DALLAS COUNTY COMMUNITY COLLEGE
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DISTRICT AUDIT COMMITTEE MEETING>> EVERYBODY TAKE A SEAT, PLEASE.
THIS OPEN MEETING OF THE BOARD OF TRUSTEES IS AUTHORIZED IN ACCORDANCE WITH THE TEXAS GOVERNMENT CODE, 551.001 THROUGH 551.146.
VERIFICATION OF NOTICE OF MEETING AND AGENDA ARE ON FILE IN THE OFFICE OF THE CHANCELLOR.
PER TEXAS GOVERNMENT CODE 551.1282, THIS MEETING IS BEING BROADCAST OVER THE INTERNET IN THE MANNER PRESCRIBED BY TEXAS GOVERNMENT CODE 551.128.
[1. Certification of Notice Posted for the Meeting]
>> MR. CHAIR, I CERTIFY THE NOTICE FOR THE MEETING WAS POSTED ACCORDING TO 51.504.
[2A. Presentation of 3rd Quarter Report from Internal Audit for Quarter Ending May 31, 2019 Presenter: Paul Styrvoky]
PAUL, IF YOU WANT TO START OFF WITH YOUR PRESENTATION OF THE THIRD QUARTER REPORT.>> THANK YOU, CHAIR PERSON WILLIAMS, TRUSTEE BRAVO, CHANCELLOR MAY, TRUSTEE COMPTON, AND TRUSTEE ZIMMERMANN.
I'M HONORED TO APPEAR BEFORE YOU.
I'M HERE PRESENTING -- I WILL SPEAK UP A LITTLE BIT.
TODAY WE'RE PRESENTING THE THIRD QUARTER STATUS REPORT.
WE COMPLETED ONE AUDIT, A COMBINATION OF TWO AUDITS.
A TECHNICAL AUTTHAT FOCUSED ON FACILITIES AT THE SERVICE CENTER.
WE MADE OPERATIONAL IMPROVEMENTS WHICH HAVE BEEN MPLEMENTED.
ONE THING THAT I HAVE DONE WITH THE STATUS REPORT I'M REFLECTING CURRENT ACTIVITIES IN TERMS OF OUTSTANDING AND [INDISCERNIBLE] AND THEN REPORTS AND AUDITS ON THE HORIZON TO BE STARTED SO YOU HAVE A GREATER INSIGHT IN TERMS OF ACTIVITY WE'RE DOING, WE'RE QUITE BUSY YEAR AROUND.
ANYTHING LISTED IN TERMS OF PENDING RESPONSE OR FIELD WORK IS STILL IN A GRAPH SITUATION.
WE HAVE NOT ISSUED ANY REPORTS.
WE'RE WORKING WITH MANAGEMENT IN TERMS OF GETTING RESPONSES BUT I WANT TO MAKE YOUR AWARE OF WHAT IS HAPPENING.
SPECIFICALLY, WANTED TO POINT OUT A COUPLE OF OF ITEMS IN DEPARTMENTS MANAGEMENT.
WE CONTINUE TO SEARCH FOR A CHIEF INTERNAL AUDITOR, I SERVED UNTIL THE POSITION IS FILLED.
WE ARE WELL UNDERWAY WITH OUR ANNUAL PLANNING CYCLE FOR OUR RISK ASSESSMENT.
WE'RE DEVELOPING A TOOL WE'LL SEND TO OU TO GET YOUR INSIGHTS THAT ALIGN WITH YOUR INITIATIVES SO WE FOCUS OUR WORK ON WHAT YOU DESIRE.
AND THAT WILL BE PRESENTED TO YOU IN THE AUGUST TIMEFRAME.
WE CONTINUE TO CROSS TRAIN OUR STAFF.
AND WE RECENTLY RECEIVED A LAPTOP THAT WILL ALLOW US TO WORK MORE EFFECTIVELY IN THE FIELD.
DO YOU HAVE ANY QUESTIONS FOR ME TODAY?
>> C. COMPTON: HAVE YOU TALKEN THE V.A. ISSUES TOTALLY RESOLVED? I KNOW THE DEADLINE --
>> I DID SEE A STATUS REPORT FROM THE COMPTROLLER THAT THERE IS A RELATIVELY SMALL AMOUNT THAT NEEDS TO BE RESEARCHED THAT RELATES TO TWO STUDENTS.
BUT IT LOOKS LIKE THE ISSUE WAS RESOLVED.
IT WAS APPROXIMATELY $385 IN TERMS OF RESOLUTION.
>> C. COMPTON: BECAUSE I SAW SOMETHING THAT SAID THAT THIS ISSUE DID NOT AFFECT ANY STUDENTS.
>> IT WAS TWO STUDENTS ACCOUNTS.
IN TERMS OF THE MONIES DUE BACK TO THEM, THOSE NEED TO BE RESEARCHED.
