Lincoln Land Community College

October9, 2015

To the Board of Trustees

Community College District #526

Springfield, IL 62794

The Comprehensive Annual Financial Report of Lincoln Land Community College District #526 (District), County of Sangamon, State of Illinois, for the fiscal year ended June 30, 2015,is hereby submitted. Responsibility for both the accuracy of the data and the completeness and fairness of the presentation, including all disclosures, rests with the District. To the best of our knowledge and belief, the enclosed data is accurate in all material respects and is reported in a manner designed to present fairly the financial position and results of operations of the District. All disclosures necessary to enable the reader to gain an understanding of the District’s financial activities in relation to its mission have been included.

The Comprehensive Annual Financial Report is presented in four sections: introductory, financial, statistical and special reports. The introductory section includes this transmittal letter, the District’s principal officials and an organization chart. The financial section includes the report of independent accountants, the management’s discussion and analysis, basic financial statements, the notes to financial statements and supplemental financial information. The statistical section includes selected unaudited financial and demographic information, generally presented on a multi-year basis. The special reports section includes Uniform Financial Statements, Certificate of Chargeback reimbursement, grant financial statements and enrollment schedules required by the Illinois Community College Board (ICCB), together with the related auditors’ reports. The DistrictManagement’s Discussion and Analysis letter is presented to provide an analytical review of the past two fiscal years.

Established in 1967, Lincoln Land Community College is a comprehensive two-year public community college that serves approximately 341,105 residents and stretches nearly 4,115 square miles, covering all or part of a 15 county area in Central Illinois. The mission of Lincoln Land Community College is to improve the lives of district residents by providing quality educational programs and services that are accessible and affordable to individuals and responsive to individual and community needs. Included herein are:

Programs leading to certificates and occupational and transfer degrees,
Workforce training and economic development,
College preparatory, continuing and adult education, and
Community-based programs and services.

It was through the following institutional goals for fiscal year 2014 that the District carried out its mission:

Goal I – Student Access and Success

The District is committed to promoting academic access and success as well as personal development for all students.

Goal II – Financial Strength

The District is committed to fiscal responsibility and stewardship.

Goal III – Economic Responsiveness

The District is committed to providing leadership in meeting the economic needs of the community.

Goal IV – Community Engagement

The District is committed to providing leadership in meeting the learning, cultural, social and recreational needs of the community.

Goal V – Diversity and Cultural Competency

The District is committed to strengthening cultural competency relative to a diverse and global society among faculty, staff and students.

Goal VI – Operational Strength

The District is committed to developing a work environment that promotes growth, development and open communication.

The District is committed to ensuring educational excellence, recognizing diversity and multiculturalism, providing excellent facilities, using financial resources prudentlyand building partnerships to extend services to the District.

Lincoln Land Community College serves approximately 12,800students per year with an average age of 28. The students are comprised of 81.02% White Non-Hispanic, 12.79% African-American, 3.72% Hispanic, and the remaining 2.46% Asian and other. These statistics are based on end-of-year credit enrollment data.

The District maintains its accounts and prepares its financial statements in accordance with accounting principles generally accepted in the United States of America (GAAP) as applied to governmental entities. The Governmental Accounting Standards Board (GASB) is the accepted standard-setting body for establishing governmental accounting and financial reporting principles. The accounting policies also conform to the Fiscal Management Manual published by the Illinois Community College Board. The ICCB requires accounting by funds in order that limitations and restrictions on resources can be easily monitored. The financial records of the District are maintained on the accrual basis of accounting, whereby all revenues are recorded when earned, and all expenses are recorded when they have been reduced to a legal obligation to pay.

ECONOMIC CONDITION AND OUTLOOK

The District serves an area of approximately 4,115 square miles, which includes all or parts of the following counties Bond, Cass, Christian, DeWitt, Fayette, Greene, Logan, Macon, Macoupin, Mason, Menard, Montgomery, Morgan, Sangamon and Scott. The District draws students from communities large and small, from farms and urban areas, and from a broad range of ages, occupations, interests and needs.

The District’s tax base within Sangamon County is estimated to be: 68.90% residential, 5.97% farm, .46% industrial, .07% mineral, and 24.60% commercial. The total tax base amounts to $5,882,581,871 and has increased by 1.77% since last year.

Student enrollment projections for FY16 are being projected at an9% decrease from last year.

MAJOR INITIATIVES

FOR THE YEAR:

LLCC-Taylorville building project completed

Renovation was completed to the 40-year-old administrative and classroom building at LLCC-Taylorville. Renovations include new energy-efficient windows and doors, roofing and exterior walls. The interior was transformed to widen student gathering spaces and passageways.A state-of-the-art Mac lab for digital media and computer art classes, plus computer labs for testing and general use were added. Offices were updated, and the welding and construction areas were upgraded with a new classroom.

