STANDARD NINE

Financial Resources

 

The institution has adequate financial resources to achieve, maintain and enhance its programs and services. The level of financial resources provides a reasonable expectation of financial viability and institutional improvement. The institution manages its financial affairs with integrity, consistent with its educational objectives.

 

A. Financial Planning

 

A.1 Financial planning supports institutional goals and is linked to other institutional planning efforts.

 

DESCRIPTIVE SUMMARY

 

In May 1995, the Irvine Valley College community completed a formal Organizational Assessment (9.1). The purpose of the Organizational Assessment was to evaluate the appropriateness and effectiveness of the college's administrative organization as it related to both functional need and cost effectiveness. This self-study examined the organization of the administrative units of the college, supervisory relationships, the alignment of responsibilities within the administrative organization, and the interconnection between administrative offices.

 

The development of the Organizational Assessment (9.1) was a lengthy and collaborative process that involved an administrative group comprised of all of the college's administrators; a steering committee that included administrators, faculty and classified staff; and the college's governance groups as a collective.

 

In August 1996, IVC completed a Strategic Plan for the 1996-2001 period. The Strategic Plan included a series of planning assumptions that were based on area demographics, fiscal circumstances, employment trends, social dynamics and government mandates (9.2, page 8). Twenty institutional goals were derived from these assumptions (9.2, page 47) and these goals were further refined as six broad strategic planning themes (9.2, pages 9-10). Finally, action plans for the recommended strategies were developed that included identification of the responsible party, implementation dates, estimated costs of implementation, and/or revenues that would be generated by the activity to fund implementation costs (9.2, pages 11-39).

 

 

SELF-EVALUATION

 

The completed Organizational Assessment (9.1) included a number of recommendations for significant changes in organizational relationships and the assignment of responsibilities. These changes affected instructional, student services and other support areas. The completed Organizational Assessment was presented to the district Board of Trustees for information on May 8, 1995.

 

The college immediately proceeded to implement those organizational changes that did not have significant cost implications. Over the next year, all of the low-cost organizational changes included in the Organizational Assessment were completed. Funds for the implementation of more costly elements of the Organizational Assessment were planned for inclusion in future years' budgets.

 

On July 16, 1997, the South Orange County Community College District (SOCCCD) Board of Trustees reorganized the administration of the district (9.3). The administration of IVC's instructional and student services programs were significantly altered by the elimination of the School chair model, and the reassignment of five academic deans from Saddleback College to IVC. Academic Schools, as well as student services departments and programs, were reorganized and assigned to the new college deans. The college's Organizational Assessment is no longer reflective of the administrative organization of the college. The Board of Trustees has implemented additional administrative reorganization during the past nine months. The college has not been able to financially plan for these reorganizations until announced and implemented.

 

The completed Strategic Plan was widely reviewed by the college's governance groups and was adopted as a primary college-planning document. Priority funding for activities that were not revenue neutral were planned for inclusion in future year budgets. A second year review of the Strategic Plan monitored the implementation status of the Strategic Plan (9.4, pages 4-6) and made recommendations for changes as appropriate (9.4, pages 11-12).

 

The Institutional Effectiveness Survey was distributed to approximately 525 IVC faculty and staff members (9.5). Of these, 176 actually completed the survey, including 11 administrators; 67 full-time and 47 part-time faculty; 32 full-time and nine part-time classified; and 10 participants who did not indicate their staff affiliation but whose responses were included in the survey results. The Institutional Effectiveness Survey reflects a wide disparity of agreement regarding the financial planning efforts of the district and the college with only 21.8% of the 100 respondents agreeing that district level financial planning support the institutional goals of IVC (9.5, Item 142, Section Three, page 49) but 62.4% of 109 respondents agreeing that the college does support its institutional goals (9.5, Item 143, Section Three, page 50).

 

PLANNING AGENDA

 

No changes are recommended at this time.

 

A.2 Annual and long range financial planning reflects realistic assessments of resource availability and expenditure requirements. In those institutions which set tuition rates, and which receive a majority of funding from student fees and tuition, charges are reasonable in light of the operating costs, services to be rendered, equipment and learning resources to be supplied.

 

DESCRIPTIVE SUMMARY

 

In 1996, the district's Board of Trustees delegated authority for the determination of the district's budget processes to the academic senates of both Saddleback and IVC (9.6). The academic senates jointly developed the below-described district-level budget development process, which was subsequently adopted by the district Board of Trustees (9.7):

 

Financial Resource Advisory Committee (FRAC):

The Financial Resource Advisory Committee (FRAC) was established upon the recommendation of the academic senates of both Saddleback and IVC (9.7, page 4). FRAC is charged with the responsibility for meeting on an as required basis for the purpose of issuing public advisories on the financial condition of the district. This committee's membership includes representation from the college communities, district Fiscal Services and the Board of Trustees. While chartered to be a "watch dog" committee that monitors serious financial issues, the committee has met on only one occasion.

 

District Resource Allocation Council (DRAC):

 

The District Resource Allocation Council (DRAC) was also established upon the recommendation of the academic senates of both Saddleback and IVC (9.7, page 3). DRAC is the body that determines the ways in which financial resources will be distributed to the two colleges and district Fiscal Services. Each of the colleges has representation on this committee which regularly meets throughout the school year. The DRAC arrives at its recommendations as to the plan for annual budget allocations and makes its recommendation to the chancellor. The Board of Trustees provides the final step in the approval process by reviewing, revising as necessary, and adopting the allocation plan and the final budget in August of each year.

