GAVILAN JOINT COMMUNITY COLLEGE DISTRICT
Board Budget Subcommittee Minutes

Vice President Joe Keeler presented a spreadsheet with proposed mid-year changes to Gavilan's budget; both revenues and expenditures. He noted that with the governor's proposed budget changes, we have added $615,840 in growth revenue. Joe also noted that the $200,000 being requested for the San Martin airport project can be eliminated as that project is eligible for Measure E (ME) funding. With the proposed changes, the ending fund balance would be over 10%. Joe said that Business Director Susan Cheu will present a mid-year report to the board at their February 8, 2011 meeting. Trustee Child said that expenditures tend to occur in the beginning of the academic/fiscal year. Joe agreed and said that he and Susan are looking at ways to better estimate what the actual numbers will be once encumbrances are closed at year end. President Steven Kinsella said the dollars should be spent during the fiscal year.

Trustee Davenport called for a motion to recommend the proposed FY 10/11 budget changes with the withdrawal of the $200,000 proposed increase for the San Martin project. MSC (Child/Dover), 3-ayes.

A state budget update handout was provided from the Chancellor's Office. In addition, the Community College League provided Gavilan with the budget impact of three different June Tax Package scenarios. President Steven Kinsella stated that the May revise will be important and that even if the tax package does not pass in June, Gavilan will remain stable and ready for future growth.

Joe noted that the budget process has started. Steve noted that since the economy is getting better, Gavilan should be positioning itself for growth.

Joe reviewed the draft District Wide Capital Projects list dated January 14, 2011. He talked about the major capital projects some of which utilize ME funds as the district match. Those projects that have a 50/50 district match are the PE complex, Library/Media remodel, and the new Student Services/Administration building. Joe also reviewed additional requests for projects that need ME funding including HVAC for the current Student Center building (Admissions & Records, Counseling, Financial Aid and Administration), the relocation of GECA, summer moves and the San Martin airport. Joe discussed the need for board direction concerning the golf course property and San Benito and Morgan Hill /Coyote Valley leases. Trustee Child noted that the Theater project was a replacement not a remodel and asked about the history of the project development. President Kinsella explained that it was more economical to rebuild new than to retrofit the building.

Measure E adjustments - Joe reported that the Measure E projects' accounts had been reviewed and several completed projects were closed out. Adjustments were noted when budget figures needed to be increased or decreased as projects neared completion or new information was available. The recommended adjustments include adding: $558,000 for domestic water project, $200,000 for Student Center HVAC, $500,000 for GECA relocation costs, and the addition of $600,000 for the San Martin airport project. Some of the project budgets would be reduced such as: removing the district match of 50% plus inflation for a total of $6.6 million for the new construction of the Student Services/Administration building and reducing the inflation amount from the Library/TV Studio project by $1.6 million. The administration is recommending that the net amount from these adjustments be identified in the Program Contingency account for use in completing Measure E projects. Trustee Dover noted that the adjustments were discussed at the Board Facilities Development & Utilization Committee and that committee had recommended approval.

Trustee Davenport called for a motion to recommend to the Board of Trustees that the ME budget adjustments be approved and the net change of $7,052,745, be placed in Program Contingency. MSC (Breen/Child) 3-ayes.

Joe reviewed a "Cash Flow Analysis" chart of the Measure E Program. In addition, Joe reviewed a letter dated September 1, 2009 from David Casnocha, District Bond Counsel, regarding the rules that govern the district's issuance of ME Bonds. The projections indicate a cash flow problem this fall. Approximately $3 - $4 million is needed to continue the Social Science remodel and other ME projects. From the ME total of $108 million, $28 million remain and can be cashed out. Joe introduced Dale Scott of Dale Scott & Company who discussed financing options for the $28 million. Dale provided an overview of the Gavilan JCCD assessed valuation history and discussed four alternative financing structures for issuing general obligation bonds. The options include: Level Debt, Interest Only, Capital Appreciation Bonds, and Two Series Five Years Apart. The Trustees reviewed each option and asked questions. Trustee Davenport called for a motion to recommend to the Board of Trustees to finance $28 million using Alternative #1, Level Debt, and that it be structured to keep the rate per $100,000 of valuation under $25. MSC (Child/Dover) 3-ayes.

President Kinsella reported on other budget items.