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Published on 8/7/2018.

The Board’s Audit Committee (Trustees Emad, Mathews and Mullery) met immediately before the regular August 7, 2018 meeting today.  They reviewed the auditor’s report for the year ended June 30, 2017 and discussed the draft 2018-19 Final Budget and the 2019-21 budget forecast. Julia Morrison guided them through new funding model simulation and discussed the assumptions we used when developing the short and long-term budgets, the status of the OPEB fund, and expected increases in medical expense.

Overall, the auditor’s findings were positive. We received an unmodified auditors’ report with no material weaknesses or significant deficiencies for our financial statements. During fiscal years 2014-15, 2015-16 and 2016-17 our unrestricted fund balance for the general fund exceeded the Chancellor’s Office minimum prudent unrestricted fund balance guidance of 5%.

We also satisfied the 50% law requirements in 2016-17.  To meet the 50% law we were required that we spend at least 50% or $13,058,004 of our expenditures on instruction.  The auditors confirmed actual expenditures of 55.02 %, or $14,368,442, on instruction.  In other words, we exceeded the minimum by $1,310,438.  

However, the auditors found deficiencies in our state awards. Here is a quick summary of the deficiencies.

• During the auditor’s testing of our state apportionment, they found that their FTES calculation did not match what we reported on our P2 320 Report. We underreported summer 2016 FTES by 10.17, fall 2016 FTES by 3.06, and Spring 2017 FTES by 2.91. The Business Office performed an internal audit of our software system and corrected the error in census type.
• Our Annual 320 Section Summary Report did not match the Annual 320. This discrepancy resulted in our over reporting 14.47 FTES in the Annual 320.
• The auditors noted that we reported three students who were not eligible to be claimed for apportionment for one of the 40 course selection they tested. The students were “no shows” for one course section but were still claimed for apportionment. This resulted in an over reporting in the Annual 320 by .25 FTES. However, since the auditors were not able to isolate the reporting error by census type, they extrapolated the reporting error to the entire population of course sections and reduced our FTES by 13.29 FTES.
• Our AB288 Dual Enrollment agreements with local high schools did not meet the requirements in AB 288. Several of the high school boards did not approve the agreements. Additionally, we had some language missing for the agreements.  We’ve subsequently revised our AB 288 CCAP agreements.

Julia Morrison led a discussion of the draft Final 2018-19 budget and the assumptions we used to develop the budget. Here is a snapshot of our budget assumptions:

• Receiving $28,137,999 in State revenue (or 3,682 FTES);
• Including the 2% salary increase and regular step increases for permanent staff and the 3% increase for Associate Faculty;
• Including STRS at 16.28% and PERS at 18.062%;
• Increasing medical benefit costs by 5.75%;
• Using cost trends from 2015-16 through current year-to-date to develop a fixed expense budget;
• Reducing the Other Operating and Capital Outlay from the 2017-18 budgeted amount; and
• Transferring $90,000 to the Child Development Center, $95,762 to the Shively Farm, and $250,000 to the OPEB fund.

The net result for the draft Final 2018-19 Budget is that we should see a 6.8% ending fund balance. That said, we are going to continue to look for ways to cut expenditures and therefore increase the fund balance beyond the 6.8%. The Trustees will approve the Final 2018-19 Budget at its September Board meeting.

We also discussed a budget forecast for the 2019-20 and 2020-21 fiscal years.  The forecasts show that if the State provides the 2.71 COLA for the 2019-20 and 2020-21 fiscal years, and our salaries/benefits, fixed expenses and operating expenses continue to climb; our fund reserve will fall below the Chancellor’s Office and ACCJC’s required minimum of 5%. The fund reserve will drop to 4% in 2019-20 and -1.2% in 2020-21. Clearly, this is an untenable position. The administration will continue to work closely with all constituents groups to implement actions now to address what we know will be budget difficulties beginning with the 2019-20 fiscal year.   

The Board met in regular session following the Audit Committee meeting.

Board Business.

Professor Emeritus Paul Farnham and Peter Portugal gave public comment about the vacant buildings on the Eureka Campus.

Trustee Emad (Chair of the Audit Committee) summarized the items discussed in the Audit Committee meeting. Trustee Emad informed the Board that he and I met with the Chair and Executive Director of the Botanical Gardens board.

The Board discussed its draft 2018-19 goals and objectives developed by the ad hoc committee.  Their final goals will be discussed and approved at the August 25 Board workshop.

Approve/Ratify Personnel Actions.  With the Board’s action, we welcome Sara Stolt as the Administrative Assistant to Vice President Julia Morrison (Eureka), Cameron Johnson as a new Associate Faculty in History (Eureka) and James McQuillen as a new Associate Faculty in Guidance (Del Norte). 