EVERYTHING ELSE FURTHER REPORT I SAW FROM THE COMPTROLLER THAT WENT TO THERE THE PRESIDENT SAID AND SO FORTH --
>> C. COMPTON: STUDENTS, CONSEQUENCE --
STATUS? DOWN TO I BELIEVE IT'S TWO STUDENTS FOR A TOTAL OF $385 THAT NEEDS TO BE RECONCILED AND THEY ARE WORKING ON THAT.
WATCHING THAT WE STAY CURRENT.
FROM THE ITEMS SCHEDULED TO BE FINISHED BY MAY 31ST, THAT'S WHERE WE'RE AT.
>> C. COMPTON: MY QUESTION WAS, DID WE HAVE ANY STUDENTS WE HAD TO REFER MONEY TO? I SAW SOMEWHERE THAT NO STUDENTS WERE INVOLVED.
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>> NOW, I'LL GET YOU THAT ANSWER.
I DON'T HAVE IT IMMEDIATELY IN FRONT OF ME BUT I'LL BE HAPPY TO GET YOU AN ANSWER.
I MEAN, IT INVOLVES STUDENTS BUT I DON'T THINK THEY LOST ANY DOLLARS.
>> IN MANY CASES IT WAS MONEY WE HAD TO RETURN TO THE VETERANS ADMINISTRATION TO ADJUST OUR RECORDS TO ACCURATELY REFLECT THE AWARDING OF THAT.
I'M NOT AWARE ANY STUDENTS LOST MONEY ON THAT.
BUT I WILL HAVE TO GET THE DETAILS ON THAT.
>> THAT WAS PART OF THE RECONCILIATION PROCESS.
DID YOU HAVE TO REFUND MONEY TO ANY STUDENTS? WHEN THIS INITIALLY CAME UP, IT WAS THAT IT WOULDN'T AFFECT ANYTHING.
AND I KIND OF GOT THE IMPRESSION WE HAVE THE MONEY AND IT WAS, I [INDISCERNIBLE] THE WAY WE WERE KEEPING OUR RECORDS.
BUT NOTHING ABOUT REFUNDING MONEY TO STUDENTS OR ANYTHING LIKE THAT.
I'M JUST TRYING TO GET CLARIFICATION.
>> DETAIL YOU MIGHT WANT TO SAY?
>> CHAIR D. FLORES: MICROPHONE.
>> AS OF MAY 31ST WE HAD $365 FOR THE PRIOR YEAR.
$365 FOR I BELIEVE TWO STUDENTS FROM THE PRIOR YEAR THAT IS STILL OUTSTANDING.
TO ANSWER YOUR SPECIFIC QUESTION AS IT RELATES TO THE FACTS, EACH COLLEGE WORKED WITH THEIR ACCOUNT AND RECOM PROCESS.
SOME MAY HAVE WENT TO THE DEPARTMENT OF TREASURY, BASED ON IF WE COULD OR COULD NOT LOCATE THE STUDENT.
EVERYTHING IS WHERE IT SHOULD BE OTHER THAN $365.
IF MONEY WENT TO THE V.A., STUDENT OR DEPARTMENT OF TREASURY BASED ON THAT PROCESS, WHICH PAT WILL HAVE TO SPEAK TO.
>> D. ZIMMERMANN: THE RICHLAND COLLEGE HIGH SCHOOL WE KEEP ATTENDANCE WITH PAPER.
THEY ARE MOVING TOWARD A BIO METRIC SYSTEM THEY HOPE TO HAVE IN PLACE NEXT YEAR.
>> D. ZIMMERMANN: I CAN UNDERSTAND HOW THERE IS A PROBLEM WITH PAPER, THIS TO THAT TO SOMETHING ELSE.
>> AND DISCUSSIONS WITH HE PRESIDENT.
WE HAD -- [INDISCERNIBLE] DIRECTION.
>> D. ZIMMERMANN: ALSO, IT SAID THAT THE AUDIT DID NOT DENTIFY ANY SIGNIFICANT OR MATERIAL ISSUES WHICH WOULD NECESSITATE A MORE COMPREHENSIVE REVIEW OTHER THAN THE NORMAL COURSE OF INTERNAL AUDITING ACTIVITIES BY THE INTERNAL AUDIT DEPARTMENT.
THAT IS UNDER EVERY SINGLE ONE OF THESE.
EVEN THE ONE THAT SAYS ADJUSTMENTS TO THE RICHLAND COLLEGE SCHOOL PROGRAM FUNDING ALLOTMENT THAT PROBLEMS WITH THIS COULD CAUSE FUNDING ALLOTMENT PROBLEMS. THAT AGAIN, THAT SAME STATEMENT IS FOLLOWED UNDERNEATH.
