State reprimands RVC for finances

Rock Valley College (RVC) became the second Illinois community college since 1996 to be reprimanded by the state for “financial problems” on Feb. 21. The Illinois Community College Board (ICCB) found RVC to be out of compliance in 11 of 20 financial standards. RVC has never been reprimanded by the state since its founding in the 1960s.

Illinois has54 community colleges accredited by the state.

The new state status means RVC has nine months to get its finances in order before further action may be taken by the ICCB. If further action is taken, RVC could risk losing state aid and its ability to award degrees. ICCB, one of the governing bodies of RVC, voted unanimously to give RVC the dubious status of “recognition continued—with conditions.”

In addition, the ICCB’s summary report indicates, “the number and the relative importance of the standards may signify that a college has systemic problems that warrant further exploration.”

The only other community college that has received a similar status was the financially beleaguered State Community College in East St. Louis in 1996. According to a 1996 series in the St. Louis Post-Dispatch, State Community College suffered, “widespread financial and record-keeping lapses—including $1,640 spent for more than seven hours of 1-900 toll calls to telephone ‘psychic’ services.” Later in 1996, the state fired all 154 employees of the college and reopened it under local control.

While the full ICCB report won’t be released until later this week, a summary of its findings provided at the end of this article indicates, “that the college was found to have a substantial number of standards on which it was not in compliance. … The college was found to be out of compliance in 11 of the 20 compliance standards. … Rock Valley progress has been closely monitored during the past six months and while as in 2002 improvements have been noted, staff believes that the college has been given more than sufficient time to correct deficiencies.”

Specifically, ICCB cited RVC for late filing of external audits, cost reports and financial statements. The Jan. 29 issue of The Rock River Times indicated that for fiscal year 2001, RVC’s audited operating expenditures outpaced its revenue by $1,014,776. The Times has requested the same data for fiscal years 1998, 1999, 2000 and 2002 from ICCB and will report the data when it is available. Dr. Joseph Cipfl, president and chief executive officer for ICCB, said there was no loss or delay in funding as a result of RVC’s filing late reports, audits and statements. Cipfl also said he would speak to RVC officials to convince them to release financial information sought by The Rock River Times in Freedom Of Information Act (FOIA), some of which were filed with RVC last October. The FOIA standards give 14 days from the date of receipt for the public institution to provide the requested information.

This paper’s Editor & Publisher Frank Schier said, “RVC is in clear violation of state law by not completely fulfilling our FOIA request. The junior college’s administration clearly has been stonewalling us on this information. RVC’s President Dr. Roland Chapdelaine is violating the public’s right to know and trust.”

Since 1997, RVC’s long-term debt has gone from about $2 million in 1997 to more than $61 million today. All of the debt incurred since 1997 has been done with non-voter approved bonds, which have primarily been used to fund massive construction projects at the college. If state funding is not forthcoming to complete planned construction projects, the college’s long-term debt may top $85 million, according to sources. Also, the number of upper-level administrators that are responsible for operation of the college, including finance, has gone from seven in 1997 to 14 in 2002. On average, these administrators earned $99,012 in fiscal year 2002.

Reportedly, RVC is advertising for a Chief Financial Officer, offering a salary range of $80,000 to $140,000.

RVC officials sent a fax Feb. 21 that attributed part of the reporting problems to the “reorganization” from former RVC President Karl Jacobs’ 1997 administration, to current President Roland Chapdelaine’s. The message also cited open administrative positions, computers unable to handle data processing and “insufficient people-driven processes” to handle growth.

Other parts of the ICCB summary indicate: “Major concerns remain in the finance area: Over the past four years—fiscal years 1999, 2000, 2001, and 2002—the college has been late in submitting its External Audit due each year on October 15. In addition, “The fiscal year 2002 unit cost report was received three weeks late. This continues a five-year trend that began in fiscal year 1998 (the first year Chapdelaine took the helm from Jacobs). “According to RVC officials, the accuracy of the unit cost reports is also in question.

Chapdelaine told the Rockford Register Star, “the slap on the wrist (by the ICCB) for noncompliance was justified.”

RVC Board of Trustees Chairman Chris Johnson expressed disagreement with Chapdelaine’s characterization of the noncompliance as just a “slap on the wrist.” Johnson said, “We (the board) take this (ICCB report) seriously and will do what is necessary to correct the problems. I would say it’s a reprimand.” As evidence of the board’s concern, Johnson said Cipfl was invited to the board of trustees meeting Feb. 25 to explain the report and give it context.

