RVC board takes action on deficit

July 1, 1993

n Pay, hiring frozen; preliminary budget rejected; financial statement published?

The Rock Valley College (RVC) Board of Trustees has taken measures to address financial problems at the college under the leadership of RVC President Roland Chapdelaine’s administration. The board recently ordered pay and hiring freezes and rejected the administration’s preliminary budget, which called for about $5 million in deficit spending for this fiscal year.

RVC previously had four straight years of deficit spending that insiders said totaled at least $4.3 million. Exact deficit numbers for last fiscal year are expected later this month.

Sources said Chapdelaine was stunned by the board’s action. RVC Board Chairman and Winnebago County Board member Chris Johnson (R-4) said Chapdelaine was “not stunned but surprised.” Johnson added the board will cut expenses rather than raise taxes to eliminate the deficits.

When Johnson was asked if Chapdelaine was the right person to continue to lead the college, Johnson paused silently for about 10 seconds and said, “He’s the president,” and offered no further comment about the question. However, Johnson was very supportive of Chapdelaine on a local radio show.

No arts center money in bill

If Gov. Rod Blagojevich (D) signs Senate Bill 1239, which passed the Senate and House of Representatives in June, RVC will not receive any capital funds from the state this year to begin construction on Chapdelaine’s $32 million arts center. RVC received $9.1 million toward the project last year and is expected to receive another $15 million this year.

Chapdelaine said last August; “I am confident that we will secure the remainder of the state funding for this project next year [2003]. …In the next few months, we will be pursuing options for an early start to construction.” However, there has been no early construction.

The state’s funding decisions may require RVC to sell another $23 million in bonds to ensure completion of the project. If the board borrows the money rather than waits for state assistance, during the last two years, Chapdelaine and the board will have plunged RVC into $84 million in debt without a voter-approved referendum.

If Senate Bill 1239 is signed into law without funds for the proposed arts center, the college has one other opportunity to obtain state funding for the project this year. Don Wilske, chief financial officer for the Illinois Community College Board (ICCB), said $50 million is available in a temporary facilities replacement fund.

Wilske said no decision has been made to award any of the fund’s money to any institution. The decision on how to distribute the $50 million will be made in the fall by a group of officials from the Governor’s office and ICCB, Wilske said.

Johnson said, he is disappointed RVC wasn’t included in the senate bill. When asked if the administration proposed selling $23 million in bonds to ensure completion of the arts center, Johnson said he doubted the board would approve such a proposal—the board would rather wait for state assistance and better economic conditions.

Financial statements

The Rock River Times e-mailed Johnson July 17 asking when and in what newspaper RVC published its legally required financial statements. Johnson said he forwarded the question to Chapdelaine and informed Chapdelaine the question was from The Rock River Times. Johnson said Monday he never received a response but distributed the question last week to other board members and board attorney Charles Kostantacos.

State statute requires all community colleges to annually publish financial statements in a “newspaper of general circulation in the community college district” (110 ILCS 805/3-22.2). RVC’s district includes all of the counties of Winnebago and Boone and portions of Ogle, DeKalb, Stephenson and McHenry counties. However, The Rock River Times’ research found no such financial statements in the Rockford Register Star archives, The (Loves Park/Machesney Park) Post-Journal or Rockford Labor News.

Last Thursday, The Rock River Times submitted a Freedom of Information Act (FOIA) request asking for the past six fiscal years’ financial statements. The request also asked to identify the newspaper’s name and dates of publication of the statements. The college has until August 11 to respond to the request.

ICCB officials issued a report in February that severely reprimanded RVC for issuing late and inaccurate financial information to the state. Chapdelaine dismissed the report as a “slap on the wrist” during an interview with the Rockford Register Star. It is not known how RVC’s late reporting to the state may or may not have affected the financial statements’ publication.

The Rock River Times sought last week to interview Chapdelaine for this article. However, Mike Robinson, RVC’s new public relations director said, “RVC will not respond to any requests, outside of FOIA requests, because The Rock River Times distorts information.” When asked who at the college said The Rock River Times “distorts information,” Robinson said he couldn’t offer any further comment.

Diverting responsibility

Insiders alleged that during a recent meeting Penny Billman, associate vice president for strategic effectiveness and executive assistant to the president, said the college’s financial reporting problems and deficits are attributable to obsolete accounting software purchased by former RVC President Karl Jacobs’ administration. Jacobs was RVC president from 1969 to 1997.

Sources countered that Chapdelaine fired or forced out individuals that knew the previous accounting system, who could have helped the college transition to its current accounting system.

Although Jacobs’ administration also experienced difficulties using the previous accounting software, sources said all Jacobs’ administration reports to ICCB were timely and accurate. Previous interviews with ICCB officials and ICCB documents support the sources’ assertion. Johnson said he had no knowledge of the sources’ allegation.

Labor, dorms and reserve

RVC’s faculty voted overwhelmingly to affiliate with the Illinois Federation of Teachers union in March 2002. Sources said the vote was in response to Chapdelaine’s autocratic management style, growing unease with college finances and the board’s previous laissez-faire approach to managing Chapdelaine.

Union and administration negotiators continue efforts to reach an agreement to avert a possible October strike by the faculty. Insiders said negotiations are not going well and asked that details not be made public.

After examining the administration’s preliminary budget for this fiscal year, Johnson said the board rejected the proposed spending. The preliminary 2004 budget called for about $5 million in deficit spending. Had the board give the green light to Chapdelaine’s spending proposal, the total five-year deficit would have more than doubled from $4.3 million for fiscal years 2000-2003 to $9.3 million for 2000-2004.

Chapdelaine has defended the college’s financial condition in the Rockford Register Star by citing RVC’s Aa3 bond rating from Moody’s investment service and $17 million “reserve” cash fund. Johnson said because he is a bookkeeper and business operator, “I roll my eyes when I hear Dr. Chapdelaine make references to the reserve.”

Johnson explained Chapdelaine’s “reserve” is an “aggregate of fund balances” that doesn’t necessarily constitute a reserve because each fund has restrictions that limit how the money in the fund may be spent.

For example, capital funds may be restricted to only new construction expenditures. The restriction means capital funds may not be used for operating expenditures or any other type of expenditure.

Johnson ranked RVC’s financial condition as a “ four or five” on a scale of one to 10–one being no unusual problems and 10 being fiscal tragedy.

Earlier this year, the board asked the college’s new Chief Financial Officer Sam Overton to report directly to the board rather than through Chapdelaine. Johnso

n said Overton’s briefings have been valuable to the board in their decision-making.

Johnson also said employee layoffs may also be in the works. “Everything is under review,” Johnson said. However, the board remains committed to the college’s master plan that calls for campus dormitories.

The dormitories reportedly carry a $30 million price tag. It is not known how RVC will pay for their construction or operating expenses in light of the board’s desire to not increase taxes and reluctance to incur more bond debt.

Johnson said the board wants to cut the deficit in half by next fiscal year and eliminate the deficit by fiscal year 2006.

Observers noted that with each new construction project, the school’s operating expenses increase while there appears to be less of an emphasis on the original purpose of all community colleges—accessible and affordable, higher education.

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