PERALTA RECOVERY TEAM UPDATE April 21, 2010 2008-09 Financial Closure and Audit On Thursday, April 15, 2010, at the Audit & Budget Committee meeting, members of the Audit & Budget Committee and the Recovery Team received an update from the VTD Auditors regarding the status of the audit report. There was some confusion regarding the expected timeline for the closure of the 2008-09 audit report and closure of the 2008-09 financial books. In the Board update dated April 13, 2010 the Recovery Team communicated the estimated timeline for the closure of the financial books and completion of the 200809 audit report. Essentially, those timelines have not changed and are consistent with prior updates on this matter. The dates are also contingent on the recovery effort going well without any unexpected surprises. As a reminder, the Recovery Team is hopeful that the financial books for 2008-09 can be closed in May 2010 and that the audit report completed subsequent to closure of the financial books. It must be emphasized that the Recovery Team is making every effort to provide the VTD auditors with all requests and to close the financial books in order to be able to communicate that effort prior to the June 10th/11th ACCJC Hearing. However, the timeline is very short and a great deal of work remains. At this point, it is more important for the closure of the financial books to be accurate as it impacts the development of the 2010-11 budget. The fact is, PCCD did not adopt a 2009-10 budget in a timely manner, did not submit the State report in a timely manner and did not close its financial books in a timely manner. We cannot change those facts. What is most important for the PCCD, is to acknowledge those facts and to correct the deficiencies going forward. We will further review this timeline and status at our Recovery Team meeting this Wednesday and also at the audit report status meeting this Thursday. Regardless of the ultimate completion, PCCD will be able to communicate to ACCJC progress todate, prior to and at the June ACCJC hearing. ACCJC Team Visit Members of the ACCJC Team visited the Peralta Community College District office this past Monday, April 19, 2010. Team members interviewed individuals representing the Board, administration, recovery team, auditors, staff and others. The general focus of the visit centered on three distinct areas; Governance/Leadership Fiscal Stability Technology /MIS It was clear that the PCCD has the opportunity to continue its effort in addressing outstanding issues addressed in previous ACCJC correspondence. It was suggested that any progress in the three focus areas could be communicated in monthly progress reports as well as testimony at the June 2010, hearing. As the Fiscal Adviser, I am recommending to the PCCD Chancellor the following: GOVERNANCE Place on the Board agenda, for future Board meetings, the following items for discussion and potential actions: A re-visitation, affirmation, and re-adoption of a Governing Board “Code of Conduct”. The roles and responsibilities of community college governing boards are spelled out in the Education Code, in Title 5 and in Board Policy. The Board of Trustees needs to concur that these responsibilities are essential to effective trusteeship. The Board is a corporate body. It governs as a unit, with one voice. This principle means that individual trustees have authority only when they are acting as a board. They have no power or authority to act or to direct college employees or operations. Governing Boards establish policies that provide direction and guidance to the Chancellor. It is important relative to accreditation that the Chancellor in concert with the Board of Trustees schedules a training session as soon as possible on Board leadership and governance as part of the Accreditation Standard IV. The Chancellor and Board needs to collectively evaluate the number and focus of the Board Sub-Committees’ as it relates to Standard IV and Eligibility Requirement 3. A good measurement to evaluate Board Sub-Committees’ is the following: o Does the Committee promote the College in the community? o Does the Committee advance partnerships with other entities in the community? o Does the Committee support the foundation and fundraising effort within the community? o Does the Committee refrain from operational and direct intervention into the day-to-day responsibilities of the CEO? o Does the Committee refrain from inappropriate influence in decision making by the CEO? The Board needs to conduct a “How Do We Rate Checklist”. Questions could include the following: o Have we created an environment in which the Chancellor has the power to lead the PCCD? o Have we delegated authority to the Chancellor to lead and administer? o Are we keeping the Chancellor informed, adhering to the rule of “no surprises”? o Are we honoring the Chancellor as the point of contact for the institution? o Do we fully consider information and recommendations offered by the Chancellor? o Are we supporting professional development for the Chancellor? o Are we adhering to the standards of Board ethics and ACCJC Standards IV relative to governance? o Are we ensuring that the Chancellor has the resources needed to do the job? o Do we respect and support the Chancellor? o Does the Chancellor always ask the Board to make major decisions with advance preparation? o Do we alert the Chancellor and Board about our concerns prior to going public with them? o Do all Board members receive the same communications from the Chancellor? o Do we make it a practice to share information and questions with other Board members and the Chancellor? o Do we keep the Chancellor informed about our contacts in the community, discussions with employees, policymakers and any visits to the Colleges related to College business? o Do we help the Chancellor in being effective by not making unnecessary demands on him? o Do we provide guidance, support, dialogue, information and feedback to the Chancellor? o Do we rely on the Chancellor for leadership and have confidence in his recommendations? o Is our time spent in governing and policy making, not managing, the institution? o Do we honor the professionalism of the Colleges (faculty, staff and administration) by allowing them to perform their duties? o As trustees, do we monitor ourselves carefully to ensure that offering opinions to the Chancellor and