Public board governance that drives strategic impact

Dr. Chad Bledsoe, President of Montgomery Community College in North Carolina. The College offers a wide range of educational opportunities including associate degrees, technical diplomas, certificates and continuing education programs.

In this episode, we explore why financial and risk oversight is essential for effective governance and decision-making in community colleges. Dr. Bledsoe emphasizes the importance of aligning financial strategies with the institution's mission and goals, and ensuring that resources are used effectively to support student success and community engagement.

He shares his perspective on how boards can function efficiently by fostering a culture of transparency and accountability.

We also discuss the importance of ongoing education for the board in areas such as financial management and risk assessment. And how the integration of technology to enhance board operations can help boards function more efficiently and enhance their oversight.

Stick around to the end to find out what advice Dr. Bledsoe gives for public leaders and board members for managing risk and financials.

Resources on financial oversight and risk management for public facing boards

A practical guide to mastering financial oversight for public sector boards

The 5 essentials of financial oversight: A cheat sheet for public sector leaders

Managing risk: An infographic and guide for public leaders

Please see below for a transcript from this episode:

Jill Holtz: Hi everybody. So today I am joined by Dr. Chad Bledsoe, who is president of Montgomery Community College. Welcome, Chad.

Dr. Chad Bledsoe: Thank you for having me today.

Jill Holtz: So the reason I invited you to join me was that I am talking to lots of different people who work in public sector about boards and how boards manage financial and risk oversight and I thought of you so thank you for taking the time to talk to me. So will we start with a definition if you don't mind? What do you think is meant by financial and risk oversight by boards? What does that term mean to you?

Dr. Chad Bledsoe: Certainly. Well, in our state, the term financial oversight and by default risk oversight talk to the idea of governance to ensure that the institution is maintaining fiscal responsibility, that the resources are going where they're supposed to, and that we're meeting the needs of the community by default our programs.

So that would be assessing that we're spending our budgets as defined, that we're able to offer the programs, able to employ the individuals. It really doesn't mean a day-to-day oversight of, you know, what individual expenditures are, but rather just ensuring that we're meeting the mission of the institution. And the same thing goes for risk. ensuring that all of our audits are clean, ensuring that we're following general statute, state guidelines, state policies, and et cetera.

Jill Holtz: And this might be a bit of an obvious question, but why is oversight of the financials and risk important for public facing boards?

Dr. Chad Bledsoe: Well, certainly important because ultimately the board has the responsibility of ensuring that the institution is meeting its mission, i.e. serving the educational needs of the community. And that can't be done if there's not adequate oversight of financial resources of the risk that we all take on whenever we talk about providing services, equipment, training, employing teachers, all of those areas.

Jill Holtz: Yeah, I mean, I feel sometimes that maybe people who have stood for election or if they've been appointed to a public sector board, they might think that risk management or financial oversight, that's really more of a corporate board, commercial board, you know, for profit responsibility. How should board members think about these things in relation to their own governance oversight?

Dr. Chad Bledsoe: Well, certainly in our case, they're overseeing public funds. So these are tax dollars that go to support education and by default they are overseeing the funds that citizens are paying in to receive that education. So it's very important that we make sure that we're spending our money in a very efficient manner, that we're spending it on the things that support education.

Jill Holtz: Chad, what has worked well for your organisation in terms of board oversight in these areas?

Dr. Chad Bledsoe: Well, fortunately we have a strong board at Montgomery Community College. So they're knowledgeable, they're involved, they're well informed, and I think what has worked well for us is that we have a number of training opportunities available for board members. So each trustee, when they come on to the college board, they receive an orientation from both myself and my chief financial officer regarding finances. So we explain all the terminology, all the funding sources, everything that they're going to be seeing in their monthly board updates. And then beyond that, we go to statewide trainings where they join other trustees and they hear about these issues from a global perspective. So they're seeing the detail every day from us and then they're seeing how that impacts the state and the system as a whole at some of their other trainings. And then beyond that, as I said, we present monthly to the board. We share updates. We compare previous years, we share updates on all of our audits, all of our assessments. And so there's a reporting cycle from a fiscal perspective that we go through with the board every month. And we present on different items. And we say that we're at X percentage of spending at this time of year that's in line with last year or that's not. And here's why it's not. Again, it's not into the details of we spent X number of dollars on part-time salaries this month, it's what do we spend proportionally as we're going through our fiscal year.

