BOARD OF EDUCATION MONITORING REPORT
February 14, 2007
Presented by Greg Morgan, College Operations
POLICY TYPE: EXECUTIVE DIRECTIONS
POLICY TITLE: ASSET PROTECTION
POLICY NUMBER: A.070
ADOPTED: November 9, 1998
REVISED: April 12, 2000
REVISED: December 13, 2000
REVISED: September 10, 2003
REVISED: January 14, 2004
REVISED: July 19, 2006
The president shall assure that assets are protected, adequately maintained, and not placed at risk.
Accordingly, the president shall:
1. Insure against theft and casualty losses and against liability losses to board members, staff, and the organization itself in an amount similar to the average for comparable organizations.
The Annual Insurance Summary from the college’s Agent of Record is on file in the College Operations Office. The coverage in force is equal to or exceeds industry standards.
2. Prevent uninsured personnel from access to material amounts of funds.
The college’s insurance Agent of Record insures the college under a public employee dishonesty policy. The college is the principal in the policy and the insurance company covers the losses. Under the college’s insurance policy, all employees are covered.
3. Assure that plant and equipment are not subjected to improper wear and tear or insufficient maintenance.
Lane is in the fifth year of an eight-year plan to significantly reduce our deferred maintenance backlog and increase recurring funding for major maintenance needs. Through November 2005, approximately $1,700,000 has been spent on completed major maintenance projects. Another $1,300,000 was committed for projects scheduled for fiscal year 2005-06 and into fiscal year 2006-07. Due to current budget shortfalls, it has been necessary for the college to re-purpose portions of the recurring major maintenance funding. This necessity has reduced the ability to address every major maintenance need. However, progress toward reducing the deferred maintenance backlog continues. In addition to the reduced capacity to fund projects, reductions in maintenance staff have been made over the last few years. Short term benefits are being realized by these reductions. In the long term the reductions will have an effect on the condition of the physical plant.
The highest priorities for scheduling major maintenance projects are correcting safety/health hazards, protecting the public’s investment in the physical plant and projects that reduce costs. Over the last five years significant progress has been made in the form of sidewalk repairs, gutter replacements, painting projects, parking lot repairs, ceiling tile replacements, floor covering replacements, landscape work and replacement of aged classroom furniture. Replacement of the Center Building mansard roof, renovation of Center Building ductwork and replacement of the Administration Building skylight are complete.
Note: the project to upgrade the college wastewater system to meet DEQ standards is coming to an end. This work is the last of the Bond Projects to be completed.
Project proposals for the 07 fiscal year have been identified by Facilities Management and Planning. Several projects have been put on hold and have been prioritized for planning purposes. In addition to the proposed major maintenance projects for this year, several energy conservation measures are being planned that will address outdated HVAC equipment controls. Ongoing energy conservation measures will continue to significantly reduce utility costs.
Looking Ahead
Major maintenance items that will need attention in the next two to three years include the following:
- Door hardware systems are antiquated and continue to show need of major repair or replacement.
- Components of the HVAC systems are nearing the end of their lifecycle. HVAC front-end controls are outdated and need to be replaced.
- Structural systems such as exterior beams on buildings at the main campus are in need of repair or replacement. Such as the Forum fascia and exterior roof trusses on buildings 9,10 and 12
- The DTC needs to be painted.
- Canopy roofing at the main campus – buildings 2,3,4 and 11 need repair.
- The Cottage Grove center and the Florence center need exterior walls repaired. An exterior block wall at the Cottage Grove center has failed. The Florence center needs exterior siding replaced.
- More sidewalk and non-structural concrete repairs are needed.
- Lane’s Siltcoos property needs attention.
In addition to the list above, seismic improvements continue to be needed at several locations at the Main campus. While these upgrades are not required or urgent, the college should develop a plan for taking care of these upgrades. Costs for the improvements are significant enough that college probably will be looking to the State for assistance.
Also, within the next ten years the college will have roofing systems that need replacement. Funding for replacement of these systems should be allocated annually and reserved for future needs.
Technology
The college maintains its technology infrastructure through annual budget allocations of capital outlay funds for telecommunications, network/server and workstation replacement. In 2003, the college adopted a four-year replacement cycle for desktops, funded through capital outlay.
4. Assure that the organization, its board, or staff, are not unnecessarily exposed to claims of liability.
Most exposure to liability resides in three areas: purchasing and contract operations, human resources practices, and workplace safety.
A. With regard to purchasing and contracts, in formal solicitations the following provisions are typically part of the contract:
1. “Performance under this contract is at Contractor’s sole risk. Contractor shall indemnify the College’s Board of Education, agents, officers and employees, from any and all liability for damages, costs, losses and expenses resulting from, arising out of, or in any way connected with the Contractor’s failure to perform fully hereunder and shall carry appropriate insurance for this purpose.”
