>> I'd like to call the meeting to order. Ms. Thompson will you take the roll? Mr. Baum? >> Here. >> Mr. Martin? Dr. Fellow? Ms. Brown? >> Yes. >> Dr. Mann? >> Present. >> Mr. Thomson? >> Here. >> Ms. Wah? Ms. Israel? >> Are there any members of the public who submitted a comment card to address the board on any of the close session items? Okay, seeing none, we will recess to closed session to discuss two items on the agenda, collective bargaining and public employee appointment under the appertaining government codes. Let's get on the agenda. [ Noise ] >> Go ahead and gavel the meeting to order. Dr. Mann as you're standing, will you lead us in the Plead of Allegiance? >> Yes. Please rise. >> I pledge allegiance to the flag of the United States of America, and to the republic for which it stands, one nation under God, indivisible, with liberty and justice for all. >> Thank you. I want to announce that there was no action taken in closed session. And moving on to introductions and announcements. First off, I want to extend a warm welcome to the members of the PCC Community to District 1. This is the first time in my term since I've been elected to the board 11 years ago we actually have met in District 1. We're in the community of Altadena. Altadena is split right down on the middle of Lake Avenue. Dr. Mann represents District 2 and I represent everything west of District 1. And if you haven't already seen, Altadena is one of the treasures of our community. We have a number of great people who are--who live and work here, a lot of great businesses, good schools. And it's a real pleasure to welcome everybody to Altadena. I know it's also home to our AS president, Mr. Fraser. And one other introduction I'd like to make also from District 1 is our immediate past student trustee from La Canada Unified School District is here in the audience Alex Keledjian and a future--and he just graduated and will be joining PCC as a student in the fall. So, I want to recognize Alex Keledjian, it's great to see you, Alex. >> Dr. Rocha, are there any other introductions? >> I do not except to thank all of our faculty and staff for what they're doing in the service of our students and all of our administration for doing their hard work over the, hard work over the summer. So, with that, I am [inaudible]. >> Other board members? Trustee Brown, any introductions or announcements? >> No report at this time. >> All right. Dr. Mann? >> Nothing to report. >> Mr. Martin? >> None, thank you. >> Trustee Wah? >> Yeah. I just wanted to mention that I had a chance to attend the Pasadena Sister Cities event last weekend and met the two Finland students who will be coming to PCC. So it was really a pleasure to see them. >> Trustee Thomson? >> There's no report. >> Trustee Israel? >> No reports. >> Shared Governance Groups, Management Association, are there any announcements to make. >> Yes, thank you. Thank you, Mr. Baum. I'd like to report that the Management Association has elected its new board for the year. We have Amy Ulmer representing the group at large, Don Eckmann representing Supervisors and Classified, Crystal Kollross representing business and ed services. Nick Mata, Student and Learning Services and I'm representing [inaudible]. >> Thank you very much. Academic Senate? >> Good evening. This is my first meeting so [inaudible]. >> Yes, welcome. Pleasure to have you here. >> Thank you. I have two items I just like to bring to your attention. First, about 40 to 50 faculty, I never really counted but about 40 to 50 faculty attended a retreat at Clark Kellogg in Pomona last weekend. And I think you have a report in the packet that I saw on my desk here. I'd like to just let you know that it was an immense success. People who were there and who have spoken to me after felt reinvigorated, felt inspired and I think you have a report of the various things that faculty are doing. I think a lot of us are going to be coming into the fall with great, great energy. And so I thank the board and the president for supporting our work on that. And we hope we will produce good work when it's all said and done. And then second, the senate is going to have its annual retreat on Saturday, August 25th at the Huntington from about 9:30 to 1:30. >> Thank you. President of the Associated Students? >> Thank you President Baum. I'd like to start by asking the members of the Associated Students Board that are present to stand. And I'd like to just introduce and not everyone can make it but present with us, we have Diego Lopez, our new Chief Justice. Miranda Alvarado, our new Vice President for Academic Affairs and the liaison to the Academic Senate. Anna Torres, our VP for Internal Affairs and manager of all things club and organization related. Fernando Becerra who will be heading up our VP of Campus Activities, arranging everything that you see in the quad interrupting the day-to-day business. And Myra Whittington, Vice President for Student and Learning Services who will be directly interfacing with Dr. Baum on a regular basis. Not present, Andrew Bott is the Vice President for our Business Affairs. Juan Diego Ashton is our new Vice President for Sustainability. Peter Torres is our new Vice President for Public Relations. And I don't think--oh and John Fraser is returning as our Vice President for External Affairs and our Chief Lobbyist. So this is your Associated Students Board for the 2012-13 year. So the committees are getting set up, you guys can sit down now. Thank you. [ Laughter ] [ Applause ] >> We very much look forward to working with you as the voice of the students of PCC. >> Thank you. Our committees are getting set up. In fact our lobby committee is already reviewing seven bills federally and two statewide that we'll be hoping to lobby on and also bring to the board's attention. These will be issues we're lobbying on for the full legislative session. Also, in this plane, we are redesigning a new club portal to replace outdated technology. Clubs are one of the biggest drawers of PCC and they're also one of the biggest ways to get students involved. So our hope is by upgrading the online digital presence, we can push students to the other online services, the PCC office through the ASPCC, and also through the new 24 hours smart tutoring program which has been implemented by John Wood, the Director of the Learning Assistance Center using a grant from the Associated Students' student activity fee initiative which will provide 24 hours tutoring to student in a variety of transfer level classes. And finally, next week, we will be going over college budgetary issues from the position of the students. And we would invite any interested party and especially some of the administration if they would be interested to come and attend to give their views on the budget and how we as a college move forward. Thank you. >> Thank you very much President Fraser and I should again point out, President Fraser is one of nearly a thousand PCC students who claim Altadena as their home community. So it's a very important part of this district and so glad to have you. The one announcement I'll make. Last week I was in Sacramento for the Board of Governors meeting, we'll be taking up some recommendations that the board is addressing including some very alarming news out of San Francisco where San Francisco City College is threatened with the lost of its accreditation due to a series of measures that have accumulated over the years. And I'll be continuing to report back to our district about some of the lessons learned from the tragedy that's happening in San Francisco. In addition, a very hotly debated item was a proposal to establish specific priorities in student registration. And the state has mandated specific groups have access to priority registration. And I'm going to be putting that on our agenda to discuss the impact on our district. Some of them are directed by state law, some of them by education code. And then some will be left to local districts to establish those registration priorities as well. And I'll be bringing that to our board for once the state is acted for to consider what actions we may want to take as a local district. Okay, moving on to public comment on non-agenda items. I only have one comment card for non-agenda items. And I just will say members of the public may request to address the board regarding any item on the agenda to complete this form and give it to the board secretary prior to the deliberation of the agenda item. Individual speakers are limited to 5 minutes and total audience participation on any agenda item is limited to 30 minutes. The one card I have is from Professor Rod Foster. [ Pause ] >> Thank you. Good evening. I'm here tonight to represent the faculty association to talk eventually about the progress of collective bargaining this summer and recent developments. And we met today with the district's bargaining team, we met with members of the team also on Monday this week. And I want to begin by thanking Dr. Bell for conducting the bargaining in a dignified and organized way and also Bob Miller who you guys have put in a heck of a pickle. [Laughter] And who's been very game nonetheless, and Gail Cooper, the members of the team have been great to work with. Our discussions have been spirited but I believe they've been respectful and we're working as hard as we can to get to the goals that we all want us to get to. I also want to say that we are, you know, dealing with a very fresh financial crisis. Last Thursday, Dr. Rocha presented information at the BRAC meeting which is the first time this reached the light of day. On Monday, at our session with the team, partial team, we were given kind of a preview of what the crisis--the outlines of the crisis. Last night at 7 o'clock, via e-mail, a proposal was transmitted to our chief negotiators by the district and we got it in solid form today at noon. And, basically, what we were being asked to do was to respond today. And we asked for more time, and I want to thank the board because Gail apparently stepped out of our meeting for a minute, contacted members of the board, and got us some more time to deal with this. Now, one of the, what's probably the predicate to this and to our disagreements with the board is that, we disagree over numbers. And the basis of it, this report that the board members get, I assume every month, and these are the actual expenditures as compared to the budget expenditures. And we know that as of tonight, and we had this discussion today, that the closing members for the year aren't available yet. And we all understand that that takes a little while. You know, I kind of remember from my days in management that around August 5, we got the closing numbers. And so, we agreed that we would get some fresh numbers that will be closer to the actual closing numbers on Tuesday. We're going to work late into the night of Tuesday just like we did yesterday to deal with those numbers to try to get together with the committee again on Wednesday and to try to make progress towards the district's proposal. And for the people that weren't in the room today, I don't think that this proposal is secret, is it? >> No. >> No. So the basic two things that the district wants are to immediately go to a new calendar that eliminates winter session, moves up spring. Basically, it looks like a trimester. And then secondly, to freeze step and column increases as a way of responding to the financial crisis that has been outlined by Dr. Rocha. So we disagree on the numbers and we think that we were, you know, we're talking about three different kinds of numbers here, the actual amount of money we're going to spend this year and what the ending balance will actually be, and how that impacts the financial crisis. Number two, cash flow numbers. And number three, budget numbers. And tonight, you're going to get a budget presentation 'cause you've got to have a budget ready by September. And we understand that. But we believe that the assumptions that your budget numbers are going to be based on may be erroneous. And so, what we're afraid of is that we have another one of these [inaudible] summer surprises. And that we act rashly without the information. And so that's our concern, we're going to continue to work as diligently as possible in order to get this thing resolved as best as possible we can. You know, we as faculty have--I'm sorry to say this--longer tenure than anybody of the board members here and that's just the nature of faculty. And we have as big a stake in this as anybody else does and it's our pledge that we're going to do everything we can to get us to a resolution as swiftly as possible. Thank you. [Applause] >> Very good. [Applause] >> I see that you were making announcements that the student government leaders and another District 1 resident student government leader Juan Ashton is here now to join us too. Everybody else was introduced as well. Okay, moving on, there--I have no other request for public comment so we'll move on to approval of the minutes. We can take them up separately or as a group. First off, are there any corrections or changes to the minutes as presented? Okay, seeing none I'll take a motion to approve the minutes as presented by Ms. Thompson. >> I move approval of the minutes. >> Second. >> The motion by Trustee Brown, second by Trustee Mann, any further discussion? All those in--oh advisory vote? Mr. Thomson? >> I have to abstain for the minutes of, what was it, June the 6th. I was not at that meeting. >> If we could record that vote altogether then we'll note Mr. Thomson's abstention for the meeting for which he's absent. We'll take our advisory vote. >> I will be abstaining from June 6 meeting. >> And, okay. For--could you note the abstention for Ms. Israel on the June 6th meeting as well? Okay with that, we'll go to a vote. All those in favor say aye. >> Aye. >> Any opposed, motion carries. Okay, moving on to consent items, I will go, Trustee Israel, are there any consent items you would like to call for a separate vote or a separate discussion? >> 9B. >> 9B. Trustee Thomson? >> 6B. >> Trustee Wah? >> I just want to make a general comment on B. >> On B? Okay. >> Trustee Martin? Trustee Mann? >> None, thank you. >> Trustee Brown? >> None. >> And I'm going to pull 4P for a separate vote. Okay. So Trustee Wah, why don't you go ahead with the comment you'd like to make on the B items? >> Yeah. One of the requests I had made previously was to see whether or not we could get an aggregated total for vendors whenever we list them on the purchase order services on like consent item 2B. And I know Vice President Miller had said that at some point, we would be able to do that. So, I just wanted to remind him and hopefully, that we'll get a date when that can appear on it. So that we have a cumulative total at least annually on what we're paying vendors. >> This is on--for all the--for the contracts as well as the warrants and like on-- >> Right. >> On 2B where we see all these different ones. And, Dr. Rocha, any comment on that? >> We will do it. >> Yeah, we're working on that right now. >> Okay. Mr. Thomson's 6B. >> Yes, there are two items there for Vicenti, Lloyd and Stutzman, LLP to provide forensic auditing consulting services in the amount of 57,000 dollars and also then to provide auditing service related to oversight and direction on the year end of closing process and assistance then offered a budget for 59, not to exceed 59,000 dollars. Can somebody explain to me why we need this type of service and why it should cost so much? >> Dr. Rocha? >> Yeah, we sure can, Dr. Thomson. One is for, basically, the replacement of financial services staff so that we can do the close and the development of budget. And the others to do the forensic investigation that was pursuant to the Mr. Van Pelt situation. But I'll turn to Mr. Miller and have him fill that out. Last time, you will recall that we had this item on and Trustee Mann asked for us to identify what the amount of it would be. And that, she was uncomfortable doing that. And so this time, we come back with more detail and a cap amount. >> Thank you, Dr. Rocha. So we'll speak to the second item first which has to do with the--to provide auditing services related to oversight and direction and the year end closing process and assistance for development of the 2012-13 budget for the amount not to exceed 59,000. Ms. Renee Graves who is a partner with Vicenti, Lloyd and Stutzman and her team are providing services to augment our physical services staff right now as we close out 11-12 as Dr. Rocha mentioned and as we prepare a budget for 12-13. But also, as we look at a number of processes related to how we do business, if you will, going forward. So part of what they are going to provide other than those two levels of services I just mentioned are some recommendations about ways in which we can go about the things, the business that we need to go about so that we can more affectively develop--first of all, develop budgets, manage budgets and move forward. For example, one of the things that we've got those folks doing is working with our benefits technician in terms of how we are managing the allocation of benefits, the tracking of benefits, the receipt of moneys, for example, from retirees who continue to want to maintain some level with health services and insurance, so forth and the money that they owe us and the like. So, this is another set of eyes, if you will, collective set of eyes as we close 11-12 and open 12-13. We also thought that it would be, that given the situation that we're under with the Dr. Van Pelt situation that it would be good to have an outside group help lend assurances, if you will, to the public--the campus community and the public at large that in fact we are managing our resources correctly. As far as the audit is concerned, we have a very extensive third party audit, the audit compliance team of Vicenti, Lloyd and Stutzman, they have two people on that, a partner and a member of their staff that is very, very carefully going through the processes. Well, going through the situation that occurred, identifying what the issues were, providing assurances that other than what we know, what we think, knew happened that there was no other material damage that resulted to the district as a result of the situation recommending internal control procedures that would lead to perhaps helping us not being in situation like this going forward and what have you. So there're two very separate and distinct tracks of works that the LS is doing. One, dealing with the forensic audit and related matters when dealing with 11-12, 12-13 and how we did business going forward. >> We have periodic reports on these two items as how much money is being spent and for what? >> Yes, it's anticipated that at the next Board Meeting likely in close session you will have a report on the status of the forensic audit. The RR audit team will be ready to speak with you at that point and certainly for example this evening, Ms. Graves [phonetic] is here tonight and she will be speaking to our 11-12 process and what's happen with that. So, yes we can report to you the activities and we can report to you what the costs are as we go along. >> Thank you. >> Is there something you like to pull for separate vote Mr. Thomson if you do that. >> No, no, no that explains. >> I do have--before we go to the next trustee requested consent item, I do have a request by Mr. Krause to speak to the consent items as a member of the public. >> Good evening. I just wanted to draw your attention to page 1, 2B consent on 2B scheduled maintenance fund. Two company--[inaudible] one from [inaudible] a little over 17 that she look like I'm almost [inaudible] to me. I think the board should take a look into it. >> [Inaudible] I'll just go ahead if I'm under item 2B, and-- >> 2B. >> Yeah on your [inaudible] 43, the two bids from Grady Electric Company, is that what you're referring? >> Okay, under Fund 43, the scheduled maintenance fund. >> Right, [inaudible]-- >> But you think it looks like a split bid. >> Yeah, because if you--they are pretty close together. Do not, you know, separate part and the one with 17 shouldn't been bid out anyway using a 15,000. [Inaudible Remark] So I just want to draw your attention to that. Thank you. [Inaudible Remark] >> I'll ask the administration to look into that and report back to the board if there's anything to do the honor. >> But as far as questions can, but we know what that's for, right, for the-- >> Oh yes. >> The expenditure. >> Yes, we do. >> Yeah, sure. >> Okay. >> We just learn respond at the board so we're aware after we take a vote. Okay, Trustee Israel item 9B, your request? >> So I have a comment about 9B, it's not necessarily about the change or itself but on the subject of restoring upgrade in the R building. At the September facilities and planning meeting, the chair at that time had outlined gender neutral single cell restrooms were going to be a part of the remodeling. And it isn't according to the new plans, neither is it for the D Building and some others that were mention. So I guess I just wanted to make this aware to the Board and perhaps we could revisit this. >> Could you repeat that? What is it that's not there? >> Yeah, we'll follow up with that. >> Yeah. >> Parts facilities. >> We'll put that in to our weekly facilities meeting. >> Yeah. >> Do we--it has come up that the students have brought up a request that we have. They call them gender neutral, I call 'em family restroom so that we do--what is our plan and that hasn't been incorporated. Do we have a--opportunities for those who would seek a restroom that would be gender neutral? >> Let me ask Jack to respond. >> And do we have other places on campus where those [inaudible]? >> Yes, yes we do for your direction. The arts--the new Center for the Arts will have one. The health services has one now and the R Building restrooms remember not just the first floor, we had to start at the first floor and for budget reasons all the restrooms are being remodeled but not to the extent as the first level because the first level restroom for both male and female we're lawfully undersized. We're completing the--what used to be the men side, now it's in fact it is done. We're completing the punch list. And it will become the women's, the other side that was the women's will become the men's. Once the arts divisions moves out in to the new Arts Building because that expansion takes part of their current division. So, those both restrooms are the largest, the gender neutral restroom would be I believe are--either at the second or the third floor. And that's what we reported to before and that's what we were sticking to as far as the three areas of the campus. The health center that used to be in the U Building that was to remain since we moved it, it moved with the program or the health center. >> Right, so there will be one in the--the Arts Building I think that addresses the question that Trustee Israel raised. >> Other than those three-- >> Yeah. >> If there's more that's--that's the direction we have from the board at the time. >> Okay, so while you're up there [laughs], you know me in change orders. The one that came in for 400,000 dollars really kind of jumped out at me, what was that for and how could we not have anticipated such as significant [inaudible]-- >> Well it was--it was a little higher to start. When it came in, I was directed to take it back and review it even after it was approved by the architects and engineers. This is a little of years, mind and hours change order. That means the district have some changes that we make. The architect had some errors and then there were some middle ground to where things happened. All the changes we're came about after the project was let after our end users received the plans back from DSA and we always go back over the plans with our end user that there were no exhaust fans in the--our area, certain programs of