State Auditor To Look At Gila College Finances

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In an apparent coincidence, the Arizona auditor general’s office said this week that it will soon examine Gila Community College’s finances for fiscal year 2006.

Payson’s Citizens Awareness Committee, in late October, requested that the auditor general comb through the community college’s current finances to address seeming inconsistencies, including a wildly fluctuating deficit projection.

GCC has been audited just twice, in fiscal years 2004 and 2005. During both years, the college contracted with Pima Community College, and not Eastern Arizona College, with whom the college currently contracts.

The fiscal year 2005 audit was completed in February 2009. The next audit is scheduled to begin February 2010.

Arizona Auditor General Financial Audit Director Jay Zsorey attributed the delay to GCC’s slowness in sending the agency financial information. However, Zsorey said in a telephone interview that the college has hired an accounting firm to help it gather relevant information.

The auditor general does not skip years, Zsorey said, however the agency can conduct more than one audit in a year if the financial information becomes available. It will start examining fiscal year 2006 and continue its audits chronologically from there.

“It depends on the college,” Zsorey said, and “how quickly they can put together statements.” Zsorey said no penalty exists for not filing statements on time.

Questions have surrounded GCC’s budget, and the varying figures from $2 million down to $500,000 college officials have presented as the school’s deficit. The budget approved in June listed $2 million in reserves.

Thursday night, budget projections provided by EAC and presented to the GCC board showed that the college is on track for a $743,000 shortfall by the end of this fiscal year.

As of Oct. 26, the projections showed GCC $878,000 in the hole, but the figures didn’t include a potential $420,000 nursing grant, $658,000 in state aid, or $175,000 in federal stimulus funding.

CAC’s letter cited the previously fluctuating budget inconsistencies in its request for an audit, and also questioned whether the college’s primary property tax levy is accurate.

CAC claims the approved property tax levy is too low. However, Zsorey wrote in a reply to CAC that the auditor general only ensures that levies do not exceed legal limits.

The CAC letter also derides the college’s operating agreement with Eastern Arizona College as “one-sided” and with an “exorbitant management fee.” GCC pays EAC 25 percent overhead on all expenditures.

CAC co-chair and spokesman Jim Hippel says EAC has no incentive to spend prudently because the more of GCC’s money EAC spends, the more money EAC makes.

EAC’s unrestricted net assets increased $6.4 million from 2006 to 2008, up to $26.4 million, according to the auditor general.

Also, EAC allowed its executive vice president to approve purchases over $25,000 without competitive bidding, according to the fiscal year 2008 audit.

The auditor general also told the college it should require board members and employees to file conflict of interest statements.

To erase the budget shortfall, GCC’s board agreed to increase tuition starting in January and reduce tuition wavers for senior citizens, among other things. At their October meeting, board members agreed to ask voters in a March election to fund $1.2 million through a secondary property tax.

Board chairman Bob Ashford has said the $1.2 million would erase the deficit and eventually allow administrative employees, now furloughed four days each month, to work full-time.

On Thursday, however, Ashford said he would postpone the election until November.

EAC’s business director did not return phone calls this week, nor has he returned any phone calls from the Roundup for months.

Some board members are troubled by GCC’s budget, which fails to include significant figures like revenue from tuition. The budget also does not include a spending plan for the college’s programs.

The main expenditure listed is $5.9 million for “institutional support.”

Also at the October board meeting, members discussed a work study session to examine, among other things, a plan Loeffler created for ultimately allowing GCC to operate independently.

The date for that session is pending. Ashford said Thursday that he’s waiting for certain financial information before scheduling it.

Gila County is legally prohibited from operating its own college because population and assessed property valuations fall beneath legislatively set thresholds. GCC contracts with EAC to provide academic certification.

Originally signed in 2005, critics say the contract between the two colleges hamstrings GCC. The agreement provides EAC with control over all curriculum decisions, the hiring and firing of employees, and financial management. GCC is allowed to audit EAC’s pertaining financial records once annually with 30 days written notice.

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