Faculty and staff participate in AQIP Strategy Forum; new action projects declared

LLCC participated in a three-day AQIP strategy forum in November 2014. Members from the Higher Learning Commission (HLC) facilitated the forum on the Springfield campus. The purpose of the forum was to develop a tentative improvement agenda for the college. Following the forum, two action projects were declared in December: designing a student employment process and thedevelopment and documentation of a program review/assessment process. Another project launched in January was the dynamic stakeholder inventory process. Additional improvement projects are also underway.

Student Services redesigns admission, registration and billing processes

Steps to redesign the admission, registration and billing processes took place in 2014-2015. A new online admission form was implemented to increase efficiency and personalize communication with students. Additional processes implemented include a system to define our students in terms of their goals at LLCC, a method for separating undergraduate students from other students, a mechanism for having Colleague recognize students who have not been in attendance for an excessive amount of time, and a means to track students who change residency status permanently or temporarily.

The redesigned admission process has also allowed other improvements such as assigned advising and a New Student Orientation redesign to occur in the 2015-2016 academic year. These processes allow the college to better serve new students with career exploration and educational and financial planning. Students will have a deeper connection to LLCC by having an assigned advisor to assist them from initial enrollment to graduation.

The Finance Department also started a new business process analysis to review the billing structure in our system.More efficient ways to accurately reflect the proper billing charges for classes were implemented, in particular for variable tuition rates. System problems were identified and corrections to setups in Colleague were made. Additional information was coded to make it easier for students to identify and search for classes on WebAdvisor.

Additional system processes are still being reviewed in regard to improving efficiency and capturing unused system functionality.

FOR THE FUTURE:

LLCC awarded $883,000 federal grant to develop watershed and lake management programs

LLCC is one of four community colleges in Illinois to receive federal funding as part of the Building Illinois’ Bioeconomy Consortium to train individuals who own land, farm or work on reducing nutrient and sediment losses. The training programs developed by the consortium will allow students to earn industry certifications and postsecondary certificates, along with degrees in water management, storm water management, agricultural watershed management, bioprocessing, process maintenance and biofuels. Specifically, LLCC will be developing new stackable certificates, one-year programs and associate in applied science programs in agricultural watershed and landscape lake management.Additionally, LLCC’s land lab, managed by the agriculture program, is a research and demonstration site for best practices to reduce nutrient runoff.

LLCC chosen for national competency-based education initiative

LLCC is one of six colleges and universities recently chosen for a nationwide project that may help students dramatically decrease the time it takes to earn a degree. LLCC was selected by the Council for Adult and Experiential Learning (CAEL) to participate in a competency-based education (CBE) training program called “Jumpstart” funded by the Lumina Foundation. Participation in the program will help the college understand the impact that competency-based education may have on the institution’s faculty, student services, technology and others while working toward implementation of a CBE program. The vision of a CBE program shifts the focus from grades to learning. The college plans to develop the first program in cybersecurity.

LLCC Awarded TRIO/Student Support Services Program Funding

The TRIO/SSS program is a federally funded grant program that provides intensive support and resources to students who are low-income, first generation, and/or special needs. The focus of the grant is to improve the persistence, academic achievement, and graduation/transfer of at-risk students. LLCC would provide services which include, but are not limited to, intrusive advising, extensive monitoring of academic progress, academic coaching, building the students’ resource-seeking behaviors, required academic tutoring, peer mentoring, financial planning, financial and economic literacy, and targeted transfer assistance/advising. The college will receive $1.1 million dollars over the five year grant cycle.

FINANCIAL INFORMATION

Internal Controls. Management of the District is responsible for establishing and maintaining internal controls designed to ensure that the assets of the District are protected from loss, theft or misuse and to ensure that adequate accounting data are compiled to allow for the preparation of financial statements in conformity with accounting principles generally accepted in the United States of America. The internal controlsare designed to provide reasonable, but not absolute, assurance that these objectives are met. The concept of reasonable assurance recognizes that: (1) the cost of a control should not exceed the benefits likely to be derived; and (2) the evaluation of costs and benefits requires estimates and judgments by management.

Tests are made by the District’s independent auditors to determine the adequacy of the internal controls, including that portion related to federal financial assistance programs, as well as to determine that the District has complied with applicable laws and regulations. No findings were presented in the Comprehensive Annual Financial Report.

