BOR Minutes: September 19-20, 2002

APPROVAL OF MINUTES

      Regent Jasmin MOVED for APPROVAL of the Minutes of the July 11-12, 2002 Regular Meeting in Glendive, MT as circulated

     The Minutes were APPROVED unanimously as AMENDED.

Dan Berube from the Local Executive Board in Butte, commented on the Alliance for Montana's Future and the work they are doing to pull together facts about the university system to demonstrate its role as an engine for economic development in Montana.  He hopes that this information will be made available throughout the state and that people will listen and show the legislature their support for the MUS.

Please see attached statements by Harold Anderson and Mike Foster of St. Vincent Healthcare.

Regent Semmens noted that Stuart Rosenfeld, Dave Gibson and the Governor have invited the Regents to attend a presentation on October 17 regarding this issue.

Governor Martz reiterated the budget problems facing Montana and indicated they will last two and a half to three more years.  No money will be available to anyone in the next legislative session and she noted that everyone needs to work together during this time.  Although education is the key, she stated she needed help with a plan that is just formulating on tax reform.

President Gamble indicated he has invited Mike Foster to a meeting on Monday covering the issues with health care shortages.

CONSENT AGENDA

Prior to voting on the Consent Agenda, the following Motions were made:

      Regent Hur MOVED to ADOPT Item q. of System Issues to Freeze the salaries and pay of  MUS regents, the commissioner, and the campus CEOs during the period of any implemented tuition surcharges.

    The Motion FAILED on 5-2 vote with Regents Mercer and Hur supporting.

      Regent Mercer MOVED to amend the staff items to limit all individual salary increases for the year beginning November 1, 2002 for University System administrators, academic executives and professionals to no more than 4% of their previous salary.  This motion does not cover salaries given for the performance of faculty duties by faculty members nor does it affect increases that may be the result of promotions, provided that the new salary of the person promoted does not exceed the pre-November 1, 2002 salary of the previous office holder by more than 4%.

    The Motion FAILED on 5-2 vote with Regents Mercer and Hur supporting.

  Regent Mercer MOVED to amend the staff items to limit the salary increase effective November 1, 2002 for any University System administrator, academic executive or professional whose pre-November 1, 2002 salary rate exceeds $100,000 per annum to the average dollar increase in salaries for the year beginning November 1, 2002 for all other employees of the Montana University System (as calculated by the Office of the Commissioner of Higher Education).  Further, any administrator, academic executive or professional whose pre-November 1, 2002 annual salary rate is less than $100,000 but whose currently scheduled salary increase will increase the individual's annual rate to above $100,000 shall receive no increase that raises the individual's new salary above the lesser of either the new salary level specified in the staff item or $100,000 plus the average dollar increase in salaries for the year beginning November 1, 2002 for all other employees of the Montana University System (as calculated by the Office of the Commissioner of Higher Education).  For purposes of this amendment the $100,000.00 compensation threshold shall be based on total university system wage and salary compensation including any salary in excess of the amount listed on the previous Board of Regents' staff item in which the employee's contract salary was listed.

    The Motion FAILED on 5-2 vote with Regents Mercer and Hur supporting.

A question was raised on "no change" in salary for individuals who were going to be working less than full time.  It was explained that the base rate does not change, but that the employee will receive only a portion of that base.

Staff Items:

ITEM 116-2700-R0902 - Staff; Montana State University-Billings

o.

       Regent Thompson MOVED for APPROVAL of all Staff Items.

      Motion APPROVED on a 5-2 vote with Regents Mercer and Hur dissenting.

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a.

       Regent Jasmin MOVED for APPROVAL of Item a. 

      Motion APPROVED unanimously on 7-0 vote.

b.

     Regent Semmens RECUSED himself from deliberation and vote on this item. 

      Regent Jasmin MOVED for APPROVAL of Item b. 

     Motion APPROVED unanimously on 6-0 vote.

     Regent Jasmin MOVED for APPROVAL of Items c. and d. 

     Motion APPROVED unanimously on 7-0 vote.

       Regent Hur MOVED for APPROVAL of Item e. 

      Motion APPROVED unanimously on 7-0 vote.

h.

ITEM 116-2852-R0902 Authorization to Expend Student Equipment Fees; Montana State University-Great Falls College of Technology

       Regent Jasmin MOVED for APPROVAL of  Items f., g. and h.

      Motion APPROVED unanimously on 7-0 vote.

a.

