
improvement in space.
VC Smith told Lehman we are taking $5.9M out of fund to pay last year’s retiree
healthcare debt. Need positive balance at the end for the county.
Student Trustee James asked about EOPS, et al what are the alternate ways to get
funding. VC Smith indicated programs that will be out of favor in Sacramento will be
cut such as CalWorks, Parity Pay, hourly faculty; they will try not to cut EOPS and
matriculation. VC Smith said District will move forward with 21 full-time faculty and
five counselors.
January 24, 2008
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Item #6 – Report by Inspector General, to include status of the audit of the
Procurement function (IG Waiters)
IG Waiters update on procurement, some good news, spoke to three of four business
managers and one thing is they are very pleased with ongoing meetings with IT and
getting things done with the PeopleSoft model as it relates to purchasing. She received
log of issues they brought up and feel there is movement on a lot of things.
Bigger issues have to do with business processes and budget. Six items on budget
system that haven’t moved since October 2006 – budgets need to be loaded in timely
manner, budget transfers done instead of correcting errors, original budgets not in
PeopleSoft, original budgets should be available as a reference. Employees using
system, but don’t really understand where their problems are.
CIO Perkins stated that we are down in issues and there is a more recent document
that what Ms. Waiters had. Business managers have been trained to work with their
employees. VC Smith and CIO Perkins are working on the budget issues. Issues of
training, people unfamiliar with the way the process works. Using consultants to go out
and do training. RWD (consultant) working on documentation.
IG Waiters indicated that employees comfortable with system complain about how long
it takes to do one task, takes multiple steps. Chabot purchasing manager has Banner
System, he said that essentially Peralta has the Cadillac and Banner is second. When
you buy top of the line and need lesser, it will be more complex. There are so many
options, it becomes frustrating.
IG Waiters interviews with warehouse and receiving – it takes a long time to get things
when they come in, when you talk to receiving you see how much actually comes in.
One thing of concern is the warehouse supervisor can not do inventory because the
module is not up and running. They have slow moving or no moving inventory which is
about five to ten years old and taking up space. They are comfortable with current
inventory, but have $8K worth of items employees are not using.
VC Ikharo indicated the warehouse was set up to be a repository which issued items on
orders from colleges, then it changed, warehouse was not storing items. Paper is kept
because it is high volume; all supplies not being used are not being brought in to the
warehouse. Original intent if order was placed before 3:00 p.m. the order was brought
to you, colleges said they did not have people available when Corporate Express or
Office Depot made drop offs. Only District Office has ability for receiving and
warehouse delivers to the college. VC Ikharo is working with VC Smith and Lynn Long
(Local 39 Business Representative) to try and resolve who does the receiving.
IG Waiters need internal controls in place and have the inventory module up and in
place. Warehouse does not just receive, but they also need to deliver to the campuses
and district office.
IG Waiters stated another part of review is to look at small emerging local business
process. Asked for annual report for 2007, employee hired as compliance manager was
to have report available to Board – who is participating and what money is resolved.
This is specific to independent contractors and public works. Chair Withrow was
curious as to how this interacts with our overall procurement process.
Last thing, in regards to review of contract administration, trying to complete matrix of
independent contractors/consultants – things that are important in looking at, is the
January 24, 2008
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consistency between independent contracts and public works contracts. There should
be some consistency throughout. I’m looking to see if they have Tax ID number,
opportunities in working with district, total dollar amount, billings – what they
proposed vs. what they were paid.
The procurement process for Measure A is separate. VC Ikharo spoke about items
ordered through Measure A that were not on the original list presented to the Board.
There are delays in PO’s, some employees go out and buy things then expect to be
reimbursed. Trustee Gulassa stated management needs to resolve the problem not just
keep talking about it. Move step by step to fix it.
Item #7 - Review IT Strategic Financial Plan and current financial status (Gary
Perkins)
This item was postponed until a future meeting.
The meeting adjourned at 7:00 p.m.
Minutes recorded by Jennifer Lenahan.
January 24, 2008
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