Also approved was the change of employee status of Courtney Bishop, Payroll Technician (Eureka) from .50 FTE to .78 FTE; Cameron Papp from Student Services Specialist II-Financial Aid to Student Services Specialist IV-Enrollment Services (Eureka); Sheila Hall from Talent Acquisition Specialist in HR to Scholarship Program Coordinator (Eureka); Megan Laney from Student Services Specialist I-Community Education to Student Services Specialist IV-Career Education; and Margaret Talcott from Assistant Director of Adult Education to Interim Director of Adult Education.

Monthly Financial Status Report. The monthly financial status report reflected year-to-date budget adjustments and activity for unrestricted general fund revenue and expenditures through June. We continued to “true up” the budget numbers over the past month.

As Julia Morrison reported, the District received notice from the Chancellor’s Office that general apportionment would not be adjusted down by 55 FTES and the SB 361 revenue budget has been adjusted to reflect this.  The current budgeted ending fund balance is 7.31%.

Quarterly Financial Status Report. The Board approved the Chancellor’s Office Quarterly Status Report (CCFS-311Q) ending June 30, 2018. The Chancellor’s Office uses these reports to monitor the financial stability of all of the community colleges in the system. Noted in the report was that we’re looking at a TRAN to cover a potential cash shortfall.

Approve College and Career Access Pathways Partnership (CCAP) Partnerships with Eureka City School District, Fortuna Union School District, and Northern Humboldt Unified High School District. The Board executed a second reading of our AB 288 CCAP agreements with the Eureka, Fortuna and Northern Humboldt School Districts.

Award Contract on Public Bid for Demolition of the Vacant Library Building on the Eureka Campus. We solicited public bids for the demolition of the three vacant buildings on the Eureka campus several weeks ago.  However, I changed the scope of work to the “possible demolition of the vacant Library Building "Old Library after the initial bid requests were publicized.  We have since solicited public bids for the demolition of the Old Library only. 

This agenda item requested authorization from the Board of Trustees for me to accept the lowest bid for demolition of the Old Library since we expect to receive the Old Library bids before the September 4 Board meeting. We will not move forward on actual demolition of the building until we receive approval by the County Building and Planning Department.

The Board approved the recommendation by majority vote.

Second (and Final) Read of Board Policies and Administrative Procedures. The Board approved BP 7262 Management Performance Evaluation and AP 7262 Management Performance Evaluation Report.

Presentation of Redwoods Community College District's Initial Bargaining Proposals to the College of the Redwoods Faculty Organization. We presented the administration’s initial interests for bargaining with CRFO as an informational item. The administration’s interests include negotiating Article II (Recognition and Agency Fee Organization), Article III (Wages and Working Conditions), Article IV (Leaves), Article V (Benefits), Article VII (Preretirement reduction of Workload with STRS Service Credit), Article X (Transfer and Reassignment), Article XI (Faculty Tenure and Evaluations), Article XV (Faculty and Associate Faculty Scheduling), and Article XVI (Completion of Meeting and Negotiating/Article XVII Term). I agreed with CRFO to use Interest Based Bargaining in our negotiation process.

Discuss the New District Athletic Logo. Marty Coelho reviewed the process used to identify the new Athletics Logo. The Board took action to approve the new logo so it will be available for the fall sports season.

Informational Report: Student Success Data—English and Math Placement Trends. The student success data report that Angelina provided revealed that sixty-five percent of students placed into transfer-level math and zero placed three or more levels below since moving away from Accuplacer.  Additionally, over 90 percent of students placed into transfer-level English after we moved away from Accuplacer and less than 2 percent placed lower than one level below transfer.

Professional Development Report for 2017-18. Wendy Bates provided an informational report on our professional development program. Wendy’s report noted the commendation the District received in the ACCJC’s External Evaluation Report: “The College is commended for its broad and inclusive program of professional development that utilizes technology and multiple modes of delivery to provide opportunities for faculty, staff, administrators, and the Board of Trustees (III.A.14).”  Also noted was an appreciation for the work of Kerry Mayer, Crystal Morse and the Professional Development Committee comprised of Tina Vaughan, Darius Kalvaitis, Dan Calderwood, Wendy Riggs, Kintay Johnson, Rory Johnson, Tatiana Robinson, Mark Bernards, Sheila Hall and Joselle Wagner for building a strong, sustainable, and forward thinking professional development program.

The Trustees had a very thoughtful and engaged discussion relative to the future of our professional development program.