 

College Budget and Operations Committee:

 

The academic senates also recommended the continuation of local budget committees at each of the colleges. The college's financial planning efforts are centered on the annual development process for general fund and categorical budgets. Administrators, faculty and classified staff have the opportunity to participate in the budget planning and development process through involvement of the college's representative governance groups, and through representative participation on the Committee on Budget and Operations (9.8, page 2). The budget planning and development process generally commences in April and concludes in August with adoption of the final budget.

 

SELF-EVALUATION

 

Annual financial planning and budget development at IVC is largely dependent upon the annual revenue distribution formula developed by the District Resource Allocation Council (DRAC) and approved by the chancellor and board of trustees. Long range financial planning is limited, as the DRAC does not project college revenue allocations beyond the next fiscal year. The IVC Budget and Operations Committee meets throughout the school year to review district and college financial issues. The deliberations of the Budget and Operations Committee result in annual recommendations to the college president regarding the allocation of revenues above levels required to fund continuing college instructional and non-instructional programs.

 

Annual financial planning reflects realistic assessments of resource availability and expenditure requirements, and commences in the spring of each year with general fund revenue estimates provided by the district (9.9). Limited medium to long range financial planning is based upon factors including projected enrollment growth, program based funding increases in base revenue levels, and changes in local revenues.

 

The portion of the college's general fund budget that is annually available to support non-personnel costs and, thus, subject to discretionary uses also limits financial planning at the college. In the college's 1997-98 adopted budget, 92.4% of the general fund budget is dedicated to full-time, part-time and hourly salaries and benefits. The historical trend of reductions to the discretionary portion of the college's general fund budget is as indicated below:

 

 

Budget Year

Annual General

Budget

Personnel Salary

& Benefits

Per Cent

1993-94

$ 16,377,081

$ 14,158,209

86.45%

       

1994-95

$ 17,705,527

$ 15,457,043

87.30%

       

1995-96

$ 19,021,915

$ 17,052,903

89.64%

       

1996-97

$ 19,156,343

$ 17,567,168

91.70%

       

1997-98

$ 20,429,077

$ 18,879,279

92.41%

 

 

The decreasing amount of the college's annual general fund budget that is available for other than salary and benefits results in a budget condition that cannot adequately address the needs of the institution (9.10). Following are examples of the institutional impact resulting from this condition:

 

At this point in time, the college has classified employee vacancies that cannot be filled due to the lack of available general funds.

For the past several years, planned deficits have been included in the college's annual general fund budget for purposes of establishing a balanced annual budget. Each year, the college has anticipated that these deficits will be funded through various cost savings, or through the receipt of unanticipated revenues.

 

Adequate contingency reserve funds are not available to deal with unplanned or unforeseen expenditure requirements that develop during the budget year.

 

Funds are not available for new program development or the expansion of existing programs.

 

In March of 1998, the South Orange County Community College District Board of Trustees reached an agreement with the district's Faculty Association on a five year contract for the 1997-98 through 2001-02 period (9.11). This agreement includes provisions for cost of living allowances (COLA) for the 1998-99 through 2001-02 period, as well as increases in doctoral stipend amounts and other cost items. On February 27, 1998, the district vice chancellor, fiscal services distributed a cost analysis of the tentative agreement to the District Resources Allocation Committee (9.12). This cost analysis indicates that the net cost of the agreement over the five-year period will approach $5,650,000. IVC's vice president for business services prepared a cost analysis of the financial impact of the tentative agreement on the 1998-99 general fund budget (9.10). This cost analysis indicates the cost of the COLA for faculty as being $254,841 and $387,934 if the COLA is extended to all other employee groups. It is anticipated that the result of this agreement will continue the annual trend of decreasing discretionary general funds.

 

Of the 193 responses to Item 145, 52.7% agreed that annual and long range planning "reflects realistic assessments of resource availability and expenditure requirements (9.5, Section Three, page 50).

 

PLANNING AGENDA

 

1. The college's Committee on Budget and Operations will continue to carefully monitor the state of the college's general operating funds.

 

A.3 Annual and long range capital plans support educational objectives and relate to the plan for physical facilities.

 

DESCRIPTIVE SUMMARY

 

As a part of a districtwide effort, IVC completed a formal update of its Educational Master Plan and Facilities Master Plan in 1996 (9.13). The college was assisted in this revision of master plans by an architectural firm experienced in community college master planning. The master plans comply with the standards adopted by the State Chancellor's Office and included in the 1998-99 State Chancellor's Office Capital Outlay Design and Cost Guidelines Manual for the California Community Colleges (9.14).

 

The college's Committee on Facilities and Capital Improvements (9.8, page 3) annually reviews the IVC component of the district's Five Year Construction Plan and recommends needed revisions to the President's Council for approval. The college's 1996 Educational and Facilities Master Plan (9.13) is the primary source document for this annual review and update. The college provided its recommendations to the district for inclusion in the district's 1999-2003 Five Year Construction Plan (9.15) that is submitted to the State Chancellor's Office on February 1st of each year.

 

SELF-EVALUATION

 

The district's 1999-2003 Five-Year Construction Plan (9.15) identifies the following order of priority for unfunded construction needs at IVC:

 

Requested:

 

Priority

Project

 

Year of Funding

1.

Library Secondary Effects Remodeling

1998-99 (C)

   

1999-00 (E)

2.

Humanities Classroom Building

1999-00 (W)

   

2000-01 (C)

   

2001-02 (E)

3.

Corporate Yard - Phase I

1999-00 (W)

4.

