GAVILAN JOINT COMMUNITY COLLEGE DISTRICT
Board Budget Subcommittee Minutes

Joe Keeler reviewed "Exhibit 2, Consolidated Summary of All Funds, Final Budget FY 2011-12"; a spreadsheet which provides the prior year’s revenues and expenses as compared to the final budget. He made note of the projected $750,000 surplus variance between the FY 10-11 actual versus budget. In addition, he pointed out the projected $1.7 million deficit for the FY 11-12 final budget. Trustee Child asked about the swing in ASB funds throughout the year and Business Director Susan Cheu said that is a normal trend for that fund.

Joe identified 3 basic questions in the reconciliation process. He added that he and Susan Cheu had shared the presentation with the shared governance groups as well as the administration group, the manager group, and the Department Chairs. The three questions are:

A "Summary Reconciliation of FY 10/11 Budget to FY 10/11 Actuals and to FY 11/12 Budget" was provided. Susan discussed questions #1 and #2. Susan reviewed several transactions that resulted in the $750,000 surplus and the $1.7 million deficit for FY 11-12 budget. During the review, Trustee Child commented that a small department may not use their funds because it is not enough to purchase an item they need. If those small funds were pooled, they could purchase a larger item, i.e. copier. Joe noted that the annual budget process allows programs to request funds for a large item. Those requests are addressed by the managers, administrators, and Cabinet. In addition, the Program Planning and Budget Request Process allow programs to request funds for a large item. Those requests are also addressed by the managers, administrators, and Cabinet as well as ranked by both the College Budget Committee and President’s Council.

Trustee Dover expressed concern about staff being told there is no money yet the District closed with a surplus. He wants the departments to be able to spend the surplus funds before year end. Joe said that for a number of years the District has been sending the message to departments to either spend or return the funds allocated to their program. Joe said that (1) revenue and (2) expenses such as salaries, benefits, and burdens are "centralized" with Cabinet and are being monitored closely by the Business Office. The variances’ in these two (2) areas are not the primary problem. The largest problem is in the direct expenses and Interfund transfers. These expenditures are "decentralized" and managed by managers, administrators, and Cabinet. Although the Business Office monitors these budgets the authority to spend or not or to adjust rests with the managers and administrators.

One of the items identified was the 8% projected increase in health benefits. Trustee Davenport questioned why that was a projected figure as we were midyear. President Kinsella explained that 8% was a historical estimate and that PERS releases that number midyear. Trustee Child asked if the District is closer to being able to make a decision about adding another class by reviewing the impact on the budget. Joe said that we are getting closer to that point and now use estimates. However, it is a complicated project, time sensitive, and at this point it is a cost/benefit item.

In answer to question #3, Joe noted that the District has implemented a number of solution sets to help narrow the variance between the budget and actuals at year end. Those solutions will be discussed later in the agenda.

Susan reviewed a spreadsheet that identified both posted budget transfers and proposed entries for the FY 2011-12 budget reflecting a $600,000 reduction to the deficit. The District will continue to "true up" the numbers throughout the year. Trustee Davenport added that the ending fund balance after the proposed adjustments would be 9.17%. President Kinsella said that a fund balance over 10% would indicate that we are not spending as much as we should be.

In an effort to help narrow the variance between the budget and actuals at year end Joe explained that staff are undergoing a more detailed midyear review of their budgets. The message is to either spend or return the funds. Approved adjustments are immediate and surplus funds can be used where shortages are identified. In addition, if the net change affects fund balance the adjustments will be made during the year as opposed to holding the adjustments to end of the year. He explained that it is important to educate the users as they become involved participants in resolving the year end swings. This process involves Department Chairs, managers, administrators, and Cabinet.

Joe reported that the FY10-11 audit is nearing completion and added that it has been both a financial and a program state compliance audit. The scope of the audit has been large and time consuming for the staff involved. For the most part the Business Office has answered the financial issues but the state compliance issues have involved a number of program administrators as well. Joe added that the additional scope by the auditors has been a directive from the state and that the auditor’s fee will be increased as a result. He said that for the past 10 years the District has not warranted an audit comment. The FY 10-11 audit will contain 2 state compliance comments and 1 substantive financial comment.

Joe provided the draft "Budget Planning Calendar for FY 2012 – 2013" and noted that it has gone through the shared governance approval process and is now presented to the board committee for consideration. Trustee Dover asked that board committee meeting dates be scheduled in advance and noted on the calendar. Trustee Child felt the calendar was very comprehensive and provided full disclosure of the process. A motion was made to approve the "Budget Planning Calendar for FY 2012 – 2013" with the addition of quarterly board committee meetings. MSC (Child/Dover)

Trustees Dover and Davenport both expressed concern about the budget to actual figures showing a large swing at year end. Joe said that there is a focus to prevent that from happening and added that managing decentralized expenses is a balancing act. President Kinsella said the District used to fund a contingency reserve but that was not funded as budgets become tighter. He said this would help when a department needs to buy a big item or unexpected expenses occur.

Susan was thanked for her work. Trustee Davenport added that he was supportive and appreciated the staff answering all their questions.