Audit Minutes 06-05-06

Jon O'Bergh

Informations

• Publié par: Mephor
• Nombre de lectures: 35
• Langue: English

Extrait

FOOTHILL-DE ANZA COMMUNITY COLLEGE DISTRICT Office of the Chancellor

AUDIT & FINANCE COMMITTEE MEETING MINUTES JUNE 5, 2006

Present Robert Grimm, Kent Peterson, Hal Plotkin, Bruce Swenson, Delia Ybarra Absent Pat Millar Others Mike Brandy, Claudette Brero-Gow, Debbie Budd, Jane Enright, Rich Hansen, Tony Hughes, Martha Kanter, Jon OBergh, Anne Paye, Hector Quinonez, John Schulze, Bernata Slater

1. PUBLICHEARING Tony Hughes from Citigroup asked the Committee to reconsider its recommendation to the Board of Trustees and include Citigroup as one of the firms to engage as bond underwriters.He explained his rationale and reviewed the benefits of using his firm.

2. APPROVALOF MINUTES It was M/S/C (Grimm/Peterson) to approve the minutes of April 10, 2006 and May 18, 2006.

3. MEASUREE CONSTRUCTION PROJECTS UPDATE Schulze provided an update regarding the De Anza Science Center remediation efforts, which are underway, and noted that the college is setting aside sufficient funds to cover the expense and provide for contingency.He reviewed the Campus Center and Lower Campus projects at Foothill, both of which are behind schedule, and explained that the projects are being reviewed and plans are being developed to handle increased costs.Grimm distributed a report showing that projects representing 49% of Measure E funding have been completed, and contingency for uncompleted projects remains substantial.Brandy reported that the format of the Measure E Projects Report will be adjusted to provide more detail on funding sources and bring the report into line with how data is reported in the Districts quarterly reports.

4. TENTATIVEBUDGET UPDATE Brandy provided an update on the tentative budget, noting the improved state budget situation. He highlighted the Districts recovery of the enrollment base, developments regarding equalization funding, funding for maintenance and operations revenue that will fund 17 of the 34 positions recommended by staff, and increases in health benefits and utility costs.He also discussed the planned transfer of $640,000 to fund the unfunded retiree medical benefits liability both this year and next, pointing out that it had been recommended for the District to fund $2.4 million annually.He described the budget situation as the most positive in three years.

Audit & Finance Committee Minutes, 6/5/06Page 2 5. CERTIFICATESOF PARTICIPATION (COP) Brandy reported that Measure C, if passed, includes at the Boards discretion paying off two debts: the lease/purchase of the telephone system and the technology infrastructure.He discussed plans to issue new COPs for the campus center at each college, a plan which the Board approved two years ago.

6. ACTUARIALSTUDY AND UNFUNDED RETIREE BENEFITS LIABILITY INVESTMENT OPTIONS Brandy reviewed data from the statewide study of how community college districts are responding to the mandate to fund their unfunded retiree benefits liabilities.He reported that FoothillDe Anza has joined an irrevocable trust and he believes this is a good mechanism for addressing the liability. Hewill be recommending to the Board to transfer funds to the trust.He presented a number of options and solicited the Committees advice, noting that he recommends option #2. Ybarra asked about the risk that the state would appropriate the trusts funds during poor economic times, and Brandy explained that the state would not be able to do so.Responding to a question from Swenson about other advantages of option #2, Brandy answered that it would provide higher interest earnings.Hansen said there was not a lot of discussion with constituency groups about the other options.Plotkin urged him to speak up at meetings. Grimm applauded the Districts efforts to address the liability, saying it was the first positive step hes seen that will actually accomplish something significant.Grimm and Peterson both stated that the balanced approach is fine, at least in terms of starting out in that kind of conservative manner, but they hope that equities would be considered in the future with other more aggressive financial approaches. Plotkinasked about dollar cost averaging as a technique to provide a higher comfort level when dealing with equities.

7. PREPARATIONFOR PASSAGE OF MEASURE C Plotkin reported that Pat Millar had expressed concern that the recommendation going forward to the Board regarding the bond underwriters did not reflect the Committees actual recommendation for a co-management approach with UBS in the lead, and she was disappointed that Citigroup was not part of the mix.Committee members discussed their recollection of the discussion on May 18 and reiterated their understanding that the Committee had indeed recommended a co-management approach with UBS in the lead but had left it up to Brandy and the consultants to determine how to work out final arrangements.Brandy explained that, in his judgment, the best strategy would be to alternate the lead between UBS and Morgan Stanley.He also explained that it would be easier logistically to coordinate with two firms rather than three, and the bond experts with which he consulted  David Casnocha and Bill Euphrat  recommended using two firms.The Committee members expressed support for his decision. Brandy noted that a special Board meeting had been scheduled for June 7 to quickly initiate the first issuance of the bond.

8. NEXTMEETING DATE The next meeting was scheduled for August 28 at 3:30 p.m.If the need arises, Committee members will be contacted about their availability for a special meeting on or around July 10.

Audit & Finance Committee Minutes, 6/5/06

Page 3

CALENDAR OF PENDING ITEMS Measure E Progress Report (Schulze)..................................................................August 28, 2006 Discussion of How to Use New Revenue Streams .................................................................TBA Revised Board Policy 9123, Audit & Finance Committee......................................................TBA Board Policy 3153, Audit...................................................................................................... TBA Pro-Card Activity Operational Audit (Brandy) ......................................................................TBA Small and Local Business Procurement................................................................................. TBA Cash Handling Operational Audit (Brandy ..............................................................Summer 2006

jo Approved 8/28/06