Physical Sciences Building (B-200)

1999-00 (W)

 

Renovation Expansion

2000-01 (C/E)

5.

Performing Arts Center/Theater

2000-01 (W)

   

2002-03 (C/E)

6.

P. E. Swim Training Facility

2000-01 (W/C)

7.

Life Sciences Building

2000-01 (W)

   

2001-02 (C)

   

2002-03 (E)

8.

Studio Arts Building

2000-01 (W)

   

2001-02 (C)

   

2002-03 (E)

C = construction W = working drawings E= equipment

 

The South Orange County Community College District has received state funding during the past five years for the construction of the following instructional and non-instructional facilities at IVC:

Learning Resource Center (Library)

Gymnasium

Life/Fitness Complex

Child Development Center

Physical Education Fields and Courts

Fire Safety Access Road (Construction drawings only)

Library Secondary Effects Remodeling (Construction drawings only)

 

During the 1993/94 - 1997/98 period, the college's fall semester student enrollment has grown 15.5% from 9,500 to 11,243 (9.16). The Cumulative Capacity-Load Ratios at IVC following completion of the recently approved Learning Resource Center Secondary Effects Remodeling Project are as follows (9.15):

 

 

Cumulative Capacity Load Ratios

Lecture

80%

Laboratory

61%

Library

84%

Office

110%

AV/TV/Radio

55%

 

The last "instructional" building funded by the State and constructed at the college was the Computer Sciences and Technologies (B-300) Building that was completed in 1989. All growth in instructional and support programs from 1989 to present has been absorbed in existing facilities through increases in instructional productivity, through alternative scheduling on Friday evenings and Saturdays, or has been housed in temporary rented portable classrooms.

 

The current proposed 1998-99 State Chancellor's Office Capital Outlay Program (9.17) does not include any of the college's Five-Year Plan instructional buildings. The current method of funding capital outlay through the periodic approval of statewide bond issues is unpredictable and results in an inability for the college to do meaningful long range instructional planning. It is not considered feasible to develop local funding sources for major capital outlay projects in that Proposition 13 requires that bond issues for capital construction be approved by a 2/3 majority of the voters.

 

Tidal Wave II enrollment projections find that 240,000 new students will be enrolled in the state system by the year 2005. IVC will not be able to accommodate expected growth without the funding and construction of new facilities.

 

Each year the State Chancellor's Office establishes growth targets for each district in the system. These targets are in part based upon the demographics of each district and the expected population growth over the short to medium term. As the northern portion of the South Orange County Community College District is a relatively high growth area, the prospects for enrollment at IVC is higher than at many neighboring colleges. While student demand is high, the lack of instructional and other support facilities will limit IVC's ability to respond to this demand.

 

Of the 118 respondents to Item 141 of the Institutional Effectiveness Survey, 78% did not agree that IVC has annual revenues "sufficient to maintain and enhance the quality of its instructional and student support programs" (9.5, Section Three, page 49).

 

 

PLANNING AGENDA

 

1. The college will retain a Master Plan architect to update the 1996 Educational and Facilities Master Plan on a five-year cycle.

2. IVC will continue to maintain its part of the district Five-Year Construction Plan in a manner that reflects the facility construction priorities set forth in the college's Educational and Facilities Master Plan.

 

A.4 Institutional guidelines and processes for financial planning and budget development are clearly defined and followed.

 

DESCRIPTIVE SUMMARY

 

The district annually establishes and publishes a budget development calendar and guidelines (9.18) to assist the colleges with the development of their tentative and final budgets.

 

In 1987, the Saddleback Community College District adopted a revenue based budget allocation model for IVC, Saddleback College and district Fiscal Services. While the budget allocation model has been modified over the years, the general structure of the model remains essentially the same (9.19). The budget model allocates annual revenues to each of the college's based upon its previous year enrollments, rather than a more traditional analysis of expenditure patterns and needs. Salary and benefit costs for each of the college's instructional programs are considered to be fixed costs and are funded by the budget allocation model prior to the allocation of remaining revenues.

 

An IVC budget model has been developed and is annually used for the allocation of general operating funds. All general funds, other then instructional program salary and benefit costs, are considered to be discretionary. The college is therefore free to develop an annual expenditure plan and budget that best directs available revenues to meet the complex institutional needs of the college. In large part, the district's budget allocation model has allowed IVC to manage its own development without concern that its activities will negatively impact the other district operating units.

 

The following brief narrative describes the primary elements of the college's annual budget development process:

 

1. As a primary element of the budget development process, the district annually provides each of the colleges with an estimate of general fund income for the next fiscal year (9.12).

2. The college publishes an annual budget development calendar that is designed to meet district time lines for approval of both the tentative and final budget by the district's Board of Trustees (9.20).

3. The Committee on Budget and Operations is one of the college's permanent standing committees and serves as an advisory body to the President's Council (9.8, page 2). The membership of this committee includes representatives from the college's various instructional, student services, support area and student constituencies. This committee meets monthly throughout the school year and is responsible for the development of policy, guidelines and priorities for the implementation of the college's annual expenditure budget.

4. The Committee on Budget and Operations has chosen to utilize a "base budget" model as the methodology for annually developing the college's general fund expenditure budgets. In this model, the previous year's operating budgets are considered to be the funding base and are in large part replicated with appropriate adjustments in funding levels made to reflect changing program needs.