       Regent Jasmin MOVED for APPROVAL of  Item a.

      Motion APPROVED unanimously on a 7-0 vote.  

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SYSTEM ISSUES

      Regent Hamilton MOVED for APPROVAL of  Item a.

      Regent Mercer MOVED to AMEND Item a. to set the research budget of the Agricultural Experiment Station budget for FY03 at the level of FY02 actual expenditures.  The amount needed to do this shall be derived by reducing the FY03 general fund allocation to the campuses of the two Universities.  Each Universitys share shall be based on the respective size of its current unrestricted operating budget.  Within each University the president shall determine the distribution among the respective campuses of the University.

Discussion ensued of the problems inherent in commingling educational funds with agency funds, creating undue tension between the educational units, students and the agencies, as well damage to  the ongoing and greatly improved relationship between MUS and the ag community.  Jake Cummins, Vice President of the Montana Farm Bureau indicated the ag community has ongoing problems and that they are distressed and frustrated, but he expressed his faith in President Gamble to continue his efforts on behalf of the ag community.

     MOTION to AMEND FAILED on a 4-3 vote with Regents Jasmin, Mercer and Hur supporting.

     Regent Mercer MOVED to AMEND Item a. to set the FY03 budget of the Extension Service at approximately the level of FY02 actual expenditures by making the Service whole for $100,000 in contemplated cuts in federal funding.  The $100,000 needed to do this shall be derived by reducing the FY03 general fund allocation to the campuses of the two Universities.  Each University's share shall be based on the respective size of its current unrestricted operating budget.  Within each University the president shall determine the distribution among the respective campuses of the University.  If the federal funding cuts are less than $100,000 the required campus reductions shall be modified to reflect the new amount.

With the same discussion as on the previous motion, President Gamble indicated he is opposed to the mechanism suggested to solve the problems.  He noted that seven different counties are willing to invest county dollars to bring extension agents to their areas.  An ongoing rumor that federal dollars for extension services will be discontinued has caused concern over the past decade, and caused counties to be hesitant in this area. 

     MOTION to AMEND FAILED on a 5-2 vote with Regents Mercer and Hur supporting.

     Original MOTION PASSED on a 5-2 vote with Regents Mercer and Hur dissenting.

b.

ITEM 116-106-R0902 Complaint to be filed on Administrative Assessment on Land Grant Income and Permanent Trust Funds (Action Item)  Memo

Following discussion of the current status of this item and the fact there would be no statute of limitations, it was pulled from the Agenda pending ongoing negotiations with the Governor's office and DNRC.

Chairman Roehm recommended the creation of a special committee of the Board to assess the budget process and recommended Regent Jasmin to chair the committee, with Regents Semmens and Mercer as members and asked for a Board member to make such motion.

     Regent Hur so MOVED
    The Board reached CONSENSUS on the Motion

The Charge to the Committee:

1.   Determine the most effective means for the Board of Regents to provide timely and relevant parameters and objectives during the formulation of future budgets.
2.   Propose to the Board the most effective means for the board to review and ultimately approve the budget and how to best report the budget to the public.
3.   The committee will disband upon completion of this charge.

c.

Report from Tuition Policy Committee - Regent Hamilton

There was discussion concerning the feasibility of making the so-called Tuition Surcharge a designated fee, the difficulty of permitting flexibility to charge it as a designated fee at the campus level, and the need for the fee to be covered by all students, including those on fee waivers.  The Commissioner's office staff was not convinced it should be made a designated fee, however as tuition it is Board policy that it be waived for those students with waivers.  The price per student varies by campus from about $15 or $20 to as much as $100.

       Regent Mercer MOVED that the tuition surcharge for spring be made a designated fee to ensure all students share equally in the burden of funding the campus, and that tuition surcharges be adjusted accordingly and that the fee sunset at the end of spring semester, 2003.

Dan Geelan indicated that the students believed that if the fee could not be made flexible for each campus to apply as they saw fit, that it should be left the way it now stands.

       Regent Mercer WITHDREW his motion. 

The Commissioner gave a brief overview of the report and indicated that the MUS took $12.4 million of the $24,000,000 in actual budget cuts.  Discussion revolved around the presentation to the Legislature in January 2003, including the possibility of supporting tax increases.  President Dennison noted that the study of the university system-wide economic impact on Montana will be available in late October.  Regent Thompson recommended having a forum on Friday afternoon or evening of the November Board of Regents' meeting in Missoula.  Many people will be in town because of the big game and it would be a wonderful opportunity to pull legislators together to present to them this information.