THAT DIDN'T FIND ANY SIGNIFICANT MATERIAL ISSUES.
>> THAT AUDIT IS SOMEWHAT SPECIAL.
AND THAT IS A [INDISCERNIBLE] AUDIT.
>> D. ZIMMERMANN: BUT THAT SAME AUDIT MESSAGE IS UNDER EVERY SINGLE AUDIT.
EITHER IT'S MATERIAL OR OT MATERIAL.
IT MAKES A DIFFERENCE OR IT DOESN'T.
THE STATEMENT NEEDS TO BE LOOKED AT IF IT COULD AFFECT THE FUNDING ALLOTMENT.
>> I'LL TAKE IT UNDER ADVISEMENT.
THAT'S A GOOD POINT, TRUSTEE ZIMMERMANN.
>> D. ZIMMERMANN: ALSO IN THE CASH COUNTS, DO WE CARRY MATERIAL DOLLAR AMOUNTS OF CASH?
>> WE DO NOT. IN THE PAST WE HAVE, LESS THAN $10,000 PER CAMPUS.
>> D. ZIMMERMANN: I WOULD LOOK, DO WE LOOK AT THE CREDIT CARD? BECAUSE THAT'S WHERE THE MALFEASANCE HAS BEEN BEFORE.
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>> D. ZIMMERMANN: I REMEMBER SOME YEARS BACK A GAS CARD THAT WAS MISUSED.
>> D. ZIMMERMANN: IT WAS $16,800.
AND IT TOOK THEM 17 MONTHS TO FIND IT.
>> PAUL, YOU MENTIONED YOU ARE ABOUT TO ENTER A RISK ASSESSMENT, ND HOW YOU GATHER INPUT TO INFORM THAT PROCESS?
>> WE START WITH TWO-YEAR MANAGEMENT.
I USE THE COASTAL MODEL AS OUR BASIS TO DRIVE HAT THE RISK ASSESSMENT IS.
IT'S AN ENTERPRISE RISK ASSESSMENT.
>> WHAT YOU WILL EXPECT TO SEE IS SOMETHING LIKE A SURVEY THAT IS GOING TO HAVE ALL THE INITIATIVES.
YOU WILL BE ABLE TO PROVIDE YOUR FEEDBACK ON WHAT IS A HIGH, MEDIUM OR LOW PROGRAMS WHERE YOU SEE AN OPPORTUNITY FOR SOMETHING TO OCCUR THAT WE NEED TO ADDRESS ONE OUR PLAN.
>> ARE YOU DOING ANYTHING SPECIFICALLY IN YOUR DEPARTMENT TO GET READY FOR THE BOND PROGRAM WE'RE ABOUT TO GO INTO?
>> WE HAVE NOT SPECIFICALLY DISCUSSED THAT YET.
THAT WOULD BE PART OF OUR PLANNING PROCESS.
>> S. WILLIAMS: OTHER QUESTIONS? OKAY.
>> AGAIN, THANK YOU FOR THE OPPORTUNITY TO SERVE YOU, OUR
[3. Overview of Regular Agenda Items]
EMPLOYEES AND OUR STUDENTS.JOHN, THE LAST COMMENT ABOUT THE BOND PROGRAM.
>> WE HAVE FOUR ITEMS ON THE REGULAR AGENDA.
WE PUT HERE BECAUSE WE DIDN'T HAVE A FINANCE COMMITTEE, WE PUT HERE ON THE AUDIT COMMITTEE TO BE ABLE TO ANSWER QUESTIONS HERE RATHER THAN NECESSARILY IN A REGULAR BOARD MEETING.
THE FIRST IS APPROVAL OF THE AWARD FOR THE BOND PROGRAM SERVICE ON THE CAPITAL CAMPAIGN WE HAD THEMHE IN GEO BONDS.
THE RECOMMENDATION FROM THE COMMITTEE THAT WE NEEDED IS A CBRE, IN CONJUNCTION WITH JACOB'S ENGINEERING ND OTHER PARTNERS THEY HAVE PUT TOGETHER TO BE ABLE TO DO ALL THE SERVICES WE WOULD WANT TO DO OUT THERE.
>> WHO WAS ON THE EVALUATION COMMITTEE?
DISTRICT FACILITIES, ARCHITECTURE, NORA REECE, TISKA THOMAS, BROOKHAVEN, SHARON WILSON, DISTRICTED FACILITIES ENGINEERING, MARY BRUMBACH AND MYSELF.
I HAD TWO NEW PEOPLE THAT THIS WAS GOING TO BE A LEARNING SESSION FOR THEM.
AND THEN WE ALSO HAD OTHERS THAT ARE INTIMATELY INVOLVED IN THE PROJECT, ACCOUNTING AND BOND WORK WE DO.
JUST AN FYI FOR EVERYBODY ELSE.