the art and that was one--that was one of their biggest complaints that they had now. And it was noticed that there was no--there were no exhaust fan. So a large chunk of this is for the exhaust fans. When we went back, when my office went back and looked in fact the end users had requested the exhaust, so this is for that addition. We didn't see it till they came back out of DSA that the fans we're missing. Also, what we--also did on this is the first time since I've been here that we are going to go after the architect for areas in the missions. The reason its not showing up here is because the architects sent me a letter and requested that it looks like since you're going to do this, there's going to be more we want to wait 'till the end of the project so that they don't have to go to their insurance company and continually ask for case by case by case of an areas in missions insurance will do it one time. >> Okay, let me just ask Jack with this change order, on this project, in this budget, are we still within the change order budget and within the budget for the project? >> Yes. >> Okay. >> And I believe that when you're done because I'll answer your next question Mr. [inaudible] that we'll probably be between 1.5--1.3 and 1.5, well below the 10 percent. >> So we're not anticipating any additional change orders of this magnitude? >> None of this magnitude, there'll be quite a few coming your way but then none of this magnitude. >> And how close are we the completion on that building? >> May--March 3rd, 2013-- >> Okay. >> Is the completion date. >> We're hoping that be able to occupy it-- >> All right. >> In Spring of 2013. >> With all the changes that are going on. We've got bigger cruise than we've ever had but they are still behind. >> Okay, thank you. That's my question. The last item I have is on 4P, there's not really discussion but I'll be a broken record again too. I'd been speaking out for the last three or four years and I went back to the record that I find myself on the record talking about large group instruction and overload as being a significant a impact on our budget and specially when we are cutting opportunities for adjunct teachers to teach. And so I'll be voting against this large group instruction recommendation as I have in the past even though but because I think that's something we need to take a look at. Okay, so any--so I'm going to pull that for a separate vote. Any other discussion on consent items? Okay, so we'll start with all of them except for 4P, all those advisory vote, I'll take you're advisory vote. >> Aye. >> All those in favor say, "Aye." >> Aye. >> Any opposed? Any abstentions? The motion carries unanimously. Okay. Did I--I have not received-- >> No, I think you we had a motion. >> Okay, I take that back. [Laughter] >> Is there a motion in the--is there a motion to-- >> Move approval? [Inaudible Remark] >> Second. >> Okay, thank you for that advisory vote. >> Aye. >> All those in favors say, "Aye." >> Aye. >> All opposed? >> Let's vote. >> Okay, motion passes. Is there a motion to approve item 4P? >> I move approval. >> Is there a second? >> I second. >> Okay, motion by Trustee Brown, second by Trustee Martin. Any additional discussion? Okay. Advisory vote? >> Aye. >> All those in favor say, "Aye." >> Aye. >> All those opposed, no. Any abstentions? Okay, motion carries. Thank you very much. Moving on to our reports, do I have any--before we start the recording I want to see if there's--Mr. Clinton, you've submitted--I just want to give you a heads up to the audience, you've submitted three requests to address the Board of Trustees. As I stated before, in order for me to be able to include that, it has to be before an item is discussed. So we're not going to be able to go into your request to discuss the consent item but we will be able to accept your comments on the other items. Okay, item F, Dr. Rocha, I'll turn it over to you. >> Yes, thank you Trustee Baum. I'd asked Vice President Miller and Renee Graves from Vicenti, Lloyd, Stutzman, to take the hearing table. And this is without any ado, they are going to present three very important reports. Then I ask our--you know, I know I can count on your copious attention too. One is the closing of the books of 2011-12. That is the fiscal year that just ended on June 30th. And that is what we're working on now and that's what we ask Renee and her staff to assist us with. Another and this information is in your packet on the borrowing and the cash flow and fund balances 'cause we wanted to account for every penny that the district has in house. And then finally, there is a--some information that we wanted to present to you about a request for qualifications for the audit for our year just closed. So I'll turn it over to the Vice President. >> Thank you Dr. Rocha. Good evening everyone again. So, let's start with F item 1, closing the--of the 2011-12. I'll just give a brief verbal update and then turn it over to Renee again. This is Renee Graves, a partner with the Vicenti, Lloyd and Stutzman working with us very, very well. By the way, Renee has been a great help and has been here on a regular basis and has worked many hours with our staff thus far. Basically, we are on target for a July 31st close. I checked with Maria Descalzo, our Accounting Supervisor this morning and she's feeling comfortable that we--that we're on track for the July 31st to get everything wrapped up. With that said I think I'll turn it over to Renee and have Renee say a few things. >> Okay, thank you. What Bobbi said is correct. We are working diligently through the closing. I'm out here typically two to three days a week starting roughly the week of July 18th. I have another staff member that has been working with me as Dr. Miller had mentioned earlier in regard to the benefits reconciliation and he has spend at this point about 30 hours going to that reconciliation. It's a big piece of the closing process because it does hit all of the funds and it's a number of different vendors that befits our pay too. And so he has been spending quite a bit of time getting that reconciled so that it is a clean year end cut off and then the roll over into the next fiscal year we're also be as clean. As far as the closing, some of the things that we are doing is we are analyzing each and every fund of the district. I believe there is roughly 10 different funds. So part of that closing has been insuring that prior accruals were properly cleared. Looking at the postings that happened the year as far as revenues and expenses and then looking at the accruals that are being recorded for the end of this fiscal year. One of the things that's interesting is working with the Chancellors Office. It's--it is a moving target and that's not an exaggeration. Numbers don't change day to day. They occasionally change minute to minute. We all pull every port off of the Chancellors Office website. I think we have a good number. Go back on looking for something else and they posted a new report within I believe it was 20 minutes with the new number on there. So those are the types of issues that we're dealing with but we are being very diligent to ensure that the numbers that you get at the end of the year are as accurate as they possibly can. Part of that process is also going to be preparing the final report. It's the CCFS 311 report and that is your financial statements that are presented to your auditors so they can begin their audit. And it's also provided to the Chancellors Office before your ending balance that they can do their fiscal monitoring. And that will also be a part of our closing process and something that we want to ensure is prepared accurately. >> Okay, thank you. All right, so let's move on. In your packets, you have this green PowerPoint. And so what I'm going to do is go through some of the items in there. The first item that we're looking at here is the fiscal year fund balances as of June 30th. And these are basically tentative numbers as of July 16th, so a day or so ago. And it's very similar to the report that you saw last time except for the fact that it's obviously a month later. We go through the different general funds starting with the unrestricted general fund which is the primary fund that operates the institution. The restricted which is primarily our grants and et cetera as you go through this. The one thing that we wanted to specifically point out to you is the capital outlay fund 41. And the intent that the district has for the allocation of those capital outlay funds in support of our AIS and other types of educational technology on campus. The facility's renovations, equipment replacement, et cetera, a major upgrade to out heating ventilation, air conditioning and our electricity upgrade which the facilities tell us is absolutely necessary. And then there is roughly a million dollars for things that are already encumbered, not the least of which is asbestos abatement which every wall that we touch in many of our buildings or every ceiling that we touch we have a significant asbestos challenge that we have to deal with. Beyond that, you see the various funds that we have, schedule of maintenance, financial aid, the self insurance, our GASB 45, that funds the other post-employment benefit that we have. And you might recall that its fund 65 and fund 41 that gives us our interfund borrowing. So in effect, you see the beginning fund balances, the year and date revenue and expenditures by category or the ending fund balance as of now what's encumbered in the actual cash in the bank that we have, the bank being the county--LA County Office of Education. So that is where we are with our funds right now. Yes? >> I just want to ask you a question and-- >> Trustee Martin has a question. >> Oh, I'm sorry. >> I'm trying to remember looking at fund 41 and the expenditures this year were 9 million plus. I think we did the lead, the LED lights across campus perhaps, out of that fund. I'm trying to think of what else more or less to a major magnitude of around 9 million. The LAD was 5 million give or take. Is Jack still here? [Inaudible Remark] Beyond that, we have a number of construction projects that occurred that some of which were rehab and not part of Measure P. So constructions projects were part of that. The-- >> I wasn't--and again, I made the incorrect. I thought a major chunk of that money was to do the moving from the-- >> I was just going to say-- >> U building and all that. >> The Science village, okay. >> And the moving the nurses out to CEC and science to lot 5 and so on. >> Right. >> Okay, sure, yeah. >> I was just about to go into that whole to the U building. >> Okay, that's-- >> You moved a lot of [inaudible] community education center and there were some significant expense of rehab-- >> Right, sure. >> And that's extended for all the health sciences for programs. And then of course they have the science building. If anybody hasn't been by at in lot 5 A lately, you might want to stop by and see that's a massive undertaking. And it's really going to be quite nice. Dr. Douglas is here and--it's quite a [inaudible]. >> That's fine. I didn't want to slow down. >> Right. >> I just wanted a quick reminder what we did for 9 million out of that fund? >> Yeah. >> And--right. And I just have a couple of quick questions and maybe I'd--I'll ask Renee to respond to the extent that she can because this is--we haven't spoken and this is unscripted. So, first of all, the question I have, is this all the money that we have? Is there any money that the district has that it is not accounted for on this page? >> Absolutely not that I'm aware. >> I concur without statement. This is all your funds, all of your money, all that you got to-- >> There's nothing that's off the page, under the page, over the page, to the left of the page, this is every dollar? >> It is every dollar. >> Okay, because we're paying you to tell us that. [Laughter] >> Right. >> And I'm telling you that answer honestly. >> Okay, so that's important. Now-- >> The public is paying her to give an honest assessment. >> Independent. >> Right, right. >> Okay. >> Make it right. >> So, with that and you know, and then I'm only being partly tongue and cheek because that is, you know, an issue. I want to be clear that the capital outlay fund which now stands at 18,254,768, right? All right, at least, that's the way it looks, right? That those are planned expenditures and have not yet been approved except for the small amount for asbestos, right? In other words, we are planning to use the money for the Technology Conversion but we could as a policy matter, not an accounting manner decide to do something else with it. Okay? Is that correct? >> That is correct. >> Okay, and the same thing facilities, renovations, for example, when we move a wall or we need to buy new chairs, new desks and so on and so forth, that is what that money is for, correct? >> That's correct. >> All right. And then the HVAC and the power upgrade is a result, if--again, if I understand correctly, two million dollars, is that we had fuel cell contract, okay, which I have under the previous financial administration, that I have directed general counsel to see about voiding, okay? Because there were some issues with it and so, given that, there would need to be money to generate power of that fuel cell. Now, we haven't brought this to the board and we could decide to do something else with that money, but is that correct? >> The fuel cell contract, I'd advise them we're terminating and I'm waiting final agreements from their board, their general council's advice if they concur that the fuel cell contract is terminated and if we rescind it. >> So, I want to make clear and this is my understanding of it. That that 18 million dollars is sitting there but it's planned for these purchases and this board could decide as a policy matter to use that money for something else? >> That is correct. >> Okay. Now, the last question I have is up at the top, the General Fund, the apportionment money, that stuff that comes from the state. And I want you to explain, Renee, in plain English because this is what we need to know. That we began the year with a balance of 18.9 million dollars, okay? Began the year with a fund balance of 18.9 million dollars. It looks like your work so far indicates that we will close with about 19.8 million dollars, okay? And assuming that that's correct, normally, I read that as happy days are here again, we have almost 20 million dollars to spend, okay? If that was the policy, the decision of the board, can we spend that 20 million dollars? >> The problem with the 20 million is it's not sitting in your bank account and you can see that by looking a little bit further over to the right with Cash in County. What that 19 million dollar of the year is or [inaudible]--yeah, 19 million, that is an accumulation from the inception of this institute every single year and some years, you would have revenues exceed expenditures, other years, you would have had expenditures exceed revenues. But from day 1 to June 30, 2012, the accumulation of every time your revenues exceeded your expenses it is resulting in that 19 million dollar figure. >> Right. >> The issue that you have and a lot of your colleagues have is that you don't have the cash in the bank to pay the expenditures once you incur them. And that is a result of the state and the chancellor's office not paying the money that you have earned through servicing your students. They are not paying you that money at the time you earn it. They are withholding every single month, their withholding a portion of your payment. And particularly, toward the end of the year, their withholding larger amounts to the tune of between 22 and 24 million, they have withheld from you just for this fiscal year 2011-2012. So that's what creating the issue is that there isn't cash available to make those payments if you do incur the expenditures. >> Right. [Inaudible Remark] >> Regarding the 3,336,000 of encumbrances, I would understand that those are contractual obligated encumbrances which are unavoidable. Is that correct? >> I probably defer to legal council on that but yes, normally, an encumbrance is something that you have committed to and you should be making those payments whether you can still get out of them, I don't know the answer to that question. But it is something that you have committed to--most likely, there's a purchase order sitting out there that you have told a vendor that we are going to make this purchase, here is our purchase, so you have encumbered that amount to cover those purchase orders. >> So, I would read this that we're obligated and under contract that the first 3,336,000 of the 19 million or the first 3,336,000 of the 6.9 million in cash is already contractually obligated and going to fulfill those contractual obligations? >> Right. >> In essence-- >> The timing of when those all happen, you know, that would affect your cash flows of course. >> But underneath the schedule or something-- >> Exactly. >>--that more or less-- >> Exactly. >>--the situation is actually slightly worse that what you just portrayed by saying we have 7 million in cash while we do but we also have 3 million in obligations against this, right? >> Right. >> Okay. >> Yeah. And it--again, it just depends on that timing of cash when you get your money in versus when the payment goes out. If it all worked nicely, there could--you know, they may not be an issue, but if it doesn't work as nicely as we hope, it does create an issue. >> And I would direct the board attention to the bottom of the page, the Fund 01 General Fund Unrestricted, where FY 11-12, the notation says fund ending balance of 19--59,316 includes a receivable of 24,493,602 from the state. Its 11-12 deferred apportionment. >> Right, so-- >> That's the cash issue. >> So, again, what I'm trying to say in plain English for me who needs it and for the Board of Trustees, for the public, is there available money to spend? >> The only available money that we have to spend as of this particular report is what's known as the Cash in County columns and it is basically the 01 General Fund Unrestricted and then elements of some of these funds. Some of these funds are restricted for very specific purposes. So, really, it's 01 up to 75 percent of 64, the Self Insurance Fund and up to 75 percent of the fund 41, Capital Outlay. Beyond that, that's pretty much our flexibility right now. >> So, I apologize, so please continue with the cash flow report. >> Okay, so are there any other questions on these? If not, I'll go on to the next item. So, the next item is the Daily Cash Balance. And what I wanted to really direct the attention. We told the Board at the last meeting that when we enacted interfund--an interfund loan that we would endeavor to repay that loan as quickly as possible based upon revenue to the district. So what this--this chart points out, the red is our daily cash balance without the interfund borrowing and that borrowing, again, comes from either Fund 41 or Fund 64. And the black is the daily cash balance with the interfund borrowing. So, you'll note on June 28th, our cash situation got to a point where it was necessary to borrow 5 millin dollars and in this particular case, we took it out of the Fund 64. We were able to transact the business of the district with that money and then, if you go down to the bottom of the page, you'll note a payment part of the deferred revenue from the state of 9 million 5--or 9.5 million dollars that we received approximately on July 12. And we then were able to get that through the system and deposited if you will on July 16. So, if you go to the far left of the chart, you'll see on July 17th, the loan--we repay the interfund loan and we--as of July 17th, an approximate balance in our cash account of 9 million dollars. >> Quick question. >> Yes. >> Do we have any outstanding interfund loans that have not yet been repaid? >> No, no. >> It's in the general fund, didn't we borrow from that? >> Well, no, we didn't--well, what we did is we did not make a contribution last year to that fund. We didn't borrow from it. We just did not fund it last year. >> I see. >> So, now we have a balance about 1.4 million and that's another issue for the 12-13 budget. But no, we did not borrow from that fund. >> So, we have no other outstanding interfund loan balances? >> No, not in the present time. So anyway, as of July 17th, we had a rough balance of 9 million dollars. We have a payroll that comes out on July 25th and we have another pay--another payroll coming up on August 1st. And in talking with Maria today, we are anticipating that there will not be a need for interfund borrowing through at least August and perhaps, in the September. Assuming that this next payment that is due to us and as a Renee alluded to, the information we get from the Chancellor's Office changes on almost the day-by-day basis in terms of revenue deferred money is going to come to the district. Although they are feeling pretty secure about that, the second payment on July 19th. >> [Inaudible] that the length of the deferral has stretched longer too, correct? >> That's correct. And if you--you might recall from the last presentation from the last board meeting, we've been advised by the Chancellor's Office in the most strenuous of language that to expect because the state has advised them that there roughly the first five months of money we would have normally gotten in 12-13 which is about 35 or 40 percent will be deferred until the last quarter, and specifically May or June of that quarter. So, we're going in to 12-13 with a significant--with the knowledge in hand, that's what they are trying to tell us, cash is your friend right now because the money is--the money is going to come that much more slowly next year. You know, there was deferral of roughly 18 or 19 million in 10-11 that came slow then they--then they--it increased to 24 million in 11-12 and I don't have an exact number but I suspect that it will be 30, 35 million or more in 12-13. So, part of our need is to plan for that from a cash flow point of view. So, a little later this evening, we'll talk about the TRAN, the Tax and Revenue Anticipation Note, and we'll talk about a local line of credit. So, this is--this is the daily cash balance situation and we will provide this report on a monthly basis. So, when we have to borrow, we'll show you and then when we pay back, we will show you. >> Can I add one thing? Talking about the deferral when it's paid, in the prior 2 years, it was a hundred percent paid sometime in July and for this year, they are making the two payments on this page in July but a portion of it has been deferred until October, which is something new this year. So, they are definitely stretching it out. And again, that information was given to us on July 12th, is when it was posted that a portion will be deferred until October. Prior to that, we thought the whole amount was going to be received on July 27th or 28th, they had originally communicated. >> Okay, so moving--yes, Edward? >> No, I'm good. I'm good. >> Moving on then to the budget projection. So, the next page is an attempt to--not an attempt, it is a projected budget for the General Fund, the 01 which is our primary operating account. So, what we are projecting for 12-13 is a beginning fund balance and it's important to note that this is accrual as opposed to cash. This is accrual, this is budget, it's not cash. This is just the accrual of how the moneys exist even though it is not cash in the bank yet. So, that you can see the beginning fund balance for 12-13 of 19.8 as compared to roughly 18.8 of last year. The fund--the federal funding sources per variety of things are coming from the federal government. The state funding which is primarily are apportionment fees and you'll notice in apportionment in 11-12, that's our FTES money, it was 75.5 million and based upon the projected workload reduction of approximately 7.3 percent, the