DESCRIPTIVE SUMMARY

The Board of Trustees has authorized a major district-wide decentralizing process since the last self-study. As a direct result of this process, a new resource allocation model (9.1) appropriates earnings to the colleges in the district before funding district office and district-wide functions. This new district model follows the state model and includes the parameters that determine each college’s revenue and allocation.

According to its answers to the Multi-College Pilot Program matrix (9.2), the district bases its financial planning on the Board of Trustees’ resolution to allow the colleges to retain their own generated revenue in order to support their local educational master plans, goals, and objectives. Thus, the colleges are responsible for having a budget and planning process that reflects their missions and goals. Every year, each college develops its operational plan, which identifies resources necessary to support programs and services during the upcoming year. Next, the district office analyzes these plans prior to implementing the permanent budget. The Board of Trustees then approves the budget (9.3) with input from the District Budget Committee, which coordinates the budget process for the district and makes recommendations to the chancellor.

Each year, Mission College receives an allocation that the resource allocation model determines. From 1997 to 2000, the Mission President’s Coordinating Council (MPCC) has overseen financial planning through the work of the Budget Committee. This committee, comprised of representatives from all campus constituencies, has served as part of the operational plan process. During this process, the college administration, managers, and department chairs review budgetary needs and submit their requests according to a procedure that the college revised and expanded in 1999.

For example, during the 2000-01 operational plan process in December of 1999, each budgetary unit received a budget packet (9.4) through the division to which it reports, such as Academic Affairs, Administrative Services, or Student Services. The packet included instructions on how to maintain or reallocate the current level of funding and how to request additional funds. In the case of academic departments, each faculty department chair met with individual discipline representatives to discuss their goals and resource needs for the upcoming year. Then during a divisional review, the vice president of academic affairs, the area dean, and the department chair evaluated the department’s preliminary needs in light of program vitality and other relevant criteria.

The various divisions presented the preliminary plans in summary form to the Budget Committee in mid-January of 2000 and then submitted them to Administrative Services. This coincided with the receipt of the preliminary funding allocation from the district. In February, the committee reviewed the summaries and recommended the preliminary operational plan to the MPCC, which gave its approval. The college president accepted the MPCC’s recommendations at the end of February, and the district received the plan electronically in March. Subsequently, the district and all managers and offices on campus received the completed operational plan (9.5).

Between March and May, the Budget Committee made additional recommendations for the distribution of anticipated added revenue based on supplementary information, such as the revised state allocation to the district that came out in May. In June, the district prepared and the Board of Trustees approved a preliminary budget for all the colleges. In July and August, the district closed the district-wide accounts and made further modifications to the preliminary budget. Mission College submitted the final budget to the Board of Trustees for adoption in late August, and then the campus received its final budget.

The college regularly assesses resource availability and expenditure requirements (e.g., relying on state and district budget data in developing plans). During the planning period, the college receives weekly updates based on legislative committee actions and the response of the governor’s office, and it uses them to analyze resource availability. A college representative participates on the District Budget Committee (9.6), which also reviews budget developments. When making both annual and long-range financial plans, the college identifies expenditures as fixed (by law and collective bargaining agreements) or discretionary (supplies and non-capital outlays) to ensure that the plan covers legal obligations.

Several strategic educational master planning efforts over the last decade have resulted in a series of plans based on a changing mission statement and a number of iterations of college goals and objectives (see Standard 3). The proposed assessment and planning process (9.7) on campus has been in development for two years and has yielded a new mission statement and seven college-wide goals. With the assistance of a new full-time associate dean for campus development and institutional research, the college is moving forward with the development of a planning procedure that uses measurable outcomes assessment as a means of institutional improvement.

The college continues to look at expansion and development of facilities in response to the growing needs of the community. A number of capital plan proposals (9.8) have been submitted for state approval. The college has also incorporated several short-term plans for capital improvements in the 2000-01 operational plan (9.9). A consulting firm working with the college and district administration is helping to develop a long-range capital plan for all projects.

The district submits its five-year Capital Construction Plan (9.10), which incorporates the college’s plan and includes funding requests for new projects, to the state annually. Locally, the college plans those programs not supported by the state and the district appropriates funds during the operational plan process. Under the most recent procedure, projects have been developed through discussion, and after the approval of the Campus Development Committee, these are forwarded to the MPCC for authorization to proceed.

According to the district’s Operations Division in its answers to the matrix (9.11), its primary mission is to provide and facilitate consistent and efficient financial and business services on a district-wide basis. Financial resource responsibilities of the district office (9.12) include district financial accountability; fiscal reporting to private and public entities; allocation of financial resources; and the development, interpretation and implementation of the rules and policies of the Board of Trustees and the administrative directives of the chancellor as they affect financial resources.

