BOR Minutes - April 14, 2004

Montana Board of Regents of Higher Education
Minutes
Conference Call Meeting

April 14, 2004

Montana Higher Education Complex
2500 Broadway
Helena, MT 59620

WEDNESDAY, APRIL 14, 2004

The meeting was called to order at 10:34 a.m.

ROLL CALL

Roll Call indicated a Quorum Present  

Regents Present (by conference call): Mike Foster, Lynn Hamilton, Christian Hur Vice Chair, John Mercer Chair, Richard Roehm, Lila Taylor.  

Also present in person:  Commissioner Sheila M. Stearns

Regents Absent:  Excused, Mark Semmens, Governor Judy Martz, ex officio, and Superintendent Linda McCulloch ex officio

Locations linked to conference call:

Montana Higher Education Complex in Helena, The University of Montana-Missoula, Montana State University-Bozeman chaired by Regent Roehm.

ADMINISTRATIVE/BUDGET ITEMS

a.   Chemistry Research Lab - ITEM 122-2005-R0304 - Authorization to Construct a New Chemistry/Biochemistry Research Laboratory Facility through a Sale of Bonds, to Which Federal Grant & Contracts F&A Revenues will be Pledged; Montana State University-Bozeman   Attachment  Supplemental Information   Revenue   Discussion with Governor

President Gamble gave a brief description of the history of this item, and the dire need to build this facility as soon as possible.  The grants generated by the faculty doing research in the building will cover the cost of the bond debt, and O&M.  Since they need to have approval from both the Board of Regents and the Governor's office, they met with Chuck Swysgood and Tom Beck of her office following the Board meeting in March.  They toured the facilities, and many of their questions were answered.  Reluctant to bind future Legislatures, Chuck Swysgood did not want MSU to look for the O&M from the state for this new facility.  President Gamble indicated they stand ready to take on the O&M and there are indirect costs that will cover it.  The driving factor in this item is the favorable bond market which is temporary by nature.  The Governor now is interested in, and supportive of the project.

   Regent Roehm Moved Approval of Item a.

Regent Foster stated this project has positive economic development implications.  He asked the Presidents about the trend in the state refusing to pay for O&M over the past ten years.  President Dennison said his experience is that the state sometimes does accept and sometimes does not, depending on the source of the revenue and the purpose of the building.  The Davidson Honors College was built with mostly private funds and the University carries the O&M on it.  The School of Business had a great deal of money from the private sector, but the state also contributed, and the State carries the O&M on that one.  In 1999, with the first addition to the Skaggs Building, the state provided $2,000,000 and the private sector provided $8,000,000.  The academic portions of that building receive O&M from the state, but the research portions receive O&M from indirect costs.  President Gamble said he has heard the same thing about his campus, and this is essentially a research building which will have a significant economic impact.  It is not inappropriate for the O&M to be covered by indirect costs.  They will talk with the Legislature to look at this issue in general, and how the state sees itself dealing with O&M in the future.  Regent Foster agreed they would need to have conversations with the legislature and the executive branch, since the Board will be working with a variety of partners, and it is necessary to understand what each partner is willing to add to the mix.  As joint efforts continue on economic development, it becomes more important.  Regent Taylor indicated O&M was her one concern.  She requested that the three words "at this time" following "not seeking any O&M" be removed from the letter to the Governor.  Regent Mercer felt it was a matter of semantics, but it would be wise to delete that portion from the letter.  The Board will not tell the State that the O&M is their responsibility, but will keep open the opportunity if the State ever is willing to discuss covering the O&M, to allow the MUS to provide some other programs.  He congratulated everyone on how this issue was worked through with the executive and legislative branches, and sees this as a classic example of improved communication.  Regent Hamilton asked if the letter stayed the same, or would the three words be removed.  Commissioner Stearns explained that they would be removed.  Regent Hamilton stated she objected to that since it would close their options as they proceed in the future.  It leaves it to the State to initiate discussions, and not the MUS.  It will make things more difficult for the campuses in the future.  She believes with O&M of $500,000 to $750,000 per year on a $20,000,000 research building which impacts the economy as it will, that the Board needs to make a stronger case to the legislature.  Regent Mercer felt the position in the letter was that they did not want to ask for O&M at this time, and that at no time will they say O&M is the obligation of the State.  Regent Hamilton responded that it is a state owned building, and therefore the responsibility of the State.  She realized they would not come to an agreement on that point, but indicated it would not prevent her from voting for the item.  Regent Mercer indicated that since Regent Hamilton had objections, there was need for a motion to amend the letter.

  Regent Taylor Moved to Amend the letter to the Governor by removing the words "at this time"

  Motion Carried on 5-1 vote with Regent Hamilton dissenting

Commissioner Stearns noted that a letter of strong support for this item was received from the Kalispell Area Chamber of Commerce.  Regent Mercer commented on the positive aspects of this item, such as the loan rates, contribution to scientific discovery that will help our country and the world, the economic impact on Montana, and the value added to students.

  The original Motion APPROVED unanimously on 6-0 vote

With no further business to come before the Board, the meeting adjourned at 11:00 a.m.