Chancellor's Office is telling us that our apportionment for next year will be 66.3 million dollars. This budget is predicated on the fact that the governor's initiative will not pass because that's--because we won't know if it passes until obviously November. So, this budget anticipates the 10.5 million dollar reduction that we need to balance the budget. The local funding sources are defined as property taxes, enrollment fees, tuition. That number is a challenging number because of the Board of Governor tuition wager--waivers. As everyone, I believe, knows our tuition was 36 dollars a unit. Some 65 percent or more of our students received bag waivers. So, when that occurs, we get less local revenue and that results when they call it triple flip which is a complicated thing. But the point is it fluctuates what the local revenue is going to be. So, you've got enrollment fees, property taxes, et cetera, possibly redevelopment agency money when that shows up and some other things. And then other financing sources, it's basically miscellaneous, that money that comes in for one reason or another. So, our total revenue then becomes 105 million--105.5 million versus last year's 116 million. >> Can I ask you one question of-- >> Yes. >>--on the federal funding, we got Title 5, we got federal work study, and others, where--how--that--it's much more than it? >> Yeah. [Simultaneous Talking] >> Much of that end up in the 03 account, in the restricted 03 fund. >> This is unrestricted. >> This is unrestricted in the 01 account. >> Okay, thank you. >> Yeah. So, that's--you'll see that the reduction is approximately 10.5 million dollars. Now, on the expenditure side, you see the categories, academic salaries, classified non-academic salaries, employee benefit, supplies, other expenses, et cetera, the equipment purchase line where in 11-12, the number was 2.3 million, almost 2.4 million and in 12-13, it's 392,000. Because we use our capital outlay, we used our capital outlay as much as the reserve fund as anything else, there was two million dollars set aside last year for that enrollment fee situation I--that bag waiver thing that I talked about as a way to find some moneys in the budget that would help offset some of that income if it didn't arrive. We have chosen--we're choosing this year not to--not to allocate the funding that way to build that more into our overall expenses and to manage it that way. So, that's why--that's why you see that 2 million dollar difference there. At the end of the day, you'll see that our 12-13 expenses are 2 million dollars above our 12-13 income. At the moment, the Tax and Revenue Anticipation Note is anticipated to be a vehicle to help with our cash flow issues as we go through there. In a pure accounting sense, this is not the way to do this. Right, Renee? >> That would be correct. And it's not included in that total. >> Right. >> I mean it's showing up and reflected on this spreadsheet or on this PowerPoint but it's not-- >> Right. >>--included in revenue or expense. But--so it is generating cash, getting back to the original conversation so that you can pay those vendor invoices, pay salaries as they come due 'cause you're able to generate cash through the TRAN vehicle. >> So, at the end of the day, you'll see the projected ending balance of 17.84 for next year. >> I have a question. >> Yeah. >> On the expenditure side, we're anticipating significant increases in the cost of health benefit expenditures. But you're projecting a significant decrease in the cost of employee benefits. Is that accurate? >> It's accurate. Again, this is as of today, 7/18, we're still working--we're actually going to be meeting with Kenan [phonetic] in the near future. We know that our Anthem Blue Cross is going up 5.5 percent. We know our Kaiser is going up 4.8 percent. We got to pass on the dental right now and a few other things. The answer to your question, Mr. Baum is that based upon the lower number of employees that we have overall, because our employee count is down, as of now, that's our estimate. But again, we will be meeting in getting a better handle on that. >> [Inaudible] Where is it--that we spread out the SERP, the early retirement incentive over two years, where is that reflected in here? >> There is a slide we're going to get to and if I can hold that question till I get to it, I think that might answer--I think I can answer the question better there. [Simultaneous Talking] The bottom line is that that the money is--that the savings--and I hate to use that word, that the money that we realized as a result of the retirements is helping us to balance our budget, roughly 2.3 million specifically. And again, you'll see that when I get to that next slide. >> Are there any other questions from other members of the board? Okay, so do want to go in the next slide? >> If I may, thank you. [Noise] Okay, so by way of a recap, the first SERP. SERP stands for supplemental early retirement program resulted in 92 position retired as we looked at the first SERP. The second SERP which became effective December 31st or January 1 whichever one it was of 2010 that resulted in seven retirements and the third SERP resulted in 14 retirements. So it's a total of a 113 vacant positions, we propose to add back 9 positions so let's put something there. >> We're going to take to--on budget 9 positions. >> Yeah. >> Yeah. >> The--those 9 positions are positions that are budgeted in the existing 11-12 budget so there is a total of 122 vacant positions, if you will, as a result of the SERP and the 9 that are in the 11-12 budget that have not been filled yet, 122. Out of that 122, we had faculty hires totalling 32 or roughly 22 in 10-11 and another 10 in 11-12. So at the moment, our subtotal is 90 vacant positions. Later on at the meeting, we will get to the discussion about the proposed hires. After that discussion, if the board agrees to what Dr. Rocha is recommending, there will be 34 proposed hires, the overall reduction is 56 staff members. Now, if you were to put numbers to all of that, roughly 2.3 million dollars, 2,326, 136 dollars to be exact came out of the all of these SERP and other positions, SERP positions primarily and went in to balancing the 12-13 budget. >> Okay, let me a return over to Renee again. >> Yes. >> So, again, plain English okay, 'cause there's an idea out there that those--the value of those 56 positions, I asked you the question before, the value of those 56 positions, if we just say, 100,000 dollars for position, lets say with benefits is what in format? It's like 5.6 million dollars, okay? Is there some SERP money that we have and accounted for that's sitting someplace that's 5.6 million dollars? >> No. >> Okay. All right, I want to get to that. So, all of the "SERP savings" are reflected in the budget cut you've presented. >> That's correct. >> In other words, the budget has been cut from 116 to 105, so all of those vacant positions are not sitting out there in space but are actually on this page. >> You're saying that's when we look at the salaries-- >> That's right. >> With academic-- >> That's why--that's why are reduced. >> From 558 to 5537 >> But for those retirements, we would have had to do many steeper hard money cuts. I want to be clear on that but I'm checking with you, okay? My last question is--at least on this matter is that the budget, you know, that you presented and, you know, as all the numbers are accounted for shows that the revenue at the top line went from 116 to 105 so that's about a 9 million dollar--9.5 million dollar hard money cut to the district this year, right? And then the way just parenthetically, the way that we get to 10.5, the famous 10.5 is we take that hard money cut and then we add the dental-- >> That's right. >> The dental money and that becomes 10.5. >> Great. >> Okay. I'm asking a policy question now. Given our state, I am already recommending to this board that we spend 2 million dollars more than the hard money cut, okay, because the TRAN is just a paper, it's just a cash flow. Would it be your policy recommendation, you know, as an accountant and knowing our books as well as anyone right now, that we spend anymore money in this coming year, spend closer to--can we spend at last year's level? >> I definitely would not recommend that. We do see reserves down even further would put you on a more precarious position going forward and right now, we don't know where state funding is going to be, we don't know where the economy is going to be, there are so many questions, if you bring that balance down to such a low level, you've realty hand cuffed yourselves as to what you can do and then your starting into serious program cuts and serious changes for the students so that is not something I would recommend. >> And let me, you know, and I appreciate the members of the board, I may ask the questions for all of our information. Let me ask you the question about the famous 5 percent accreditation reserve. Okay, is there and this is just a question, is there anything that we would call conventionally at PCC, a reserve account that is a reserve fund. >> A reserve funds? No, I mean it's all sitting in the general fund, you have certain portions of that 18 million or 19 million, if you will, that your holding--reflecting it as a reserve to comply with chancellor's office requirements that you've maintain a prudent level but it's all in the general fund, it's nowhere else. >> So there is no, you know, identified separate discrete reserve fund. >> Correct. >> okay, so since the accreditation recommendation is that you have to have a 5 percent reserve, what would be your policy recommendation for us to show that to the accreditor? >> I'm not sure that I'm following your question-- >> I guess--and, you know, and that's why I'm trying to get help here because, you know, these are questions that I'd like to have clear in my mind before I complete my recommendation on the board. The accreditor says, "We're going to put you on the watch list unless you can show us you have 5 percent which would be about 5 or 6 million dollars stashed away somewhere, okay, as a reserve. Do we have that? >> Yes. >> We do. Where? >> It's in your general fund. It's in that 18 million. >> And let me clarify-- >> Okay, right. >> It's all--it comes back to the general fund in the 18 million. It's really-- >> The 18 million is not money. >> It's not cash in the bank, correct. >> It's not cash in the-- >> And it's in the 01 general fund. >> Right, the 01 general fund--fund 'cause these are all, you know, that you've got 01, 03 and 04, it's 01, the unscripted and that's where we have traditionally put the so called reserve and report it that way. >> So that's your last slide, I'd like to see if other board members have questions. I have one. So, how do other districts report their reserve balance when it comes to-- >> It's really a reporting mechanism on your financial statements, you know, you have assets liabilities, your ending fund balance and they would have that 18 million-- >> How we're doing--is it how it's commonly around the state. >> Right. And then within that 18 million, there's an additional breakout so it's really--it's a reporting mechanism where you say, "You know, here is our 5 percent reserve that we are keeping as required by the chancellor's office and the amount would go there." Any other commitments, any board designations that you have made, anything of that nature would be reflected which would all then add up back to the 18 million dollar total balance. So it's just that a designation of that amount. It's not moved anywhere, it's not hidden anywhere, it's not reflected anywhere, it's all still within the 01 fund. >> So really--so really we don't really have to put this is in a separate fund. Is it necessary to have in a different fund label or the way we have been doing it, is that acceptable? >> Yes, the way you're doing it acceptable. >> Thank you. >> Trustee Mann. >> Okay, I have a really basic question. Is my understanding that the money you identified here is being with the county, the cash. That's all the cash we have, and in fact, we cannot keep cash anywhere except with the county, is that correct? >> That is where 99 percent of your cash is held. You have some small cash accounts, it's really just a mechanism to make the depositing easier and let me give you a quick example, you're collecting a lot of small checks for tuition and the county does not want to have all those small checks deposit with them. So you deposit it with a bank--a local bank and then when that accumulates to after few days then all of that money is transferred over to the accounting. So there are some small checks in the accounts that you have and then some of the other fund, your auxiliary funds, your trust funds they would have a separate-- >> That's separate [inaudible]. Okay. >> Right. But as far as your general fund, all of your money is in the cash in county other than the time it's sitting in this--what's referred to as a clearing account and then you would also have a very--you have a very small revolving account, I believe it's 30,000 maybe 32,000 and that's for any small payments that you can't wait for the process to come through the county and a check can be written for very small amounts other that account but other than that's it. >> So those are all the accounts. So when--it says cash on the county that's really all of the cash. >> It really is. The others are--it's pretty much zeroed out every month. A check is written out of that account into the accounting account ad the other balance it's just it's a 32,000 revolving or impressed cash account if you will. >> One of the reasons I asked as I recall, I think I recall when Orange County got in so much financial problems several years ago, they had money outside of the County account and that apparently was the huge no no. >> Well that was actually the county treasurer that-- >> Oh the county treasurer-- >> There was--it was-- >> The one that did this, okay. >> Their money unfortunately was with the county treasurer-- >> Oh I'm sorry we had money with the county and lost it. Sorry. >> Interestingly enough other districts and other counties? >> Uh-huh. >> Though that the Orange County treasurer is doing well, they pulled it out of their county's treasury and put it in the Orange County Treasury and I think this--'til this day they probably regret having done that. >> Okay. But ours is on LA County. >> Yours is all in LA County. >> Okay, correct. >> Trustee Israel and trustee Thomson, do you have any--of trustee Wah, do you have any questions? >> And I think I'll just add almost parenthetically at this point that this board traditionally has maintained a position at the reserved to more like 8, 9, 10, 11 percent. That's just it and Mr. Martin and others can affirm that, but we rarely, at least in my knowledge, ever happy with just a 5 percent reserve. We've always wanted something-- >> So lastly then I'd like to say--want to know what is the process we'll be going forward as we move to adopting the budget also addressing Professor Foster's comment that when we feel these numbers are within the ball park of year end closing numbers that we can use for other decision making purposes. >> Right. >> And then--before you say that I will assert, it's been a policy of this board that we will always manage the districts resources in a way that revenues exceed expenditures a must--unless in very special circumstances and I don't believe that we've moved away from that principle unless we haven't taken action as a board to do that yet. But this budget, what you're recommending is if we go with the TRAN, we are actually suggesting having expenditures that exceed our revenues. >> That is essentially correct. The--and to answer your question as far as the budget development timeline is concerned, after tonight's board meeting after we hear the decision of the board related to the 10.5million dollar situation, we will then go forward and we are--we're on track to bring to the board subcommittee on budget facilities and technology a proposed budget for that group to review as we prepare for an adopted budget, a final budget to come to the full board on September 5th. So some are the neighborhood of August 20th give or take Dr. Rocha being contact with the standing committee staff will do a presentation and discussion and then we'll take that as our final direction as we prepare the final budget to bring to this board on September 5th. And I believe the date that we have to get to the chancellor's office is September 15th give or take I believe, September 15th. >> And so when are we--though, that's going to be for our final budget adoption. When do we have a good confidence enough in these numbers that will help us guide our decision making? >> We as far as year end. >> Right. As I mentioned earlier, we're looking at the 31st--July 31st to have a final close not audited but a final close by staff of the 11-12 year. As it was indicated to the faculty association today in our negotiating session, we will actually be providing some additional actual numbers, as oppose as if we can get to by next Monday. So we're sneaking up on it, I made a joke today in the sense that we--I send a purchase order for abacuses for all over accounting staff because, again, we are working with administrate information system that is, you know, 30 years old and it takes eight accountants if you will to literally grind these numbers out because we don't have the proper-- >> You have no sense though that the numbers you're presenting tonight are going to be appreciably different two weeks from now. >> I have notice since. >> When I'm looking at this 11-12 column you're pretty confident of this 11-12 column isn't in a very much differently when it comes to what a revenue is? What are expenditures were? >> I don't know if I want to say that to Mr. Baum at this point. We have numbers through May. We have an operating statement through May 31st. By next Monday I'll have a better sense of this but I don't think it's going to be dramatically different to be honest with you, but I don't want to state emphatically that I have reserved up there. [Inaudible Remark] >> This is budgeted? >> Yeah. >> Oh that's our actual-- >> Yeah. >> Yeah. >> This is the budget. >> Okay. Vice president Martin. >> Well, my first comment is we've had a long standing policy to balance budget and just to say it, as President Baum said it but to say it clear, this isn't a balance budget. We can call at 10.5--we call it to 10.5 budget but to me that's a misnomer, it's an 8.5 and where 2 million in the red. So we added just, you know, at least in public own up and say we're more or less suspending--we're taking 2 million and we'll put it in and there are obviously some issues with doing that. If we believe 13-14 will be a better year for community colleges than it is this year then it would certainly be understandable that we might take a one time 2 million dollar hit in anticipation that it's not a function that's going to continue year after year after year. I don't if anyone, anywhere that believes that 13-14 is going to be better than 12-13 and in fact a little bit of rumblings I've heard is it could be significantly worst. So it puts us in an even more precarious position because it means when we--if this comes to fruition exactly as planned, we will begin budgeting 13-14 with 2 million in the whole. The first 2 million we cut for 13-14 will have nothing to with 13-14 because it will be basically catching up with 12-13. And in essence we will becoming a, on the road to successfully becoming the next Greece. And so we should not look on the TRAN as any kind of saving grace, it's a cash flow thing. It has nothing to do with real hard decisions. So I can support this for the moment, I appreciate what the administration has done, but I'm concerned about budgeting for the very first time that I'm aware of--to we are--we don not have a balance budget, we have a budget that's in the [inaudible]. >> Yeah I want to ask that question. In your 30 years on the board, Dr. Mann is almost 30 years on the board, how many times have you adopted a budget that was--had expenses more that revenue? >> I can't remember-- >> We'd never, we never, we never. That has been one of our very basic policies that we awe is-- >> And that to put Mr. Thomson on the spot. In your 16 years on the city council, how many budgets did you adopt that had expenses in excess of revenues? >> Zero. >> Okay. I just wanted to make that for the record. President Rocha? >> In my defense, since I'm--since I'm proposing the first deficit budget in the history of mankind [Laughter] Right. First of all I would like to clarify it as well you know. >> I just want to make it clear to the public where this-- >> No, no, absolutely. >> Where this support stands in this business. >> We're on the same page. First I am not recommending a budget tonight. My intention was to come tonight to give you the facts that we have known for quite sometime. I wrote in February, we have hit the wall; we ignored it then, all right. So and here we are, I am suggesting to you that we might need to borrow--we're going to have to borrow money, we're borrowing money to make payroll right now. I'm suggesting to you that we may need to borrow more money to operate for this next year and patch 2 million of it to avoid the most painful cuts up front. But if the board's guidance is to get that money, hard money out of the budget now, we will follow the board's guidance and we will have to find a way. Now we had been. We are yet hopeful, yet hopeful that our union partners will participate 'cause I want to be clear about this. I mean for the record. You have shown that we have lost 25 percent or 25 million dollars in top line revenue over the last 4 years. There is no way we can move forward with our contracts with any of the unions and not have the cost of those contracts come down. Or else, I will be continuing to recommend the deficit budget to you, but I--I hear you loud and clear. >> Right >> Trustee Martin. >> And, you know, and the--most of the rest of stuff you'll hear tonight, except for the authority to borrow money, is just information. Again, I want to make that clear to the public. No decisions will be made tonight about the famous 10.5. But if it's not that 10.5 then where's the money coming from? >> Right. >> Trustee Mann. >> Yes. I do have another question. I think I know the answer. However, this budget is based on the governor's tax initiative not passing. >> Correct >> If the governor's tax initiative does pass, some time we will get some more money. We will get more than two. I understand what, like 5 million. >> About 6.7. >> About 6.7. Even if we don't get it to 2014, we would still get it. Is that correct? >> Correct. >> And that's why, you know, and since we're on it, and that's why I might as will take it up as it comes up 'cause this goes right to the heart of the manner, Trustee Mann. That's why if you look on at my recommendation that we differ some of the painful cuts such as negotiating furloughs to January in the hopes that if the tax initiative passes that we can pull some of the furloughs and the layoffs off. However, as you correctly pointed out, we will still have the serious cash flow crisis because that money will not be promised, will not actually show in the bank account until June of 13. So we will need to borrow money to pay the bills until they passed. >> Right. I was just responding what Mr. Martin was saying about-- >> Correct, oh no, your >> [Inaudible] that we--there is a possibility. >> Yeah, there is. >> There is? >> No, I didn't. >> No but-- >> I appreciate bringing that up and I'm--again I don't. >> I'm a little bit more comfortable going forward. >> Sure. And I don't think you have anything to defend. I was trying to be complementary of actually what the administration has told is doing. >> Right. >> And where basically you're doing almost everything you