 

SELF-EVALUATION

 

The results of the Institutional Effectiveness Survey indicate that the processes for financial planning and budget development are well understood by the college's administrators, who typically serve as the college's budget managers, and by classified staff: all eight administrators responding to Item 144 of the Institutional Effectiveness Survey agreed that "guidelines and processes for financial planning and budget development are clearly defined and followed" (9.5, Section Three, page 50). However, only 44.9% of the 49 full-time faculty members responding agreed (9.5, Section Three, page 50). This concern may result from the lack of direct contact and involvement by faculty in the development of operating budgets for the areas to which they are assigned.

PLANNING AGENDA

 

  1. The college will clearly communicate the budget development process to the college community so that there is increased awareness of the manner in which the college is budgeted and managed.

 

A.5 Administrators, faculty, and support staff have appropriate opportunities to participate in the development of financial plans and budgets.

 

 

DESCRIPTIVE SUMMARY

 

In the Joint Academic Senate Policy proposal (9.7) the academic senates recommended the continuation of local budget committees at each of the colleges. The college's financial planning efforts are centered on the annual development process for general fund and categorical budgets. Administrators, faculty and classified staff have the opportunity to participate in the budget planning and development process through involvement of the college's representative governance groups and through representative participation on the Committee on Budget and Operations (9.8, pages 2-3). The budget planning and development process generally commences in April and concludes in August with adoption of the final budget by the Board.

 

SELF-EVALUATION

 

Fiscal and business services staff, as well as the Committee on Budget and Operations, conclude that the budget planning and development processes affords ample opportunity for participation in the planning and development of the colleges annual operating budgets. The results of the Institutional Effectiveness Survey confirm that 55.4% of the 112 respondents to Item 140 consider this to be true (9.5, Section Three, page 49).

 

PLANNING AGENDA

 

1. The college will continue to annually develop its operating budgets with the full participation of administrators, classified managers, faculty and staff.

 

B. Financial Management

 

B.1 The financial management system creates appropriate control mechanisms and provides dependable and timely information for sound financial decision making.

 

DESCRIPTIVE SUMMARY

 

The district vice chancellor, fiscal services is responsible for the fiscal management of the district. The district Office of Fiscal Services provides a wide variety of financial reports required for the proper management of the college's operating budget.

 

The district Office of Business Services prepares monthly and quarterly district financial statements for the Board of Trustees. Additionally, budget amendments and other financial transactions are processed to reflect changes in district and college revenues and expenditures. District staff provides accounting support for the college's general fund and categorical budgets.

 

The district Office of Business Services has recently extended "read only" access, via VAX (district computerized information system), for college personnel managing department or school budgets to real-time expenditure account histories. This access has given college budget managers the ability to better manage their financial resources on a daily basis.

 

At the college level, the vice president for business services is responsible to the college president for the proper management of the college's budgets.

 

SELF-EVALUATION

 

The college's vice president for business services and Office of College Operations staff provide regular support to college budget managers by producing budget development reports, monthly expenditure reports, dedicated revenue income reports, monthly income reports for Child Development Center revenues, monthly commission reports for food services and bookstore activities, and other miscellaneous reports as are requested.

 

PLANNING AGENDA

 

No changes are recommended at this time.

 

B.2 Financial documents, including the budget and independent audit, reflect appropriate allocation and use of financial resources to support institutional programs and services. Institutional responses to external audit findings are comprehensive and timely.

 

DESCRIPTIVE SUMMARY

 

The college's financial documents, including the budget, are annually developed to reflect the appropriate allocation and use of resources to support institutional programs and services. Each year the college's financial records are audited by the district's independent auditor (9.21 and 9.22). The audit includes all funds managed by the college including general funds, categorical program funds, funds of the Associated Students of Irvine Valley College, and the college Foundation.

 

 

SELF-EVALUATION

 

The annual district audit generally confirms that IVC's internal control systems adequately manage funds in the custody of the college. Audit exceptions are generally minor and are addressed and corrected in a timely manner. However, during the past two years, the college has been somewhat slow in addressing and correcting minor audit exceptions in the areas of Financial Aid and Foundation (9.21 and 9.22). Of the 104 respondents to Item 146 of the Institutional Effectiveness Survey, 52.9% agreed that the IVC budget reflects "appropriate allocations of financial resources in support of institutional programs and services" (9.5, Section Three, page 51).

 

PLANNING AGENDA

 

1. The college will continue to work towards a goal of no audit exceptions, and will improve its response time to correct any audit exceptions identified.

 

B.3 The institution practices effective oversight of finances, including management of financial aid, externally funded programs, contractual relationships, auxiliary organizations or foundations, and institutional investments.

 

DESCRIPTIVE SUMMARY

 

South Orange County Community College District staff provides all accounting services and support for college programs. All financial records resulting from local program activity are maintained at the district offices. The general oversight of the district's finances is a primary responsibility of the district vice chancellor, fiscal services and his staff. The college's vice president for business services is responsible at the local level for managing the college's financial affairs; for college budget development and control; for ensuring that college administrators, managers and staff are aware of their fiduciary responsibilities; and that cash and other negotiable financial instruments are properly controlled and managed.

 

In 1995, the college established a Financial Aid Office independent from Saddleback College. Prior to 1995, the IVC Financial Aid Office had been managed as a part of the Saddleback College Financial Aid Program. To establish an independent financial aids program, the college hired its first director of financial aid and additional classified staff. Since establishing its independent Financial Aid Office, financial aid grants and loans have grown in value from approximately $700,000 to an estimated $4,500,000 for the 1997-98 school year (9.23).

