PERALTA COMMUNITY COLLEGE DISTRICT
AUDIT AND FINANCE COMMITTEE MEETING
MINUTES
Date:
Location:
Start time:
End time:
January 23, 2009
Chancellor’s Conference Room, District Office
4:00 p.m.
5:20 p.m.
PRESENT:
Bill Withrow, Chair
Cy Gulassa, Trustee
Thomas Smith, Vice Chancellor Finance and Administration
Gail Waiters, Inspector General
Diana Lara, SEIU Local 1021 Chapter President
Abigail Brewster, SEIU Local 1021 Publicity Coordinator
AGENDA:
1.
2.
3.
4.
Review and approve the agenda.
Review and approve the minutes from December 11, 2008
Discuss the status of the external audit for FY 2007-08
Discuss written report on the current status of all significant and
material weaknesses that were documented in the External Audit
Report for the fiscal years 2005-06 and 2006-07
5. Review status of California State Budget and prognosis for impact
upon The Peralta Colleges.
6. Report by the Inspector General.
7. Review audit report of the Peralta Colleges Foundation.
8. Review report on the financial issues involving the IT Department
9. Discuss the progress to date in developing and implementing
Program Based Budgeting techniques for the FY 2008-09
10. Review the status of the Retiree Healthcare Trust Investments and
modification of Asset Allocation to ensure that we are adequately
positioned for the future economy and financial market
Chair Withrow opened meeting at 4:18 p.m.; Item 1, agenda was approved. Item 2,
approval of the December 11, 2008 minutes will be postponed until the next meeting.
Item 3 – Discuss the status of the external audit for FY 2007-08 (VC Smith)
Audit not completed. VTD has too many clients, not enough people. The auditors were
here this week and will be here early part of next week. Do not have a time on when the
audit will be finished but it should be before end of month. Chair Withrow proposed
the next Audit and Finance Committee meeting be scheduled on Thursday, February
12th at 5:00 p.m.
Item 4 – Discuss written report on the current status of all significant and material
weaknesses that were documented in the External Audit Report for the FY 2005-06 and
FY 2006-07 (VC Smith)
Draft report provided to Chair Withrow. Report to include outstanding issues only. On
spreadsheet – Chair Withrow likes format. Accreditation committee going back three
January 23, 2009
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years, they want status and to find out if corrected. It is an area that is not Peralta
focused. A matrix is easier to review other than actual audit report.
Item 5 – Review status of California State Budget and prognosis for impact upon the
Peralta Colleges (VC Smith)
VC Smith said state is on third version of budget. The Governor’s January FY 2009-10
budget came out a few weeks ago and covers two fiscal years. This budget is the best
one for Peralta. Unemployment in California is expected to climb to 10%; believe in
retraining at community colleges so budget includes 3% growth, smart move by state
and Peralta will go after growth. There is statutory COLA of 5.2% which will not be
distributed. No fee increases for the students. Eliminated the FY 2008-09 COLA and
deferral of apportionments from January to July causing some Districts cash flow
issues.
We have Measure A money that we can borrow and put into the general fund, borrowed
$15M from Measure A. We want to make sure that interest is paid back; rather pay
interest to Measure A than to the county. Trustee Gulassa asked about who oversees
the money and does it show up in the budget. VC Smith replied that the county
receives a transfer authorization, so they know what Peralta is doing. This is done at
year end sometimes because you need a positive cash balance at June 30th; sometimes
we run short and we will borrow one day short and repay the next day.
Chair Withrow mentioned that sales tax in Washington DC is 10.5% and VC Smith says
Governor wants to increase California sales tax by 1.5%. Budget also includes increase
in vehicle registration fee, reduction of exemption credit, redirection of Proposition 10
(cigarette tax) and Proposition 63 (mental health tax – added surcharge to income tax
that is designated to help mentally disabled people). The propositions require voter
approval. Governor wanted some environmental issues waived to start infrastructure
projects right away.
Stimulus plan has good things for higher education; there is $4.5 billion for California
infrastructure. No earmarks in stimulus plan.
Item 6 – Report by Inspector General (IG Waiters)
No report.
Item 7 – Review of Audit report for the Peralta Colleges Foundation
The audit is not available. Chair Withrow wants it by the February 12th meeting.
Item 8 – Review report on the financial issues involving the IT department (VC Smith)
VC Smith said Mojdeh Mehdizadeh will present her report on Tuesday night in closed
session. It is a very good report. District is under spending in IT – to fill all positions
we need money and we need to stay in compliance with 50% law. Would like to defer to
discussion until closed session, the District is underfunded by $1.5 million.
District cannot keep spending Measure A money to solve IT problems. We are in
process of advertising for technical and functional people; if you don’t have support you
can’t keep the system up and running. VC Smith says District has additional
PeopleSoft modules which have to be implemented.
January 23, 2009
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Item 9 – Discuss the progress to date in developing and implementing Program Based
Budgeting techniques for the FY 2008-09
VC Wise Allen has lead and again it is a standard item for Audit and Finance
Committee and VC Allen should attend the February 12th meeting to say how the
Education Master Plan drives the budget. The Educational Master Plan will be ready
for the accreditation committee. VC Smith commented that the report is very good.
Item 10 – Review the status of the Retiree Healthcare Trust Investments (VC Smith)
Chair Withrow mentioned the one item (letter from) from Neuberger Berman (Lehman)
saying asset manager did not use brokerage side of Lehman to do purchasing. Had
they bought directly from Lehman with loss we probably would have been in litigation.
Lehman Brothers staff is under investigation for mortgage backed securities loss.
Chair Withrow requested that the record reflect Gordon Froeb (Vice President at
Neuberger Berman) met with him and VC Smith to discuss the new structure of
Neuberger Berman. They have lost three key personnel; who were not related to Peralta
accounts. His role is to convince Peralta they will be a stronger firm in asset
management than they were before. The creditors of Lehman are in fact a joint venture
corporation run by an investment management company and they convinced the
bankruptcy court not to accept Heller Friedman or Bain Capital. The creditors are
receiving a 49% interest and 51% to the employees. Important to Peralta as a stability
standpoint as they have an equity interest, and a majority of their income is deferred in
golden handshakes. Employees have 10 year tenure period; at the end of five years the
money will be theirs. This means that Morgan Stanley, Wells Fargo, et al cannot come
in and efficiently hire away the top talent because they would leave too much money on
the table.
Meeting adjourned at 5:20 p.m.
January 23, 2009
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