I HAD [INDISCERNIBLE] INFORMATION THAT GAVE ME SOME BACKGROUND ON THIS COMPANY.
AND THEY SENT ME A 40-PAGE DOCUMENT THAT WAS -- WHICH I REVIEWED.
MY SECOND PROBLEM, I DID GET THAT AND TAKE A LOOK AT IT.
WHEN YOU LOOK AT THESE TWO ITEMS, I ASKED ABOUT THE DOLLAR AMOUNTS ON THEM.
ROB, ON A, BECAUSE EVEN IF YOU LOOK AT THE BOARD DOCUMENTS, IT DOESN'T HAVE A DOLLAR AMOUNT ON THAT.
IT SAYS, FEES AND SOMETHING ABOUT BEING NEGOTIATED.
I WAS TOLD THAT BECAUSE IT WAS AN RFQ, PROFESSIONAL SERVICES THEY DIDN'T HAVE TO PUT A DOLLAR AMOUNT ON THERE.
THE SAME THING ON THAT DEPOSITORY FOR BANKING SERVICES.
WE WERE ASKED TO APPROVE THAT.
AND IT DIDN'T HAVE ANY FIGURES ON IT.
WHAT THE NTICIPATED BUDGET OR THE DOLLAR AMOUNT.
I REMIND ROB THAT WHEN WE DID THE POLICY IN BOSTON [INDISCERNIBLE] I THINK IT SAID NOT TO EXCEED "X" AMOUNT OF
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DOLLARS.I'M NOT IN FAVOR OF VOTING FOR AN ITEM AND I DON'T KNOW HOW MUCH WE'RE COMMITTING TO IN TERMS OF DOLLARS.
I THINK THAT WOULD BE IRRESPONSIBLE.
MY NEXT QUESTION WAS, WELL, DON'T YOU HAVE A BUDGET FOR THESE ITEMS? WHAT IS THAT BUDGET AT LEAST? IT SHOULD HAVE NOT TO EXCEED WHAT THE BUDGET ITEM IS.
I'M NOT SAYING IT MIGHT NOT EXCEED IT.
BUT I THINK THAT WE NEED TO BE FISCALLY RESPONSIBLE.
THAT WE SHOULD BE COMMITTED TO A DOLLAR AMOUNT OF SOMETHING EVEN IF IT'S JUST WHAT THEY HAVE BUDGETED FOR THOSE PARTICULAR SERVICES, EVEN ON THE DEPOSITORY FACT, THE CHANCELLOR TOLD ME TALK TO JOHN.
AND JOHN SAID, IT WASN'T COSTING US ANYTHING.
IF IT'S NOT COSTING US ANYTHING, THAT SHOULD BE REFLECTED ON THE DOCUMENT.
IF WE'RE NOT PAYING -- I READ IT.
BUT IF WE'RE NOT PAYING ANY MORE THAN WE PAID LAST YEAR OR WHATEVER THE CIRCUMSTANCES SHOULD BE, THAT SHOULD BE SPELLED OUT ON THE DOCUMENT THAT WE'RE BEING ASKED TO APPROVE.
SO I'M NOT SURE WHAT YOU STARTED IN THE CONVERSATIONS.
BUT IT OESN'T SEEM TO BE ANY CONSISTENCY.
YOU COME BEFORE US BEFORE WITH THIS REQUEST FOR QUALIFICATIONS.
ONE INSTANCE YOU HANDLE IT ONE WAY AND ANOTHER INSTANCE IT'S BEING HANDLED A DIFFERENT WAY.
THERE ARE TWO DIFFERENT CIRCUMSTANCES.
ONE WE DID HAVE A NOT TO EXCEED.
WE DON'T KNOW HOW MUCH WE'LL SELL.
IT WILL DEPEND ON THE COST AND WHAT IS OUT THERE.
WE NEED TO PICK AND FIRM AND NEGOTIATE THE RATE.
WE HAVE ONE PROJECT THAT IS OUT THERE.
BUT THAT'S A SMALL PIECE OF WHAT WE WILL ULTIMATELY DO.
SO IF WE SELL THE BONDS IN THREE, LET'S SAY NO MORE THAN 400 MILLION, WE INTEND TO USE THREE MANAGERS SO ONE IS NOT RESPONSIBLE FOR ALL.
HONESTLY, WE'RE NOT GOING TO KNOW, [INDISCERNIBLE] FIRST ROUND.
>> WE'LL BRING TO THE WORKSHOPS THE PROJECT LIST FOR THE FIRST ISSUE OF BONDS, WHICH WE'LL ASK THE BOARD TO APPROVE.
IT'S ABOUT $300 MILLION WORTH OF PROJECTS WE HAVE ON THERE.
