The Peralta Colleges Governing Board
Audit and Finance Committee Minutes
District Boardroom
February 11, 2010
Present: Trustees Withrow, Gulassa, Riley, Chancellor Harris, Presidents Inclan, Acting
President Webb, Wise Allen, Alton Jelks, Sadiq Ikharo, Connie Willis, Gail Waiters,
David Betts, Jeff Heyman, Karolyn van Putten, MaryBeth Benvenutti, Joseph J. Bielanski
Jr., Pieter deHaan, Bob Grill, Tom Henry via conference call, Sanjiv Handa, Diana Lara,
Helene Lecar, Helena Lengal, Jim Grivich, Jennifer Seibert, Peter Wantuch, Gail Beal,
Shirley Slaughter, Linda Sanford, Helene Maxwell, Heidi White, Susan Schacher, Neal
Dunlop, Linda Sanford, and Shirley A. Coaston.
1.
Benefit Trend Analysis (Jennifer Seibert)
A presentation was given on benefit trend analysis. Meeting materials are posted on the
Peralta website: http://www.peralta.edu/apps/docs.asp?Q=1709 $12.4M was spent to date this year for active and retired employee benefits. $21M is anticipated for this year.
Peter Wantuch from PSW shared alarming trends, which he hopes can help prepare us for the future. Claims are 50% higher in the last 12 months than previously shown. There were $1.1M in claims in excess of $100,000/individual from all Kaiser employees based upon an analysis. Prescriptions, surgeries, medical, and emergency room visits are all up
50%. Wellness programs are being implemented in needed areas. Demographic information is also available. Our rates are higher than the average. The statistics presented are for active employees. The usage of medical benefits is directly related to the co-pay amount, and our co-pay is very low. There was a comment that a rise in copay could lead to more emergency visits. Mr. Wantuch shared that co-pay office visit costs are significantly lower than emergency room visit rates, and that he has not found that comment to be true. Jennifer Seibert conducted a study of other community college districts co-pay fees, and we are in the middle of the range at a $10 co-pay. A Core source claim analysis was shared. There are often more visits during hard times and before individuals are laid off. Both usage and severity were examined, and they are both up significantly. Peter recommended 0-5% contributions, as an option. 15% increase is anticipated in our health care costs. Our average past increase was 8%. Blue Cross may increase their costs by about 38% for their individual plans. A SERP retirement plan presentation was also made by Ms. Gail Beal from Keenan.
2.
EasyPass Program Funding (James Bracy)
An update was given by Dr. Allen on the EasyPass program. The problem is that students are not paying the EasyPass fee of $31/semester. We are $300,000 short in collections from students. We are negotiating with AC Transit, hoping to pay them only what we collect, and no more. They have placed us on notice that if we don’t come to an agreement by the end of March, that they will terminate the program. The students voted on and passed this initiative, giving approval to pay for the program. We are building something into the system to try to collect the student fees, but there have been
Peralta Community College District 333 East 8 th Street Oakland, CA 94606 466-7203

Board Audit and Finance Committee: February 11, 2010 complications, due to BOGG waiver and Financial Aid student status being sorted out, and students having to personally go to the college bursar’s office to lift their enrollment hold to pay the fee. Trustee Withrow shared that only 7% of the student body voted for the initiative, which was another problem. The trustees are getting far more e-mails complaining about the mandatory fee from students than positive program feedback. AC
Transit won’t accept a voluntary program, but has a minimum threshold. Jim Bracy can provide additional program information to anyone who needs it. AC Transit is also having state funding and revenue concerns.
3.
Inspector General’s Report (Gail Waiters)
This item was tabled until the next meeting.
4.
Status of the External Audit (Heidi White, Dr. Wise Allen and Tom Henry),
Budget Update (Tom Henry), and Financial Systems’ Update (Tom Henry)
Heidi gave an update on the audit. She does not want to submit an artificial date for when it will be complete. March 31 st
is a deadline for Federal audits, but it can also be extended. She recommends that the District request a 90 day extension. Issues also need to be addressed from 2007-2008. PeopleSoft is also not able to produce timely, accurate reports for the auditors. These issues will also take time to correct. Document request items from the auditors were delegated to the recovery team. Tom Henry is confident that we can address the audit issues in time. Heidi shared that the actual qualifications to the 2007-08 are the only issues being addressed, with 11 material weaknesses. Some of them have been addressed, but not the internal controls. The financial information is also being put into the Primavera database system, which will assist the process. Information needs to be posted to the general ledger in order for the auditors to use the information.
This could be an organizational, people problem. PeopleSoft was not completely configured. A list has been created to assign the duties to execute the problems by internal users now and in the future. Accreditation will look at the progress in this system. We also are working toward sustainability into the future. The business office had weaknesses in leadership and accountability. The Chancellor shared that the recovery team is identifying the problems and assigning responsibility for the problems.
Once the books are closed, a new structure will be pursued. We may need an internal auditor or analyst in the Finance department, which has been lacking. Previously, we had the Legacy system for many years, prior to switching to PeopleSoft, which will take time to integrate down to all of the users. Training and new user groups will be explored for this challenging PeopleSoft system. Tom Henry has met with the Academic Senate,
Classified Senate, student leadership, College Presidents, College business staff, and many user groups, with clear, consistent messages. Our software has necessary codes, but connections need to be made, which is called configuration. This is now being implemented. It was intended to have staff configure the system, but it didn’t work out that way, and consultants did much of the work. Tom Henry was thanked for coming to
Laney College multiple times to speak to all of the interest groups in a succinct and open manner. Past training was seen to be insufficient with a discussion of the features, but no interactive teaching. Desk reference manuals would have been helpful, due to staff
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Board Audit and Finance Committee: February 11, 2010 turnover. The colleges felt the system was not complete and didn’t meet their needs.
Trustee Riley is very pleased with the recovery team’s effort. President Inclan commended the recovery team. Steps will be taken to include the college business offices in stages. The general plan was described leading to implementation. An accomplishment chart was suggested to track our future successes, listing the responsible person, updated over time, which was suggested as a Board report. Heidi is looking forward to the process.
5.
Financial Status Report (Neuberger Berman, Pineapple Group and Dale Scott and Co)
Dan Smith and Gordon Froeb from Neuberger Berman gave a presentation on the trust fund from the OPEB bond sales. Large cap equity is 30%, divided between value and growth. The upper left hand corner on page 13 was pointed out. Asset allocation is assessed every other week. Mark Harris, The Pineapple Group, added a few comments about our investments. He is an advocate on behalf of Peralta with Neuberger Berman.
Peralta invested on the lower end of real estate investment REEFs in our portfolio. Some investment policies have laid dormant, such as emerging managers, and he needs Board direction on that issue. This will be considered at a future meeting.
Next meeting: Tentatively scheduled for March 11, 2010 3- 5 p.m. District Boardroom.
Respectfully submitted,
Roxanne Epstein
466-7203 repstein@peralta.edu
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