Capital Projects Update.  Steven Roper provided an update on several capital projects:   

• UIR: The bid package will go out at the end of August.
• Track resurfacing: Most of the track resurfacing work has been completed. We only have to paint the running lanes.
• Tennis Courts Repair/Resurfacing: The resurfacing work has started and should be finished by the start of the fall semester.
• Stadium Demolition: We are waiting until the Swallows nesting period ends before restarting this project per the cease and desist order from Fish and Wildlife.
• Creative Arts Drop and Replace: We have received some planning funds and will start discussions with the appropriate faculty and staff later this month. We are determined not to repeat the mistakes of the past related to planning and constructing new buildings.
• PE/Gymnasium Complex Drop and Replace: The formal submission of the $55 million project has been submitted to the Chancellor’s Office.

Steven also took some time to update the Trustees on our plan to meet Senate Bill 350: Clean Energy and Pollution Reduction Act and the California Community Colleges Board of Governors Energy and Sustainability Policy.

SB 350 established California's 2030 greenhouse gas reduction target of 40 percent below 1990 levels. To achieve this goal, SB 350 set ambitious goals for energy efficiency and renewable electricity. Likewise, the Chancellor’s Office is encouraging all community colleges to:

• Develop their own self-generated energy capacity;
• Consider installing and operating clean cogeneration plants and proven renewable energy generation technologies in order to reduce greenhouse gas emissions and to improve campus energy efficiency, utility reliability and service diversity;
• Pursue cost effective renewable generation in order to increase on-site production;
• Participate in all utility offered Demand Response programs;
• Operate all buildings in the most energy efficient manner without endangering public health and safety and without diminishing the quality of education; and
• Identify energy efficiency improvement measures to the greatest extent possible, undertake all necessary steps to seek funding for their implementation and upon securing funds, expeditiously implement the measures.

To comply the SB 350 and meet the Chancellor’s Office directive, we are exploring designing a micro grid system. Some of the technology being considered at this time includes a photovoltaic panels, battery storage system, wind turbines, and micro turbines with an attached heat recovery system. It is our hope that this system will not only reduce the College’s energy costs, but also become a working lab for our students.  We have already met with one provider (Blue Origin) who included the renewable Energy program in the installation of the co-generation facility at a community college in Florida.

Additionally, in order to meet the Cal-Green Act, as covered in the 2016 Building code, all of our new construction will include all LED lighting as well as an infrastructure to support renewable energy.

Organizational Report: CRFO. Professor Michelle Haggerty thanked the Board for agendizing CRFO on the Board’s agenda. She also expressed a commitment by all faculty to work collaboratively with the administration to make sure that the College remains fiscally healthy.

Organizational Report: CSEA.  Tami Engman spoke about her experience attending the CSEA conference. She also informed the Board that she is going to include a “spotlight on a department” at each Board meeting. She started by “spotlighting” the work of our wonderful maintenance department.

Administrative Report: President/Superintendent Report.  My report focused on the new funding formula enacted as part of this year’s State budget and an update on the Sphagnum Bog sale.

The new funding formula model significantly changes how we are funded. It is important to keep in mind that, as the District navigates the changes, the funding model changes are intended to improve student outcomes.  I support the funding model’s intent to help community colleges focus less on generating FTES and more put more effort toward improving student success and completion. However, it will be critical for all faculty, staff, managers, and administrators come together to position the College for success.  The new funding formula provides strong motivation for us to reexamine our academic and student development operations.

• Review all instructional programs and course offerings through the lens of effectiveness and efficiency;
• Improve how counseling/advising and financial aid services are delivered;
• Increase the number of students earning ADTs and associate degrees and certificates;
• Continue reforming remedial/basic skills education and assessment processes to increase the number of students achieving transfer level mathematics and English in their first year;
• Increase the number of students transferring to a four-year university;
• Support Career Education (formerly CTE) programs to increase the number of students acquiring a degree/certification or earning a living wage; and
• Work with the local secondary school districts to increase concurrent and dual enrollment.

What follows is a brief summary of how the funding formula is structured.