AND THOSE PROJECT BUDGETS HAVE A, QUITE FRANKLY, THE 4% FEE WE HISTORICALLY PAY FOR A PROGRAM MANAGER, BUILT INTO THOSE BUDGETS ALONG WITH THE ARCHITECT AND ENGINEERING FEE, TESTING FEES, CONSTRUCTION, IT'S ALL IN THAT DETAILED LIST THAT WE PUT TOGETHER TO COME UP WITH A BUDGET NUMBER.
THE NUMBERS WILL BE, THE AMOUNTS WE'LL PAY WE'LL DELINEATE OUT BUT IT WILL BE IN THE BUDGETED DOLLARS WE'LL BRING TO THE BOARD ON THE 25TH AND 26TH AND ASK YOU TO APPROVE THESE PROJECTS.
MY PRESENTATION WILL BE COMING THEN.
WE'RE GOING TO LOOK AT DOING INTERIM FINANCING TO ALLOWING US TO START THE PROJECTS AS SOON AS POSSIBLE BUT NOT HAVE TO SELL THE BONDS UNTIL A LATER DATE WHEN WE GET TO THE LEVEL WE CAN ISSUE A RAUNCH OF BONDS TO PAY THE INTERIM FINANCING SO YOU ONLY ISSUE FOR WHAT YOU SPENT BECAUSE IT'S THE MOST PRUDENT METHOD.
YOU WILL REMEMBER IN 2004, WE HAD THE INITIAL PROGRAM.
>> C. COMPTON: I REMEMBER THAT BUT THAT'S NOT MY POINT.
I DON'T HAVE A PROBLEM WITH THE PROPOSAL AND THE COMPANY AND THE COMPOSITION OF THAT TEAM.
MY POINT IS BASICALLY WHAT IT LOOKS LIKE NOW -- AND I DON'T THINK IT MAKES SENSE, BUT WHAT IT LOOKS LIKE NOW IS THAT WE'RE APPROVING THE COMPANY AND OPENING THE POCKET BOOK.
SURELY YOU HAVE SOME ESTIMATE OR THEY GAVE YOU SOMETHING THAT THEY DIDN'T GIVE YOU PRICING, YOU JUST CONSIDERED THE QUALIFICATION.
>> IT'S AGAINST THE LAW TO TAKE THE FEES.
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4% IS HISTORICALLY WHAT YOU WOULD PAY, LET'S SAY IT'S A $25 MILLION PROJECT.WE WOULD PAY A 4% FEE FOR A PROGRAM MANAGER FOR THAT.
THAT'S KIND F LIKE PART OF THIS IS WE HAVE TO SELECT AND START NEGOTIATING WITH THEM BECAUSE IF I PUT AN AMOUNT THAT BASICALLY TELEGRAPHS WHAT I'M GOING TO PAY.
AND I THINK WE STARTED AT THAT AMOUNT AND WORK OUR WAY DOWN.
>> COMPTON RAISED THE ISSUE EARLIER, HE REQUEST FOR QUALIFICATION PRECLUDES YOU FROM DISCUSSING PRICE CONSISTENT WITH THE GOVERNMENT CODE.
I LOOKED BACK TO DECEMBER 2018 AND THE BOSTON CONSULTING GROUP AND THAT WAS A REQUEST FOR PROPOSAL.
THAT'S WHY WE'RE NOT TO EXCEED WAS IN THERE.
>> C. COMPTON: WHEN WE GOT INTO A BACK AND FORTH ABOUT THE BOSTON CONSULTANT, WHEN I SAID YOU HAD A REQUEST OR A PROPOSAL, YOU ARGUED ME DOWN AND SAID IT WAS A REQUEST FOR QUALIFICATIONS.
AND THEN THAT'S WHEN I PRODUCED THOSE DOCUMENTS WHERE IT HAD TWO DIFFERENT THINGS.
>> CHANCELLOR MAY: THERE WAS A MISTAKE ON WHATEVER WAS PRINTED OUT THERE.
>> I THINK THAT TRUSTEE COMPTON IS RIGHT ON THAT OINT.
BUT I DON'T HAVE IT IN FRONT OF ME.
>> C. COMPTON: THIS IS WHAT I MEAN ABOUT THERE IS THOUGH CONSISTENCY BETWEEN REQUEST FOR PROPOSAL, THEN COME BACK FOR REQUEST OR QUALIFICATIONS.
I UNDERSTAND THE DIFFERENCE BETWEEN THE TWO.
BUT YOU ARE HANDLING REQUEST FOR COILIFICATION THIS WAY AND NOW IT'S A REQUEST FOR QUALIFICATIONS.
MY POINT STILL REMAINS THAT'S ONE OF THE THINGS IN ADDITION TO THOSE QUALIFICATIONS.
>> C. COMPTON: YOU GET THE COST OF THOSE SERVICES PER COMPANY, OKAY? BECAUSE YOU GOT COMPANIES OUT HERE YOU COULD DO THE SAME WORK.
