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Board Budget Subcommittee Minutes

September 2, 2009

  Committee Members: Mike Davenport, Mark Dover, and Elvira Robinson
  Committee Resources: Steve Kinsella, Joseph Keeler, and Kathleen Rose

1) Call Meeting to Order: The meeting was called to order at 3:40 p.m. Trustee Mike Davenport was unanimously approved as Committee Chair.
2) Approve Minutes: The minutes from April 21, 2009 were approved unanimously; MS (Robinson/Dover).
3) Comments from the Public: No comments from the public.

4) FY 2008-09 Gavilan "Actual"
  Joe reviewed with the Committee the "Consolidated Summary of All Funds" which includes four separate columns under the General Fund. The third column is the estimated actuals for FY 08-09 showing a deficit of ($959,665). Steve Kinsella noted that although there are a number of reasons why this deficit is greater than originally thought, the biggest single reason is that the State made a "mid year adjustment" after the year was over.
5) FY 2009-10 State Budget
  Joe reported that the State budget was finally passed but the lack of revenue is still a concern. Steve mentioned that some of the federal stimulus funding has been cut from an estimated $130 million statewide to approximately $60 million. This will affect categorical programs such as EOP&S, DRC, and matriculation. At this point, we are still waiting to see what Gavilan will receive.
6) FY 2009-10 Gavilan Final Budget
  Joe reviewed the fourth column listed in the "Consolidated Summary of All Funds". He noted that the deficit in the final budget is ($286,094). Steve indicated that he is reinstituting the Expenditure Reduction Task Force in an effort to balance the budget. The Committee also discussed staffing issues and the use of various accounts within the General Fund budget that may be used if the Gavilan budget becomes critical.
7) Review and Approve Budget Adjustment to Realign the Measure E Budget to Actual and Estimated Costs
  Joe reviewed the handout titled, Measure E Budget Adjustment" which contained amounts needed to adjust and realign the Measure E budget. Joe noted that the hard construction low bid for the Cosmetology and Business buildings project was $927,793 below what was budgeted. Those additional funds, scheduled maintenance funds, and interest income are being used to offset increases in various other Measure E projects. The largest increases are for inflationary adjustments for those projects requiring state matching funds.

Joe reviewed with the Committee that he plans to take this same information to the Board Facilities Committee on September 9. If approved by both Committees, this item will be an action item at the October Board meeting. The Board Budget Committee agreed to the requested adjustments.
8) Measure E Cash Flow Requirements
  Joe reviewed the cash flow projection handout and noted that in the 2nd quarter of 2010-11, given current projections, the Measure E program will be out of cash. The plan at this point is to wait until January 2010, review an updated cash flow projection, and review various options to get the program through the last major project which is the Social Science building. The lack of cash after the 2nd quarter is estimated to be approximately $3 million. The District has $28 million of bonds remaining to be issued. The dilemma is that we only need approximately $3.million and there are a number of IRS rules the District would run up against if we issued the $28 million but did not spend it.

Joe also noted that other District funds are experiencing projected cash flow problems because the State is deferring a number of our apportionment payments. Thus far, the County of Santa Clara has been very helpful in covering any projected shortfalls. At some point the County will have cash flow problems also. To solve this problem the District will look at what are called TRANS which is a short term borrowing solution but is paid off by the end of any given fiscal year.
9) Audit Request for Proposal (RFP)
  Joe reviewed that we are now in the last year of a five year contract with our current auditors. The District needs to send out an RFP for auditing services for the next 3-5 years. Joe noted that the RFP is pretty much the same as it was five years ago and would like the Committee’s approval to move ahead in sending out the RFP. The Committee agreed. Joe also noted that he will let Trustee Breen know that we are planning to do this as he had expressed in interest in this.
10) Other
  1. Cell Phones: Steve provided the Committee with a draft write up for the September Board meeting concerning the use and stipends for cell phones. Steve noted that under this plan the District is estimated to be saving $13,000 a year. The Committee agreed with the proposal.
  2. Morgan Hill Lease – Joe noted that current cost per year for rent of the Morgan Hill Cultural and Community Center is $205,360. The current lease ends June 2010 with a 90 day written notice to terminate early. Steve and the Morgan Hill City Manager have discussed extending that lease and we are in the process of writing that up and bringing it to the October Board meeting.
  3. Briggs Building Lease and San Benito Property Building Out – Joe noted that the current costs per year for rent of the Briggs building is $132,600. On another note, the administration was asked to review how much it would cost to put a 20,000 square foot brick and mortar building on the San Benito property. Joe provided the Committee with a estimate from BFGC Architects which showed the cost at approximately $20 million. As an example, borrowing $15 million would cost the District approximately $950,000 a year for 30 years or a total of $15 million in principal and $13.5 million of interest. The Committee discussed other options and asked the administration to reconsider the modular concept that was discussed with the Board in January 2009 as this would be a cheaper alternative to a brick and mortar building. Joe indicated that he would contact BFGC Architects and get that information updated.
11) Next Meeting Date No meeting date set.
12) Adjourned Meeting adjourned at 4:40 p.m.

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Last modified: May 26, 2011
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