Commissioner Crofts pointed out the significant revision to this proposal following the Special Session.  Paper 1 now offers one new proposal for financial aid and student access.  Paper 2 consists of Initiatives I and II and has been shortened into a one page document now called Investment Opportunities.  Full details of these proposals are still included as an attachment.  A third paper would be a Fact Sheet for the MUS.  He asked the Board to endorse the first two papers.  He indicated that senior leadership is convinced of the need for a strong presentation on the base budget and present law adjustments, and the area of student growth, followed by having Investment Opportunities available to hand out.  Such issues as the Honors Scholarships and Veterans Fee waiver will be covered under special bills.

      Regent Hamilton moved APPROVAL to implement the requests outlined in the Commissioners memo.

     Motion was APPROVED unanimously on a 7-0 vote 

The meeting recessed at 11:55 for lunch with student leadership followed by a meeting with staff representatives. 

The meeting reconvened at 1:45 p.m.

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Governor Martz did not return to the meeting after lunch.

ACADEMIC/STUDENT AFFAIRS ITEMS

The following items are Informational Only.

a.

b.

There was general agreement that the nursing situation in Montana is rather confusing.  The data indicates that there are enough slots in the university system to fill the positions needed in the state, but vacancies remain.  Graduations are down somewhat, but with low wages, there has been a drastic increase in the number of graduates leaving the state following graduation in the last three to four years.  It was noted that some nurses in Bozeman work in San Diego and commute weekly.  Taking into consideration the cost of round trip tickets they still make more money than if they worked in-state.  The shortage in Montana also means some nurses are requested to work 12 hour days which is very difficult as it leaves them no time for family life.  The Governor's Blue Ribbon Report on Nursing will be available in the near future, and Rod Sundsted will have a fiscal report on the costs of nursing education at the November meeting.  With those items, the Regents will be able to make their final decision at that time.  President Hammon noted that they received a FIPSI grant for LPNs, but appropriate clinical sites are necessary and those decrease in numbers as the population shrinks.

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ADMINISTRATIVE/BUDGET ITEMS

a.

b.

President Dennison indicated they are now asking for approval for the second phase of this project because they finally have the money in hand.

c.

       Regent Jasmin MOVED for APPROVAL of Items a., b. and c.

      Motion APPROVED unanimously on a 7-0 vote.

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Regent Mercer recommended removing the language "states the real needs" from the description.  However, since the Board of Public Education had already endorsed the description, it remained unchanged. 

     The Board reached Consensus on Item h. 

        The Board reached No Consensus on Item i. 

     Regent Thompson moved The Board of Regents direct staff in the Montana University System to provide no further assistance to the development of the Leadership College until a formal request comes to the Board of Regents from the Dean of the Leadership College on behalf of the Board of the organization.

There was a full discussion on the inert condition of the Leadership College, the use or non-use of campus resources, reservations held from the beginning by various Regents, and the possible good that can come from this enterprise. 

      The Motion FAILED on a 4-3 Vote with Regents, Hamilton, Roehm and Thompson supporting. 

        Regent Mercer  moved Approval of Item l. 

The pros and cons of using e-mail were debated with comparisons to telephone calls and letters.  Regent Hamilton indicated the Board has made no decisions or deliberations by e-mail, but uses it as a very efficient form of communication.  Issues cited as being decision-making were in fact solicitation of counsel or input.  Chief Legal Counsel LeRoy Schramm will work with Regent Mercer in order to clarify the language of the proposed policy.

       Regent Mercer  WITHDREW his motion in order to do further work with LeRoy Schramm. 

       Regent Mercer moved approval of Item m.

Concern was expressed on the narrow focus of this proposed policy. It was noted that there are good and practical reasons in any enterprise to have negative fund balances caused by a variety of circumstances. The Board previously passed a policy on negative fund balances which states that negative fund balance will not be maintained, and if they are it specifically outlines what the campuses are to do. The Presidents and Chancellors are allowed to move funds around to cover shortages that may arise. Regents Semmens advised Regent Mercer that he may find it impossible to guarantee there will never be a negative balance in the multitude of funds. It was agreed that Regent Mercer will work with Rod Sundsted to revise the proposed policy.   

       Regent Mercer WITHDREW his motion in order to do further work with Rod Sundsted.

