Arizona Board of Regents-April 2004 Minutes

A meeting of the Arizona Board of Regents was held April 29 and 30, 2004, in the Alumni Lounge of the Memorial Union at Arizona State University, Tempe, Arizona. President Herstam called the meeting to order at 10:12 a.m. on April 29.

PRESENT:	Regent Fred Boice Regent Robert Bulla Regent Ernest Calderòn Regent Chris Herstam Regent Jack Jewett (Thursday morning only) Regent Danelle Kelling Regent Wes McCalley Regent Christina Palacios Regent Gary Stuart Superintendent Tom Horne (Friday only)
ABSENT:	Governor Janet Napolitano Regent Lorraine Frank

Also present were: President Michael Crow, Dr. Kathleen Church, Dr. Milt Glick, Dr. Mernoy Harrison, Dr. Christine Wilkinson, and Mr. Scott Cole, Arizona State University; President John Haeger, Dr. Elizabeth Grobsmith, Dr. M. J. McMahon, Dr. David Lorenz, and Mr. Dave Harris, Northern Arizona University; President Peter Likins, Dr. George Davis, Dr. Ray Woosley, Ms. Judith Leonard, Ms. Edith Auslander, Mr. Dick Roberts, and Mr. Joel Valdez, University of Arizona; Executive Director Linda Blessing, Board Counsel Joel Sideman, Secretary to the Board Judy Garza, Dr. Art Ashton, Ms. Cathy McGonigle, Mr. Ted Gates, Ms. Kathy Bedard, Dr. Tom Wickenden, and Dr. Mark Denke, Central Office; and Dr. David Camacho, Arizona Faculties Council.

All lists, reports, summaries, background materials, and other documents referred to in these minutes can be found in the April 29 and 30, 2004, Documents File.

President Herstam asked everyone to stand for a moment of silence in honor of Pat Tillman, an ASU graduate who was killed in Afghanistan, and all the other military men and women who had lost their lives in the war on terrorism.

President Herstam thanked the ASU information technology people that were handling the technology needs for the meeting. They were substituting for Keith Jennings who was recovering from a major illness. Best wishes were sent to Keith for his quick recovery.

President Herstam announced that Regent Jack Jewett had been honored by the Association of Governing Boards (AGB) with its Distinguished Service Award for 2004 at its national conference in New Orleans last month. Only two awards are given nationally each year–one to a board member from a private institution of higher learning and one to a board member from a public institution of higher learning. AGB representatives came to Arizona and talked to Regent Jewett, family members, government officials, university officials, and others concerning Regent Jewett’s efforts on behalf of higher education in Arizona, especially his leadership on the Changing Directions initiative. The video made from these interviews, which was presented at the national conference, was shown to recognize Regent Jewett.

Ms. Cathy McGonigle joined the meeting for this discussion. President Herstam said that looking for options for revised funding mechanisms was the last major component of Changing Directions. This discussion was a continuation of the study sessions held over the last two Board meetings. The Board heard presentations in March from each president regarding possible models for modifying the existing state funding mechanisms. The presidents have now consolidated their proposals to feature those thought to be the most feasible. Preliminary proposals, along with specifics to illustrate how they might have affected this year’s budget request, were shared with the Governor’s staff and legislative staff.

President Likins said this discussion concerns only the funds the universities receive from the state. For this year, the University of Arizona received 28% of its budget from the state. The presidents tried to be realistic and used the formulas that exist with additions and refinements rather than creating a radical new funding mechanism.

President Haeger said he believed the undergraduate weighting would provide an enormously important message to the state about the different missions of the universities. The other critical part of the proposal is the student financial aid.

President Crow said it is clear the model that is in place is no longer adequate and needs to be replaced by a model that is more capable of engaging the universities in a more creative way. He believes the proposed funding concepts will improve the public investment model in higher education in Arizona.

Regent Stuart said the work group needs to build into the model the consequences of failure as well as the rewards for performance. He also said the universities should encourage the community colleges to transfer as many students as possible to the universities. President Likins said the proposed mechanisms do provide both rewards and consequences, more than the current model does.

Regent Calderòn asked if the talks with the legislature and the governor’s office had included a discussion of the remedial problems faced by NAU for building repairs.

Ms. McGonigle said the message had been given various times that NAU’s situation is different from the other two universities. These meetings dealt more with the building renewal formula in terms of including infrastructure. Regent Calderòn said he believed the proposals were a step in the right direction, especially the incentives and the disincentives, and he supported the strengthening of ties with the community colleges. He said he would prefer to call cheaper education “affordable” rather than “discount.” President Crow said he did not believe you could keep the price of education low and provide a high quality education; therefore, he believes financial aid is extremely important for access.