can so. But I wanted to be clear to the public and to ourselves to what our doing. And it is a deficit budget. >> That is correct and I also want to be clear to the public what the boards principle is when it comes to budgeting as well. >> I think of that. >> Yes, and if we could just refer to our colleague in San Francisco, they have deficit budgets for several years. Will this would be our first deficit budget and would also be one, but there is a possibility that we might be able to pull it off. So we are really on thin ice but we haven't gone through yet. >> And so we look forward to receiving that budget recommendation. But you've heard clearly what the board, what the board says in this so. >> Okay. >> [inaudible] the audit RFP? >> Yeah, and this is a very quick report. I want it--we wanted to advice the board that we are at the end of our 3 year auditing agreement with the VTD. And as a result of that, we have an RFQ that is being--being prepared right now. It will be issued on August 15th that will close on October 15. We anticipate the award will be in the neighborhood of November 1st. We are going to send this out to 10 to 15 CPA firms that specialized in community colleges. Renee was quite helpful from providing us a list of every auditing firm for every all of the 112 community colleges and we will--we will submit. Now there those obviously specialized in northern and central and southern, but we will send it out far and wide and request that, and it will be for another 3 year term and we will carefully pursue that whole process. >> So just to be clear, we are reopening the bidding for our audit firm for the audit of the, of the year just close. >> Yeah VTD has one final year, the 11-12 audit. >> So they will audit 11-12? >> They are in the process of that. >> But we are going to reopen and we are not guaranteeing the VTD or anyone else that they will be the audit firm for the year that we're current in? Is that correct? >> Correct >> Right, so >> Okay >> Any questions about our approach to select being the auditor? >> Okay, thank you very much. >> Thank you. >> Moving on to item G, the procurement process for administrative information systems. >> Yeah, I'd ask Dwayne to come up. He's going to make a brief presentation. The reason why I ask Dwayne to make his presentation which he made to the board subcommittee a week and a half ago is for two primary reasons. First of all you heard tonight that we have planned but not yet spent, 14 million dollars in the capital outlay fund for the conversion of two IT, all right? And so that is a discretionary decision. That is not encumbered money so. And then also, so that's just one thing. So we do have a final if you will at some point approval of whether we are going to cross the river and get a new system or not. And the second thing is--is that Dwayne has conducted a wide open selection process all year and we are at a result and so I ask Dwayne to just come and briefly give you a heads up, there's no action here, but as they percolate along, we expect in--in August to bring you more detailed plans. Dwayne. >> Okay, well certainly thank you. It has been a while since I've had an opportunity to report. I always find it fascinating that I--I follow my presentations after a budget reports. [Laughter] So with that--with that said, I hope within 5 to 7 minutes that I kind of go through a very brief update in terms of where we are and what we've done. I have presented a draft pocket to the subcommittee back on July the 9th and while that has a lot more information in it, I'm really just giving you a very high level summary of that report and where we are. Basically what I'm going to do, I want to very briefly go over the--the selection process, vendor recommendations, the cost and what are next steps are going to be as we move forward. In this process, back in October if you recall and I know I've reported it a few times on how our process is kind of work. But back in October we did several things. We contracted with the consultant companies, try the information group to help us go through and facilitate the procurement process. We also establish an executive steering committee to help guide the institutional side of things, and then we organized twelve functional evaluation teams who representative us from all across the institutions, from all--all unions who were represented, the students who were represented and so it's very inclusive process. In the November, December timeframe, we also felt it was very important as we were looking at moving to a new information system to actually look at a more intensely at a number of our business processes and so they were 6 of those actually, workshops that were conducted with a mapping and all of that, that has been shared with the college community and we'll be using those as we move into an implementation phase. We put out an RFQ, a request for qualifications for a--we send that in December, we send that to a vendors, 5 of them responded in January. The student committee selected 3 of the vendors to actually come in and do demos and in which we selected in February, then each of the vendors began their--we had put together functional scripts for all of the vendors to actually come on campus and present which we provided to the vendors and we have to give them about a month or so to get prepared to do these presentations. And each vendor had an entire week to actually conduct presentations of each of the pieces of functionality that we, we required. And approximately I would say close to 60 individuals, separated individuals from faculty, staff and students who participated in this process. There were a number of them that participated in multiple presentations but in the entire month of May all the vendors actually did their presentations. And we received feedback from all of the vendor, I mean from all of the participants in terms of their reactions to how well the vendors met their--the functionality requirements and so, as we look at how--what our primary considerations for the finalist, obviously, functionality was at the high level. It also had to have a strategy that most all of the services and would all be web based and that it would be available 24/7. We also required the vendor to have some pretty solid experience in the California community colleges as we have unique requirements as most any other state does, California is certainly has its requirements. And then we also had to have some very robust reporting tools which the vendor needed to demonstrate. And these were tools not only for the technical side but for the users across the institution. And in that process, it was unanimous by those that participated that illusion with their banner software suite was actually selected. It was unanimously voted on by all the participants as the top choice and with people soft--the Oracle people solve solution after that and I think the third vendor was not even recommended to go forward. And this was the kind of quality feedback that we got. And we database all of that information and all of those evaluation forms. We are recommending the illusion banner product because of the functionality in terms of the support across the institution that it met all of the--it had a very solid technology based to it. Everything web based in terms of its portal and once--anyone that is part of the PCC community logs in to the--through the portal. They have access to a broad, a range of services, and of course the experience, quite in depth in terms of the California Community Colleges. Now this is rather small and I do apologize for that but let me just say in terms of the total cost of the illusion product over a 5 year period is approximately 14 million dollars. In year one, we expect that cost to be around 6 million dollars. So when you look at cash, that's what--that's part of what we're going to have to look at in terms of what we would need to pay. In year two, it's slightly over 3 million dollars and year three almost 2 million or about 1.8. And then it sort of levels at 1.5 there after through a five year period. So with that and the reason that--part of what our next steps are, is we are still in contract negotiations. Both Gail [phonetic] and myself are very much involved with the illusion attorneys and service organizations in terms of working through the terms and conditions of the contract. We hope to complete that in time to present to the subcommittee at the next subcommittee meeting for the August--in preparation for the August board meeting. We are looking forward two phase implementation approach here. One is to really get the student information system component of this in place as fast as we can, our Santa Rosa system. It is a semester does not go by that we do not have some kind of a problem or issue with whether it's registration, whether it is grade input, whether it is census counting, you name it, there's always something that we're constantly putting the finger in the dyke if you will as we kind of move forward. But we still anticipate to get the student information system side of it in 12 months and of course, I put the--or less timeframe and to get in there sooner, but the overall project we expect to be done within 18 months. And that's my very brief overview. >> Thank you very much. >> Questions? >> I want to turn to the members of the comm--first I want to thank, Trustee Martin, Trustee Wah, and Trustee Brown for working on this and investing extra hours to participate in this process. I want to turn to any of them for either questions or comments. Trustee Wah? >> No I have-- >> Trustee Wah. >> Trustee Wah. >> Yes, thank you Vice President Cable. You know, I'm very supportive of us moving forward in increasing technology in the college. I think this has really been a dirt and I think it's really harmed our ability to really adequately serve our students. So, I think that this is some a good project. You know, I understood, I have a brief conversation with Dr. Rocha and I understood that we are also going to be getting some presentations by banner, by the selective. I understood that we can get more of an idea and some a better feel about what we're going to be getting in this and I think that would be good. One of the other things, I hope that we come out with is, you know, I see the 5 year total cost of ownership but overall on the project, we've allocated about 60 million even though this costs 3 million, is that 13 million, is that right? >> 14. >> 14. Okay, so we were like 2 millions. Sorry, so I assumed that we'll get a project layout for the external cost and internal cost of the projects so it will be a total cost of the project. >> Well, a lot of that detail is summarized in that spreadsheet. As part of this spreadsheet though you can't really see the software cost if this is your question. Software costs are roughly 3 million dollars with services to the tune of the balance of our 6 million dollar cost in that first year. Next year, we would not have anymore software cost 'cause we've required it upfront in year one. But now we have additional services for implementations and hosting if we choose to continue down the hosting route given cost. >> Okay, well, let's just go to the chart then. So that was one of my questions. So, in year one, we're paying 426 for application software maintenance and then it jumps in year two to 593. So, 1.1, so we have about 110 delta. >> Yes, correct. >> And the reason for that is >>Well, in the first year, anytime you--and you're questioning the maintenance cost issues and the first year. >> I'm just questioning why it has spikes from year one to year two and then it levels off. >> Well, as we--we choose not to pay interest on, I mean maintenance on products that we haven't implemented yet. And part of what rolls in as we kind of roll into the next year, the next fiscal year that we would have additional maintenance cost associated with that and then it levels. >> So, it reflects the implementation of the modules that we're-- >> Yes. >> Okay >> And if you would look into your packet, there are in the project schedule that I didn't choose to put up here or there, there are--a lot of the modules are broken out into that and I didn't really want to get into explaining that. We will go over that at another time as we get closer to looking at an implementation timeline. >> Right, I did see that and I was really pleased to see that the early implementations of the modules are really going to benefit the students first. So I think that's important. Now, but my question about the total cost in a project is we will also be incurring internal cost. Is that correct? >> Okay, internal cost meaning-- >> Staffing >> In terms of support services. Part of what we will be coming forward with in the next board cycle is some type of unified call center concept where we will actually provides support services to the--across all over the divisions that will be involve in this and that will be part of the relief strategy that we'll be using to do and support this aggressive implementation timeline. So yes, there will be some cost associated with that. We're expecting that to be around a million dollars. >> Okay, so I think that will be helpful if we can see it laid out over the--for the total implement--the total cost of the implementation project. >> Sure. >> Because right now, we're just really looking at the external cost. And then hopefully we'll have some time to talk about what the--I guess the reasons. I guess that we went forward with this vendor, you know, and their particular strengths because I think it will be good for us to know. And to be able to way that functionality in a way that really not just speaks to how many bodies counted up-- >> Sure. >> Like the product versus, you know, what we actually like in terms of sort of a way to criteria on the functionality. >> We can go in and we will go in to a lot more detail as we proceed forward and particularly with our roll out. We will actually involve the illusion folks in that process and you will actually hear from them and we will look at all of the resources that they're bringing to bear as part of the cost that we have in here. And in fact, one of--one of those strategies for instance is they are actually providing a full-time functional consultants in four broad areas of the institution which is essentially allowing us to delay our hiring or a need to hire a certain number of banner--business analyst to support the bandwidth product ourselves. So, that will help us as part of our implementation so it's--we're getting that and we're going to be putting those within working with each of the divisions across the institution. >> And as we're looking at externally provided services versus internally provided services so hosting out externally and technical support outsourcing then we will hopefully, we'll get a chart that shows the difference in the alternatives, so okay. >> Yeah. >> Okay. >> We can do that. >> Great! Thank you. >> Sure. Good suggestions? There're other questions? >> Trustee Brown or Trustee Martin? >> I have no comments. >> Thank you. >> All right, I have a--just a really quick question now, do we as a district made a significant investment before you came on Board in to upgrading our bandwidth capacity, the Verizon in infrastructure. Was that a wise investment and has that helped us because that was I believe 6 or 7 million dollars? >> It was closer--it was close to 7 million dollars. It was a wise investment. The issue though with out network infrastructure is we have to continue to grow that. There are a number of areas across the institution for instance our wireless infrastructure, has--what was the term, soft spots, across and there're areas where there's no coverage at all. And so, we have to continue to invest in that and to keep growing it. And in fact, we are expanding our capacity link out to the CEC because we're running into issues, we're putting more folks out into that area, we need bigger pipes to work all of the data and that includes video too with respect to video surveillance and other types of traffic that comes across that highway. >> So, does that--so does that address some of the issues that Trustee Wah was raising about additional investments beyond-- >> Yeah. >> --this 14 million that may need to be made. >> Well, and there's--and I made that report. I--in previous presentations where we looked that network infracture cost that we're going to need to address but they're not as nearly as significant as this. And part of what we have to do as we look at other projects like Smart 18 for the Smart classrooms and the faculty laptops and all of those, all of that has to be built into how do we lay out our capital, you know, our capital out lay account in terms of what we're planning to expand over the foreseeable future. And we're having to revisit some of those decisions to look at, can we really afford all of these at this particular time given out budget constraints? And so we're having to make adjustments. >> But this--does this recommendation that will come, and I appreciate that we're doing this in stages so that we can say nobody rush, we didn't and rush in to anything but I'm glad we're finally making progress 'cause many of us around this table have been hoping for this day that we can actually move into a modern information technology system. But, will this--when we do this, will this address all of our information software needs, academic business advancement, and others. This is a comprehensive solution. >> This is [inaudible], all of our administrative. In your packet, I put into 4 or 5 charts or a list of this is what you get with the software. >> Yeah, I saw that. >> And as part of that, it talks about that functionality and the types of-- >> It doesn't do anything for instructional technology or anything like that. >> Know what, other than how it relates to faculty and students in their interactions on an administrative side of the house but no, not from a classroom or pedagogical other than the Smart 18 for Smart classrooms and those kinds of things. >> Sure. >> But this particular project, no, it does not. >> You mean this last--you're telling me, the infracture that we did invest in, you know, has allowed us at least make a certain measure of progress in implement--in having the infrastructure to implement this. >> Trust me. It was a pay now or pay later. And frankly, I was really glad you did what you did and that what we have to do is to catch up some of the year since then where we really haven't made as much investment in our network infrastructure as we should have. And so, what we're trying to do now is to get all of those proper assessments done and then be able to make sure we cover those gaps as we need to and work those into our operating budget. >> One last question, do any costs go away as a result of doing this so we don't have to pay Santa. Rosa licensing, we don't have to do--we don't have to have all these extra technicians and contractors to help us manage Santa. Rosa anymore if we get this. >> We don't pay any licensing fees for Santa. Rosa now. We we're--you know, we were asked to as part of the partnership, but we have not been really receiving any benefits from Santa. Rosa for years. And so, we do not pay a maintenance fee for that. We do have a couple contractors that we use for application development, but yes, once we complete the implementation of the student's side of this house which we're projecting around May of next year, that systems, we could flip to switch on that system and say we're done. And then those contractors and those resources associated with that would go away. >> Okay. Trustee Wah, I saw your hand up. >> And I'll try to talk to-- >> Yeah, right. I wasn't going to pin you on this but since Trustee Baum was asking all the questions, I guess-- >> Thank you. [Laughter] Well, now I am. >> Yeah, go ahead. >> And it is something I brought up when you first came on Board. You know, I think what would be helpful and I hope that we will continue to move--work towards this is develop an overall IT master plan and I know I said that earlier but I know that we're very concentrated and focused right now on getting at least this one system up to bring--to improve the operations and the efficiency in the organization. But I think once this gets implemented, I think there had been a number of technology plans that have already been developed for the college and I think it would be good for us to springboard and to go through and maybe update that and lay out a plan so the Board can see what the overall investment would look like. >> We'll do that, and we have those plans and we look at those plans as we proceeded to assess where we are and where we're not. And as we look to our institutional planning process, we will integrate the technology planning piece of that as part of that process which hopefully then will include a budgeting prioritization component so that we know in where we want to prioritize what limited funds we have. All right, we'll do that. >> I didn't recognize Trustee Thomson but as part of our approval and Consent Item 1-B, there is a 40,000 dollar MIS charge for the Santa. Rosa system that is-- >> That was last year? >> This year. >> That was--That's what submitted to us for approval tonight which we voted on already. And so, if we no longer have to do that, we're happy to save that 40,000 dollars and offer eight more sections of English. We're going to do that, so. >> Actually, the amount that Santa. Rosa, I have to look at that particular item but the amount that Santa. Rosa was looking to charge us was closer to about 60,000 dollars and-- >> Sure. >> But I just-- >> Okay. >> If you can just report back to the trustees. >> All right, we'll do that. Sure. >> And let us know because if we don't have to--I mean, we authorize it tonight but maybe we don't have to actually go forward with it. Trustee Thompson and then Trustee Israel? >> Just a comment. This is the year 2012, and the college has been operating on a system I think it is so in the 1980s. No business and that's what we are, can operate with that that type of the system. So as expensive and as painful as this may be in term of spending the money now, it's a necessity. We just have to do it. We have to get in the modern age and go forward like that. We can't keep operating with what we had before so we have to do it. >> I agree. >> Were there any students on the selection committee? >> On the selection committee? >> Like on the committee for-- >> There were students that actually participate, came to any of the open sessions that we had and all the vendor demonstrations. They were--I couldn't tell you who they were but yes, there were students. >> Okay, great. >> Sure. >> And just by show of hand, is there anybody in the room that participated in the review process here? So, a number of the folks were part of that process so it's good to see. >> Yeah, I think just to summarize, I think the part that the administration feels most comfortable about is that we've had this shared governance process for the selection and we feel we didn't go into detail about the other vendors that we've looked at but we feel very confident about the selection. But as Dwayne has described tonight, we have a lot of more work to do to bring to you the details of implementation, so. >> So, when do you hope to bring to the Board an actionable recommendation? >> Well, my goal is the August 15's meeting-- >> Okay. >> But we will take all the time necessary. [Laughter] >> Okay. Any other Trustees who have comments or questions? Okay, thank you. >> Thank you. >> Thank you Dr. Rocha, and thank you the members of the campus community who participated in this process. It's a long time coming and I'm very grateful to have that. Okay, we have item H report of the subcommittee but I have two members of the public that would like to address the Board before we take up that item. On item H, I will recognize Kevin Clinton