       Regent Mercer moved Approval of Item n.  

Regent Mercer indicated he was asking that the campuses go further than is required by GASB 39. He would like detailed reports of where foundation money is being spent. Regent Hamilton noted that the Foundations have never refused to show their reports to the Regents if asked. They provide OCHE with audited reports and statements and are partners with the university system. Resistance was raised to mandating that the Foundations be forced to provide a review of their expenditures every six months. There was also an objection to creating a policy that directs staff to do something they are statutorily required to do. It was noted that the controllers who prepare the statements would find such a policy demeaning or insulting because they are going to comply with GASB 39. However the last paragraph of the proposed policy goes far beyond GASB 39 requirements. The Foundations are independent corporations who could refuse to provide more information than is already being provided. The worst thing that could happen to them would be for the Board to remove the right for them to use the university name. Over the years, the Board has worked diligently to create good working relationships with the Foundations, and it is understood that there is an arms length relationship with their business. It was argued that the Foundations have contributed significantly to the growth and development of the campuses and that they will be relied upon even more in the future. 

       The Motion FAILED on a 6-1 vote with Regent Mercer supporting

o.     Motions by Regent Mercer

1.   Student, Faculty & Staff Incentive Program

It is the board's objective to actively encourage innovations that contribute to the efficiency, economy, or other improvement of the university system.  The board, therefore, directs the Office of Commissioner of Higher Education to present to the board for its consideration at the November 2002 regular meeting, a review of the existing Employee Incentive Program for the Montana university system, solicit suggested improvements for the Program, and set forth the steps necessary to revise the Program beyond employees to include students.  

     Regent Mercer moved Approval of Item o1.

Commissioner Crofts offered support of this motion.  He indicated that the EIP has not been very effective with the state or the MUS.  He suggested that OCHE would report information about other incentive programs that MUS has implemented, with MAP being the foremost.  It should be fairly simple to expand EIP to include students, however they cannot be included in MAP.  Given the desire for flexibility and the cost involved, the program would be campus-based.  

      The Motion PASSED on a 6-1 Vote with Regent Mercer dissenting although it was his own motion.

2.   Worker Comp Self Insurance

      Regent Mercer MOVED that the board direct the Office of Commissioner of Higher Education to present to the board for its consideration at the January 2003 regular meeting, a proposal whereby the Montana university system could become self insured for purposes of worker compensation insurance. 

Commissioner Crofts advised that the statute was changed about a year ago to permit the MUS to do its own bidding on workers compensation insurance or to become self insured.  The Advisory Committee has been interested in this issue and continues to look at it.  However, with the short experience history at this time, it is premature to attempt to work up a proposal for self insurance.  Rod Sundsted will bring an analysis of the history to the November 21-22, 2002 Board of Regents' meeting, but it will likely be May before the Committee will be ready to make any recommendation. 

Regent Mercer AMENDED his motion to have a report on the advantages and disadvantages presented at the January 16-17, 2003 meeting.

     The Motion PASSED unanimously on 7-0 vote.  

3.   Health Benefits   

      Regent Mercer MOVED that the board direct the Office of Commissioner of Higher Education to present to the board for its consideration at the January 2003 regular meeting, alternatives that would place the system share of health benefits on a sliding scale based on level of pay, reducing the share paid to higher paid workers and increasing the amount paid for lower paid workers, or alternatives using the savings from reducing the share paid to the highest paid workers to offset budget reductions.

Following discussion of the merits of the issue, the state's statutory contribution to employee health benefits, as well as the statutory relationship of MUS with the Inter Unit Benefits Committee, Regent Mercer amended his motion as follows:  

     Regent Mercer AMENDED HIS MOTION for APPROVAL for the Board of Regents to direct the Office of Commissioner of Higher Education to request that the Inter Unit Benefits Committee explore methods for reducing the cost of health care for lower paid employees by increasing the cost of health care for higher paid employees.

    Motion APPROVED unanimously on a 7-0 vote.

4.  State Government Outreach

     Regent Mercer moved for the Board to direct that a letter be sent from the Board to Montana state government officials expressing the Board's interest in working with them inventorying the various challenges facing state government extending beyond education and education funding and setting forth the sincere desire of the Board and the Montana University System to work with those officials on crafting solutions.