ICCB officials notified Chapdelaine on Feb. 11 of the completion of a draft copy of the report. The notification prompted Chapdelaine and other RVC administrators to hastily cancel scheduled meetings on Feb. 12 to allow them to drive to Springfield to discuss the report with Don Wilske, ICCB chief financial officer.

Wilske was asked if Chapdelaine tried to influence the wording of the report and if changes were made as a result of the meeting. Wilske said, “Drafts undergo changes.” The Times submitted a Freedom of Information Act request for a copy of the draft report from ICCB, but was denied. ICCB officials cited a part of the Act that exempts drafts from the request. The Times is appealing this denial.

ICCB found irregularities in RVC’s finances during their routine recognition process in fiscal year 2001 and returned for further review for the next two-and-half years. A previous ICCB report for fiscal year 2001 indicated that the college’s audited operating expenditures outpaced its revenues by $1,014,776.

One option the state has is “to appoint a financial administrator to exercise oversight and control over the district’s budget,” reads part of the state law governing community colleges (110 ILCS 805). Cipfl said ICCB will do all it can to help the college out of its current difficulties.

Editor’s note: On our deadline, Feb. 25, RVC’s Suzanne Berger said Dr. Chapdelaine would agree to an interview with this paper only if Attorney Charles Kostantacos were present because of possible FOIA litigation. The following is the full text of the ICCB summary report:

Illinois Community College Board

Rock Valley College

Recognition Status

Agenda Item #9, February 21, 2003

The Illinois Community College Board has statutory authority to “recognize” community colleges for their compliance with state statutes and standards. An evaluation of Rock Valley College commenced in fiscal year 2001 and was extended into fiscal years 2002 and 2003 with written and verbal communication with the college district indicating the ICCB staff has concerns about operations at the college. While the college has demonstrated improvements in the area of many of the concerns, it is the opinion of the staff that the remaining concerns are sufficiently serious that the Board should take the following action.

Recommended action

It is recommended that the following motion be adopted:

The Illinois Community College Board hereby grants a status of “recognition continued-with conditions” to Rock Valley College. A follow-up evaluation should be scheduled no sooner than three nor later than nine months from the date of this action to determine Rock Valley College’s progress in resolving the conditions.

Background

Recognition is a statutory term describing the status of a district which meets instructional, administrative, financial, facility and equipment standards as established by the Illinois Community College Board (110 ILCS Section 805/2-12f and 805/2-15). Community colleges must be recognized to be eligible for state funding. Once a college district has been recognized by the ICCB, that recognition status is continued unless action is taken by the Board to interrupt it. To determine a district’s recognition status, the ICCB conducts periodic evaluations. The objectives of the recognition evaluation include I) the determination of a district’s compliance with the Public Community College Act and ICCB Administrative Rules; 2) the provision of assistance to districts in achieving compliance with the Act and rules; 3) identification of issues which may be of concern to the community college system and the gathering of basic data about these issues; and 4) the identification of exemplary district practices/programs that can be shared with other districts.

Based on a five-year cycle, ICCB staff conduct recognition evaluations to assure that districts are in compliance with selected standards. All districts are evaluated on a select number of standards during the same five-year cycle. ICCB staff make an assessment on each individual standard and on a global basis. On individual standards, districts are identified as either in compliance or not in compliance. Recommendations are either mandatory, when a college is “out of compliance” or otherwise advisory. On an overall, global basis, there are three categories of recognition status:

Recognition continued – The district generally meets ICCB standards. A district which has been granted a status of “recognition continued” is entitled to receive ICCB grants

for which it is otherwise entitled and eligible.

Recognition continued—with conditions: The district generally does not meet ICCB standards. A district which has been assigned the status of “recognition continued—with conditions” is entitled to receive ICCB grants for which it is otherwise entitled and eligible, but it is given a specified time to resolve the conditions which led to the assignment of that status. A follow-up evaluation is scheduled no sooner than three nor later than nine months after ICCB action on the assignment to determine the district’s progress in resolving the conditions.