first. [ Noise ] [ Inaudible Remark ] >> Hello everyone, Kevin Clinton here. I'm going to be talking about three particular things. One will be the Carnegie Hour which is actually in your board packet. It was on page 54 from my version. I don't know which--where it is for yours. But it's in the 10.5 million section of that packet and the recommendations from what we need to cut, this will be in the future--for at least the future plans as far. There were two that I particularly really enjoyed and one that I just dislike and I'll be talking about that. So, the Carnegie Hour, contract education, and the last one was the normalization of the units. So, first, Carnegie Hour, this normal--this made it so that classes would begin on the hour and end on the hour. I really like this. I think this would benefit students immensely. As President Rocha brought up, this will allow classes not to conflict with each other and it's a wonderful idea and I would definitely like its implementation. The second one was contract education and I really strongly oppose this. I don't want privatization in any way shape or perform on the campus. And well, I understand we're in a very big budget crisis, I would definitely like this not even on the conversation table because it's just too much of a risk to privatizing the school, and I know that's a bit of slippery slope argument so feel free. I understand it's invalid but I definitely don't like contract education, it opens up a can of worms. And then finally, I like to conclude with the normalization of units. Now, the main reason I support this is because of enrollment priority. We we're planning--I don't think it has happened yet but there was 110 unit cap for a possible enrollment priority. Now, if we normalize this from what my understanding is, this will lower the numbers for units for classes. Now, this is great because it will allow students who need to take those classes due to having to take basic skills courses. This will give them the time to make sure they still have enrollment priority, they get there things done, and they're able to transfer. And I just want to say it, I support the Carnegie Hour, I do not support contract education, and I support the normalization of the units, and I hope those are passed. Thank you very much. >> Thank you. Mr. Krause? I also want to do address this on this item. [ Pause ] >> Good evening again, as Dr. Rocha knows, I do have a problem with what is recommending. I feel that if you're going to ask for discussions with unions, you need to go deeper and that's only 50 percent of our list. I think it should be a lot more than that. And, the 1.3 million going into--he says repaid dental funds, actually, it's not repaying, it wasn't funded last year, and I feel that the 1.3 million probably could be dropped to maybe half a million. Thank you. >> Okay, so now we'll go to the recommendations that are before us. This is report, not an action item. And so, Dr. Rocha, I turn over to you the committee. >> Well, let me start by saying this. First of all, the document that you have before you has been reviewed by the budget--oh, by the Board of Trustees-Budget Subcommittee but it has not been approved. In fact, the version that you see in front of you is a, if you will, a second draft version. So in there, we had some changes between today and the version I originally shared with the Budget Subcommittee which includes Trustee Wah and Trustee Martin and Trustee Brown. And, but, I did review with the Budget Subcommittee to some in substance of this and so now, with the subcommittee's permission with the Trustees permission, I would like to go through this in order to engender a discussion, a further discussion about the budget task in front of us so that I can get the maximum kind of guidance but without an action. So, with your permission-- >> Just what--yeah, I've asked each--any of the Trustees that were on the committee if they wanted to say something before you end? >> Oh sure, sure. [Inaudible Remark] >> Okay, go ahead. >> Thank you. >> Would you mind if I went there at side to-- >> So we should see heads. >> A lot of turning of the head here. >> Oh, all right. >> Yeah, do that. >> We're going to do that, well, you have this document the now infamous 10.5 document and-- [Inaudible Remark] And let me just go through it with you. And this is item H and the first thing I wanted to do on the page one of that is to make sure that the board understands how the budget reduction math came about. So the budget reduction you saw, the previous presentation that shows that our budget has been reduced by about 9 and a half million dollars. But if you recall in 2011 and 2012 that we receive that trigger cut. Do you remember all that value who doing their--you know, with the February surprise, but that cut became a permanent part of this year's base budget, okay. >> Uh-hmm. >> So that cut is in the reduction, the budget that was signed on June 30th, Professor Foster, you know, kindly said that well, we've just come up with it, while Governor Brown just past a budget on June 30th and handed it to us the first week in July. So, we came to the FA the moment that we have these numbers. That includes a 6.7 million dollar budget cut and I want to be clear about this. That's in the budget you saw, a budget plan at least the very preliminary budget plan that you've already saw. Now, let's talk about the tax initiative because that's were that 6.7 number related too. If the November tax initiative passes the 2012-2013 budget cut of 6.7 million dollars will be restored but the cash as we've already noted will be deferred until June of 13th. Therefore, the state chancellor's office advices districts to budget the cuts in their 12-13 adopted budgets, the one that we have to do on September 5th, the night of September 5th. If the budget initiative passes and the funds are restored, all of the 6.7 million dollars list my preliminary recommendations since most of that money was work load reduction that is FTES enrollment reduction. My preliminary thinking is that--that money would not--would go back into classes for students. So, and then let me talk if you flip back to page one about the dental loan. It actually wasn't a dental loan. It is actual--we had enough money and it cost us about 1-1/2 million dollars. We don't have a fund. We don't have insurance if you will for dental. We just--we pay the premiums for all of us as they come in and last year and it's about 1-1/2 million dollars of dental premiums for all of us. Okay. Last year, that fund was over, okay, and so we took the 1.3 million dollars--took the 1.3 to help the budget last year, all right. The problem is that money needs to be restored, not so much because of being alone but because we anticipate in this next year that the dental premiums, not premiums but the dental bills that are come to us for all of us will again be about a million and a half, a million .8. >> 1.6 at this year, that's far. >> 1.6, so we've got to get that cash back to the dental fund or else we can't pay our dental bills, all right. As it is, as you've already noted and correctly noted, I have quite a few bandage on this budget. So--and let me point out to that none of us in the administration take lightly the effectiveness on human beings. I also want to note that this is not the first time that we are laying people off. We have laid off hundreds of adjunct faculty in the last three year because of the work load reduction. When anyone loses a job or loses income, it is a serious impact on that person and the family. So not me, not anybody in the administration, I know not the board of trustees takes that lightly, but our producer requirement is to make sure, as you said that the budget balances and the district continues. So, in open discussion, if we can figure out where else we can get this money but from at this point the administration suggest that, it cost about 7 million dollars a year on unclassified temporary workers. We are proposing that we will cut about half of that--that might not be the cut of an individual completely off the payroll, that what that might mean is that you would have your hours reduced or not work the summer or not work during winter session. So there is a number or operational ways to do that. The state mandated workload reduction that's required and one of the reasons why we're in the fix we're in, that I've reported for the last two years is that, each year, we have overspent our apportionment revenue. And we have, it's funded more sections than to say, has an--much money for. So it's part of the reason why our cash is so low right now. The GASB--I won't go into the details of this, 'cause it would take an hour but basically, there is money that we set aside to fund other post employment benefits, mostly insurance for retirees, all right? We can--if you will, take money from that fund because it's a bit over-funded. That, you might say, you could look at that as a loan, okay? It's hard money, it's 1 million dollars of hard money but there you go. The administration is doing everything we can to keep these cuts away from instruction, away from students, away from the impact on human beings. A ten-day furlough for all non-faculty. Now, I point out here that this would be scheduled for January 1st, 2013 in the hope and the prayer that the tax initiative passes, it's scheduled for January 1st, so that if the tax initiative passes, I can recommend to you that the furlough comes off, okay. 'Cause we would not have the cash but at least we know the money is going to show up, okay. That's what the TRAN is for, basically, okay. But I do want to point out that furloughs must be negotiated with non-faculty unions, all right, with all unions. Okay, so we can even click this is in until we sit down with our union partners and negotiate with them. But we will this situation rather observed that because you see the large section reductions of having essentially no classes scheduled in winter session, but people here. No students here during the winter session but non-faculty staff here. And so that's one of the reasons if we keep this in calendar, one of the reasons why we thought that we could take a week furlough in January and a week furlough in the spring, two weeks of furlough--that's a half a months to pay for all of us, from top to the bottom. Okay, and then finally there are--you know, a significant number of dollars that we get to release time for worthy--worthy things but we need to--anything that's non-contractual, we need to call this faculty back off the release time and ask them to go back to their teaching schedule. Even if, you know, for some important need and I'm sure that we will hear, even from our own dean's administration, we need this, well we do. But if that doesn't go in, then where is the hard money path going to come from? All right and then by now you have my proposal for the TRAN which I do--I do have an action item today to borrow the money whether your guidance is that I cannot post that money to the budget or not, that's another question. But you heard that our cash flow situation is perilous. So that's the famous 10.5, all right there. If you flip the page, these are the actions that the board has within its ability to take now, if, you know and even the furloughs would have to be negotiated. The further actions we must negotiate with the PCC Faculty Association with our union partners and the faculty union. The free step in column, you heard Mr. Foster--Professor Foster referred to that. If we did that--that would be 740,000 dollars of hard money, okay? That money is scheduled to be paid. I think on September 1st. >> For faculty, yes, it would start in September. >> So, we have a little bit of time to negotiate with the union to see if that we can at least, our proposal when you saw the copy of it, is not to take that money away but to suspend temporarily the paying. And that if the tax initiative passes that we would pay all that money back, okay. We do propose eliminating this winter session because we're not going to have any classes in this winter session, okay? And we would realize that won't go into great detail about how the savings would develop. But by re-countering, we would also avoid furlough. At least for a void furlough in January and defer that decision even farther down the road, okay? Now, in the proposals that we made to the FA, not just this morning it is incorrect to say that the proposal that we made today was not--was sprung on the FA. That proposal has been on the table since February, in writing, okay. And we have yet to receive a cogent response. That proposal said that if the Faculty Association, right. And the--it is only the Faculty Association because the senate, when President Martinez was sent, made it clear that this was an item negotiating with the union and if you recall, President Martinez said that in open session, all right? That's what we put on our proposal. We propose because of the impact that for at least 1 year that if we could collapse the semesters, okay, and make it a normal fall spring that we would add what the previous winter was which it was about 200 sections. So under the proposal that we have standing since February and we reiterate it today that if the faculty association was to agree to this, there would be 200 more sections for students in next years in these coming years budget that begins, you know, Labor Day, you know, there's classes in Labor Day. And then you just heard about the trimester counter, the conversion of Carnegie hour. This is generally supported by many administrators and deans, by many of the faculty, by many of, you know, even you have heard Clint speak today, is just common sense. And we do--okay, so that's the proposal we made today. We are going back to the table with the Faculty Association next week. And we are hopeful that we can get some movement here. And we will give the Faculty Association, all the information. You heard Renee and the independent accounting--account and tell you what our financial situation is. But ultimately, it will be your decision about how to balance this budget. We did, by the way, okay, this morning, make it clear. The, I should say, this afternoon, at noon, that if the faculty was to agree to items one and two that we would temporarily at least continue negotiation and keep the overload for this year. That's in the proposal that's in front of you. And at least as of this morning, the faculty said that that's not, you know, that that was not agreement for them. So we're going to have to continue working on this. But in my 10.5, I didn't assume that we were going to come to agreement with the Faculty Association about these savings. Now let's turn to the senate. As you know, we are bound by law. AP1725, to rely primarily on the senate, the academic senate in academic and professional matters, okay, and we do. We have that good open, shared governance relationship with the senate. It is the senate that has purview over what we call normal closing number. The class size limit for each class, all right? And we want to approach the senate in an open and cordial way to see if we can get a temporary increase to the class size. So that faculty could add as many students as they wish to, or if you will, as a practical matter, add as many seats as they have in the room, okay, without those having to pay extra money for. If we were to that, now next year, we're scheduling about 48 hundred sections. A normal class is say, 30 students, okay? Our average class size is about 30, all right. Wed like to get it to 35 which is about there, okay? On 48 hundred sections, multiply that by an extra 6 seats and extra 6 enrollments. So do the math and you're talking about thousands and thousands of extra seats for students without any increase in cost to the district. So we understand that there are sound academic and pedagogical reasons. But we are on a budget emergency. .6 And so, I, you know impute no ill will or bad fate to the senator or to President Hanvey. And you know, and this is not a demand in any way to straight perform. But I wanted to make clear to the board, conversations that we could continue to have. But again, I can't post that to the budget because it won't be, you know, it's not money, it's not a sure thing. And some of these other things are technical things. And that what Clint was speaking of item two was simply, you know, a long story short, is that English 101 at CSU is three units, okay, or at Northridge just three units. Here, it's three plus one. We're all three units plus are required to take a riding center class that what that does is it requires students to take extra units. And it also reduces faculty workload, okay? And in the times when we could afford it, that was fine but we want to see if overtime, we could norm our course unit values to our CSU partners. Again, this is not going to happen this year. This is not going to happen this year, okay? But this is a project. And then I'm so proud and Dustin referred to the Kellogg West group. Many of the faculty in the Kellogg West group are doing absolutely inspirational brilliant work about our first year experience program that just last week, won a 4-million dollar grant from the federal government, our design technology program, thank Trustee Mann for attending the press conference on that. So they're going to continue to work to see how, that we can do basic skills more efficiently, save money, but more effectively. So but again, that's a long project. That's not, if we save money on that, this year project. We have to continue actions for institutional effectiveness and accreditation compliance. Forgive the typo, all right. We have to continue outcomes-based program review of all instructional programs. All instructional programs, it's a requirement for accreditation. Transfer, CTE, CEC and noncredit, extended education. Outcomes-based program, review of all business services, for example the bookstore. Not picking on the bookstore but the bookstore, okay, needs to be program reviewed. That's also one of the reasons why the positions that are--that I'm asking for your authority to search. We need to have, if you will, administrators who are going to help and support this program reviewing which we have to get done. The other thing is, if the board's guidance to the administration is no deficit spending, get the hard money cuts. We only--the only other place to go get the money is to actually cut programs, whole programs and begin to prioritize that. That's where we are. So, and I just wanted to, you see that notes that I won't read out for you. And there are some revenue possibilities and the chief among them are the adding the international students. And we'd like an additional 1,000 international students could add 5 million dollars of revenue at the top line. And you could see how much of that would help. But we can't count on this money. But we are going to ask the district to invest in this to see if we can. Bobbi Abram foundation fund-raising and contributions from assets, we need the foundation to raise more money. That's the long and the short of it and we need to get after that. But how much are we going to raise this year? Certainly not a half a million dollars of discretionary money. We need to expand these successful grants of program. I reported that since I've been here, we've taken in, you know, overtime but a total of 17 million dollars in fresh money grants. Had we not had that money, all right, we would have hit the wall a lot sooner. Because a lot of that money, there's an administrative overhead portion that comes back to the district, you know for expenses. And there's a lot of positions that are budgeted on those restricted funds. There's a lot of people that you see walking around campus that are budgeted, not on the budget that we have to adopt but on, you know, in the September 5th, but on all those grants. So, and then finally, I did want to be straight up. I did go and present this exact presentation to the Budget Resource and Allocation Committee. I wanted to report to you that they do support the workload reduction and the reduction in sections. They support the GASB loan, you know, if you use that term. They support borrowing the money for TRANS. They do ask the fair question, can the dental fund loan be delayed on in part, and my answer, at least is I have it today is no, okay? And they do not support reduction and force for unclassified staff nor furloughs for non-faculty, okay? So, what's that? And finally, I just want to be clear that off the table for now, based on the guidance to the board. You know, there is one, it's not an easy way and again, everything is painful at this point. But one way that some districts have tried to solve, the problem that we now face is rather than the try on piecemeal, okay, since our real problem is that we're--our spending is at a 2012 level and our salary basis is at a 2008 level. So somehow, someway, okay? The salary and benefits are going to have to come down. Now, one way to do that, rather than go through all these contortions, would be to go through all of our unions and to tell the managers and the executives that everybody's salary is going to be reduced by 7 percent. In that, you know, 7 percent of a hundred million dollars is your hard money, right? We could do that. Problem one is we have to negotiate that with our unions, and many unions have a stand to do that. Glendale is one. And the other problem is, at least at this point, if you reduce somebody's salary as opposed to a furlough, it reduces their salary use for retirement computation, okay? And that would be, you know, something that at least at this point, we've taken off the table. The final thing is, and I really, you know, say this to all of us, and here, I want to thank the board of trustees, for its long-standing commitment to humane healthcare. We stand alone, a-lone, as a district that has 100 percent paid PPO benefits for employee spouse and family, with virtually no deductibles, even for prescriptions. The district's current cause for that is 16,000 dollars per employee. This does not include the fact that we also pay dental and eye insurance benefits, nor does it include the rapidly increasing cost of funding health benefits for retirees, age 55 to 65, which we are bound to do by contract. And we also, for retirees, after 65, for as long as they live, we pay them 1500 dollars a year to defray the cost of their medical expenses. No other district offers these benefits. I am proud, proud to work for a district that has this kind of benefits, one of the reasons why I'm here, okay? But for me, my colleagues, for any of the employees here to take this for granted, is a mistake. You rightly gave me the guidance, take this off the table, all right? And we should, we should wait until we get through the Obama Care, you know, situation, in the next year or so and see where our--what I am recommending here, for the first time, a permanent joint benefits committee comprised of trustees, administrators and union representatives to at least begin to review this issue. Begin to review, make no change in this, either for this year. Well for that matter, next year. But to begin and review the issue of healthcare cost containment, whether we have to--we have to face off to this. But if we take this off the table, and if the other cuts on page 2 and 3 are almost wholly contingent, then we're left with what's on page 1. And even that, is a lot of small [inaudible], okay? So that is the end of my presentation. I'll be--well I haven't just bludgeoned you on this already, you know, I'll be glad to take up any questions. We're open. >> Sure, thank you on behalf of the board for preparing these recommendations. They're not for action, right? They're just for information and consideration. And so we will go to the questions. I will give you one attaboy, as well which we could have done during announcements but when you