Jill Holtz: So I heard a good few things there that I'd like to kind of unpick and say back to you. So onboarding, huge opportunity to set the groundwork, give them the knowledge, get them kind of familiar with things. Using the state training, and maybe it's an obligation in your state or other people's states that you tap into that as a resource, send them to the trainings they need, and then you're getting monthly updates so that the conversation is always there about how are the finances from the overview and how are we assessing the risk if things have changed and how does that look to last year is really important. That gives you a signal so it's benchmarking your data becomes really invaluable, doesn't it?

Dr. Chad Bledsoe: Yes. Yes, it does.

Jill Holtz: Now obviously we're in a bit of turmoil at the moment, there's turbulent times taking place, but what do you feel are the most significant kind of risk challenges faced by public boards such as community college boards today?

Dr. Chad Bledsoe: We're talking about from a fiscal perspective, what do we...

Jill Holtz: Anything, any risk. Let's widen the beyond just fiscal.

Dr. Chad Bledsoe: Well, I mean, anytime you're in a changing economic environment, there's risk. Right now we've been on an unprecedented growth cycle in the U.S. At some point that will change. When that does change, when we see recession, when we see the step backs in our economy, that does two things. First of all, that causes an increase in enrollment, but it also restricts available resources. So, that is obviously a risk that we monitor at all times.

The changing demographic of population is a risk because we're seeing the baby boomers are now aging out, even their children are now beginning to age out somewhat. So we are seeing a decline in the number of younger students coming to the institutions. Beyond that, there is a question nationwide about what is the value of degree? What training do I need?

I think that we're in the middle of a shift in the definition of qualified training. And those are all exciting things. Sometimes they're nerve-wracking, but in general, they're just opportunities for continued ability to educate students in new and different ways.

Jill Holtz: And that kind of raises an interesting point. know, a risk can also be an opportunity for an institution to innovate and do something different as well.

Dr. Chad Bledsoe: Yes. Absolutely. And that's what we have to remember is that we're in an industry of change. And we have to be ready for that. Just because we educate students in one particular way over the last 20 years doesn't mean that that's the way we'll do it for the next 20.

Jill Holtz: Yeah, yeah. Just going back to kind of the importance of internal audit and audit committees, how do they play a role in your financial kind of oversight for your board? You mentioned monthly reports. How does that kind of all tie together in how you plan strategically as well?

Dr. Chad Bledsoe: Right. So from an internal audit perspective, I don't know whether internal audits play a significant role for our board. However, it's that monthly reporting that does play a significant role. So we report on external audits, and as I said, we just keep that in our reporting cycle. But internal information, internal reporting that goes to the board shows our global picture on a monthly basis. And they find that very valuable.

The board members are great to ask questions. They inquire about, you know, what's going on with our finances. Where are we seeing revenues coming in? Where are we sending expenditures? What's changing? Obviously, we're in an inflationary environment. So the cost of electricity materials goes up dramatically whenever you see those types of environment. And they ask and discuss how that impacts us. But they also go a step beyond and they ask how can they advocate or how can they share how these things are impacting our institution. And I think that's important for boards to do because, you know, we always talk about asking for more money or needing more money. know, just a general statement like that can follow on deaf ears. But when you explain that, you know, your energy costs are going up a specific amount because of the number of students you're educating, and we often do present information that way. You know, the cost per student to turn the lights on, the cost per student to provide these resources. And that really does hit home. And so when we're talking about a board perspective, understanding expenditures to the point of being able to know if they're in line with what would be expected. And you talk about a corporate environment, a public sector, a corporate sector, just understanding that those things are in line and then knowing how you might present that to the public so that they understand that the funds that we're spending are not just going for nothing. They're going for very specific, very important items.

Jill Holtz: Do you involve your stakeholders, including the public, in your kind of oversight process? How do you do that if you do?

Dr. Chad Bledsoe: Sure. Of course, all board meetings are open and so we have members of the community who may come and visit a board meeting. They may read our board reports. So that's one way. Obviously, internally, all employees are involved in that. So they see the exact same information we share with the board. They know monthly I do a follow-up to the board meeting with all of my employees. And we discuss what we're sharing with the board, whether we're in line, whether we think spending is going to be the same next year or revenues are going to be the same next year. So, internally, the institution, they receive exactly what the board does. And then to the external constituents, we obviously share that with our local boards and commissions. And we talk with them about how we expend public funds. We do it at the state level as well. And that's a little more of broad discussion. Obviously, there's some detail there that may not be necessary, but sharing how we're using those resources. And then lastly, during our annual planning cycle, our strategic planning cycle, we share a very broad view of how we're serving our community. We actually, every five years, do an economic impact study that shows what we spend in our community versus the return on investment that the community receives for that.