Recognition Interrupted: The district fails to take corrective action to resolve the conditions placed upon it under “recognition continued—with conditions” within a prescribed time period. A district which has been assigned a status of “recognition interrupted” may apply for recognition at such time as all requirements set forth by the ICCB have been satisfied. A district will have state funding suspended on a prorata, per diem basis for the period of time for which such status is in effect.

Standards identified for focused review during the fiscal years 2001 through 2005 were selected from the following categories: accountability, finance/facilities, instruction, workforce development, and technology/telecommunications. These same standards are used by each district in a self-evaluation that is submitted to ICCB prior to the staff evaluation.

During the current review cycle, Rock Valley College underwent its initial review in fiscal year 2001 with a credit hour grant audit followed by an in-depth evaluation of the focused standards. At that time the college was found to have a substantial number of standards on which it was not in compliance. The college, however, was undergoing a reorganization and had several, key administrative vacancies. The review was continued into fiscal year 2002 in order to give the college time to fill vacancies and address the concerns identified in the evaluation. During fiscal year 2002, an evaluation was again conducted. The college was found to have been out of compliance in 11 of the 20 compliance standards with at least one non-compliance in each of the five recognition categories. Although the number of standards alone does not necessarily indicate that a college has issues that would call for additional action on the part of the ICCB, the number and the relative importance of the standards may signify that a college has systemic problems that warrant further exploration. While the 2002 review noted some improvement from the previous year, staffing at the college was again in transition. The college was informed of the staff’s assessment and given until January, 2003 to take corrective measures to bring the college into compliance with all standards.

Rock Valley progress has been closely monitored during the past six months and while as in 2002 improvements have been noted, staff believes that the college has been given more than sufficient time to correct deficiencies. ICCB staff considered both its own evaluation and the College’s internal audit in reaching its conclusions. Substantial improvements were noted in programmatic/instructional areas. Key administrative positions have been filled in this area, college staff has sought training and counsel, and ICCB staff is in agreement with the college’s assessment of improvements in this area. Improvements were also noted in the restricted grants areas. Recent reports in the Workforce Development and Technology restricted grant areas were timely and reflected allowable expenditures. Improvements were also noted in many of the accountability areas although some submissions required from 6 weeks to 2 1/2 months to finalize the needed corrections.

Major concerns remain in the finance area: Over the past four years—fiscal years 1999, 2000, 2001, and 2002—the college has been late in submitting its External Audit due each year on October 15. Extensions were sought and granted in fiscal years 2000 and 2002. No extension was requested in 1999 and the report was received on October 25, 1999. The fiscal year 2000 audit was granted an extension until November 15. No extension was requested in fiscal year 2001 and the audit was not received until January 22, 2002. In fiscal year 2002, the college requested and received a one-month extension until November 15. The completed audit was received December 2, 2002.

The fiscal year 2002 unit cost report was received three weeks late. This continues a five-year trend that began in fiscal year 1998. The college’s fiscal year 2002 compliance recommendation response indicated it had addressed the issues with the completion of the migration and implementation of a GL structure that follows ICCB guidelines. While the unit cost was submitted in a more timely manner than the year before, it was not submitted by the due date. The Audit/Unit Cost Reconciliation due October 15 was never received in fiscal year 2000; was more than five months late in fiscal year 2001; and was received on February 12, 2003, for fiscal year 2002. ICCB staff do not believe the college has adequately demonstrated that it has addressed the systemic problems leading to the untimely submission of the unit cost study and related submissions and, thus, is not yet in compliance with this standard.

Over the past two years—fiscal years 2001 and 2002—the college has been late in submitting its published financial statements. For fiscal year 2001, the published financial statements were received by the ICCB on January 7, 2002, and were published on December 28,2001. For fiscal year 2002, the ICCB received the published financial statements for the college on February 12, 2003, which indicated the statements were published on December 17, 2002.

The college has been without the services of a permanent chief financial officer (CFO) for nearly two years. The college has made two unsuccessful attempts to fill this position. It has now hired an interim chief financial officer and has secured the services of a firm to conduct the search for a permanent CFO. Staff believes that it will be difficult for the college to adequately address its financial issues until there is more stability in the college’s financial operations. Therefore, staff is recommending that the college be put on “recognition continued—with conditions” until such time as it can demonstrate greater stability within its financial operations and the necessary reports produced by this area. A follow-up will be conducted according to the Board’s rules on recognition procedures to assess the college’s progress.

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