talked about for accreditation and institutional effectiveness, we did ge a letter from the accreditation commission. At the same time, they were putting other districts on show cost. We got a midterm report that said the commission noted that Pasadena City College and its midterm report responded for--to all five recommendations from the comprehensive review. And review progress on self-identified plans from improvement, several of which were linked to comprehensive team recommendations. In accreditation terms, that is very enthusiastic phrase for where we are. >> That's right. >> In what we've done with the district. And we need to keep on that path. >> I thank you for that but the credit belongs to my colleagues and also to you because 2 years ago, when I first came, you decided to invest in the accreditation process in the program review process and the student access and success initiative that is bearing so much fruit 2 years later. So, I thank you. >> Trustee Thompson, I saw your hand. >> Just one point, you mentioned several times about the tax initiative. There are actually two tax initiatives [inaudible] about in November. >> Yes. >> One of which doesn't do anything directly for community colleges, is strictly preschool and K-12. >> Right. >> So, that's just another factor of uncertainty in the outcome of the election process. And so I don't think for now, we need to make any assumptions that the [inaudible] is the tax initiative is going to be passed and we get 6.7 million dollars. >> Yeah, I agree it's a very difficult environment to pass tax increases as we have already decided by resolution. We are going to get out there and fight and campaign, join with the students. And we are going to campaign. We do not care if it passes by 50.00002 percent, okay? And that's the [inaudible] because I think this, if this thing is going to pass, it's going to pass with 51 percent of the vote, you know. It's a cigarette tax, kind of thing where they're accounting the ballots, you know, for two more reasons. So we're going to pull out every stop to make sure our tax initiative passes. But you're also correct, Trustee Thompson that for budget purposes, we can assume that that tax initiative would pass, because if we just pretended that money was there and as the accounting told you it's not there, and that it didn't pass, we would be in a layoff in January. >> But not only that. But if the other one passes, it gets 51.1000 whatever maybe. [Inaudible Remark] We're really then behind the ball, or behind the 8th ball, all the way along, so. >> Yeah, right. >> Other Trustees questions for Dr. Rocha or comments? Trustee Brown. >> It's not really a question, it's just a thought. So we all agree that we are in some dire situation. The budget is just tearing us up. And what's interesting is that we do not get the opportunity to negotiate with the governor, we just got slam. And our purpose here is for student success. And all--that's really what our purpose is here for. We often talked about what we want to do. Well I think this is a great opportunity for all the union, the students, to really sit down and get this done. We cannot--the Board of Trustees cannot do it by themselves. Definitely Dr. Rocha cannot do it. I think--I don't think I know that if the union, the faculty members, all the union sit together and talk about this, take it at is face value. We will be able to do to good things. So, if we get a surprise and we get some extra money, well we can renegotiate. But the fact is, we need to take the bull by the horn and get it done and get it done quick because this could be very painful. Why carry on months and weeks of drama? Let's just do what we need to do. And that's what responsible people do. And responsible mean administration, unions, students instead of just talking--find out who your real friends are. This is a great opportunity. As you see, we have 90 percent, 90 percent of the budget goes for personnel. So how much do we have left? Not much. If it's not payable, it's our healthcare, and what have you? We can take this. And we have to take this for the student sake. So let's just sit down, do what we need to do, and get this done, that's all I need to say. >> Thank you. Dr. Mann. >> I would agree with that, I have a couple of comments I would like to make. It's not really backward to say we haven't been negotiating with the governor because through our advocacy, we have a negotiating with the governor. And this is what we, you know, this is what we got. I assume it could have been worse. But the other thing I wanted to say is, I was one, one of the Trustees representative for whom we had Trustees on BRAC. And there are some principles in BRAC. And I would very supportive with this because I think it honors them. But I don't have all of them memorized, but I know the first one is to try to protect classes so that we can offer as many classes and serve students, to try to preserve students as well as possible. And then to protect the jobs of full-time employees, so even though we have let a lot of adjuncts go, we have--that is, the principle was to protect full-time at the cost to part time and temporary people. So that is--and I think everyone was aware of what that cost to the people who were let go. And of course as trustees, we hear from those people and it's very sad. But that's where we are. >> Any other further discussion? >> Thank you, Dr. Rocha. >> Okay, thank you. >> Now, we're moving on to our action agenda. Action item I, we have talked a lot about it already. This is the actual action taken, recommended by the administration for us to adopt the resolution. And we'll authorize and approve the borrowing of funds through the sale of the tax revenue anticipation note. I don't know if we need additional conversation or presentation on this. But--and I see our friend from RBC, right? >> Correct. >> And if I may do a quick introduction, if that's typical? >> Go ahead. >> Thank you. I just want to introduce Rod Carter. And as you say, he is a friend of the district, he is the managing director for Municipal Finance with RBC Capital Markets. RBC Capital Markets since worked with us on the previous TRAN on our measure P financing on our construction projects, the parking facility, and what have you, that type of thing. And then this is Christina Long, Christina is an associate with the RBC Capital. They do have a complete presentation that you don't have to make that presentation, you have copies of it in your packets. And one of the pages here talks about the cost of this [inaudible] to go forward. So with that brief introduction, President Baum, we can go from there. >> I could take two sentences, I could say nothing. >> Two sentences. >> Two sentences. >> Sure, go ahead. >> TRANs are a short term vehicle design to help the district with all districts, all public agencies with short-term capital needs. Short term capital needs. >> Capital needs. >> Excuse me, short-term cash flow needs. Thank you for that correction, Mr. Baum. Short term cash flow needs, it is not for capital needs. It is not for capital needs. It must be repaid with funds attributable to the same year in which the TRANs are sold. It is not designed to assist with multi-year deficits, a single year, a temporary cash flow need. That's what it's designed for. Three sentences so I'll stop. [Laughter] >> I'd like to open up for discussion or questions, Trustee Brown? >> So the little I read, you said short-term, I am familiar with that. >> One year. >> I got it. So what happens--let's just say we couldn't pay it, what happens? >> Happens if you what? >> We couldn't pay it in a year. >> It would be--you would be in default. >> Well, yes. >> There would be-- >> What are the consequences? >> Well, you would have investors suing district. >> Thank you. >> It would be disastrous. It would be disastrous for all community colleges in California. You'd probably be--it would be a long time before you get at the marketing, be able to borrow any money in the market again. >> Trustee Wah. >> So their quest is for an amount not to exceed 10 million, correct? So is that 10 million then, well, I guess it's just--so, we'll only be for that fiscal year 2012-2013. So that would be the maximum amount of time that we will have that served, that line of credit I guess for that-- >> It's basically a-- >> --availability. >> A note that's sold in the market that's deposited into your general fund. We have what we call pledge dates which occur prior to the maturity of the note in which the county, the auditor-controller of the county of Los Angeles will take the money out of your general fund, come hell or high water, will grab the first funds that come in that money even if it's apportionment and set those funds aside. >> So the note will be for 10 million, regardless if we go forward on this, so in that-- >> 10 million or less, if the board approves this resolution tonight, we cannot sell a penny over 10 million, a maximum of 10 million. We have not reviewed the detail of cash flows of the district yet above--and the staff are still working on that. Once those are complete, then we will size the trend 'cause there are specific rules by the IRS that govern how we determine the size of a TRAN. >> And so when we determine what that actual amount is, will that come back to the board or? >> No. >> Well. >> It--I'm sorry >> We are authorizing up to 10 million. >> Up to 10 million. >> But I guess what I want to know is when will we--so there's no additional authorization to say, okay this or I guess, it's not authorization 'cause if we already, if we do approve this then the 10 million is there. But at what point will we know what the actual amount is that you're going to ask for the note? >> Once the cash flows are complete? >> That's correct, and if we have a notice from the board tonight, we can get on this relatively quickly. We just didn't want to--and we still have time and until we what the board wanted to do. But we can get that information pretty quickly. And the idea is to participate in the pool that would fund in October, November. And yes, we do a mid-year TRAN to help districts with their deferred principal apportionment that had 35 districts in LA county, K12 and community colleges for a total of 445 million. And then we just did a July TRAN that closed a few weeks ago that had 18 districts in California. And that was for 100, well over 100 million. >> Trustee Thomson? >> Do we have to act on this, this evening? >> Yes. >> Why? >> We'll because we're short of cash right now to make payroll this month. And so, given the cash situation that we spent last month in which, on June 27th we were negative 857,000 dollars in our bank account. And given the fact that we, you know, are short this month on payroll, this would only, if I understand, activate in October, November. So in the event, this is, if you will, our insurance. >> All right. >> That if in the event, you know, the taxing issue doesn't pass, we're able to continue to fund operations. But be clear, this is not a budget as you said, this is not a budget, this is a cash flow situation. >> A temporary cash flow. >> Okay we, we as, as Renee reported, we only have 6 million dollars in the bank and it takes 10 million dollars a month to operate. So anything that could happen that could, you know, not the pennies out from under us. But if I understand correctly this, this--if 10 million dollars is collateralized, if you will, by the deferrals, by the amount of money the state now owes us. >> If we do a mid-year TRAN that overlaps fiscal years, which we can do but those, that trend that overlaps a fiscal year cannot exceed the amount of our principal apportionment that's differed. Because the TRAN must be repaid with funds attributable to the same fiscal year in which the notes are sold. >> And maybe I can help ask answer the question to Mr. Thomson. I'll ask the same question in terms of the timing of this and between bond council and getting ready for market and doing the credit ratings and what have you, it's a several week process. And in order to participate in the October, November pool, we have to have this process done within about 3 to 4 weeks if I remember correctly. >> The process takes about [inaudible] days >> Yeah, so we have to start the process now in order to get the money, make the money available to us in October, November. In order to participate in that pool, and by the way it's going to be relatively a large pool. So theoretically-based on our credit rating, we might get better terms as well, is that correct? >> That's possible. It depends on how many districts actually complete these cash flows in the [inaudible]. >> It's only the process is one thing but going down the road to actually borrow 10 million dollars is entirely different. And it just seems to me that there are a lot of unknowns that we're being asked to just kind of push to one side, and then say let's go ahead and authorize borrowing 10 million dollars. We're not going to get the money until October, so that's not going to help us with our payroll for this coming month, or till after the money is actually collected, assuming the bond are still [inaudible] that type of stuff. So I'm not--I'm careful authorizing, starting a process, I am, I'm careful to saying, go ahead and we're going to borrow 10 million dollars. >> And yet, I have a question. But what is the worst case scenario that we need in the entire 10 million for an entire year, how much does that cost the district? >> The rates on the trends that we just recently sold, based on the credit rating of the district, as well as investor's perception of their credit worthiness. We had districts receive as low as 0.23 percent. That's less than a quarter of 1 percent. And the highest rate received or the worst rate received was 0.885. >> Well give me--I want it in the money, how much is that, how much money will it cost this-- >> Well 1 percent on, you know what 1 percent is on 10 million. >> Right, well what is 1 percent of 10 million? Help me with the math. >> Christina's got the numbers here I think, she know that. >> So it's just--as example, we have the recent TRAN that we just finished on a 10 million. >> And this is in your presentation? Page? [ Simultaneous Talking ] >> It turns out we do not have the presentation in our-- >> In your packet. I apologize about that. >> No, in our packet. >> Where Christina? >> Is it in our packet? >> No it's not. >> No, it's not. >> No, okay. >> So we don't have the presentation, we did not receive that in the [inaudible]. >> So on 10 million dollars, that was for one of the districts that had a yield of basically a quarter of a percent. The cost with 18 districts in this pool, cost of issuance was 14,943 and the interest expense was a 131,000. But you have to realize that when the money is not being spent actively, it's also sitting in the county pool, earning interest. >> I think a little bit interest but, but so. >> So, yeah? >> But it helped you think about like this, to have access to this 10 million dollar when the credit could cost the district about 150,000 dollars? >> For this district? It came out to basically a broke even. >> Because they earned, what? >> Because they earned at 0.83 percent, that was the county allocation rate for the last 3 months and their expenses. >> Right, but our outside exposure is, is--now let me ask you one thing. >> You should not count on earning interest, you should say that, yes, it could cost you 150,000 dollars to borrow 10 million. >> 10 million dollar. >> Correct. >> The other question I have, when we pass the--the voters pass the bond they gave us the authority to go and issue a 150 million dollars in bonds which you helped us-- >> Correct. >> --issue for capital projects. >> Correct. >> Where is our authority to actually go out and incur another 10 million dollars of debt on behalf of the district? [ Inaudible Remarks ] >> In the resolution, pursuant to section 53850 of the Government Code of the State of California, just on or after the first day of any fiscal year, the community colleges may borrow money by issuing notes to be designated. In anticipation, of the receipt of taxes, income, revenue, cash receipts, and other moneys to be received by the District. >> Where is that? Again on? >> It's in the first paragraph. [Simultaneous Talking] >> Okay. So we do have the authority to do this? >> We do have the authority. >> Okay, since we didn't have the presentation on our packet, what haven't we covered that we should know about before doing this? >> Let me just see. >> Or before taking any action? >> We stopped to what cost, we talked about this program sponsored by the County Office of Education, the Treasurer and Tax collector of LA County, we talked about the rates. Christina mentioned that there is the possibility to earn interest when the funds are not being used by the district, those are the main items. >> And I apologize to the board, they--I don't know how you didn't get a packet throughout this, I'll take responsibility for that, I apologize. >> Okay, okay so now--so what's the recommendation of the administrations of the board? >> Well the authorization, as you see, it's to authorize and approve the borrowing funds for fiscal year '12-'13, the issue and then sale of the TRAN okay? And you know, that as you've heard the process if we have hope of having the money by fall, we need to begin the process today and you've heard the cash flow report. >> Okay, question? >> A question for Dr. Rocha and Mr. Miller, so when and what circumstances would you use to TRAN and then what circumstances would you borrow from fund until we buy Banner and it's only six million in the first year and so there's a little bit of Banner money sitting there. When would you use which? >> I can respond, two ways. The first way I can respond is that at the last board meeting, we did a cash flow report that, assuming everything comes in from the state as they have told us, although tonight we heard that that's shifting, that's a moving target. We anticipated that through November-December maybe January between our interfund borrowing and the apportionment payment for the schedule from the state, we would be able to get through. But we're--at least at the time that we did that at the last meeting, we saw the problem beginning to occur in the January-February time frame which is why having the TRAN and participating in the October-November pool is important so that we can, you know, depending on what happens, as we get into December-January, we've got an available source of funds to draw down on for the purpose of cash flow and [inaudible]-- >> So it's a second level--it's actually necessary as a second level borrowing source in the event that our own internal borrowing is not large enough to handle cash flowing in. >> That's correct, that's exactly correct. And again we have AIS funding, it's one of the things that we anticipate needing. And Rob, the next pool that we might be able to participate in would be in March or April as I recall. >> We are contemplating another pool then. We neither set in concrete but that's the plan. >> Yeah, so if we don't get in on this October-November one, we'd be potentially cutting it very close. >> So we're--we're--let's say we authorize it tonight and get that arrow going so that the arrow's in your quiver, at what point are you actually pulling a trigger that says we're borrowing it and at what point--I guess it has--if you're in the package are you in, I mean, are we obligated for the 10 million if we're in the package? >> No. >> So-- >> If you can--up to the time we price the interest rates on the notes, you could hop out and say we don't want to do it. >> So you have the option, once we put the arrow in your quiver, shall we say, you have the option up until that point to look at what cash flow might be and decide-- >> That is correct. >> --we can't or can or we may need just five or whatever. >> That is correct. >> Okay. Well, thank you. >> To follow up on that quickly, though we didn't have the authorization to tell you, "Don't borrow any money until we tell you specifically to do so and borrow X dollars?" >> Well, once I sell the TRAN-- >> Yeah. >> --The funds will be deposited with the treasure tax collector in your account. >> Right. >> You have the authority to tell the staff, "Don't touch the TRAN or don't use the TRAN until you come to us first [inaudible] between your internal policies. >> Right. >> But do we incur any obligations by you going ahead and buying or selling the bonds and getting the 10 million dollars in our account? >> If you do a TRAN, if you become a larger issuer, and you just sell a TRAN for more than five million, your deficit, which is part of the way we determine the size of the TRAN then [inaudible] but the amount of your deficit plus a reasonable working capital reserve, those two items together determine the size of your TRAN. If you are greater than five million, you must hit your deficit. It must not be--if you're a small issuer, five million or less, it can be a reasonable expectation. If you're above five million, it must be an occurrence effect. >> I don't really understand that. In other words, if we authorize this for 10 million dollars, what's going to cost us? 150, 000 dollars I think is the number that has been mentioned. >> Correct. >> Well, cost is that even we don't spend a penny of that 10 million. >> Correct. >> So by saying, go ahead and sell or buy the bonds or whatever [inaudible]-- >> You will have incurred the cost. >> We're going to incur 150,000 dollars. >> You will get some marginal return because the 10 million is sitting in your county-- >> Yeah, but-- >> County treasurer, I'm not saying you're going to get 150-- >> But actually, that's not what I heard. What I heard was that you had an example that was exactly the size in which they didn't touch the money. It was an absolute wash. >> Correct. >> That was actually a-- >> But that cannot--we can't guarantee that. It is a good possibility-- >> Sure, no-- >> --likelihood that you were not using it. You can earn enough interest to cover your cost. >> That example also was assuming they used it for 10 days and the numbers that we used to do, they estimated as based on their cash-flow. >> Right. >> So it showed that, you know, in the month of December until their apportionment comes in, they're going to have trouble meeting payroll and the total amount of full usage of the 10 million would have been only 10 days out of the entire year. >> Trustee Wah and Trustee Mann. >> Can you issue--do you--can you issue multiple notes against the 10 million so-- >> No. >> You could only do it at one time? >> Only one note per fiscal year. It's like you couldn't do a series of first mortgages for your home. Yeah, but you can do multiple notes. Somebody's got to be first, someone's got to be second, someone's got to be third. If you would have pursued a line of credit or borrowing from the treasures office at the same time you did a TRAN, somebody's got to be first, somebody's got to be second, somebody's got to be third. >> Trustee Mann and Trustee Brown. >> Yes. But I thought I heard you say that we can actually decide not to do this up to the time where you actually sell the bond. >> Correct. >> So if on, say, September 16th, something happens and we decided we don't want to do this. We can tell the staff and the staff can tell you and then you--the process will be started but the bonds will not be sold. >> Correct. The only cost you would incur is that we obtained a rating. That's the only cost that's not contingent. >> And how much you think that would be? >> It's the customer rating for 10 million dollar TRAN. >> It depends on the number of districts who participate. >> Ballpark for this. >> Just ballpark. Five to eight thousand. Okay. >> Trustee Brown? >> So I have a question for Dr. Rocha. When we met, we discussed borrowing two million. That's what we talked about. At that point, I still--I