Institutional Self Evaluation Report

Standard IIID.3.c

The institution plans for and allocates appropriate resources for the payment of liabilities and future obligations, including Other Post-Employment Benefits (OPEB), compensated absences, and other employee obligations.

Descriptive Summary

Historically the district has met long-term obligation requirements and, per Board of Trustee Policy 6200 and Administrative Procedure 6305, maintains a reserve of five-percent of budgeted expenditures plus a contingency reserve not to exceed three-percent of budgeted expenditures for unanticipated changes that would significantly reduce operations or services. In addition, BP 6200 requires budget projections to address long term goals and commitments. (3D.3.c.1)

Annually, the district’s Vice Chancellor for Administrative Services reviews for the Board of Trustees the district’s long-term liabilities. For the board meeting of May 30, 2013 (3D.3.c.2), the Vice Chancellor’s review of long-term liabilities includes the following:

Faculty Bank Leave

Per ACE Bargaining Agreement, Article 38: “Banked load leave is leave which is earned and results from an accumulation of overload, summer and/or winter-session assignments which the member has chosen to ‘bank’ rather than receive payment.” As of Fiscal Year 2012-3013, total Banked Leave liability is $10.1 million, of which short-term of $0.5 million and long-term liability of $5.6 million are funded, approximately 60% of the total liability.

Vacations

Managers, Confidential, and Teamsters unit employment agreements include provision for annual vacation, accumulated as hours per employee. The following table shows the vacation carryover per employee unit, currently totaling approximately $3.0 million, of which 6% is funded as current vacation pay-out, leaving approximately 94% unfunded and treated as an annual expense to the district as vacation occurs.

Lease Revenue Bonds

In 2009, $55 million of Lease Revenue Bonds were issued to fund state capital outlay projects and $1.12 million for the Campus Center at West Valley College. The bond debt is repaid from two sources: The larger bond amount is paid from the general fund and from federal subsidy under the Build America Bond program. Campus Center debt is repaid from Student Center Fees.

In 2011, a $9.905 million Lease Revenue Bond was issued to fund solar projects on both district campuses. The resulting debt is being repaid from federal subsidy under the Clean Renewable Energy Bond, utility savings from the use of solar energy, and from local energy rebates.

OPEB

As of June 30, 2012, there are 519 retirees currently covered by OPEB, and 117 eligible active employees eligible for OPEB provisions. (3D.3.c.3) Employees hired after January 1, 1994 are not eligible for post-retirement medical benefits. The actuarial accrued liability was reduced from $124,279,282 in 2006 to $88,514,298 in 2011. An updated actuarial study of retiree health liabilities is due to be completed during 2013. From the West Valley-Mission Community College District Annual Financial Report, June 30, 2012, the following statement explicitly describes OPEB liability as of the time of the district’s audit:

The District’s annual other postemployment benefit (OPEB) cost (expense) is calculated based on the annual required contribution of the employer (ARC), an amount actuarially determined in accordance with the parameters of GASB Statement No. 45. The ARC represents a level of funding that, if paid on an ongoing basis, is projected to cover normal cost each year and amortize any unfunded actuarial accrued liabilities (UAAL) (or funding excess) over a period not to exceed thirty years.

The following table shows the components of the District’s annual OPEB cost for the year, the amount actually contributed to the Plan and changes in the District’s net OPEB obligation to the Plan:

Annual OPEB Costs as of June 30, 2012
Annual required contribution	(6,570,773)
Contributions made	22,416,516
Change in net OPEB liability	15,845,743
Net OPEB liability, beginning of year	17,823,320
Net OPEB assets, end of year	33,669,063

CalPERS and CalSTRS

Both state-funded retirement programs were changed as a result of recent elections, thus creating two-tiered retirement systems. One result of the elections as well as the current market conditions is a near-certain increase in employer contributions to both of these plans. Currently, these contributions are:

• 
  ^{CalPERS Contribution for FY 12/13}
  
  1. 
     ^{Employee: 7.0% (9.0% for Public Safety Officers)}
     
  2. 
     ^{Employer: 11.42% (36.03% for Public Safety Officers)}
     

• 
  ^{CalSTRS Contribution for FY 12/13}
  
  1. 
     ^{Employee: 8.0%}
     
  2. 
     ^{Employer: 8.25%}
     

Projected contribution rate changes are as of this writing unknown, but the district’s best estimates are shown on the following charts:

Fund analysis by the college includes review of current, past, and projected fund balances by administrative areas and shared governance structures. Expenditure patterns, FTES, salary and benefit compensation, audit findings, internal controls, and other factors are considered as well in planning for and assuring financial stability. Enrollment management has been developed and is a key part of maximizing revenue through strategies to boost enrollment. Identification and planning for payment of liabilities and future obligations has also been accomplished through annual allocations by Land Corporation to fund special projects, such as small capital improvements. (3D.3.c.4) Bond funds have been secured for various future authorized construction projects.

Self-Evaluation

The college meets this standard.

Actionable Improvement Plans

None.

Evidence

3D.3.c.1	Board Policy 6200, Administrative Policy 6305	http://www.westvalley.edu/committees/Accreditation/2013/evidence/3d/bp_6200_ap_6305.pdf
3D.3.c.2	Board of Trustees Meeting – May 30, 2013 Minutes	http://www.westvalley.edu/committees/Accreditation/2013/evidence/3d/bot_minutes_06_04_13.pdf
3D.3.c.3	OPEB Reports	http://www.westvalley.edu/committees/Accreditation/2013/evidence/3d/OPEB_Report_from_FY_11-12_Final_Audit.pdf
3D.3.c.4	Land Corporation Allocation Funding Policy	http://www.westvalley.edu/committees/Accreditation/2013/evidence/3d/land_corp_allocation_policy.pdf