The Operations Division submits periodic financial reports to the Board of Trustees and develops the tentative and final budgets for the Board’s adoption. It also ensures that each college utilizes all funds and resources in accordance with the Board Rules; the Education Code and regulations; and federal, state, and local funding agencies.

The Board of Trustees approved the budget allocation model for all colleges as the District Budget Committee recommended to the Chancellor’s Cabinet (comprised of the college presidents). The Board evaluates the effectiveness of the model and accepts recommendations for modification based on periodic reports by the vice chancellor of operations.

The college follows planning guidelines that include district, as well as federal, state, and local rules and regulations for public educational financing, and the district distributes these operational plan directions in a letter to each of the divisions’ budget managers at the time of the operational plan preparation. The Budget Committee has been the link between financial and institutional planning, and as such, it approved the by-laws and the rules of process.

The Academic Senate is involved in the planning process for a portion of the college’s Partnership for Excellence (9.13) funding and Instructional Equipment Block Grant (9.14) funding for special equipment and instructional materials. Plus, the Staff Development Committee develops plans annually for managing staff development funds. However, the administration has the overall responsibility of evaluating and integrating college resource funds.

Individual guidelines in each grant or program determine management of planning and budgeting for restricted, categorical, and specially funded programs (9.15).

Administrators, faculty, and staff have appropriate opportunities to participate in financial planning and budgeting. At the district-wide level, the District Budget Committee has representatives from district-wide constituencies including academic senates, union representatives, and college administrators. This committee reviews budget developments and makes budget recommendations to the chancellor and to the cabinet. It then submits these to the Board of Trustees.

At the college level, the operational plan approval process described above has involved Mission College’s Budget Committee, a participatory governance committee with broad involvement from a widely representative group. The Budget Committee has had an open-door policy so that anyone can be put on the agenda.

SELF EVALUATION

The new budget allocation model, in its third year, is a major change since the last self-study and a result of the Board of Trustees’ directive on decentralization. The District Budget Committee has established a sub-committee of presidents to evaluate the effectiveness of this model. Although the intent of the model is to maintain fiscal stability for all colleges, some are still having trouble covering potential expenditures with allocations.

At the institution level, there is limited understanding of and participation in the financial planning and budgeting process. Only 20.6 percent of faculty and staff possess a good understanding of college budget procedures [FSS, #24] and only 20.1 percent believe that they have a good understanding of the role of the college Budget Committee [FSS, #23].

Participation at a college level is more limited, with only 18.5 percent of faculty and staff believing that they have adequate input into the college budget process [FSS, #27]. The high number of neutral responses to this statement (48 percent) is also indicative of the limited involvement of most individuals with this process. In addition, only 16 percent of faculty and staff believe that the budget process is responsive to emerging instructional requirements and student services [FSS, #29]. Overall, 52 percent [FSS, #28] do not believe that the college budget is sufficient to maintain the quality of college programs and services.

These results are not too surprising given that the college’s ability to link planning to resource allocation has been limited by a period of inadequate resources and the lack of an effective strategic plan. As the budget allocation model has changed, additional resources have become available, and they provide an incentive for the development of understandable and systematic processes that allocate funds based on measurable institutional objectives. Administrative Services has responded in part to the new situation by expanding the operational plan process to be more inclusive. With the development and adoption of the new mission statement and goals and the movement toward developing an assessment and planning process, the college will be better able to link financial planning and capital long-range planning to the college mission and goals.

Historically, the college directed and coordinated long-range financial planning based on similar plans used at sister community colleges. These efforts considered the evolving educational needs of the surrounding community, such as changes in demographics, changes in job market, new emerging professions, and the fluctuating average age of incoming students. One challenge to long-range planning has been the short history of the college’s permanent facility. The college has little experience with the effect that a permanent modern campus has on planning.

In the recent past, discussions between college administrators, the district, and the state chancellor’s office have characterized the long-range capital planning process. The college has used historical data, such as enrollments and FTES, and it solicits external data on current and projected population trends. This information has been discussed in an informal basis at the committee level, but a systematic process of planning future capital construction projects that involve large segments of the faculty and staff has not existed. The discussion has generally focused on available funding and space needs but has not resulted in the development of a planning structure to be presented to the Mission President’s Coordinating Council or the Budget Committee. Presumably, the new assessment and planning process will address this.