“In any event such action or claim is brought against College, Contractor shall, upon notice of the expense, promptly satisfy any judgment adverse to College and shall reimburse College for any loss, cost, damage or expense (including legal fees) suffered or incurred by College.”
“The Contractor agrees to protect the College against all claims, suits, or proceedings for patent, trademark, copyright, or franchise infringement arising from the purchase, installation or use of the goods and materials purchased herein. The Contractor further agrees to assume all expenses and damages arising form such claims, suits, or proceedings.”
2. a) “The contract resulting from this solicitation may be terminated at any time by the College for good cause. Good cause may be such items as breach of contract by Contractor, failure of Contractor to fulfill requirements for insurance, workers compensation, professional registration, bonding or licensing, failure of Contractor to perform in accordance with any requirements of the contract including the meeting of delivery dates, invoicing, filings, etcetera.”
b) “This contract may also be terminated for convenience of the College without warning or advance notice. If the contract is terminated for convenience of the College any monies owing to either party shall be paid within thirty (30) days of contract termination.”
3. “In the event of litigation involving the terms and conditions of this contract or the performance hereunder, the prevailing party shall be entitled to recover reasonable attorney fees, costs and expenses from the losing party, including all such fees, costs and expenses of appeal.”
B. The major exposure to risk from human resources practices is in the area of gender and race discrimination or harassment. The college’s policies and practices in these areas have been described in the monitoring reports on Treatment of Staff.
C. The college continues to focus effort on increasing workplace safety measures and awareness, thereby reducing SAIF claims. The following table lists the number and amounts of claims for the past six years:
Fiscal Year Disabling Claims Medical Claims Incurred Losses
2001-02 17 41 $ 236,064
2002-03 8 33 $ 79,544
2003-04 6 35 $ 126,207
2004-05 6 31 $ 106,356
2005-06 6 19 $ 48,540
2006-07* 3 12 $ 24,033
*Year to date as of 01/25/07The Safety Committee continues to be proactive in ensuring that employees receive ongoing workplace safety information and appropriate training.
5. Assure that every purchase (A) includes normally prudent protection against conflict of interest; and (B) of over $100,000, or $150,000 for public improvements contracts includes a stringent method of assuring the balance of long-term quality and cost.
(A) No purchases have been made without due consideration for the possibility of conflict of interest. The Purchasing Services Department abides by the COPPS policy entitled “Purchases: Conflict of Interest”.
Additionally, the following wording is included in every formal bid and request for proposal form, just above the signature of the Bidder/Proposer:
Conflict Of Interest
The undersigned Bidder/Proposer and each person signing on behalf of the Bidder/Proposer certifies, and in the case of a sole proprietorship, partnership or corporation, each party thereto certifies as to its own or¬ganization, under penalty of per¬jury, that to the best of their knowle¬dge and belief, no member of the Lane Community College Board of Education or college officer, employee, or person, whose salary is payable in whole or in part by Lane Community College, has a direct or indirect financial interest in the award of this Bid/Project¬, or in the services to which this Bid/Project relates, or in any of the profits, real or potential, thereof.”Finally, the Purchasing Services Department reviews every purchase order for potential conflict, and, as an added safeguard, Banner prevents allowing a Vendor with the same Social Security Number as that of any current college employee.
(B) No single purchase or commitment of $75,000 or greater has been made without board approval. Those purchases which have been processed during fiscal year 2005-06 with board approval are as follows:
Project/Name
Awarded To
Date
Amount
Board's annual authorizations (greater than $75,000)
Varies
July 2005
* $ 24,663,254
05-06/03 Health Clinic Remodel
ATR Air Inc.
August 2005
$94,946
05-06/03 Health Clinic Remodel
Robinson Plumbing
August 2005
$106,205
05-06/04 Media & Public Relations Services
Funk/Levis & Associates
March 2006
$250,000
05-06/06 SCT Assessment Project
SunGard SCT
October 2005
$88,000
05-06/07 College Audit Services
Ken Khuns & Co.
March 2006
$53,460
05-06/08 Wastewater Treatment System
2G Construction
May 2006
$2,001,000
05-06/10 Center Building Roofing, Phase 2
2G Construction
May 2006
$296,981
05-06/11 Virtual Tape Library System
HP and SyncSoft
June 2006
$167,000
05-06/12 Center Building HVAC System
FM Sheet metal
June 2006
$371,594
05-06/13 Center Building Air Cleaning
IRC Abatement Technologies
June 2006
$132,320
05-06/16Auto Tech Training System
Klein Educational Systems
June 2006
$145,479
Total All Projects
* $28,370,239
* Figure is approximate
Note: Some purchases are pre-authorized by the board in its approval of the President's Annual Authorizations.No purchases over $75,000 have been made without due consideration for the balance of long-term quality and cost. Not only is this a guide in all purchasing endeavors, but it is mandated by state law; specifically, ORS 279A.015 which states, in part:
It is the policy of the State of Oregon, in enacting the Public Contracting Code that a sound and responsive public contracting system should:
- Simplify, clarify and modernize procurement practices so that they reflect the market place and industry standards.
