Huge reserves well above lines set by Governing Board—College awash in money

The College reported at its December, 2015 meeting that it now has in its Educational & General and Auxiliary Fund Reserve $16 million.  This is $11 more than is required by the Governing Board.  (The following chart was produced by the College.)

The College also reported that it had $9 million in reserves in its Plant Fund Reserve account.  As of November 30, 2015, Plant Fund reserves exceed the Governing Board’s designated reserve amount by $7,760,000.

Removing accounting line item this year, which once showed PAC loses, raises additional issues of trust

The Blog investigates

The Blog was shocked when the Community College, in direct response to a question from Sedona Councilor Scott Jablow at the City Council meeting October 27, 2015,  the College stated that in the last year the PAC subsidy was “about $70,000.”   You may view the exchange between the two by clicking here.  

What the Blog discovered in documented losses

The Blog began to dig through public reporting records from 2012 to November, 2015 to discover how the huge reported subsidy had dropped so dramatically.  What the Blog found did not answer the question of why the dramatic drop occurred, if it did.  What it did discover raises troubling issues of trust.

Huge loses reported for three consecutive years. For example, the College reported PAC losses in June, 2013 of $649,000, June, 2014 of $680,000 and estimated in a budget in April, 2014 loses of $585,000.  (All of the College reports are reproduced below.) Those losses would have to be subsidized. 

Wills’ explains losses. The Blog also discovered that the reason for the losses, as explained by President Penelope Wills to the Governing Board, was the following: “For the PAC, the net profit on shows and related food/beverage operations has been below projections.” (March, 2014). “Overall, the Auxiliary Fund, which was budgeted to break-even, is expected to have a deficit. This is due to Food Services (meal plans) and the Performing Arts Center having larger losses than projected.” (April, 2014).

McCasland questions. The Blog found that once  Deb McCasland was elected to the Governing Board, she began asking questions about the operation of the Performing Arts Center.  She was extremely knowledgeable because as a former Yavapai College employee, she was in charge of the programs at the Center. 

Curtain of secrecy dropped on PAC accounting line item. The Blog also found that the curtain on monthly reports of losses for the PAC was pulled down in July, 2014 by the College. It did this by simply eliminating from the monthly report the PAC line item.  This effectively removed from public view the losses that were being incurred and effectively removed the item for discussion by the Governing Board. 

Demand an independent audit. The Blog believes that Yavapai County Taxpayers cannot trust the College to provide detailed accurate information about the PAC losses, which are subsidized by taxpayers.  It believes that taxpayers should demand an independent outside audit to determine the nature and extent of taxpayer subsidy to this project. 

The following chart, which was prepared by the Blog, is based are the reports taken directly from public Yavapai Community College records.

The following are reports taken from College documents over the last three years verifying the losses stated above.

The new method of reporting auxiliaries–no PAC line item.

The two reserve accounts exceed Board minimum requirements by a total of $12 million

If you deal with the Community College and ask for explanations about how it spends money, you will have a tough time getting clear, consistent answers.  This was the case when Governing Board member McCasland asked the VP of Finance and Administrative Services, Clint Ewell to explain the apparent difference between statements he made at an earlier Board meeting and the most recent charts given to the Governing Board showing reserves in two large funds were dropping.

McCasland recalled that Ewell had indicated in response to her earlier questions that the College did not spend down the reserves in these two accounts.  However, when the October report indicated the College was spending down some of its huge reserves in the two funds, she wanted an explanation for the inconsistency.  (Note that the excess reserves in both counts in actuality total around $12 million above minimum requirements.)

 Ewell said that the November dip in the Educational and General Auxilary Fund was the result of using the fund to pay for general operating expenses. However, he indicated that the  fund will be replenished when property taxes are collected by the College and return to the $11 million mark.   

However, he indicated that the Plant Fund Reserve account would be lower at the end of the year because of the huge capital expenditures for projects on the Prescott Campus.  This came as a surprise because he had indicated to Ms. McCasland at the earlier meeting that those funds would not be spent down. Furthermore, there is there no clear indication in the current budget that reserves would  be tapped to pay for the Prescott building spree.

You may view the brief discussion between Ms. McCasland and Mr. Ewell at the November 9 Board meeting by clicking here.

Construction on Prescott and CTEC Campuses over budget; general fund shows a large surplus  

Yavapai Community College has just released the unaudited accounting statement ending the fiscal year, which runs from July 1 to June 30.  According to the statement, the capital budget will be in the red by $2.4 million dollars.  However, the College claims that it will offset that amount in the coming budget.  

The College also reports that the general fund has a net surplus of $1,688,000.  If correct, it raises questions about the need for increasing property taxes that was pushed by the Wills’ administration so hard and approved 3-2 in June. The following are the College documents stating the surplus and the deficit.

Arizona has increased its funding for Yavapai College for the coming year

The next time you hear President Penelope Wills criticize the lack of state funding for Yavapai College, if you actually check the budget for the coming year, you will discover that funding has been increased.  Here are the facts from the budget for next year.

State support for operations will increase by $3,000 to $890,300. State support from proposition 301 will be increased an additional $50,000, which will bring the total Prop 301 figure in the coming year to $1,455,700.  The Science, Technology, Engineering and Math (STEM) Workforce appropriation from the state will be increased to $805,700 for the coming year. The College claims that the STEM funding was used this past year for capital expansion and Development of the Career and Technical Education Campus and the Southwest Wine Center. It is not clear how the College will use this year’s grant. 

State support accounts for 2% of the total College budget.  County property taxes and student tuition and fees account for the bulk of revenue coming to the College each year.