Some unevenness in both participation in and communication surrounding the budget process at the level of individual college departments or offices exists. Nearly 51 percent of faculty and staff indicate that they always or frequently are invited to submit items for inclusion in their unit’s budget. However, much smaller percentages of faculty and staff are involved in setting budget priorities for their units (34 percent, FSS #83), are involved in revising their unit’s preliminary budget (30 percent, FSS #84), or are informed of their unit’s budget allocation (36 percent, FSS #85). The Office of Administrative Services has recently developed a series of workshops (9.16) to train faculty, administration, and staff on the newly expanded operational plan process. According to the process, in the operational plan packet all divisions receive the operational plan instructions and portions of the district document, such as the calendar and information specific to individual departments or offices, along with the college guidelines letter. During the years of scarce resources, the process and timeline had not been consistent, resulting in a more condensed operation with less input from program managers.

Although a sign-off procedure indicates wide participation in the development of the operational plan, the perception, as evidenced by the previously cited survey results, is that the planning has been top-down. The Office of Administrative Services has designed the budget and planning workshops to more actively involve all budget managers in the process. The coming assessment and planning process has as one of its assumptions that the college will allocate all resources according to measurable objectives tied directly to college goals. If this proposed process is successful, all program and unit managers will actively develop their operational plans and control their budgets.

B. Financial Management

DESCRIPTIVE SUMMARY

The district Operations Division (9.17) maintains all financial systems and provides financial and accounting services to the colleges and district as a whole. The staff of the Information Technology Division developed the district financial management system and now maintains it. The system provides online/real-time input of financial transactions, financial management information, and ad hoc reports.

The college relies upon the district financial management system to provide dependable and timely information for decision making regarding unrestricted programs. The district applies its control mechanisms to the college’s budget, accounting, and disbursement procedures to ensure fiscal stability. Then the college develops ad hoc reports using the district databases to provide real-time data to budget managers.

The district ensures strict adherence to and compliance with the budget and accounting manual prepared by the California Community Colleges, with various applicable provisions of the California Education Code, and with Title 5 regulations.

An independent auditor conducts an annual audit of the district’s financial statements and the related budget and accounting methods of the district, including its nine colleges. The district received an unqualified opinion audit for the fiscal year ending June 30, 1999 (9.18). This audit certified that the district presents its financial statements and records fairly, and it has no major internal control weakness. The district anticipates an ending balance approximating $31.3 million for the 1999-2000 fiscal year. According to the district’s statement in its self-study, approximately $20 million of this ending balance belongs to the colleges. While the college does not initiate internal audits, it does respond to district audits of its programs and services.

Throughout the fiscal year, the college initiates budget transfer documents (9.19), including adjustment vouchers and college budget adjustment forms, according to approved practices in order to manage the appropriate use of resources. For example, in program-based budgeting, supplies cannot be purchased with funds designated for equipment purchases. The Budget Committee (9.20) has met on a monthly basis to review, discuss, and analyze financial proposals, reports, and plans.

The district requires the college president to submit quarterly financial reports (9.21) that include fiscal year-end projections. Then district and senior level campus administrators review these reports, and the district compiles the financial data and reports it to the Board of Trustees and the state.

The college processes adjustments and changes to budgets in a manner that provides for review and approval at the different levels of responsibility. To maintain the internal control required for effective fund management, the collection and disbursement of funds is carried out through a segregation of duties. The college financial administrator provides a fiscal control structure to the fund disbursement and collection process. The college president must approve all contracts, budget adjustments, and changes, which, along with the college financial administrator, creates a system of checks and balances (9.22).

District-wide, the colleges themselves manage all college foundations and auxiliary organizations. College presidents and their administrations must ensure that these organizations comply with the General Non-profit Corporation Law of the State of California. At Mission, the college president oversees finances for the college’s auxiliary organizations, such as the Los Angeles Mission College Foundation and the Associated Student Organization. In addition, the college financial administrator provides a similar function of fiscal control in the expenditures of the Associated Student Organization Fund. The Mission College Foundation must go through an independent annual audit (9.23).

The district oversees compliance with federal, state, and local policies for student financial aid programs. It also develops and maintains the Student Financial Policies and Procedures.

The district Business Services Division and General Counsel staff provide technical expertise and knowledge of the California Public Contract Code, Education Code, and Board of Trustees policies. These services remain centralized for effectiveness and accountability.

The Mission College Foundation previously mentioned is an ancillary community group of business and community leaders that supports the president in achieving financial, political, and strategic activities that the district does not undertake but that are important to the college. These activities are consistent with the mission of the college. The responsibility for assessing their effectiveness lies with the Board of Trustees and the president’s office. Annual audits conform to Board Rules.