Jill Holtz: And as part of that strategic planning and kind of your policy updates, as it were, you're managing your policies around how you communicate that. Sounds like you're quite, you know, you're transparent in different ways internally and then externally. How have you managed that kind of policy around that? I'm curious.

Dr. Chad Bledsoe: You mean the policy around transparency? Okay. Well, in one sense, that's very easy because North Carolina is a sunshine state. So all of our records are public records and we're certainly fine with that. We don't mind people seeing how we spend our funds, but it's managing, sharing the information that is needed for the audience that you're working with. So obviously if I were talking with a group of department chairs, the information is very detailed. We're spending this much on professional development. We're spending this much on supplies for your particular program. at the local institutional level, it is a very detailed reporting. As you move into the trustees, it turns into more of a hybrid. So yes, we're still presenting detail. My apologies, I turned that off. We're still presenting detail, but we don't get down into what did Department A spend.

Jill Holtz: Yes.

Dr. Chad Bledsoe: And then when we go into the community, it's much more broad in the sense of these are what you're giving us to spend on students. This is what we're producing. So it all depends on the audience and what they would find valuable.

Jill Holtz: So I think that's a really good advice as well, is you have to tailor the information to the audience, you have to make sure that it's in relatable terms. I know you mentioned earlier cost per student, for example, so that when you're talking about why a certain cost has gone up, it's very relatable. is literally related back to your mission, which is kind of student education.

Dr. Chad Bledsoe: Yes.

Jill Holtz: Let me move into technology then. Obviously, we sell Diligent Community. We're passionate about how that helps public facing boards. What role does technology such as ours have in improving financial and risk oversight, in your opinion?

Dr. Chad Bledsoe: So the role of technology, certainly many benefits, but two that come to mind are one, accuracy and simplicity of reporting. So using technology, you get more accurate information that's easier to present. But from there, it's also the second item would be a time savings. And that's where diligent definitely helps us. So by using the community software, we cut easily our board packet development time by three quarters.

So, you know, given that I'm paying an executive assistant to put those items together, I'm paying staff to provide the information for those items. You know, cutting out three quarters of the time it took to build a packet is a significant savings to the institution. So, I haven't run it in a couple of years, but when we were considering buying the software, we did a mathematical calculation and realized that we saved money by using Diligent.

Jill Holtz: Yeah.

Dr. Chad Bledsoe: And so, you know, that's the honest answer. You know, yes, it costs money. Yes, it is a piece of software that we have to have a subscription to every year. And, it's not an insignificant amount to us. But, you know, it saves us money in the long run. From there, it's a central place where all members of our constituency can go and see the information, know, reporting out, you know, announcing our meetings, it’s incredibly easy. Then we have also added the policy manual process and we find that to be very convenient. We also use a legal team to help us develop our policies and procedures. And so all of that is in one location and much like the minutes in the diligent community, it's very nice whenever you can grid line a policy right in the middle of a meeting, take it for its second vote, and then click one button to be done.

Jill Holtz: And also that the community can see what that vote was and what changed and how that's going to affect them. I mean, I'm hearing kind of obviously time savings, which is great, but even being able to kind of easily add risk financial conversation to the agenda, have all the board members see the same documents and the public, you know, there's a lot of value in that kind of general transparency as well, isn't there?

Dr. Chad Bledsoe: Oh, very much so. You know, prior board meetings, we may have members of our board of trustees and I would assume even members of our community who are online, who are in person, who may be on the phone, and everyone's following along with the exact same information. It’s really nice when you send that packet out and you get that question in advance of a board meeting and someone says, I'm not quite sure what this is. You think to yourself, there's this document I can add to it. And you just upload it, and it becomes part of the packet, and you're done. Republish and move on.

Jill Holtz: So it's really helping the board members become better prepared to have those conversations about how the budget is being managed, how the risks being managed. And then obviously we talk a lot about sensitive data and security cyber risk isn't going anywhere, costs of breaches and ransomware are only going up. Is the fact that your board management software keeps board information secure, is that a key factor now as part of, you do you consider that as part of your risk management now?

Dr. Chad Bledsoe: So partially, yes. In one sense, all of our information is public, we don't utilize tools that necessarily have private information to them. For example, I know there are some member notes and things that we can do for that, but everything we do is public, so we locally choose to only use it as a public-facing entity. Although those tools are wonderful and we love using them, but we just don't think of them in that way. So in one sense, it's all there, it's all public now...