THIS WAS A DECISION THAT WAS MADE ON THE CRITERIA THAT YOU ALL SET P.
BUT WHAT I'M TELLING YOU RIGHT NOW, WHAT THIS LOOKS LIKE, IS YOU ARE ASKING ME TO APPROVE A COMPANY, YOU ARE GOING TO NEGOTIATE THE FEES.
WELL, HOW DO I KNOW BEFORE IT'S OVER THE FEE IS NOT 1.1 BILLION? WHAT I'M SAYING IS WHEN YOU STARTED ON THIS JOURNEY, YOU HAD A BUDGET I ASSUME BASED ON SOME TYPE OF KNOWLEDGE AS TO WHAT WAS REASONABLE, UNREASONABLE, BASED ON WHAT YOU WERE ASKING FOR.
SO WHAT I'M SAYING AT THE MINIMUM, THIS SHOULD HAVE SAID NOT TO EXCEED WHATEVER THAT BUDGETED AMOUNT WAS.
MY UNDERSTANDING OF THIS APPROVAL OF BOND PROGRAM AND SERVICES IS WE'RE HIRING THE FIRM THAT CAME THROUGH THE SELECTION PROCESS AFTER LOOKING AT DIFFERENT FIRMS THAT CAN BEST HELP US MANAGE THE DESIGN, CONSTRUCTION AND FINANCING OF A $1.1 BILLION PROGRAM.
WE BASICALLY OUTSOURCING A BUG PART OF THE WORK.
THERE IS NO FINANCIAL BLIGATION THAT THIS OARD OCCURS, SHOULD WE APPROVE THIS ITEM TONIGHT.
THE FINANCIAL CONTROL AND CONTACT THE BOARD WILL HAVE -- ACCOUNTABILITY, IN THE ANNUAL BUDGETING PROCESS, WHEREBY YOU SAY IN THE COMING FISCAL YEAR THIS WHAT WE NEED TO ACCOMPLISH IN TERMS OF THE OVERALL BOND PROGRAM AND THESE ARE THE FEES NECESSARY NOT TO EXCEED WHATEVER THE THAT NUMBER IS AND THAT WILL BE WRITTEN INTO THE BUDGET.
ON AN ANNUAL BASIS THROUGH THE BUDGETING PROCESS OF EVERY PENNY PAID OVER TIME, AM I THINKING ABOUT IT THE RIGHT WAY?
>> WHILE E -- I HAVEN'T DONE IT YET.
WE HAVE COME UP WITH A PROJECT LIST.
I HAVE NOT BROKEN IT OUT BY THE CONSTRUCTION COSTS, ARCHITECTS,
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ENGINEERS AND ALL THAT.AND THAT WOULD BE ONE OF THE THINGS I WOULD BE INTERESTED IN, NOT ONLY SHOWING THE BOARD AT THE 25TH AND 26TH WORKSHOPS.
BUT THEN THAT'S PART OF OUR TRACKING THAT I THINK WE HAVE TO DO ALONG WITH PARTICIPATION OF MINORITY BUSINESSES AND VETERANS BUSINESSES AND ALL THE THINGS THAT WE'RE ASKING FOR THAT THIS GROUP DO.
>> IT'S, THIS IS GOING TO BE ONE OF THE MOST IMPORTANT CONTRACTS WE SIGN IN TERMS OF ADMINISTERING OF BOND PROGRAM.
THIS IS WHAT YOU ARE PREPARING TO BRING O US IN JULY.
IS BASICALLY YOU KNOW, WHAT ARE OUR STANDARDS AND EXPECTATIONS GOING TO BE IN ALL THE AREAS YOU MENTIONED AND MORE.
>> P. RITTER: I'M GOING TO MAKE THEM BETTER EACH TIME.
DR. MAY SAID, WE'RE ONLY DOING THIS FOR THE FIRST LIST, APPROXIMATELY $300 MILLION WORTH OF PROJECTS, NOT THE WHOLE 1.1 BILLION AT THIS TIME, WHILE THE BOARD AUTHORIZED THEY HAVE NOT TOLD US THEY CAN ISSUE A DOLLARS WORTH OF BOND WITHOUT A LIST.
HOPEFULLY THAT WILL GET APPROVED.
WE WWE HAVE BUILT THESE TYPE OFS INTO THOSE BUDGETS LIKE ARCHITECT AND ENGINEERS FOLKS.
>> I HAVE NOT BROKEN THEM OUT BUT THAT WOULD BE EASIER ENOUGH.
>> WHAT ARE THE TERMINATION PROVISIONS OF THIS CONTRACT IF WE DECIDE THAT WE'RE NOT HAPPY WITH IT? SHORT AND BRUTISH, I WOULD HOPE, RIGHT?