Budgetary Controls. In addition, the District maintains budgetary controls. The objective of the budgetary controls is to ensure compliance with legal provisions embodied in the annual appropriated budget approved by the District’s Board of Trustees. Activities of the funds are included in the annual appropriated budget. The level of budgetary control (that is the level at which expenditures cannot legally exceed the appropriated amount) is established within each individual fund. The District also maintains an encumbrance accounting system as a technique of accomplishing budgetary control.

The actual revenues compared to budget for the Operating Funds were less than budget by $411,699. The actual expenditures compared to budget for the General Fund were less than budget by $2,355,017. These numbers do not reflect transfers to other funds.

Debt Administration. During fiscal year 2009 the District sold $35,200,000 in debt certificates which were paid in full February 1, 2009 with the proceeds from $34,970,000 General Obligation Bond Series 2008A issue. The District is responsible for making semi-annual payments of interest which are due June 15 and December 15 and principal payments which are due annually each December 15. The principal payments will vary starting at $550,000 in 2009 and ending with $3,580,000 in 2028. The interest rate also varies from 3.00% in 2009 and ends at 5.00% in 2028. During fiscal year 2001 the District entered into a lease agreement with the Lincoln Land Community College Foundation. The Foundation sold $3,150,000 of Economic Development Revenue Bonds and the District is responsible for making semi-annual payments to the Foundation, which are due each September 1 and March 1. The payments will vary starting at $138,960.05 in 2001 and ending at $141,226.72 in 2020 with interest rates varying from 5.90% to 6.34%, the payments include both principal and interest. During fiscal year 2013 the District entered into a 7-year note for Energy Conservation Projects. The District is responsible for quarterly principal payments of $42,857 at a rate of 1.85% interest.

Cash Management. For the purpose of overall investment of excess funds, the District is governed by the Illinois Public College Act, and the statutes governing investment of public funds of the Illinois Revised Statutes (Chapter 85-901 et. Seq.) The fiduciary responsibility for said investments is entrusted to the District’s Board of Trustees, who have delegated that function to the Treasurer of the District.

In keeping with existing Board policy, all investments of excess funds are made in a prudent conservative and secure manner and in accordance with the guidelines detailed in the District Investment Policy No 6.8.

The investment income for all funds totaled $252,162 in fiscal year 2015. The average rate of return was .04% to .75% depending on the depository account for fiscal year 2015. As of June 30, 2015, investments were at United Community Bank and the Illinois Funds.

RISK MANAGEMENT

The District participates in the Illinois Community College Risk Management Consortium (Consortium), which was established in 1981 by several Chicago area community colleges as a means of reducing the cost of general liability insurance. The Consortium is a public entity risk pool currently operating as a common risk management and insurance program for the member colleges. The main purpose of the Consortium is to jointly self-insure certain risks up to an agreed-upon retention limit, and to obtain excess catastrophe coverage and aggregate stop-loss reinsurance over the selected retention limit. In 1992, the Consortium added Worker’s Compensation coverage. In fiscal year 2015, the District paid $420,000 to the Consortium for property, liability and worker’s compensation protection. Since the Consortium requests initial payments to cover substantially any losses to be incurred for the policy year, the District anticipates no future liabilities for incurred losses.

The District has established a two-tier self-insurance health insurance plan administered by a third party. The District maintains adequate reserves to cover potential losses.

OTHER INFORMATION

Awards/Recognitions. The District has continued to receive the Certificate of Excellence in Financial Reporting from the Association of School Business Officials for each fiscal year beginning with the fiscal year that ended June 30, 2000.

Independent Audit. The Illinois Public Community College Act requires an annual audit of the books of accounts, financial records and transactions of all funds of the District. The audit is done by independent certified public accountants that are selected by the Board of Trustees. This requirement has been complied with and the auditing firm has issued an unmodified opinion.

ICCB Recognition Visit. The Illinois Community College Board conducted a five-year recognition visit in April 2014. Their report contained one compliance and several advisory recommendations.

Acknowledgments.The preparation of this report in a timely manner would not have been possible without the dedicated service of the entire staff of the Finance Office. Each member of the department has our sincere appreciation for the contributions made in the preparation of this report. We thank the Board of Trustees for their continued interest and support in planning and conducting the financial operations of the District in a highly responsible and accountable manner and with fiscal integrity.

Contact Information. This financial report has been prepared in the spirit of full disclosure to provide the reader with an overview of the District’s financial operations. If the reader has questions or would like additional information about the District, please direct the request to the Associate Vice President of Finance at 5250 Shepherd Road, Springfield, Illinois 62703.

Respectfully submitted,

______

Charlotte J. Warren, Ph.D.

President