Specially funded programs are the result of grants from local, state, and federal governments and private entities that the college and individual faculty members have obtained to support the activities and needs of the college, its students, and the community. The Board of Trustees authorizes these programs, which range from childcare for students who are being retrained to citizenship classes to classes for emancipated teenagers to gerontology classes. While the college initiates and administers the provisions of the grants, which are intended to benefit all segments of the college, including both students and the community, the district shows its support by overseeing compliance with the budget and provisions of the grant. The integrity of grants can be measured by consistently passing all audits. They support college goals by enhancing support services, strengthening administrative support, providing services directly to the community, and providing some funding for non-credit classes.

Also, the community extension program (9.24) offers a wide variety of classes that serves community needs. It provides cultural or educational enrichment, updating of skills, and specific community needs, such as training food handlers and offering traffic school. It also offers children’s classes in art, music, and theater as well as tutoring. This program generates revenue for the college and functions as a recruitment tool by exposing the community to Mission College. The college plans and administers the program while the Board approves it, and the district oversees the financial viability.

The college negotiates all contracts within federal, state, and local guidelines as well as within Board Rules. The district level Business Services branch then submits all contracts to the Board of Trustees for approval. However, the college is not an authorized contracting agent, so it can only negotiate on behalf of the district.

Each college must submit its quarterly financial status report to the chancellor and the Board of Trustees. The vice chancellor of operations along with the college presidents and their staffs then reviews the report. In addition, the district Operations Division Internal Audit Unit periodically performs internal audit control for self-evaluation of the district’s internal controls and policies and procedures. The Internal Audit Unit identifies and analyzes the various programs, units, departments, and organizations throughout the district in which loss exposure exists from financial and/or managerial risk. These periodic internal audits provide reasonable assurance that the district complies with all pertinent regulations. If necessary, the Internal Audit Unit recommends changes in financial management reports, procedures, and policies.

The vice presidents of administration from each college meet each month and often review, modify, and make recommendations to affect the district’s financial policies and procedures. Currently, this group and the district office administrative staff are reviewing the district business procedures for contracts, budget, and accounting.

The college evaluates and amends its business procedures based on changes in district business procedures and on internal audits. The appropriate college offices and programs receive draft procedures for input. The MPCC has received these, and upon approval by the vice president, has posted them on the college’s Website. Paper copies are also available upon request (9.25).

SELF EVALUATION

The district states that the automated financial management system is stable and has appropriate control mechanisms to ensure the integrity of fiscal data. However, the district’s software currently lacks complete integration and needs better-automated purchasing and accounts payable systems. For example, to identify the status of a purchase order, one must maneuver through various screens in a cumbersome process. The district structure for appropriate control is sound but antiquated. For example, the business procedures referred to above have not, in some cases, been updated for many years. The district is, however, currently in the process of modernizing both its human resources and financial systems (9.26).

The college carefully interprets district procedures and works with district personnel to ensure that college constituents receive dependable and timely information. The college did not have adequate staff for some years to maintain and distribute procedures broadly and instead relied heavily on committee members to share information. This has not been particularly successful: only 44.1 percent of faculty and staff respond favorably regarding the clarity and availability of information related to personnel policies and only 34.1 percent respond favorably to a similar statement concerning purchasing procedures [FSS, #14, #15].

By the end of fiscal 1999-2000, the college budget will contain approximately 300 changes to line item budgets. Budget shortfalls have resulted in too much time spent in transferring funds, but inadequate short-term planning has led to the need for numerous budget transfers. Few written plans for expenditure of funds in programs such as Partnership for Excellence and recruitment have existed. The new assessment and planning process will alleviate this problem.

The college responds to findings in audits at the district level in a timely manner. Internal audits in the areas of financial aid and the Associated Students Organization are thorough and they consistently result in no serious exceptions. An outside firm conducts audits of the Mission College Foundation, and the college financial administrator reviews these before submission to the district. They are currently in compliance.

At present, the Mission College Foundation is more of a support group for morale than a fund-raising group. In the past, it was not very effective in supporting the college either politically or financially although it has raised some funds to support student scholarships. With the arrival of a permanent president of the college, this will undergo an evaluation with a goal of appropriate educational support. For example, the new president arranged for a consulting firm that specializes in fundraising for two-year colleges to give a workshop to college personnel and the foundation board in October.

On the other hand, specially funded programs have been and continue to be an effective means of indirect support for the college through the amount of money, equipment, and supplies they bring in, and they directly support the college’s mission in their ability to meet community needs. However, the new planning process will need to evaluate the demands that these programs place on facility use, personnel costs, and general administrative overhead.