 

SELF-EVALUATION

 

The college's 1995 Organizational Assessment recommended the creation of the Bursar's Office (9.1, page 33). Since the adoption of this report by the college, IVC has significantly strengthened its financial controls through the establishment of a Bursar's Office that is responsible for the central processing and deposit of all cash receipts at the college and the disbursement of all financial aid checks. The Bursar's Office staff assists with the processing of deposits for the college Foundation, community and contract education, the Child Development Center, the Associated Students of IVC, the college's parking program and the Foundation.

 

The majority of respondents to the Institutional Effectiveness Survey agreed that the college practices "effective oversight of budgets" for general operating funds (82.1%), Financial Aid (76.8%), ASIVC (84.2%), Foundation (87.5%) and grant funded programs (55.6%) (9.5, Items 147-151, Section Three, pages 51-53).

 

As the Bursar's Office areas of responsibility have increased, staff has been added and new office spaces have been developed. The college's 1995 Organizational Assessment addressed the matter of increased responsibilities and workload resulting from the reorganization of the fiscal office (9.1, page 33). It recommended review and revision of the Budget Control/Fiscal Officer position that has resulted in plans to create a new classified management position. The college should move forward in obtaining the approval for, and the filling of, this position to provide critically needed supervision.

 

All accounting services and controls for the college's Financial Aid Program reside with the district. District staff coordinate the draw of financial aid funds from state and federal offices, provide expenditure accounting services, and ensure that the program is compliant with state and federal regulations.

 

The past two years' annual district audits have identified minor procedural problems in the college's financial aid program (9.21 and 9.22). The college has responded to these exceptions and has implemented corrective procedures.

 

PLANNING AGENDA

 

  1. The college will continue to develop and strengthen the Bursar's Office ability to provide required support to college departments and programs.
  2. The college will strive to establish the recommended classified management position in the Bursar's Office.

 

B.4 Auxiliary activities and fund raising efforts support the programs and services of the institution, are consistent with the mission and goals of the institution, and are conducted with integrity.

 

DESCRIPTIVE SUMMARY

 

IVC has two primary auxiliary organizations, the Associated Students of Irvine Valley College (ASIVC) and the IVC Foundation. The general organization, functions, goals and objectives of these organizations are as follows:

 

1. Associated Students of Irvine Valley College

 

The Associated Students of Irvine Valley College (ASIVC) was formed in 1979 as the student body governance organization. This organization's charter includes providing the below discussed support services to the college's student population and to the college community and programs (9.24):

 

To govern student activities through an elected student government organization.

 

To raise and provide funds in support of student and general college programs and activities.

 

To represent student views and perspectives regarding issues of institutional importance through participation on a wide variety of college and district committees.

 

To establish various student clubs that represent the interests of various segments of the student community.

 

To sponsor a wide variety of activities that provide educational, recreational, entertainment or enrichment opportunities for students.

 

2. Irvine Valley College Foundation

 

The IVC Foundation was established by the Foundation for the Saddleback Community College District in 1986. The IVC Foundation is a nonprofit organization that is governed by a volunteer Board of Governors comprised of community members, business leaders and college and district administrative leadership (9.25). The IVC Foundation is committed to supporting IVC by building and maintaining a positive image of the college in the community.

 

SELF-EVALUATION

 

IVC has structured its two auxiliary organizations to ensure that each operates in support of the college's goals and principles. The following discussion summarizes the ways in which the activities of these organizations are conducted and monitored:

 

1. Associated Students of Irvine Valley College

 

The Associated Students of Irvine Valley College is a primary college governance group. The ASIVC annually elects its own student officers to administer its programs. General supervision and administrative support is provided by the vice president of student services, the dean of students and the director of student affairs in the following areas:

 

Governance of the ASIVC;

Development of the ASIVC annual budget;

Budget management and control; and

The expenditure of budgeted funds.

 

The ASIVC annually generates income to support its programs from the sale of ASIVC memberships and from commission payments from the contract operation of the college bookstore and cafeteria. Annual revenues generated by these sources have grown significantly during the past five-year period from a total of $195,616 in 1992-93 to $277,720 in the 1996-97 Fiscal Year (9.26).

 

All of the services and staff required to properly account for, manage and ensure the appropriateness of expenditures of ASIVC funds are provided by the district's Office of Fiscal Services. Regular reports regarding the collection of revenues, investments, and the status of transactions and budget accounts are provided to the vice president of student services, the dean of students, and the director of student affairs, and to the officers of the ASIVC. The financial records of the ASIVC are annually audited as a part of the district's general audit. The district currently contracts with the accounting firm of Boceta, Macon & Workman, Certified Public Accountants to provide this independent annual audit (9.21 and 9.22).

 

2. Irvine Valley College Foundation

 

On July 16, 1997, the South Orange County Community College District Board of Trustees announced a major district-wide administrative reorganization (9.3). This reorganization included the transfer of the IVC Foundation executive director and support clerical staff from the college to a new district assignment. This district assignment includes serving as the executive director of the Saddleback College Foundation as well as the IVC Foundation. The Board of Trustees, on March 23, 1998, approved revisions to the original plan. The revisions call for the hiring of an assistant director at Saddleback College, with the costs of the position split between the district and the Foundation for the first two years. After that, the position will be paid for by the Foundation. The Board also gave permission for IVC Foundation to hire an assistant, and for both foundations to hire classified staff, if they agree to reimburse the district quarterly for the costs of any such positions. The district director's duties were modified to reduce his responsibilities at Saddleback to management oversight, rather than full day-to-day implementation of the foundation program at Saddleback. The Saddleback assistant hiring process is in progress. The IVC Foundation has no immediate plans to hire an assistant, but has added 30% of a full-time accountant position. While these changes have slowed the growth of the IVC Foundation, the longer-term effect of these changes on the IVC Foundation is uncertain at this point in time.