>> 30 OR 60 DAYS WITHOUT CAUSE.
OR BECAUSE OF A FUNDING ISSUE.
>> WE PUT STANDARD LANGUAGE IN EVERY CONTRACT.
WHICH GIVES S A RIGHT TO TERMINATE ON NOTICE FOR ANY REASON AT ALL.
WE ALSO PUT A PROVISION THAT SAYS IF THE BOARD AND/OR THE TEXAS LEGISLATURE DON'T APPORTION MONEY SUFFICIENT TO ALLOW [INDISCERNIBLE] WE CAN TERMINATION IMMEDIATELY.
I TRUST IN THIS AGREEMENT AS WELL BECAUSE THAT'S OUR STANDARD PRACTICE.
>> CHAIR D. FLORES: THIS IS BASICALLY JUST AUTHORIZING YOU ALL TO ENGAGE IN CONVERSATION WITH THIS PARTICULAR IRM OR PARTNERSHIP, WHATEVER IT IS, TO BEGIN PLANNING FOR BUILDING OUT WHATEVER SET OF PROJECTS, ET CETERA. NOW, IF WE AUTHORIZE YOU TO ENGAGE IN THOSE CONVERSATIONS, NEGOTIATION, IF YOU CAN'T COME TO AGREEMENT E THEN ALL BETS ARE OFF THE TABLE?
THE RFP PROCESS SAYS YOU START WITH NUMBER ONE, THE HIGHEST RANKING FIRM.
IF YOU CAN'T COME TO AN AGREEMENT, YOU CAN THEN MOVE TO NUMBER TWO.
>> IT'S THE PROFESSIONAL SERVICES PROCUREMENT ACT.
IN THE GOVERNMENT CODE IN THE STATE OF TEXAS, IT SAYS EXACTLY THAT.
ONE, YOU CANNOT INCLUDE IN YOUR REQUEST OR QUALIFICATIONS --
ONCE YOU INDISCERNIBLE] QUALIFIED RESPONDENT [INDISCERNIBLE] YOU GO TO THE NEXT MOST QUALIFIED RESPONDENT.
AND SO IN THIS INSTANCE, I THINK THERE WERE THREE.
>> CHAIR D. FLORES: THERE WILL BE NO MONEY COMMITMENT UNTIL YOU BRING THAT ACK TO THE BOARD?
>> IT WILL BE THE MONEY COMMITMENT WILL BE IN THE BOND PROJECT APPROVAL.
THIS BOARD WILL HAVE TO APPROVE FOR US TO MOVE FORWARD ON THE NEW PROJECTS, HIRE ARCHITECTS AND CONSTRUCTION COMPANIES.
AND AT THE POINT IN TIME IT BECOMES NECESSARY TO ACTUALLY ISSUE THOSE BONDS.
AND AS A REMINDER, WHEN YOU ARE A PROGRAM MANAGER, YOU ARE PROHIBITED FROM BEING A PART OF THE CONSTRUCTION EFFORTS.
YOU ARE NOT ALLOWED TO ENGAGE IN THE GENERAL CONTRACT, ET CETERA.
>> C. COMPTON: JOE, I MIGHT HAVE ASKED ABOUT THIS EARLIER.
[INDISCERNIBLE] TOO MUCH ABOUT IT.
>> I GOT EARLIER WHEN I [INDISCERNIBLE] REALIZED IT.
I WAS REALLY TALKING MORE ABOUT HOW WE NET ZERO OUT ON THE DEPOSITORY OF THAT.
>> C. COMPTON: WHAT HAPPENS ABOUT THE CONTRACT YOU ARE ASKING US TO BOND OURSELVES TO
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THIS COMPANY TODAY?>> THE APPROVAL TO MOVE FORWARD WITH THIS COMPANY SO WE CAN START NEGOTIATING ON THE BOND PROGRAM MANAGEMENT.
THEN, AT THE WORKSHOP WE'LL COME BACK WITH THOSE PROJECT LISTS THAT WE'LL ASK THE BOARD TO APPROVE AT THAT TIME, WHICH THEN WILL BE THE LIST WE'LL MOVE FORWARD ON.
ON THE BANK DEPOSITORY, WE DO, STARTED THIS A FEW YEARS BACK WHEN I CAME.
ONE OF THE HINGS IS, YOU CAN LOOK AT BANK FEES YOU PAY.
AND USE COMPENSATING BALANCES.
IF I KEEP $4 MILLION IN THE BANK AND PAY NO FEES, IT'S BASICALLY AN INVESTMENT.
SO WE MEASURE THAT AGAINST WHAT WE CAN INVEST IN.
IF YOU REMEMBER, WE MAKE A GREATER RETURN ON THOSE COMPENSATING BALANCES THAN WHAT WE INVEST IN IN TREASURY OR COMMERCIAL PAPERS AND SHORT-TERM DEALS.