The college prepares and submits contracts to the Contracts Section at the district. The Board approves and the college maintains them by processing payments, providing general oversight, and processing renewals.

Neither the Budget Committee nor the MPCC has had an evaluation process in place to determine the effectiveness of the current financial management system other than to be aware of the outcomes (i.e. awareness of the addition of new staff and increases in allocations to various areas). However, with the new assessment and planning process, every office as well as all other components of the college structure will have an opportunity to evaluate their effectiveness using measurable outcomes.

C. Financial Stability

DESCRIPTIVE SUMMARY

The district is responsible for the retirement of bonded indebtedness and repayment of all long-term liabilities. The "General Long-term Debt Account Group" (reported on Audited Financial Statements, June 30, 1999, and audited by Price Waterhouse Coopers, L.L.P.) accounts for the district’s long-term debt and manages long-term portions of employee vacation benefits, workers’ compensation claims payable, and insurance premiums payable. Even though the audit report realizes accrued employee vacation benefits and workers’ compensation claims payable, the district only records vacation pay and workers’ compensation claim expenses as they occur.

The college sets up budget and payment plans for future obligations, which each operational plan process clearly identifies, to ensure timely payment. For example, a portion of the operational plan identifies long-term contracts for building and equipment rental, for maintenance, for capital outlay matches, and for other district-wide commitments. Each year the college anticipates salary and other fixed cost increases and builds such costs into the budget before increasing discretionary budget accounts.

The district office has a Risk Management and Insurance Unit headed by a district risk manager. This unit manages employee benefits programs, workers’ compensation programs, and property and casualty insurance programs. These programs are completely centralized at the district office with oversight resting with the Business Services staff and/or the Labor-Management Benefits Committee.

The college’s Work Environment Committee (9.27), provided for in the Bargaining Agreement (9.28), reports physical hazards to the Office of Administrative Services, and Plant Facilities takes the necessary corrective action. The college follows the newly revised procedure (9.29) for employee injuries whereby employees first report injuries to the Office of Safety and Police. Next, through Administrative Services, the employee’s supervisor investigates. Then both the district and Administrative Services receive documentation of the injury to keep on file.

According to the district self-study, it has demonstrated its ability to fulfill cash flow requirements to cover necessary operational expenses and to meet emergencies and other unanticipated costs. Individual colleges are accountable for their own budgets, and each college retains the revenue it generates and pays for centralized services. This process allows the colleges to carry forward their ending balances.

The Los Angeles County Treasury maintains the unrestricted general fund cash balance and invests it as a part of the county’s investment pool. The county has stringent investment criteria, and it provides liquidity with advance notice of one or two days. In accordance with its investment policies and with the California Administrative Code, the district may also invest its cash balance in securities of the United States government or its agencies, certificates of deposits, and other types of allowable interest bearing or income producing, minimum-risk investments.

At the college, the vice president of administrative services ensures that expenditures incurred are in accordance with Board Rules and district policies. The college recognizes the need for addressing cash flow and consistently maintains appropriate account balances to cover potential shortfalls. The Budget Committee and the administration use the quarterly report process to monitor these areas (9.30).

The district sets aside a 4 percent contingency reserve of the unrestricted general fund operating budget ($12 million). This reserve is held in the contingency reserve account, which is part of the fiscal year appropriation accounts. The Budget Committee at the district office makes recommendations on the annual amount of the contingency reserve.

SELF EVALUATION

Historically, the district has met all bonded indebtedness and other long-term obligation repayments. Likewise, the college, as an entity of the district, has met its long-term obligations and indebtedness. In the current year, funds have been set aside for projects that are not state funded, such as expansion of the student services area and expenses related to their temporary relocation.

The college applies existing policies and guidelines of the district. However, it does not have a documented plan in place for work environment safety; therefore, the college reacts to rather than plans for potential problems. It has a broad outline of an emergency plan (9.31) that only minimally addresses a disaster plan. Nevertheless, the college has established a goal to implement such a plan in the fall of 2000.

The district is maintaining a 4 percent contingency fund for the current fiscal year. While the district has not provided clear direction for the colleges to also do so, the college does maintain a small contingency through its budget planning process. The vice president of administrative services ensures that expenditures are properly budgeted.

The college has no documented policy for responding to financial emergencies. Although the district contingency fund may be available for this purpose, some have suggested including a college contingency reserve account as part of the planning process.

PLANNING AGENDA

20. Using the new assessment and planning process, program and unit managers will actively develop their operational plans and control their budgets by fiscal year 2001-2002. The same planning process will be used in allocating state block grant money and Partnership for Excellence funds. The college will evaluate all specially funded programs will be evaluated using the same process.