 

In the past five year period, the IVC Foundation has completed a major restructuring of organization, goals and direction. The primary elements of this restructuring have been in the following areas:

 

The Foundation Board of Governors has been expanded to a current total of twenty-nine members (9.25). The governors annually elect officers from within their membership.

 

The IVC Foundation has become a major provider of financial and scholarship support to IVC students and to a variety of instructional and non- instructional programs. During the 1994-95 through 1996-97 period, the Foundation provided in excess of $1.5 million in financial support for scholarships and other college programs, and in equipment donations (9.25).

 

Of the 105 responses to Item 152, 91.4% agree that "activities and fund raising efforts of the [IVC] Foundation are consistent with the mission and goals of the college, and are conducted with integrity" (9.5, Section Three, page 53).

 

PLANNING AGENDA

 

No changes are recommended at this time.

 

B.5 Contractual agreements with external entities are governed by institutional policies and contain appropriate provisions to maintain the integrity of the institution.

 

DESCRIPTIVE SUMMARY

 

A wide variety of contractual agreements are used to procure services, equipment and materials that are required to support the college's instructional, student services and other support programs.

 

SELF-EVALUATION

 

Contract authority for both of the colleges rests with the district. The vice chancellor, fiscal services serves as the contracting officer for the South Orange County Community College District with support from district staff including the director of business services and the director of central services (purchasing). There are institutional procedures that are followed before entering into any contractual agreement with a third party. Procedures are outlined in Board Policy 3200, Contract Regulations (9.27), Board Policy 3200, Purchasing Policy (9.28), and in a Procedures Manual (9.29). All contracts are reviewed by the Board of Trustees and then signed by the district vice chancellor, fiscal services, and copies are retained in that office.

 

The IVC vice president for business services serves as the college level administrator who is responsible for ensuring that contract requests are initiated as appropriate to serve college needs. The Office of College Operations maintains a central file of contracts related to facilities maintenance, lease purchases, contract operations of the bookstore and cafeteria, as well as facility rentals.

 

PLANNING AGENDA

 

No changes are recommended at this time.

 

B.6 Financial management is regularly evaluated, and the results are used to improve the financial management system.

 

DESCRIPTIVE SUMMARY

 

The district vice chancellor, fiscal services and staff provide the majority of the primary financial services required by the college. IVC's vice president for business services and staff provide direct financial services to the local college community in the areas of budget development, budget control, cashiering and cash control, as well as some cash disbursements.

 

SELF-EVALUATION

 

The district's independent auditors formally evaluate the effectiveness of financial management at both the district and college levels each year. The annual district audit report identifies areas of financial management that require some modification or improvement (9.21 and 9.22).

 

The district vice chancellor, fiscal services prepares monthly financial reports for the Board of Trustees. Additionally, required quarterly and annual financial reports are prepared by district staff and are forwarded to the Chancellor's Office, California Community Colleges. These reports are indirectly reflective of college as well as district finances.

 

The district vice chancellor, fiscal services and staff provides informal assessments of the effectiveness of college level financial arrangements.

 

PLANNING AGENDA

No changes are recommended at this time.

 

C. Financial Stability

 

C.1 Future obligations are clearly identified and plans exist for payment.

 

DESCRIPTIVE SUMMARY

 

The South Orange County Community College District (SOCCCD) has two major financial obligations that will significantly impact the availability of revenues at the college level. These financial obligations are summarized below:

 

1. In 1996, the district sold $14 million in Certificates of Participation (COPS) for purposes of funding a comprehensive technology initiative, and a variety of deferred maintenance projects that had not been funded by the State (9.30).

 

 

2. The district currently provides retirees and their dependents with medical, dental and vision insurance benefits when the employee meets certain eligibility requirements. Eligibility requirements vary somewhat by employee classification.

 

SELF-EVALUATION

 

The financial responsibility for repayment of the COPS issue belongs to Saddleback College and IVC. The COPS issue has a repayment plan that will require college funding commencing in 1999, and continues for a twenty year period (9.31). The first two annual payments will be made from unexpended portions of the capital borrowed, as well as interest earned. The third annual payment will be made from funds recovered from the County of Orange as a part of the settlement made to agencies, including the SOCCCD, who had lost funds in the 1994 county bankruptcy. The fourth and subsequent annual payments will be made from Saddleback and IVC general fund revenues. It is estimated that the annual IVC repayment obligation is $300,000. There is no identified external revenue source for repayment purposes. College general funds used for repayment of the COPS obligation will not, of course, be available to fund other college programs.

 

Only 81 responses were received to Item 153 of the Institutional Effectiveness Survey and of those only 47 (58%) agreed that future obligations are "clearly defined and plans exist for funding these obligations: (9.5, Section Three, page 53).

 

The SOCCCD has established a reserve of $1.5 million to fund future retiree health benefit costs. The district plans to increase this reserve in the future as funds become available. The district currently estimates that there is an unfunded retiree health benefit liability of $15 million. Without sufficient reserve funds to cover the future costs of retiree health benefits, the district will necessarily fund these costs on a "pay as you go" basis from annual general operating funds. These funds will not be available for allocation to the colleges for use in supporting college programs.

 

PLANNING AGENDA

 

No changes are recommended at this time.

 

C.2 The institution has policies for appropriate risk management.

