Salaries and contracts — ECMC, ECWA and ECC

There was a time during the financial meltdown of Erie County government in 2005 when the Erie County Society for the Prevention of Cruelty to Animals and the Erie County Fair tried to distance themselves a bit from the “Erie County” part of their names. It was understandable, since Erie County wasn’t a very positive brand name at the time.

We could be coming to a point where Erie County government might, by name association, become concerned about other entities that are affiliated in some fashion with the government, yet still remain essentially independent. I am referring to the Erie County Medical Center Corporation (ECMCC, or more commonly, ECMC), the Erie County Water Authority (ECWA), and Erie Community College (ECC). Continue reading

Issues and unintended consequences concerning a state “free tuition” plan

An old expression goes, “if it sounds too good to be true, it probably is.” Governor Andrew Cuomo’s announcement last week proposing a free college tuition plan offers new opportunities for many families with incomes under $125,000. It also raises a number of concerns. There might be some unintended consequences if the plan is approved by the State Legislature. Continue reading

ECC planning for senior management raises and a structural realignment

The Board of Trustees of Erie Community College, at their meeting on Monday, November 21, will vote on a resolution that provides a schedule of salary increases for the School’s senior staff, which is known as the Senior Executive Staff, or SES. The Board will likely also review a re-alignment of its management structure, eliminating, adding and re-titling a number of positions, and changing some reporting arrangements. Continue reading

Death threats, part II — where is the leadership, Bernie? More on Maziarz and ECC

I wrote on April 29th about an email from Senator Ted Cruz indicating that his presidential campaign had set up a “delegate defense fund” to help protect the convention delegates pledged to him who had received all sorts of intimidating comments and threats from people supporting Donald Trump, including evidently, death threats. Such comments also circulated in the media and appeared to have credibility. Trump supporters have in various ways publicly demonstrated their aggressive tendencies. Trump himself has done little to tamp down such activities. Continue reading

ECC’s response to the state audit is on target — so what happens now?

Erie Community College is a school with problems. It is also a school that is very important to the economic future of the region.

The College has both financial and operational difficulties. I will get back to the financial later in this post, but for the moment we will focus on the operational issues.

The Office of the State Comptroller in January 2016 issued a devastating audit of the school. It documented jobs and salaries set without formal Board of Trustee approval. Some employees were given raises or paid extra for their work without formal or informal approval by the Board.

The audit reported on professional services contracts that were used by the school without formal Board approval and without following requirements for public institutions to solicit proposals. Some vendors were paid without proper contracts in place.

The audit reported on the college’s failure to keep good control over two affiliated organizations of the College, the Auxiliary Services Corporation (ASC) and the ECC Foundation. The ASC is chiefly responsible for management and use of student fees. The Foundation has a fundraising function and also works on alumni relations.

Following the audit the College had until April 14 to prepare and submit its corrective action plan to the state. It did so by unanimous vote of the Board of Trustees on April 12th. Politics and Other Stuff has received and reviewed a copy of the audit response.

The report was prepared by the school’s Audit Review Panel, which describes its work as “an independent review of oversight and management resources.” The group consisted of nine members – four ECC Trustees, one ECC staff member, and four outside participants. It was chaired by Board member Dennis Murphy. The committee document responds to all of the recommendations contained in the audit and includes an “Implementation Plan of Action,” an “Implementation Date,” and the “Person Responsible for Implementation” for each recommendation contained in the audit.

The responses can be broken down into four board categories for which the Board commits itself to action:

  • Board oversight
    • “take a sufficiently active role in all significant financial decisions,” by setting dollar or other thresholds for Board approval as well as requiring Board approval for receipt of gifts and multi-year contracts.
    • “establish and maintain a control environment” to ensure compliance with laws and College policies. Board members will undergo annual training concerning budgets, laws, and policies affecting school operations.
    • “maintain a separate and distinct relationship” with its Auxiliary Services Corporation and the ECC Foundation. College officials will be prohibited from serving as officers of those organizations. The majority of directors of the organizations must be “independent.”
  • Executive salaries and benefits
    • “significant financial decisions, such as the creation of new positions,” must be made in “an open and transparent manner.” The President will be required to provide the Board with an “Employee Hiring Justification Form” to request creation of new positions.
    • The Board will “authorize all salaries, compensation and fringe benefits provided to senior executives.” In addition “any use of affiliated entities’ revenues for payment of any Senior Executive salary, other compensation and fringe benefits” will require Board approval. The President will be required to provide the Board with “a monthly report of his general expenses.”
    • solicit legal advice about “the advisability of ratifying salary and fringe benefits provided to current and former College employees without prior Board authorization.”
    • “recover any salary and separation payments determined to have been improperly made to current and former College employees.” Action has already been taken. A Request for Proposals has been issued for a new Enterprise Resource Plan (ERP) system to better manage HR functions.
    • The President “will prepare a Senior Executive Staff policy” concerning leave time, based on the County of Erie’s personnel policies.
    • A new policy “requiring supervisory approval prior to altering work schedules” will be prepared for Board approval, again following County policies.
    • The proposed ERP system is intended to facilitate monitoring of the use of leave time records, including those of senior staff.
    • Board minutes will include all official actions concerning salaries and benefits.
  • Procurement
    • “The College will procure professional services using a competitive method such as a Request for Proposal process.”
    • “The College will verify and document in the bid file that it has obtained State contract pricing in a proposed contract.”
    • “College officials will require that professional service providers submit documentation that includes the dates and services provided before authorizing payment.”
    • The College will use the County of Erie’s Requests for Proposals and Requests for Qualifications whenever possible.
    • The College will require “documentation from professionals before they are engaged,” and such documentation must describe “the services, timeframes for provided services and basis for compensation for such services.”
  • Affiliated entities (The Auxiliary Services Corporation and the ECC Foundation)
    • The President will be required to renegotiate the contracts with the affiliated entities, focusing “on the construct of the affiliated entities’ Board of Directors, development of specific performance metrics and reports that demonstrate accountability, and how goals and objectives are being established and achieved.”
    • Concerning the ASC, the Board will adopt a policy concerning ASC’s “fiduciary obligation pertaining to student fees and if the activity fee is spent, specifying the purpose for which the student activity fees may be used and the process for allotting the fees among those uses.” Annual applications will be required for use of the fees. Carrying over unused funds to the next year for a particular purpose will be limited and a process for returning excess balances to the College will be established. Both the ASC and the Foundation will be subject to operating procedures intended to monitor their performance both financially and operationally.
    • The affiliated entities will be required to monitor the use and allocation of the fees among the various clubs and organizations at the College. Fund balances of all clubs and organizations which have received allocations of student fees over the past three years will be reviewed.
    • The activities, goals and objectives of the affiliated entities, as well as metrics for measuring performance, will be reviewed regularly.
    • The Board will review audits and other reports from the affiliated entities.
    • The entities will be required to provide adequate documentation of their activities and contractual obligations.

 

So what happens now?

Like most any audit response, this one is overflowing with commitments to make the type of improvements that the school needs. The challenge here is whether the ECC Board and staff are up to all the grunt work of making the improvements happen.

Many of the recommendations substantially restrict the way President Jack Quinn has been managing the school. It is usually harder to explain and justify decisions about personnel activities and procurement of services and products in public and to answer questions about those things.

There are some imponderables in this report, such as:

  • Which legal counsel is the school seeking to sort out some of the thornier issues from the audit like inappropriate compensation – the County Attorney, outside counsel or the school’s own lawyers?
  • Do requirements for limitations and prior approvals for leave time extend up to the President, who has various out-of-town commitments unrelated to the College?
  • Who appoints the “independent” directors of the ASC and the Foundation?

The College Board has done a good job with this report, but its work is only beginning. There are more than twenty activities, many requiring monthly or annual attention that the Board is committing itself to. It seems that they will need some sort of checklist for themselves for appropriate follow-through, since they are promising they will do lots of things over the course of the next year and beyond.

This is a good start, but there is a great deal of work ahead.

Financial issues dominate

Even if the Board and staff at ECC are able to successfully implement the changes they are now committing to make, the really important stuff mostly involves money. Lots and lots of money.

Later this week the Board will approve a 2016-17 budget for the College. That document will then be passed on to County Executive Mark Poloncarz and the County Legislature.

Given continued falling enrollment (reportedly a three percent or greater drop in the spring semester compared to last year) and less than adequate state aid, from ECC’s point of view, it is likely that the school will once again raise tuition. Look for cuts in unfilled and perhaps filled positions. The school’s fund balance is relatively small and will not be of much help in bailing out the school’s diminished operating revenues.

The Enterprise Resource Planning system that is being proposed will cost millions. The school’s two main union contracts were settled last year, but money to pay the increased annual personnel costs remains to be fully identified. All three campuses are in need of substantial capital renovations.

By next week the College’s challenges will be handed off, at least in the short term, to the County Executive and the Legislature as they conduct their budget review. Will they come up with more money? Will they attach conditions to any increased funding? Will they accept the school’s action plan or will they require their own additional monitoring and control of the school’s operations?

Things in government often go in cycles. There was a time in the history of Erie Community College when County government held tight control over many of the activities of the College. But then the Middle States Association, which accredits colleges, said the school should operate more independently. So independence was made the rule. Independence, however, as evidenced by the state audit, has not gone as well as expected. The school’s administration moved toward operating outside of the bounds of good management and even common sense. When you look at some of the action plans noted above you have to wonder where the common sense went.

The audit and ECC’s responding corrective action plan offer an opportunity to re-set the table. Here’s hoping that those who direct and manage the school take advantage of that opportunity.