- Instill public confidence through ethical and fair dealing, honesty and good faith on the part of government officials and those who do business with the government.
- Promote efficient use of state and local government resources, maximizing the economic investment in public contracting within this state.
- Clearly identify rules and policies that implement each of the legislatively mandated socioeconomic programs that overlay public contracting and accompany the expenditure of public funds.
- Allow impartial and open competition, protecting both the integrity of the public contracting process and the competitive nature of public procurement. In public procurement, as set out in ORS chapter 279B, meaningful competition may be obtained by evaluation of performance factors and other aspects of service and product quality, as well as pricing, in arriving at best value.
- Provide a public contracting structure that can take full advantage of evolving procurement methods as they emerge within various industries, while preserving competitive bidding as the standard for public improvement contracts unless otherwise exempted.
The college Purchasing Services Department observes this and other regulations to ensure that the best possible product or service is being purchased for the lowest reasonable price.
6. Protect intellectual property, information, and files from loss or significant damage.
The most common forms of intellectual property are trademarks, patents and administrative systems database. The President certifies that to the best of her knowledge, the college owns no trademarks or patents.
All critical information systems are backed up regularly and the backups are stored in an onsite fire- and water-retardant safe. Weekly and monthly total system backups are performed and stored in specially protected environments offsite.
Individual departments are responsible for storage of active electronic and paper files; these files are stored under the auspices of the department supervisor. Archives & Records Management is responsible for storage of inactive paper records
Critical files, such as contracts, are stored in the college archival area in Center 19/20. Critical financial records are stored in a fireproof vault in College Finance. Many of these are microfilmed and stored in special onsite locations.
The SunGard Higher Education Banner information system is capturing more transactions, such as purchase orders and invoices, as electronic documents that are routinely backed up and securely stored. Implementation of the Banner document imaging module is improving the efficiency and data integrity of storing and retrieving selected documents.
7. Receive, process, or disburse funds under sufficient controls to meet the board-appointed auditor's standards.
To certify compliance, please refer to the college's June 30, 2006, audit report presented to the Board in December 2006. Lane Community College received an unqualified (clean) audit opinion (Audit Report, pages 1 and 2). This is the best audit opinion that an organization can receive. More specifically, the auditors address this very issue in the Audit Report, on pages 57 and 58 titled "INDEPENDENT AUDITOR'S REPORT ON COMPLIANCE AND ON THE INTERNAL CONTROL OVER FINANCIAL REPORTING BASED ON AN AUDIT OF THE FINANCIAL STATEMENTS PERFORMED IN ACCORDANCE WITH GOVERNMENT AUDITING STANDARDS". The auditors indicate in this report that they have considered and tested our system of internal controls in order to plan for their auditing procedures. Although this study was not to provide assurance on internal control, their testing noted no material weaknesses involving the internal control over financial reporting and its operation.
8. Invest or hold operating capital in excess of daily requirements in accordance with ORS 294.035
The college maintains its cash in secure interest-bearing accounts including the State of Oregon Local Government Investment Pool, US government and agency securities, banker's acceptances and commercial paper. Lane Community College is also in compliance with the Oregon Revised Statutes 294.035 and 295 as referenced by our auditors in the College's Audit Report dated June 30, 2006, page 66, presented to the Board in December 2006. The following is an excerpt:
"IN CONNECTION WITH OUR AUDIT, NOTHING CAME TO OUR ATTENTION THAT CAUSED US TO BELIEVE THE COLLEGE WAS NOT SUBSTANTIALLY IN COMPLIANCE WITH:
- ORS 295 regarding collateral securing depository balances,
Except as follows:- The College exceeded its collateral coverage in one institution for several days during the year.”
Management notes that this situation is not entirely under the control of the college, and is a problem common to all Oregon community colleges that rely on outside services for some financial aid loan processing. We are working to see if there is anything more we can do to come into compliance with collateral requirements.
9. Not endanger the organization’s public image or credibility, particularly in ways that would hinder the accomplishment of its mission.
Positive public opinion of the college continues to outweigh concern in meetings and other public forums, and in news media coverage. In addition, enrollment is up. However, the image of all Oregon community colleges is suffering from years of state disinvestment as reflected in the colleges’ collective failure to pass levies in November 2006.
10. Not name a building, substantial parts of buildings, or significant landscape features of Lane Community College without prior approval of the board; and, when a building has substantial support from a donor, without prior involvement of the Foundation.
No building or “substantial” area of Lane Community College was named in fiscal year 2005-06.