 

DESCRIPTIVE SUMMARY

 

The South Orange County Community College District (SOCCCD) is fully insured for workers compensation through the California Community College Risk Management Association (CCCRMA). This group purchases workers compensation insurance through Unicare Insurance Company. Property losses in excess of $10,000 and liability losses in excess of $25,000 are provided for through the Statewide Association of Community Colleges (SWACC) Joint Powers Authority. This program is administered by district staff, thereby relieving the college from the necessity of direct involvement in the management of this program. The district is reimbursed for the cost of providing this service through the annual assessment of the college's general fund revenues that funds all district provided centralized services.

 

SELF-EVALUATION

 

Because of the high cost of commercial liability and worker's compensation insurance, the South Orange County Community College District is essentially self-insured as a member of various Joint Power Authorities.

 

The district follows guidelines established by the Statewide Association of Community College (SWACC) Insurance Joint Powers Authority (JPA) of which it is a member. These guidelines address the prevention of loss associated with fire, theft, liability, personal injury and property damage. As the coordinator of the district's Risk Management Program, the district's risk manager works with the colleges, and with the district's contracted insurance program administrator, to develop policies and procedures to reduce exposure to risks that result from all district operations.

 

The District's Risk Management Program is comprised of the following elements:

 

1. Liability Insurance

2. Property/Fire Insurance

3. Student Medical/Accident Insurance

4. Workers' Compensation Insurance

 

All of the above insurance programs, with the exception of Student Medical/Accident Insurance, are provided through district membership in the self-funded Joint Powers Authority described above. This Joint Powers Authority provides insurance coverage between retention levels and $1,000,000. Excess insurance coverage above $1,000,000 is provided through district membership in a second Joint Powers Authority (SELF).

 

Student Medical/Accident Insurance is provided for all enrolled students who pay the resident Student Health Services Fee.

 

 

PLANNING AGENDA

 

No changes are recommended at this time.

 

C.3 Cash flow arrangements or reserves are sufficient to maintain stability.

 

DESCRIPTIVE SUMMARY

The South Orange County Community College District has recently transitioned from being a basic aid district during the 1993-94 through 1995-96 period, to an apportionment district for the 1996-97 Fiscal Year. As a basic aid district, annual property tax revenues exceeded the revenues that would have been provided by the State Chancellor's Office had funding been solely apportionment based. As a basic aid district, local property tax revenues that exceeded apportionment entitlement amounts were retained by the district and were available for general fund expenditure. The following is a summary of the funding above apportionment levels that was generated as a basic aid district.

 

Fiscal Year

General Fund

Adopted Budget

Funding Above Apportionment

1993-94 Fiscal Year

$ 65,912,665

$ 7,776,260

1994-95 Fiscal Year

$ 71,741,337

$ 1,918,792

1995-96 Fiscal Year

$ 69,953,988

$ 1,338,820

1996-97 Fiscal Year

$ 68,001,307

NA

 

In 1996-97, the South Orange County Community College District reverted to apportionment status. This resulted from significantly higher state funding of community colleges and a drop in local property tax revenues.

 

Increased apportionment revenues for the 1997-98 Fiscal Year comprised 87.6% of all unrestricted general fund revenues, and were at a level that placed the district in an improved financial condition. The district projects that the result of the apportionment increase, along with the receipt of unbudgeted growth and property tax revenues will improve the district's current year general fund ending balance to approximately 4% (9.32).

 

Cash flow requirements at the college level are provided for by its annual general fund revenue allocation that is made as a part of the district's budget development process.

 

SELF-EVALUATION

 

The district addresses periodic cash flow needs through the issue of Tax and Revenue Anticipation Notes (TRANS). As the district is heavily dependent upon funding from local property taxes (approximately 76.2% of the total district's 1997-98 General Fund Budget), the issue of TRANS provides sufficient cash for operating purposes during the July through November period each year. The proceeds from the TRANS issues are invested at the highest possible yield enabling the district to generate sufficient interest income to offset the administrative and interest costs related to the notes.

The district annually budgets a contingency reserve of at least 3% of the total unrestricted general fund. This is the recommended contingency reserve level recommended by the State Chancellor's Office.

 

During four of the past five years, the district has found it necessary to deficit spend general funds. The result has been end-of-year decreases in ending fund balances below the 3% level. The following summarizes the district's general fund beginning and ending balances for the past five years:

 

Budget Year

Budgeted District Contingency (%)

Contingency Ending Balance (%)

FY 1993-94

3.64%

4.9%

FY 1994-95

3.81%

3.5%

FY 1995-96

3.20%

2.3%

FY 1996-97

2.95%

1.2%

FY 1997-98

2.99%

NA

 

The level of district contingency funds, as well as the pattern of deficit spending has resulted in an expression of concern from the State Chancellor's office. In March 1996, the State Chancellor's office advised the district that it had been placed on a Level Three Financial Watch as a result of the State Chancellor's Office concerns regarding the financial health of the district (9.33). This concern and action by the State Chancellor's office was not made known to either the Board of Trustees or the two colleges. In November 1997, the State Chancellor's Office advised the district that it had been placed on a Level Two Financial Watch status (9.34). A Level Two Financial Watch is defined by the State Chancellor's Office as being appropriate when it considers that a district is at risk of financial crisis over the medium term unless its financial health is improved. An increase in the district's apportionment funding in FY 1997-98, which comprises approximately 87.6% of all of the district's unrestricted general fund revenues, places the district in a better financial position then in past years. Lower costs for staff Health and Welfare benefits will reduce expenditures in this area, and will also contribute to the district's improved financial position.