had a question of how we would repay it. Now, my question is even bigger. We went from 2 to 10. Assuming that the initiative fails, how are we going to repay this money? >> That's a great question. The money, the 10 million dollars is being given to us, not because we're paying it back in payments, you know, like in a mortgage. But because it's essentially the collateral for that, is the receivable that the accountant showed you today that we are owed what is it, 24 million dollars? Okay, so we're owed 24 million dollars. That is a promise, an IOU, okay, from the state. The TRAN will come in and at this point, first, we'll activate it, just in case, all right? And we can always, you know, say, stop. We adopt the budget September 5th and if we've made hard money cuts that have reduced the budget and helped the cash flow great, but this would give us a tool so that--they're lending the money, the bond, the notice being sold because we have a source of funds and the source of funds is the money the state owes us. So the moment that the sate pays us, okay, which is the whole reason for the TRANs in the first place because when the state pays us, it changes. But as of today, the state owes us 24 million dollars. >> Oh, I see. >> So if we borrow this money, we will pay it back within one year from the money that the state has promised us, okay? Now, if the state doesn't pay that said money, all right, and this is what gets really difficult, which is the reason why I'm recommending we have the tool now, okay? If the state doesn't pay us that money, we're still obligated to pay this money back, okay? This is not a credit line which I am asking for your authorization on the next item, okay? This is money that we have to pay back in this year. Now, if all goes well, we take the money, we put it in the, you know, in an interest-bearing account. We don't draw down on it and, you know, we pay it back, state pays us back, everything is good. If worse came to worse and the state really deferred us past the time that we have to pay the note, we would have to go into some other fund like capital outlay and take the money out of there to pay back this loan in total, which is another reason why we want to be careful about draining, you know, anymore money out of the funds. Does that make sense? >> And also as [inaudible] said, if push comes to shove, the county will just take the money out of our incoming assessment in [inaudible]. >> The apportionment, [inaudible]. >> So-- >> Exactly, they'll just take it out of the apportionment. >> I'm going to make a real stupid suggestion. So then why not just go to capital outlay, take the 10 million dollars and avoid all of these. >> Well-- >> And wait to see what happens with the initiative. >> It's a good question and maybe we should have the accounts do more work in that. We already did that last month. Okay, we were less than 0 in our bank account last month and you authorized borrowing from the capital outlay, okay, temporarily in order so that everybody in the college could get their pay checks this month. You already authorized that. We've done that once. >> 5 million dollars. >> 5 million dollars. >> Yeah. >> We paid it right back. >> Right. >> Okay. Now, if you're saying that the money is in the capital reserve fund but is not to be touched, so we are going to stop moving forward with IT and that money now becomes a reserve fund, then I would say I would be open to that, okay, but that's a policy decision for the Board to make. And up until now, the board has said that that capital outlay money is not to be used to keep on funding cash flow, but that money is to be used for the things that it was designed to be used for. Now, I think that this conversation is usually have with the next one about getting a credit line because a credit line is a true credit card that you can, you know, borrow. This is virtually, to me, first of all, a comfort level and I think maybe the Trustees will remember. The district has already done this once. The district borrowed trends and I think in 2000 and-- >> These are 9 and 10 I believe. >> 2009 and 10. Okay, so this is not something the district has done before. It's a common tool that districts use, all right. >> How much did they borrow? May I ask? >> It's 10 million. And as it turned out they didn't need--we did not need the 10 million then and we just paid it back, actually made a little money on that. And if I may also add this quickly, there are three ways in which we are suggesting three hours--arrows in our [inaudible] to manage cash flow. Way number 1 is interfund borrowing up to 75 percent of capital outlay fund 41 and GASB 64 fund up to 75 percent. So that money is need to be there to borrow again for cash flow. Second arrow is the TRAN, the tax and revenue anticipation note. And the third arrow is the local borrowing option, you know, the revolving line of credit. Those are the three cash flow management scenarios that we bring to the Board, for the Board's consideration to help manage our cash flow brought on by the deferral situation in the state. >> Let me see if we can bring this to some kind of conclusion. I think it's indicative of the Board's concern and the measures that the Board is willing to consider because this does incur indebtedness on behalf of the district which is something that is still unique and relatively unprecedented for the Board to consider. Trustee Thomson, did you have something you wanted to say? >> Yeah, in terms of the next item we're going to be addressing, the line of credit, what--now that we're looking for on that >> It's an R of P. >> It's an R--it's a request for quote I have to look at the document to get a number in there. Well, I'll take a look at that. Let's me get out of my-- >> Does that impact-- >> The concern I have on this thing, I mean if we're going to be doing this-- >> Okay, I think it's 10 to 20-- >> 10, 20 [inaudible]-- >> We're going to be going down the TRAN approach here on the expectation at the state is going to pay as 25 million dollars this coming year, then I had some land in Florida that I talked of you about buying from the--as the old saying goes, a swamp land. But I just thought that it's going to happen. I think this is a risky, risky investment. I am not--I'm happy, [inaudible] happy, I'm prepared to go forward and authorize repairing this to the rest had been an 8,000 dollars maximum. But only with the explicit limitation or condition that not a penny is spent that we don't go forward and actually do this about having it brought back to us in August or September for final approval. >> Trustee Thomson, what you're saying is that, if I heard you correctly, I just wanted to clarify that you would be okay with us authorizing the action to move forward with all the actions necessary to get the TRAN loan, okay. But that you would want us to stop short and report back before we actually-- >> Issue the bond. >> Issued the bond. >> And get explicit approval from us to issue the bond. >> Okay. Well-- >> At a later date. >> If that's--if that is your--if you will, amendment-- [Laughter] Did a recommendation, I'd be okay with that. >> Well, let's go ahead and see. First off, is there a motion on the recommendation? >> I move that we proceed with this, what are the language needs to be. >> And so the general council doesn't have heart attack over there. [Laughter] >> I'm having a little--a couple of heart attacks over here, [inaudible]. >> I just want to mention very quickly that there are some terms in this that will be revised and again when we bring it back in order to deal with interest rates and what have you that are here. There's some standard language in here that we may adjust for the interest rate. And in the action that comes back, the actual funding of the note if you decide to do that we'll have that specific information here. >> What's--what we--what the board decides here. So-- >> Okay, what I moved was adopt resolution number 494 to authorize and approve the borrowing of the funds, et cetera, as it appears in the agenda. >> Is there a second to that motion? All second, that is the board President I think. So further discussion or are there any recommended amendments for the board to consider to that motion? >> I would move to amend the motion as I said a moment ago that we were basically authorizing the process to begin but not any issuance of Bonds to go forward with authorized--they're coming back to us and have an explicit vote to approve it at that time. >> Okay, so is there a second to that? >> Second. >> Okay, so there is an amendment to consider to the original motion. And the motion would be that to authorize the procedure and the resolution but the bonds would not be issued until a subsequent ratifying action is taken by the board to authorize that. >> Mr. Baum, I'm sorry. Prior to taking a vote, I would be in remiss as general council if I did not point out to you that section 2 of the resolution, if adopted as is, authorizes an interest rate not to exceed 12 percent. >> Exactly. >> It's a statutory rate by law. >> Okay. >> That's what--that's all that is. >> Just to point it out. And then also there appears to be a typographical error in section 17 which are first the fiscal year 2010- 2011, it think it should be 2012-2013. >> Okay, so I assume that those typographical errors are corrected and I understand the resolution and by bond counsel is telling us that even though it authorizes up to 12 percent, the market rate has been below one percent on this. >> Significant below, yes. >> Just want to make sure you're aware. >> I saw that. >> Thank you. >> I do have a question before we go. >> We're--on the table is the amendment to the motion. >> This is a question about the amendment. >> Right, okay. >> Okay, counsel does is the set are who are ever going to answer? Is that anyway invalid--invalidate the resolution the fact that we put this cabinet administrative amendment on it? >> No. >> Okay fine. Then I'm comfortable with it. >> Just [inaudible]. >> I don't believe the amendment is necessary. I trust the administration only use this if at the time and at the circumstances and as this very dynamic process goes forward, it is absolutely necessary. I trust them on that. I think there's a greater question where I mean I can foresee in less state cash flow dramatically improves which may happen to some degree with the election eventually. But there's a probability that we're going to be on a vicious cycle for many, many years to come. And in our operating budget, we're going to have to set aside a portion of funds to pay interest on trends because we will be in a perpetual state of constantly having an apportionment come in a year behind that pays off the last year's TRAN. At the same time, we're going at the issuance on next year's TRAN because the state has deferred payments and until the state catches up in cash flow, all the districts in the state of California will forever suffer. I don't see the state catching up. Maybe at some point, there'll be some massive state bond thing that makes all the borrowing happen at the state level and they catch up on deferred payments and I don't know if that's more efficient, having a massive state bond and having a hundred community colleges issuing TRANs, but until such time if something like that happens, there really isn't any alternative to save the line, that one alternative is, we look to these other funds and say, we are not doing that banner. We're taking the 10 million out. We're putting it into a cash flow fund to be used for cash flow 'cause we don't want to borrow. Or we go into some other fund and say, we're not doing that. We're taking that fund out. We're putting it in another fund called the cash flow fund, and we're going to use it. Short to that, that, to me, that's a big board question that if you really don't want to do a TRAN, that's your viable alternative. But short of that, I don't see hampering the state with this amendment, I think we have to go forward with the TRAN and trust the administration, either ask them, as they have--they did a nice job reporting out on the interfund borrowing, I'd certainly, want to see that again. >> Can I put a solution on the table that I think will address Mr. Thomson's concerns? But also won't encumber the resolution in that, if I pledge, and the administration pledges to put on the agenda, for the September meeting, an option, a consideration of revoking or stopping the issuance of the bond, we can then act to direct the administration not proceed with the issuance of the bond. That's something that we would pledge that wouldn't hamper the resolution now from going forward or put any additional conditions. And then in our September meeting, on September, whatever 19th it's scheduled to be, we will then have, we will agendize it so for consideration, that if we, if conditions have changed, we can then direct the administration to stop the issuance of the bond. >> I don't see any advantage to--I don't see the difference between that and what the amendment actually directs. >> My concern about the amendment is that is clouds the authorization of the resolution. >> How does it do that? >> Because it puts a condition on it. It's--but I made it--but I'm not on a journey, so. >> It just requires be brought back for a final vote bias before they go forward with it. That's all. >> But why--why do we need to do that Will? What will we know then that we don't know now? >> 'Cause John, I'm happy to spend 8 thousand dollars. I don't want to spend 150 thousand dollars and then decide or find out that we have made a mistake. That's all. >> I also have to say, as part of the budgets, of the committee, you know, when it was first brought to us, we are looking at 2 million. So 2 million, and I felt like, okay, if something happens, we could probably repay that. But then, having seen it also is 10 million, that was one of the reasons I asked whether or not there was going to be another process where we'd actually see the amount that you're requesting. So I don think that it provides a little--it's not I don't trust the administration, I do. I trust President Rocha and Vice President Miller to report accurately but I think it's just another measure of assurance for us to know what we're actually voting on. >> So, let's--Trustee Brown, did you have a comment? >> Well not really but I kind of feel like Bill, and I definitely, personally, personally, I will rather see this not happen. That would be my feeling. >> Okay, so let's act on the amendment and see if there's a majority of the board in favor of the amendment. So I'll ask for a roll call vote on that, so we can be clear on that. So we'll start with the advisory vote. >> Aye. >> Okay, and trustee Thomson? Go ahead and call the roll. >> Mr. Baum? >> I'll say no. >> Mr. Martin? >> No. >> Miss Brown? >> I'm sorry, what are we voting? >> This is on the amendment calling of-- >> On the amendment, have him come back-- >> Yes. >> Yes. >> Dr. Mann? >> Yes. >> Mr. Thomson? >> Yes. >> Ms. Wah. >> Yes. >> Okay, so the amendment carries 4 votes to 2, would be advisory vote, aye. >> So now, we have the motion before us, to approve the resolution with the amendment that before the bond is issued, it would be brought back to the board for an affirmative--for consideration on whether to issue the final. Is there any discussion or clarification that's needed on the amendment? Okay, we'll go with our advisory vote. >> Aye. >> And then if you could call the roll. >> Mr. Baum? >> Aye. >> Mr. Martin? >> Aye. >> Mrs. Brown? >> Aye. >> Dr. Mann? >> Aye. >> Mr. Thompson? >> Aye. >> Ms. Wah? >> Aye. >> Okay, so the motion carries unanimously and I leave it to you to make sure the minutes record the amendment properly. So now we move on to item J, the authorization and thank you for the presentation and I'm counting on a great rate in as not having to use the funding if we don't need to. Authorization of the RFQ for external line of credit, discussion with possible action, Dr. Rocha. >> Yes, thank you and thank you for that discussion because-- >> If you like the idea of borrowing from TRANs you're going to love the idea. [Laughter] >> Saying that is exactly-- >> This is just an authorization to-- >> Right. >> --To send out the RFQ, this is-- >> Well, given the--let me introduce it this way and then maybe we could just cut to the chase and ask if you have any questions. Given the intelligent conversation and very helpful conversation that we just had, which was very helpful to me. What I am recommending in these two actions is tools not, you know necessary but the capability of tools, since our casual situation is difficult. I am asking for approval of this but what am I asking approval for? I am not asking for approval to borrow money. I am asking for approval to put out on the street or request for proposals, essentially banks, to respond to this, come to us in public and say based on this criteria, what if anything they could do for us, in terms of providing a revolving line of credit? And that's all I'm asking for right now. We will--if you approve this and if there are respondents, we will bring them before you, those respondents because this is a public RFP, whether it's two or three banks in town or whatever. They'll come and make their presentation, right? And then it will be up to the board to decide what to do next. But all of this is putting in place another mechanism for the possibility of another tool, okay. >> So let's see if there is a motion. Is there a second? >> Second. >> Okay, is there a discussion to, about the authorization, to do that? But before any funds are borrowed or any contract is engaged, you will bring--come back to the board. >> May I request. >> I don't think--so we'll go ahead with the advisory vote. >> Aye. >> All those in favor, say "aye." >> Aye. >> Any oppose? Thank you very--I want to say how much I appreciate the administration. I hope the campus community appreciates the administration's efforts to finding every tool possible to maintain the cash flow and the fiscal stability of the district. To the things that are very unpalatable to board, to members of the Board of Trustee, but the things that you are trying to do, to be innovative, to make sure we meet the obligations of the district. And it is very impressive to me to see the work that has gone into this and the strategic operation of the-- >> Thank you Mr. Baum and I'll--I will ask the secretary to the board to e-mail you the PDF of the TRANs of the presentation. >> And then when it comes back to us, please make sure we have any presentation in our binder beforehand because I think that would have facilitated the conversation. >> Yeah, again, our apology. >> Okay, item K, we have--I have two common [inaudible] on item K. So I'd like to address those. So we'll start with Mr. Krause. [ Pause ] >> My question is, or my comment is, anyway these 41 new positions, 20 of them are management. I mean, do we really need all of the management positions right now? I mean, that's almost 2 million dollars on salary. The other thing too is on the back, you have 8 positions that's being funded by capital outlay, well that capital outlay was one-time money. How you--how will you, you know, hiring people on that account? And like I said, some of these like the benefits technician, we already have one but we need another one at this time, you know, at this point in time. And a supervisor for human resources, we never had one before, why do we need one right now. So I'd ask you to take a good look at some of those items. Thank you. >> Thank you. Mr. Clinton? [ Noise ] [ Inaudible Remarks ] >> Mine is actually very specific. I was looking at some of the hirings and I know a lot of them are necessary and we have more hirings with that, we've seen other things. What I was wondering is there's some positions that technically didn't exist before and there is--they now exist or they are now upgrades from other position that's--and we have people who are already doing the jobs that these positions are but they didn't get a title increase which would again go with the pay increase. And since we're pretty much searching for pennies to save us 10.5 million dollars, I thought maybe we should examine that a little bit closer and that's all I'm going to ask. >> Thank you. Okay, Dr. Rocha, go ahead. >> Let me--I appreciate the comments. I think I could be responsive and I want to take a--take any questions as the trustee head. First of all, if you would go to the item which is item K and you will see two pages, the title of this 12-13 hiring plan approved positions for posting. That's the first thing. I am asking authority for posting and to continue with the search. This is something that normally the superintendent president does not do. This is hyper transparency, in other words I'm telling you that what I'd like to do is to run this by you and get your authority to continue with the searches. These are not-- >> Clarify what you said. Normally you would just do this. >> I would just do it and bring the appointments to you. >> You're--what you normally don't do is bring it to the board before you do it which you've done this time. >> Correct. And I wanted to given the budget situation, given our accreditation situation, I wanted to explain what I'm doing before I do it. Okay. Whereas normally the normal practice is you go, you know, you have a budget line, you do whatever you're going to do with the budget line, you do the search and you just bring to the board the appointment. And you may ask questions or not but, you know. So what I'm doing is this is a two-step process, you are not approving positions, you are not approving appointments. In fact invariably with these many searches, these many searches will not come to fruition, okay. What you are--I'm asking you to approve though is to confirm the authority I have to move forward to fill these positions, so with searches. Now let me just go through and if [inaudible] comes out, you might refer back to that if you have it somewhere that's certain page, remember with the positions because I want to be clear about the source of funds. The first thing I do though, and I want to--and I thank Dave Krause for his comment, the information technology positions. >> That's what I'm talking about. >> That's right, the SERP. But let me speak. The information technology positions, Dave correctly pointed out that the funding source was capital outlay fund 41. But after my discussions with the board subcommittee and with the board officers on Monday night, those positions and information technology, the entire slate, 1 through 8 are taken out for now, okay. Those positions are not under consideration, okay. Now I may bring them back but I need to spend more time to find out what would be the source of funds. 