That's the easy half of that answer. The other half, when we talk about the security, is yes, it is incredibly valuable because we know that given the protections that Diligent has in place, there is no chance that I will lose that information. There is no chance that that information will be altered or modified or changed without us actually being the ones to do it. So yes, you talk about something that takes a load off because of course, prior to using Diligent, we had shelves and shelves of board minutes back to the 60s. We've archived all of that now, obviously. But more importantly, when we were building through a PDF creation software, that only lived on our servers. And so if for some reason my assistant's laptop got hacked, like I say, fortunately, we kept them on a server there, but let's assume it was only on the local machine or it was only on a local server. That's one place. And as I'm sure you and all of the folks who we're talking to understand, know, transcripts and board minutes are the two things that we can never, ever lose. And so I sleep a lot better knowing that I've got that extra layer of security. You know, we obviously download a PDF for our archives, but we've built what, four or five years now we've been with Diligent, we've built a very long standing set of records that we know is kept well off site that meets all of the requirements for safety and security of our state and that we never have to worry about are they okay or where are they or who saved them or this person left and did I download everything off their drive? Everything is in one place and while it doesn't actually lead to security I will add something to that. The ease at which you can access that information has made life a lot easier. Because when you come around to that report that's not monthly, that report that you do once a year, that report that you do once every three years, obviously all of that information, all those individual documents are sitting on the server. And so we've had a few instances where we've had, say, people leave. And it might be the continuing education report on class visitations. Where did that go? And well, we don't know where it went. We don't know what happened to that laptop. Well, we do know what happened to but you know what happened to the information on the laptop. And we just go to Diligent and we download that report. We update it again. We put it right back. We make a lot of use of your templates so that life is just easy. We've got a standardized template that we go by and yeah, it's made record keeping easier.

Jill Holtz: I think from a security perspective, I hadn't thought of that. I'd been more thinking about, you know, what if things got hacked? But actually, the fact that you know you can always access that is really, really invaluable to kind of keep your your records going over time as well and then be able to go in and search and find that. love that. So, Chad, just yeah, sorry, go ahead.

Dr. Chad Bledsoe: Yeah. Well, and I'll add to that, you know, the hacking gets all depressed. But using an old IT term, where you really lose money is in dumpster diving. I know if you've ever heard that old term, dumpster diving. And in our case, we would have the reverse of that. We do fear hackers and we do protect against that, but we really fear that information being lost because of transition, because of someone being gone and for whatever reason they just forgot maybe and the files get lost.

Jill Holtz: Yeah, continuity, you don't have to worry about somebody leaving a role. You know that that continuity is there. That's invaluable. Yeah. So I just have to finish three quick fire questions if that's OK, Chad. OK, so are you ready? So what's the number one thing public facing board should be doing to manage their financial and risk oversight?

Dr. Chad Bledsoe: They should set clear expectations of what that governance, what that oversight means, define the items that they need to see to meet that goal. So what do I need to see in a report? And they need to review it consistently.

Jill Holtz: Okay, what advice do you have for public leaders and board members for managing risk and financials in their organization?

Dr. Chad Bledsoe: The advice I would have is to sit down, sit down early and then continue to sit down as you change over board members. But sit down with the chief executive officer, the chief financial officer and get a sense of what information, what data elements are necessary to properly judge whether the institution is physically stable and doing what they're doing. Because that is something that I've seen at other institutions, not necessarily the one I'm at now.

You know, you've been reporting on the same information for 30 years. Is that the information you need to be successful? Is that relevant to what you're doing? Because if you're getting, say for example, a 20 page report every month that has line items, can you really dig down into that and know whether the institution is fiscally stable? Can you do that in five pages, one page? What is that definition for your board?

Jill Holtz: Love it. And finally, what should a board do if they realize they don't have a good handle on risks and the finances? The opposite.

Dr. Chad Bledsoe: Well, the answer is sit down with the president, with the CEO. And, you know, I think that that's a two-way street. You know, the board needs to define what they need as information. And the president needs to assist in that by sharing that information in the best way possible for the board. Because in one sense, you know, you've got the board that understands what they need to know to answer the questions for the community. Is this a fiscally stable institution? But the president, the CFO, they are the ones who are in the weeds and who understand good ways to present that information. So it really requires a partnership. You know, it's not a board saying, want to see every line item, and it's not a administration saying, well, we're going to give you a thumbs up and we know that everything's okay. It's a balance between those two things.

Jill Holtz: Teamwork, isn't it? Yeah, lovely. Thank you so much for taking the time to talk to me today. I really, really appreciate it. It was a pleasure to hear your advice and your experience. Thank you.

Dr. Chad Bledsoe: Well, thank you so much. It was a pleasure to speak with you.