 

IVC annually attempts to establish minimum operating contingency funds totaling 1% of the total general fund budget. These contingency funds are split among the Instructional, Student Services and College Operations areas. The purpose of these contingency funds is to provide the flexibility required to deal with minor unforeseen and unbudgeted needs. Due to the declining amounts of discretionary general funds available within the college's budgets during the past several years, these operating contingency funds have been reduced to a .5% level.

 

IVC does not have a budgeted reserve to specifically deal with financial emergencies or unforeseen circumstances. The two colleges of the district rely on the district contingency reserve to address major financial emergencies. The district contingency reserves are located in the district-wide section of the district's annual adopted budget (9.35).

 

IVC is not directly involved in the management of district cash flow requirements or in the development of contingency reserves. Only 80 responses were received to Item 154 of the Institutional Effectiveness Survey and only 48.8% of those agreed that IVC "maintains reserves sufficient to maintain stability" (9.5, Section Three, page 54).

 

PLANNING AGENDA

 

No changes are recommended at this time.

 

C.4 The institution has a plan for responding to financial emergencies or unforeseen occurrences.

 

DESCRIPTIVE SUMMARY

 

The district annually establishes a contingency reserve of at least 3% in the adopted budget approved each August by the Board of Trustees. During the past several years, unforeseen expenditure requirements have occurred that have resulted in deficit spending and general fund ending balances below the 3% level. General fund ending balances are summarized in the chart found in Section C.3 of this Standard.

 

SELF-EVALUATION

 

In Fiscal Year 1996-97, the district's adopted budget was approved with a 3% contingency reserve. Had the contingency reserve been left untouched during the entire year, the ending balance would have been within Title 5 parameters. As a result of an unanticipated statewide deficit in property tax revenues, the district did not receive all anticipated revenues and a net annual general fund deficit occurred.

 

The district has adopted its 1997-98 general fund budget with a 4% contingency reserve. The district, through careful monitoring of expenditures and as a result of expected one-time revenue adjustments, should end the fiscal year with a minimum ending balance of over 3%. The anticipated one-time revenue adjustments are as summarized below:

 

1. The release of $298,600 by the County of Orange to the district as a portion of county bankruptcy settlement.

 

2. The backfill of the 1996-97 property tax deficit as a part of the apportionment recalculation in February 1998. The recalculation provided the district with an additional $669,000.

 

3. The successful pursuit of legislation by the district leading to the approval by the Governor of SB-421. This bill should result in the return to the district of approximately $532,600 in property taxes collected by the County prior to the bankruptcy, but not released to the district during the period that the district was entirely supported by local property taxes. These funds were returned to the district as a part of the February 1998 apportionment recalculation.

 

PLANNING AGENDA

 

1. IVC is not directly involved in the district's financial planning for major emergencies or unforeseen circumstances, and will continue to rely on the district for financial support in these instances.

 

 

SUPPORTING DOCUMENTATION

STANDARD NINE

 

9.1 Organizational Assessment (1995)

9.2 IVC Strategic Plan 1996-2001

    1. Raghu Mathur - Memorandum dated July 23, 1997 "Implementation of Dean System for Instructional Administration"
    2. IVC Strategic Plan 1996-2001, Status: Year Two
    3. Institutional Effectiveness Survey

9.6 Board Policy 2100.1: Delegation of Authority to the Academic Senate

9.7 Joint Academic Senate Policy Proposal - Budget Development Processes

9.8 IVC College Governance Standing Committees

9.9 District Allocation Model Dated 1/29/98

9.10 Bob Loeffler - Memorandum Dated March 2, 1998 "1998-99 Proposed General Fund Budget."

9.11 Academic Employee Master Agreement (Faculty Contract)

9.12 February 27, 1998 Memo From District Vice Chancellor, Fiscal Services

9.13 Saddleback Community College District 1996 Educational and Facilities Master Plan

9.14 The Capital Outlay Handbook for the California Community Colleges - November 1997

9.15 South Orange County Community College District 1999-03 Five Year Construction Plan

9.16 The Almanac Enrollment Reports

9.17 California Community Colleges - Overview of the 1998-99 Capital Outlay Program

9.18 Katie Slavin - Memorandum dated February 21, 1997 "1997-98 Budget Development Guidelines"

9.19 Peter Morrison - Memorandum dated April 1, 1997 "History of Allocations"

9.20 Bob Loeffler - Memorandum dated April 23, 1997 "1997-98 Budget Development Worksheets" (w/o attachments).

9.21 Board Agenda Item 27 - Acceptance of District Annual Audit Report: 1995/96

9.22 Board Agenda Item 25 - Acceptance of District Annual Audit Report: 1996/97

9.23 Financial Aid Statistics

9.24 The Constitution of the Associated Students of Irvine Valley College

9.25 Irvine Valley College and Foundation Annual Reports for 1994-95, 1995-96 and 1996-97.

9.26 ASIVC Annual Revenues 1992 - 1997

9.27 Board Policy 3200: Contract Regulations

9.28 Board Policy 3200: Purchasing Policy

9.29 Procedures Manual

9.30 SOCCCD Certificates of Participation

SUPPORTING DOCUMENTATION

STANDARD NINE

 

9.31 Lease payment schedule for COPS funds.

9.32 Board Agenda Item 44 - Monthly Financial Status Report

9.33 State Chancellor's Office Letter Dated March 1996

9.34 State Chancellor's Office letter dated November 13, 1997

9.35 SOCCCD Annual Adopted Budget