SO THIS IS CONSIDERED WHAT WE DO THERE IS BASICALLY NEGATE THE FEES.
>> WHEN YOU SAY COMPENSATED, YOU ARE TALKING INTEREST?
>> IT'S A COMPENSATING CREDIT.
ROSS HAS A HIGH RATE THAT ALLOWS US TO KEEP MINIMUM MONEY IN THE DEPOSITORY ACCOUNT WE EARN AN INTEREST RATE ON WE APPLY AGAINST THE FEES.
>> DOES ALL OF IT GO AGAINST THE FEES?
>> IT DEPENDS BECAUSE FEES ARE ESTABLISHED BASED ON THE NUMBER OF MONTHLY TRANSACTIONS, PER-RATE TRANSACTIONS, WE HAVE PEOPLE IN TREASURY WHO WATCH IT ON A MONTHLY BASIS TO KEEP IT AS CLOSE TO ZERO.
WE DON'T WANT TO KEEP TOO MUCH BUT WE DON'T WANT TO AY FEES.
>> D. ZIMMERMANN: THE SENTENCE, FROST BANK AGREED TO KEEP FEES FOR SERVICES FIRM FOR THE DURATION OF THE CONTRACT IN ANY RENEWAL PERIODS.
>> IT'S ONE OF THE THINGS WE LOOK FOR IS HOW LONG ARE YOU WILLING TO GUARANTEE THE FEES YOU HAVE.
BY USING THE COMPENSATING BALANCE WE OFFSET FEES, WE DON'T PAY THEM.
THERE IS NO MONEY WE GIVE OUT DIRECTLY.
WE USED THE INTEREST EARNED ON THE BALANCES TO PAY THE FEES.
IT'S A RATE OF RETURN CALCULATION.
AND THAT'S WHAT GETS US EXCITED.
>> CHAIR D. FLORES: WHO PROVIDES THE SERVICES NOW?
>> CHAIR D. FLORES: NOW? IT WENT FOR COMPETITION --
>> STATE LAW ALLOWS US TO DO A TWO-YEAR CONTRACT OR DEPOSITORY BANK PLUS TWO-YEAR RENEWAL FOR A TOTAL OF SIX YEARS IS THE EASIEST WAY TO TALK ABOUT IT.
WE HAVE BEEN FROST BANK HAS EEN A TEXAS BANK IS A VERY GOOD PARTNER AND HAS BEEN VERY FAIR IN DISTRICTS.
AND WE LIKE WORKING WITH THEM.
>> S. WILLIAMS: JOHN, HAVE ANYTHING ELSE? [INDISCERNIBLE]
>> ANYTHING ON THE INSTRUCTIONAL TRAINING KITS OR THE BLOOMBERG, WHICH MARKED TALKED ABOUT THREE OR FOUR MONTHS AGO.
>> D. ZIMMERMANN: TWO--YEAR-OLD TECHNOLOGY IS THAT AS GOOD AS WE CAN GET? DO WE HAVE A YEARS WORTH OF TECHNOLOGY AND HAVE IT OME UPDATED FOR THE SECOND YEAR? TWO-YEAR-OLD TECHNOLOGY, SOMETIMES FIVE MONTHS IS LONG.
>> TRUSTEE ZIMMERMANN, THE TECHNOLOGY CONSISTENTS IN THE DATA FEE AND INFORMATION MORE SO THAN THE [INDISCERNIBLE] BLOOMBERG IS GOING TO DONATE 64 MONITORS, WE HAVE DUAL MONITORS ON EACH TERMINAL.
SO THE TECHNOLOGY BASICALLY IS THE DATA THAT'S COMING IN TO TH-
YEAH, SO THE TICKERS ARE THE ONLY THINGS CONSIDERED --
>> YEAH, THE TICKERS ARE BASICALLY WHAT WE'RE LOOKING AT IS TO GET DIRECT DATA FEES FROM NAZ DAC, FOR TICKERS.
>> S. WILLIAMS: ANY QUESTIONS ON THE CHANCELLOR'S TRAVEL REPORT?
[5. Executive Session (if required)]
THANK YOU, JOHN.>> S. WILLIAMS: WE NEED TO HEAD TO EXECUTIVE COMMITTEE?
>> CHANCELLOR MAY: WE DO NEED TO HAVE THIS ONE PRIOR TO TAKING UP
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ANY OF THE AGENDA ITEMS TODAY.>> S. WILLIAMS: LET'S GO TO EXECUTIVE SESSION.
>> CHANCELLOR MAY: WE NEED [INDISCERNIBLE] WE'LL ADJOURN THE EXECUTIVE SESSION AND RECONVENE WHEN THE BOARD [INDISCERNIBLE] TO ADJOURN
* This transcript was compiled from uncorrected Closed Captioning.