employees is not constructed as directions? o When issues arise, do we question whether the decision or action we are about to take reinforce our policy role, or is it an administrative decision? o Do the Board President and the Chancellor emphasize that individual Trustees’ opinions are simply opinion and that the only legitimate direction to the Chancellor comes form the Board as a whole? o Do we recognize that the Board (not a single Trustee) has the legal right to give direction relative to the day-to-day operation and mission of the PCCD, to only one employee, the Chancellor? o Have we done anything this fiscal year to foster trust? o Do we acknowledge that the Chancellor directs the faculty, staff and administration? o Are we willing to invest time in planning meetings to ensure success? o Do we model the behaviors that the Board values? (consensus building, starting and finishing on time, moving the agenda forward) o Do the Chancellor, Board President and other Trustees have a cooperative relationship? o Do we provide fair, consistent, and constructive feedback to the Chancellor? LEADERSHIP It will be important that the PCCD provide a timely update on the status of vacant administrative and key positions. I have had the opportunity to review the applications for the VC/CFO and believe there are a number of qualified candidates for that position. As fiscal adviser, I recommend that the process for filling that position move forward as soon as possible. We will need to indicate in the update to the ACCJC that the Chancellor’s position has been filled on an interim basis for one-year with Dr. Wise Allen and that the HR Director’s position has been filled on an interim basis for one-year with Dr. Trudy Largent. We will need to provide a status report for all other vacant administrative positions. It is critically important that the Board and Administrative leadership is able to communicate that the Governing Board is focused on the institution’s major issues and questions of policy. The Governing Board will need to delegate full responsibility and authority to the Chancellor to implement and administer Board policies and the operation of the Colleges. The Administrative leaders should likewise foster empowerment, innovation, and institutional excellence through dialogue that builds trust and increases focus on student learning and assessment of learning outcomes, institutional effectiveness, and integrity. FISCAL STABILITY As it relates to ACCJC Standard III (Fiscal Integrity and Stability), the Administration needs to develop a detailed plan with a timeline and fixed responsibilities to address both short and long term fiscal concerns, including obligations, debt retirement, reserves, and the State’s fiscal crisis and its impact on PCCD. As part of that process, the following key points need immediate attention: 2009-10 Adopted Budget Closing of Financial Books for 2008-09 and Preparation for Closing of Financial Books for 2009-10. Acceptance of 2008-09 Fiscal Audit Preparation and Adoption of the 2010-11 Budget Submission of all State and Federal Reports Consistent with Statutory Guidelines Reconciliation of Cash in all Bank Accounts Development of Fiscal Policies, Regulations, and Procedures to ensure appropriate management of the district’s fiscal resources. Clarification of roles, responsibilities and increased accountability; distribution of financial information to users; training on financial reporting and preparation of budget and financial audit. An analysis of the finance office relative to current and needed positions. Districts the size of PCCD typically have staff serving in the following positions: internal auditor, bond accountant, budget analyst and accounting analysts (revenue, categorical and construction accounting). These positions are missing at PCCD and are necessary for total recovery. TECHNOLOGY/MIS The Peralta Community College District (PCCD) is experiencing technical issues that are impacting its accreditation status, fiscal stability and state reporting. There are several items contributing to this situation, but the following key items are of major concern: The PeopleSoft software used to process financial, human resources and student information is not configured or utilized properly. As such, reports produced by the system have not been accurate, timely, or reliable. In the past, data from this system could not be used for decision making. Staff are not utilizing the system properly for effective internal controls and financial reporting. Staff members continue to need both technical and procedural training in data entry, retrieval and analysis. Leadership is moving forward in developing solutions to the known issues. Key functional/operational positions within IT and the Finance office are still vacant. The PCCD’s frustration and current experiences with the financial closure, adopted budget, state/federal reporting, financial aid reporting and past and current audit findings, can be directly related to the system’s and/or staff’s inability to produce timely and accurate data. In addition to the data concerns, there are numerous human resource issues related to the PCCD’s current status. It is speculation at this juncture, but one could surmise that inadequate training with PeopleSoft, coupled with ineffective and/or inadequate staffing have attributed to the dysfunctionality. CIBER provides consulting services for clients who purchase and implement products from Oracle/PeopleSoft. CIBER has been engaged with the PCCD since July, 2005-06. Initially, the PCCD conducted a “lab implementation”, and as such, there was no trial system. This meant that PCCD did not run a parallel system in H.R., Finance and Student modules. The CIBER consultant assigned on-site since July, 2007 provided expertise in the financial system. Until recently, CIBER had not assigned anyone on the functional student system side of the house since CIBER installed the “passport system” (student module system). As fiscal adviser, I recommend that the PCCD evaluate the current use of the CIBER consultants as well as the needed or unfilled positions within MIS division. A restructuring of MIS is merited. The PCCD also needs to examine the reporting of the Chief Information Officer to the Chancellor. Once fully examined, this position would be more suited in reporting to the Vice Chancellor/Chief Fiscal Officer.