Discussion covered the motion, and then how to follow up on it.  It was suggested that after collection of data for the inventory, a follow-up letter be sent to legislators with the information, requesting input on any items they believe are missing from the list.  When that has been completed the full inventory should be distributed to the campuses for ideas and solutions from faculty and others.  The campuses have experts in a variety of areas that could be very helpful. 

     Motion APPROVED unanimously on a 7-0 vote.

5.    Federal Government Outreach

       Regent Mercer moved the Board direct that a letter be sent from the Board to the Montana congressional delegation inviting them to the November 2002 regular meeting of the Board to present ideas and proposals they have to promote the mission of the Montana University System and to set forth ways the board and the Montana University System could assist them.

Discussion on this item covered having the Congressional Delegation provide ideas they are aware are being used in other states to help higher education but have not been applied to Montana.  It is assumed that they would have better insight into the federal programs available to the states.  However, it was also suggested that MUS initially let them know in what areas they would like help.  It was further suggested that MUS offer help to the Delegation in whatever way they can.  It has already been confirmed that Senator Baucus will be able to attend the November 21-22 Board meeting in Missoula, Senator Burns may be able to attend, and no answer has yet been received from Representative Rehberg.

     Motion APPROVED unanimously on a 7-0 vote.

     Regent Hur MOVED to ADOPT Item q. of System Issues to Freeze the salaries and pay of  MUS regents, the commissioner, and the campus CEOs during the period of any implemented tuition surcharges.

    The Motion FAILED on 5-2 vote with Regents Mercer and Hur supporting.

The meeting recessed at 5:00 p.m.

STUDENT REPORTS

Please see attached reports.

SYSTEM ISSUES continued

      Regent Hur MOVED to direct staff to prepare a presentation to the Board that outlines the impact on the MUS and each of its campuses in regards to any potential decision by the Regents to not raise tuition or implement a tuition surcharge in regard to future proposals to change tuition. 

There was debate over the detail to be included in proposing cuts to the budget to satisfy this motion.  There was concern that proposing to cut certain programs to prevent tuition increase would become self-fulfilling prophecies.  Such statements, even as trial balloons, create uneasiness among faculty, staff and students who then refuse to enroll in the programs in case they are cut.  Further concern was voiced about overwhelming staff by requiring exhaustive detail as in the budget book.  Faculty do not want to see this game played every year since it basically lowers the overall quality of all programs, and leaves them with no direction.  Commissioner Crofts indicated that a demonstration spreadsheet could be ready for the November Board meeting that would accept certain assumptions such as expenditures, bases, state support, revenues, etc. and produce the bottom line needed to cover everything.  It would be able to calculate how much would be needed to buy down tuition increases, and these reductions could be made on the general side, with program productivity measures to be sure campuses are spending according to established priorities, and to prevent damaging rumors.  It was also recommended that in relation to the budgets, campus strategic plans could be reviewed to keep everything in focus.

     Regent Hur amended his motion to read "In regards to future proposals for changes in tuition the Board of Regents shall always be presented with the alternative proposal of not changing tuition.  This will include a presentation of where budget cuts will take place if tuition is not changed." 

    The Motion PASSED on 6-1 vote with Regent Hamilton dissenting.

DISCUSSION WITH CAMPUS CEOs/COMMISSIONER

Please See Attached Reports

President Gamble congratulated Paul Polzin on the comprehensive job he is doing in creating the overall economic impact of the entire MUS on the state of Montana.

Superintendent of Public Instruction Linda McCulloch noted that she was at a Pathways meeting yesterday dealing with access and barriers to the low income from K-12 to the university system.  She reminded the Board that there will be a Pathways Conference on October 2 and she looks forward to seeing them there as co-sponsors.  She indicated they also are working on their budget and are doing it a little differently than in the past.  They are preparing a package with the issues being faced by K-12 such as recruitment, retention, salary, insurance premiums, and declining enrollment rather than simply presenting the lump sum.  They will be presenting increased needs to the legislature.

Commissioner Crofts indicated that Banik has reviewed the variety of economic development programs available on the campuses, and to pull it together would cost an additional $14,000. However, there continue to be significant developments and improvements, including electronic availability from a variety of agencies.  The next thing that needs to be done is to bring together the collection of sites with links to each one.  Without additional financing to support it, there is no staff to bring all the information together, and then to keep it current on a web site.  Regent Hamilton indicated she had visited with the Director of the Department of Commerce and the view of a number of economic development individuals in the state is that the electronic directory is the most valuable.

With no further business to come before the Board, the meeting adjourned at 10:20 a.m.

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