• Knowing that implementing the new model will take time, the Legislature included a hold harmless provision in the budget law. The hold harmless provision stipulates that in 2018-19, 2019-20, and 2020-21 no district will receive less funding than they received in 2017-18. Additionally each district will receive increases to reflect a cost-of-living adjustment.
• The funding formula includes stability provisions that provide districts with additional revenue protection by allowing them to receive the greater of their past-year or current-year total revenue.
• The marginal funding rate for credit revenue per FTES will decrease from its current funding rate of $5,150 to $3,727 for the 2018–19 fiscal year; $3,387 for the 2019–20 fiscal year adjusted for changes in cost-of-living and other base adjustments; and $3,046 for the 2020–21 fiscal year adjusted for changes in cost-of-living and other base adjustment in the prior year and the cost-of-living and other base adjustments for the 2020–21 fiscal year.
• While the marginal funding rate will decrease for credit FTES, the marginal funding rate for FTES earned through non-credit courses, CDCP courses (non-credit courses included in a non-credit certificate), credit and non-credit inmate correctional facility courses, and special admit (dual and concurrent) enrollments will increase. 
• The supplemental allocation will be determined by the number of students enrolled who receive a College Promise Grant, a Pell grant, or are AB 540 students. This allocation will also be determined by the number of students who (1) earn degrees and certificates, including ADTs, associate degrees and Chancellor’s Office approved credit certificates; (2) complete key progress milestones, including: transfer-level mathematics and English within their first academic year and/or nine or more CTE units; and (3) who achieve key outcomes, including successfully transferring to a four-year university or attainment of regional living wage within one year of leaving community college.
• Commencing with the 2018–19 fiscal year, the Chancellor’s Office will compute the sum of annually funded credit FTES from the current year, the prior year, and the year prior to the prior year, and divide the sum by three.
• For 2018-19, 70 percent of funding will be distributed based on enrollment, 20 percent based on enrollment of low-income students, and 10 percent based on student success metrics. In 2019-20, 65 percent of funding will be distributed based on enrollment, 20 percent based on enrollment of low-income students, and 15 percent based on student success metrics. In 2020-21, 60 percent of funding will be distributed based on enrollment, 20 percent based on enrollment of low-income students, and 20 percent based on student success metrics.

Also in my report was an update on the potential sale of Sphagnum Bog. We offered the property simultaneously to two different interest groups in two different ways per Education Code Section 81363.5.

A written Notice of Sale was sent to low income housing entities, the regents of the University of California, the Regents of the California State University system, and any local, state, and regional parks and recreation interests. The Notice was also forwarded to public districts, public authority, public agency, public corporation, or any other political subdivision in California, to the federal government, and to qualifying nonprofit charitable corporations.

We also placed the required Notices in the Times-Standard, Fort Bragg Advocate, and the Redwoods Times. Per law, the District arranged to run the ad for three consecutive weeks. All of the Notices included the following statement, to make sure that all potential bidders understood that the Coastal Conservatory’s (the body who provided the funding for CR to purchase the property) interest will be preserved: This property is subject to a restrictive easement requiring the property be preserved as a wetland in perpetuity.

We must allow 90 days, from the last day of publication in local newspapers, for potential buyers to submit offers. The soonest the Board can consider proposals will be November 7, 2018.

Administrative Report: Vice President of Instruction Report. Angelina’s information report highlighted that we purchased eLumen, a new curriculum management system, in spring 2018 using funds from the IEPI Professional Resource Team.  We expect to implement the software for course proposals by the end of the fall semester, with degree and certificate proposals to follow soon after. Angelina noted that when fully implemented, eLumen will handle all processes that are currently reviewed by the Curriculum Committee: new and revised courses, degrees, and certificates; GE proposals, Articulation requests, Distance Education, Dual Enrollment, etc.

Angelina also acknowledged the staff who called prospective students and current students over the summer. In the first campaign, staff contacted prospective students who had completed a CR application, but had not yet registered for any classes. In the second campaign, staff called 1,206 current students who were in danger of being dropped from their classes for non-payment.  Both of these efforts should have a positive impact on fall enrollment. 

Administrative Report: Vice President of Administrative Services Report. Julia’s report spoke to the work that Dr. George Potamianos is doing to finish the first draft of the March of 2019 Follow-Up report. She also made note of the Budget Planning Committee Revision Task Force’s meeting on July 19th.  You may remember from Julia’s July remarks that the task force was formed as a result of the Institutional Self Evaluation Report that was submitted to the ACCJC during the summer of 2017 to focus on achieving the following goals:

1. Reviewing and revising as necessary the function and scope of the Budget Planning Committee
2. Creating a system for effectively educating all constituent groups and employees about budget and planning processes
3. Creating a clear, logical, and detailed description and flow chart of the process for budget creation
4. Developing a web-based tool that provides all College constituent groups and employees easy access to the status of resource allocation requests during each year’s budgeting process

Administrative Report: Vice President of Student Development Report. Joe mentioned that the annual Eureka Campus Welcome Back Party is scheduled for Wednesday, August 22 from 11:00am to 1:30pm and that faculty and staff will volunteer their time to provide assistance to students during the first week of school on the Eureka Campus. The Del Norte Campus will also provide an information/welcome table and breakfast snacks at the entrance to the main building during the first few days of the fall semester.

Joe also touched on our partnership with the Humboldt Independent Practice Association to provide crisis counseling at the Eureka Campus Student Health Center twice a week during fall semester.  Short-term initial mental health counseling will still be available from counselors in the Eureka Counseling & Advising Center and on the Del Norte Campus. 

Approve a Trustee Request to Place an item on a Future Agenda.  The Board supported Trustee Dorn’s request for an update on the work completed on the Del Norte Science Lab.