'Cause these are, you asked many good questions about, okay, well what is--what are the internal expenses of the AIS, of the banner? And what would be one-time expenses and what would be continuing expenses? And those are questions that to be frank about it, we have a result yet. So I want to take that complete chunk and take it out, okay. So that makes a total of 42 searches that I would like to post and conclude searches for. Now, of those positions, I would like you to put a circle around these that I consider entirely new positions. If you look under administrative services, number 5, supervisor human resources, that's a classified manager, if you circle that, that is a new position. That position has not existed before. The benefits technician is actually a new position but we are anticipating that there is an incumbent that we are going to work with the transfer into that position. Under the President Board of Trustees circle number 1, the internal auditor compliance officer, this is a new position, this is a compliance position that is dedicated to additional transparent oversight that reports directly to me and to you, that will be able to do internal audits, act as an inspector general and be able to increase the number of the amount of oversight and compliance so that we can be sure, assure the public that the problems that occurred that we discovered that the district attorney brought to our attention never occur again. Under instruction and student learning services, the dean of faculty as a certificate of manager and that is a new position. The director of workforce education, a certificate of manager, that is a new position. And finally, under executive assistance number 4, the office of administrative and education services, that would be a new position. So I count, 1, 2, 3, 4 and 5 positions that are on this list that are new positions, they were--that did not exist before, okay? Now, all of the other positions fit--that the source of funds are what we showed you before on the SERP vacancies. When we did the retirements, we never intended, did we not, to never replace any of those retirees or vacancies. So, let me just go through them. So they are fully funded and in the budget plan, that was presented to you tonight by Renee. So let me just go through these. The executive director, and these were at the director level of fiscal services--was that Sherry [phonetic]? >> No, that was Odessa. >> Odessa, and then one position is Odessa, one position is Sherry, those positions, they retired and we never replaced them and we should have a long time ago and we need to now. >> Let's--it might be better if there's questions-- >> Okay, I'm sorry. >> Rather than go through each line-- >> Yeah. >> Unless somebody thinks that there is a position that didn't exist before. >> And I say in general, the certificate positions just in general with the fairly obvious reasons and that the budget--and this goes to the San Francisco City College, okay, cannot be used as a reason for why we do not comply with the accreditation standards. So even though our budget is horrendous, we still need to begin the work of the self study, so we do the program reviews, so we do the curriculum, so we do all the things that's necessary to do, and so that is essentially the reason for the positions and instruction and student learning services. And that's about it. I'll just take questions from there. >> Trustee Martin and then Trustee Brown. >> So, you've done a nice job articulating what is here. I think you should spend a minute articulating what's not here. There are positions that aren't on this page that where we don't have people in those slots. >> Right. >> Well they are, and if you saw the SERP workup, is that if we, if you authorize these positions and we go on to fill them, we are anticipating that the--whatever that number was, 54, we are not anticipating doing additional hiring. >> For example, would this reduce the number of vice presidents that PCC has. >> Well, you know, I have shared with you some of the interim plan that came out and some of the reorganization, we'll be bringing that to you for formal look, but yes, clearly, we will not be replacing the vice presidents, we will be making do with the vice presidents we have. So we--so the long and the short of it is that and again, when you looked at the total salary expense, the amount of money expense for executives and managers has declined and will decline again. >> Trustee Brown? >> Yeah, I had a question I asked earlier but I didn't get an answer. Okay, administrative service list? >> Yes. >> The question I had was for the executive director of fiscal service, by the way, and the executive director of business services. >> Right. >> Now I think the two individuals that left were directors that were not executives, and my question was why is it now an executive and what is the difference in pay? >> Right. Now that's a-- >> It's a good question. >> A good question. We decided to put them at the executive director level which is a higher level than just director for two reasons. Number one, we would be able to pay a little bit more and therefore, track better candidates, because for example, the controller is a pretty high level financial position, you need a CPA and so on. So, you need to go into the mid 100s to get decent candidates. But the other important thing, some of these positions, these positions I consider president's cabinet positions, executive positions exist by contract and are not entitled employees, which means that we can bring them on by contract and put them off by contract, okay, whereas if you bring in at the director level of classified manager, after a certain period of time, that employee accrues an entitlement. And there is such a high degree of accountability now in those business positions that we feel that we need an executive level person. >> One more question. Since those two individuals that I just mentioned vacated the position or they retired, who has been keeping up with the work that we get and is she or he is that person going to be able to fill one of these, just a question. >> Let me again speak to that and anybody can help me out. First of all, again, one of the problems I want to be absolutely frank about this. These positions, fiscal services been vacant for too long, business services vacant for too long, facilities vacant for too long, okay. Those three positions were under the previous vice president of administrative services, okay. And all of the activity of those positions was being conducted by one person. That's a problem for oversight. So, the reason to fill those is to make sure that there is different people, you know, doing each one of these functions rather than one person. >> I lost you, I'm sorry. >> I don't know, first of all, I just want to give a shout out to Maria, you know, and who was, you know, just absolute, but basically, Maria is the only person in accounting [inaudible]. >> Okay, so just--let me rephrase my question. So we had three individuals, I guess Maria, whoever that is. We had I guess it was Ms. Walker and we had-- >> Odessa [inaudible]. >> Odessa, okay, so that's three, right? >> Three. >> And two are gone just last year. >> Right. >> And I guess you still have one person that's carrying the load. >> Right. >> Yeah, and basically, the load was spread but I had to tell you that since I have been in the acting position now for the last 5 or 6 weeks and I am engaged as purchasing director, as the contract person of the--the executive director of business services has responsibility for purchasing contracts, compliance, auxiliary services such as the bookstore, many, many, many business functions in the institution, all that is coming to my desk right now. Not complaining at all, I feel great for the opportunity but the days are 16 to 18 hours plus long everyday. Beyond--okay, so that's what the business officer would be responsible for. the fiscal or the controller or CFO, we're at 200 to 220 million dollar a year operation, and the--Odessa Walker was our director of fiscal services but we have an opportunity now to elevate the position with the level of responsibility that we need in order to keep track of what's going on. Maria Descalzo, our accounting supervisor, has been doing double duty as best she can as the fiscal director as well as the accounting supervisor. And that we--that's not sustainable either nor is it good business. As it turned out, Dr. Van Pelt was our facilities director, our purchasing director, our chief business officer, if you will, our contracts person, et cetera, et cetera, et cetera. And from an internal control point of view, from a good business practices point of view, from a productivity point of view, it's just not the way to do business. This structure will provide the--in the weeds, a high level management we need in some critical, critical functions of the institution from a business point of view. >> Let me see if there's any questions on this. >> But you're paying--you're also paying the CPAs. >> And they were paying the CPAs. >> To fill an office. >> That's exactly right. >> At a higher rate than what you probably would on an intern. >> That's right. Exactly right. >> When these positions are filled, the CPAs will go away. >> Right. >> Let's see, Trustee Israel and then Trustee Wah. >> What is the deadline for applications? Has that been set yet? >> For some of the executive positions, some of them were already been posted, and it's August 1st. The idea that some of these are--we're hopeful that we could fill them by the time the new academic year begins in September. >> And where are they being advertised? >> The normal way we advertise. >> Yeah, in all of the--the Chronicle, the local papers, the Community College Listservs, actually the CBO, Chief Business Officers Association Listserv, in a variety of traditional places where positions of this type are advertised. >> Okay. >> We're getting a lot of phone calls on them. >> Right. And if you have suggestions on places they should be advertised, I'm sure we would be able to accommodate that. Trustee Wah and then Trustee Mann. >> You know, I think at a time when, you know, we're talking about money and we're talking about furloughs and we're talking about laying off people. You know, it just feels to me like going out and hiring new positions, especially, just doesn't seem, it doesn't sit right unless, you know, without further information. I mean, I would have felt better if I'd had an org chart, I've seen, you know, where these positions existed pre-SERP and now, post-SERP, not only in terms of where they exist and who they report to, but also in terms of their dollars and then a count up of, you know, how many are in classified, how many are in certificated, how many are in management. So, you know, I understand this explanation on the administrative services and it seems reasonable but I think, Dr. Rocha, one of the things that you said is, you know, all you're asking is for and this is the first time that you've done this and I appreciate it, that you're just asking for the authorization to move forward and then you'll come back with the actual names. I actually would prefer to see the board get involved in approving, "Okay, these are the number of positions that we think that we should move forward on." I don't really care about the names because I think that's gone through a pretty rigorous search process and that's up to you to decide, you know, who actually gets hired. So, that's less important to me. So, I guess, you know, as I look through this list, the ones that, to me, I have no question about are 8 through 15. I think that if we're paying people over time, then we should convert them to permanent positions. But, for example, on the executive director of HR, I assume that we are going to be using that in lieu of the VP of HR, which means then that the VP of HR should be a deleted position because I wouldn't want it to say--I wouldn't want it to come back and say, "It's a budgeted position and we might have to fill it again," because in truth, it is a budgeted position, you know. So I guess I'd like a more clear picture of those kinds of--that's why I would have felt better seeing an org chart on these things. In terms of adding new positions, if you're going out for an executive of human resources, it just seems to me, wouldn't you want that person to decide whether or not the structure that requires a supervisor of human resources and a benefits technician, shouldn't they make that determination that that's what they want their org to look like and then shouldn't they be involved in selecting that rather than going out. Now, so this seems a little premature. As far as the certificated on this area, I don't know, it just--you know, I, once again, I would have liked to have seen an org chart. I'm certainly in favor of some of these positions but I just don't know where they all--they fit and I don't know, you know, I'm concerned about both salary creep in terms of where we were pre-SERP and I'm concerned about body creep, I guess, or body count creep. And then, on the confidential, I know Dr. Mann had asked about this before whether or not there was--we have clear indication or criteria for confidential. And this just looks to me like anyone who reported to any of the VPs is going to get confidential bonus pay. And while I know it's not a lot when we're counting every dollar and we're talking about laying off people, I'm concerned about that. I mean, I don't know and pardon me, VP Cable, but I don't know that the IT VP needs a confidential executive assistant. I mean, that's just an example. So, those are sort of my concerns on this. >> I hear you. You know, but I don't know what to tell you. You know, these positions are vitally needed. The positions in business, I can ensure the board that we can't comply and then we can't have proper oversight over our business functions unless we have these positions and have them now. I can't tell the board that you can hold me accountable for our accreditation outcomes unless on this certificated side and instruction of student services that we can have these positions and then some to start their work in September. So, I certainly hear, believe me, there are many positions on here and you have the SERP analysis and you do have the org chart that I did deliver to the board. You know, the SERP analysis shows that net of these positions, they are still going to be whatever that number is. A large number of positions that we will--that are gone for good, that we will never vacate, that we will never fill. Okay. But--and you know, I'll grant, you know, I certainly can answer questions about the executive systems. I haven't had one since Linda retired. I'm the only president in the state that doesn't have an executive assistant and I've asked Mary and she's doing the work of two people. So, I can't--this was a much bigger list. I can't confidently tell the board that I could be held accountable for accomplishing the mission and the goals that you've adopted without these minimal positions. Now, certainly, when I bring the appointments to you, I will give even more detail as I do about who they report to and you know and so on and so forth. Although I've done a great deal of that but the--as I said before, and I want make--I want to stress this point, the--well, the administrative services positions or I say the budget position, right, those positions are required in order for us to do our proper job of oversight and compliance. And other the position you can see are fairly obvious. The internal auditor, again, fairly obvious, you know, in terms of what I thought together, we had agreed that what we want to do is to provide to the public that there is an independent person who is reporting to you and internally auditing all of the departments for their operations. So, I think, you know, these are of a piece and Trustee Wah, I take your concerns very, very seriously. But if we are unable to settle the administration staff of this college by the time the school year begins, we will not be able to achieve the goals you have outlined for me to achieve. >> So, let's see where we are first. I'd like to--there's a recommendation for the board to authorize the conducting of these searches. Is there a motion to make that authorization? >> I so move. >> Is there a second. >> Second. >> Okay, so there's a motion and a second to authorize moving forward with this recruitment plan. I just want to clarify something if--so there are 90 vacant positions based on our SERP. These proposed hires, we would still be net down at the district from before 56 positions? >> That's correct. >> Right, so we're not adding new to the number of positions, we're still significantly down. >> I remember--I'd know what you're talking about with--because I've been on you on this. Your predecessors had three people in the office of the president and the Board of Trustees, each of your predecessors that I've worked with and you've had nobody except for Mary, who is part of the Board of Trustees-- >> And that's a lot by the way. [Laughter] >> Right. >> Mary is my [inaudible]. >> But-- >> I owe her big time but she is-- >> I--actually, Mary is the one who authorized this. >> Right. [Laughter] >> This would bring you to two when previously there were three because-- >> Yeah--no. >> And I've been--and I would just share, I've been critical of the president because I'm saying like I call the office and if Mary is--there's nobody to answer the phone and I don't think the CEO or the Board Office phone should go without a live person answering it or being able to say, "Hey, what--can you help me track down the president, I need to reach him?" or the things like that. So, I've personally encountered that. I think this district is on a path to disaster if we've got every senior administrator around this table doing at least three jobs. Dwayne is doing three jobs. Bob is doing at least three jobs. Bob is also doing four jobs. Gail is doing a number of jobs. And part of the thing--what we've experienced with our recent--most recently departed vice president is that lack of oversight and the spreading to thin, and this is also what the San Francisco City College has been criticized for and now its accreditation maybe revoked, and the Chancellor's Office may have to take it over if that proceed--if that is not addressed and appointed a special trustee. So-- >> And-- >> And then we're not--I'm not willing to compromise also on as the--hiring of an internal auditor to improve our compliance capability within the district so. >> And I do-- >> Go ahead. >> I'd also point out that I have no way of funding the IT positions. I'm not funding those right now, you know, because the money would have to come out of capital outlay. >> I also want to know if--see, also from my experience and my--on this board and involved with this district, one of the other reasons we've gotten into so much trouble is because we have chronically understaffed HR, that we have had very few staffing. And I get e-mails from the faculty and others, "What's the matter--up with my benefits? Why haven't we been able to proceed on the searches? Why haven't we done the professional training that--or compliance training within HR?" And now, I know we're decimated there and we need to staff up in that department as well. So, I feel there's a very strong urgency and I'm advocating my responsibility as a board of trustee if we don't act swiftly on this. Go ahead. >> I'm trying to-- >> I have-- >> Trustee Israel and then trustee Mann. That's it. >> I have some concerns with instruction student learning services particularly, some of these of positions look like they are being promoted from assistant dean to just dean. And again, I guess I would like to echo trustee Wah's sentiments that is this really the best thing for our college at this time when we're in--facing more budget cuts and more layoffs. And now, we're going to be giving people promotions or promoting those positions? >> And let's go to--I think this is a discussion among the board unless we have a question specifically for you I'd like to respond to. Trustee Mann? >> Well, I have--I'll just-- >> Trustee Israel stated her reservation. >> Right, right. Well, actually, I just have a couple of comments I wanted to make. I'm very pleased to see converting the overtime of the permanent positions from the police because it will give us more coverage. It makes me very nervous to have only one sworn officer on duty in covering two sites. So, I think that's very--a very positive thing. And the only question I had was on educational services, like the associate dean of teaching and learning center, this is--it says it's an internal interim. Who is that? >> Well, that would be, I think, Brock [phonetic]? >> Yeah. [Simultaneous Talking] >> It's Brock. So, he is-- >> Brock, the client, is a full time, release time faculty member now driving the-- >> So, what I was I going to say is then some of these positions might actually would be filled by faculty who might want to have an administrative position rather than the release time. >> Assuming-- >> And that would be a good thing. >> That's correct. The proper and thorough search, if they come out-- [Simultaneous Talking] >> Right. But I mean they would-- >> Certainly-- >> They might be candidates. >> Certainly, we had many qualified faculty in-house who these opportunities could accrue to. >> Okay, thank you. That was-- >> You know, and indeed, the advantage, for example with Brock, who we know well and does a great job, is that he--it would be filled from--he would become a full time administrator. So, we would have him 40 hours a week, 12 months a year. And then to--I would--I respect Hannah's comment. I'd asked Dr. Bell to just respond on the--I don't think, because my understanding is I don't think that they are--these are searches, hopeless searches. I don't think there is promotions, although there clearly are qualified encumbrance. >> Yeah, trustee Israel, I hear your concern. And there are obviously individuals in those positions now who will probably be candidates and it is my hope these likely will--if you will build ahead in the ring, but there's no guarantee they're going to be promoted. One of the reasons is, with me, handling two levels of vice presidency responsibilities, we need to make sure that there is the administrative level of capacity in student learning services. They can go forward and make the necessary day-to-day decisions so that those things won't necessarily get bottleneck. They have to come to me to make the final goal and to get some things done. >> I'm going to call the question. >> Okay. >> So, we're going to go ahead and move to a vote. We have a motion and a second on the table. I'll--we'll--I'd like to make this a roll call though. >> Okay. >> So we'll go with our advisory vote first. >> Abstain. >> Mr. Baum. >> Aye. >> Mr. Martin. >> Aye. >> Ms. Brown. >> Abstain. >> Dr. Mann. >> Aye. >> Mr. Thomson. >> A reluctant aye. [Laughter] >> Ms. Wah. >> Abstain. >> So, motion carries forward unanimously with four votes and three abstentions. And so, thank you Dr. Rocha. We move on to future board meeting dates. Our intention had been to also take our meetings on the road to other parts of the district. Dr. Mann has informed me that we would--we're going to go through in a numerical sequence which would have been District 2. Dr. Mann won't be here for our August board meeting, so I've talked to Dr.--to trustee Brown who would be happy to help facilitate the meeting in District 3 for our August board meeting. So, trust--Ms. Thomson, if you would work with trustee Brown to find a venue for that. >> I was under the impression our next meeting was August 15th? >> Correct, August 15th. >> Is that what you said? >> Yes. >> Okay. >> So, for the next meeting, we would be meeting in District 3. >> Okay. >> And then District--then we'd come back to District 2 for our regular business meeting or our study session in September. And so, I've worked with trustee Mann, and then back to District 4, the meeting after that. Is there any questions about future board meeting dates? Great. Future agenda items, I had one submitted to me in addition to some of the items we've discussed. First off, we're going to bring back to the board an affirmative vote on the issuance of the bond. Once we've gone through the process of adapting resolution during our due diligence, we would--I have been asked by other board members to have the board review our policy regarding video coverage and/or video and audio coverage of board meetings. So, I'd like to bring that back to the board for consideration in August or September. Hopefully, sooner rather than later so we can decide affirmatively. Are there other agenda items that board members would like to bring to the table? The other item I will be bringing back is responding to the state's directive on how we prioritize student enrollment at PCC. For that, we'll wait. That would probably be something later in the fall. Okay, any other reaction before the board? I see no further action. We're adjourned.