Regent Bulla said he thought it was important to move forward with the proposals and he agreed the financial aid component was very important. He said the funding formulas could be tweaked to make it more rewarding to recruit community college students to attend the universities.

Regent Boice said this is a refinement for funding that says universities get more money from the state and it has been acknowledged the percentage of state funding is going to go down. He said he believed the universities would need to do more on their own in the areas of research, intellectual property, tech transfer, private funding, and tuition as he did not believe the universities would get more money from the state.

President Herstam said he understood Regent Boice, but he did believe the new model would make a stronger case at the legislature for more money. President Likins said the state was growing and as the economy grew, the universities should receive more money from the state. He believed this model would be more appealing to the legislators than the old formula.

Regent Jewett left the meeting at this time. Regent Palacios said she agreed with Regent Boice, but she did believe this new model would make a good case for more funding for the universities.

Ms. McGonigle said the staff had taken the proposed funding model to the staffs at the Governor’s office and the legislature and briefed Representative Robson. The feedback was positive. Due to the economy, it was suggested something like this would need a phased-in approach for an increase in the state’s contribution to the Financial Aid Trust Fund. The suggestion that some programs cost more than others was seen as reasonable as long as there are not too many programs designated as high cost. The incentive model should not be presented in a manner that makes it appear the universities will only produce at a higher rate if they receive performance incentive funding. The universities should continue to strive to produce as many graduates as possible. It was also suggested a rigorous process be put in place to determine work force shortages if the universities would like to receive incentive funding for producing more graduates to meet work force needs. Legislative staff said this proposal was a policy issue and suggested meetings be scheduled with legislative leadership to explain the Board’s vision for the future, the need for changes in the funding model, and how the changes might contribute to the university system’s ability to better meet the needs of the community.

Ms. McGonigle said OSPB has been asked, at the request of President Herstam, if presenting the 2006 budget request using the proposed model would violate the Governor’s guidelines and the answer was no.

Upon motion of President Herstam, seconded by Regent Bulla, the Board instructed the Executive Director to transmit this model to the Governor’s office and the Joint Legislative Budget Committee as the Board’s recommendation and to incorporate it into the fiscal year 2006 budget request.

Ms. Cathy McGonigle, Mr. Greg Fahey, and Mr. Scott Smith joined the meeting for this discussion. Ms. McGonigle said the action taken on most of the bills that had been tracked was listed in the executive summary on this item. President Herstam thanked the members of the government affairs group and Regent Stuart for the coordinated effort that had taken place this year at the legislature.

Dr. David Camacho reported the Arizona Faculties Council (AFC) was nearing completion of the rewriting of its bylaws. He reported it would be the beginning of next year before the salary study would be completed. However, the data gathered to date shows that faculty who remain at the university are penalized in their salaries in comparison to new hires.

Representative Cajero Bedford, asked the Regents to change the university admission criteria to include more career and technical education courses. She would like to see the practical arts have the same standard as the fine arts requirements for admission. She appreciated the Board’s change in policy to allow technical courses to be accepted under the new delegated admissions policy, but asked for more technical courses to be automatically allowed. She acknowledged that no peer university has a policy that recognizes the technical arts, but asked the Arizona universities to be a pioneer in this area.

Susan Carlson, Arizona Business and Education Coalition, said the business and education community support Representative Bedford’s comments. She said high school students need to see a clear path to higher education and the career and technical credit and the foundational skills they learn in these classes, with an admission possibility, offers that clear path. She believes this change would break down barriers to higher education.

Greg Donovan, Superintendent of the joint technical district serving Western Maricopa County (Western Maricopa Education Center), President of the Peoria Unified District Governing Board, a parent, and a former employee of NAU’s Institute for Future Workforce Development, believes the admission requirements are divorced from career choices. He said technical education had changed and is more rigorous now than it used to be in earlier times.

Keith Crandell, founder and first superintendent of EVIT and president of the EVIT Board, has spent a year touring the state to meet with boards of education and superintendents. He found a great interest in career technical education; however, it is very expensive and doesn’t qualify students for a college education. He believes taking a technical course has prevented many students from dropping out of high school. He asked that technical courses be counted as an admission requirement rather than as an elective.

Marv Lamer, Superintendent of Valley Academy for Career and Technology Education, said today’s technical student must demonstrate both an understanding of a career framework and an ability to apply reading, writing, and mathematics. Indiana recognizes career and technical education as a college entrance requirement and he urged Arizona to do likewise.

Alfredo Zapata, the father of two students at ASU and one who used to be a student at NAU, said his NAU son was dismissed from his program in spite of his GPA. They followed the university due process available, but he does not believe the process was fair. He believes his son was not provided a good learning environment. He asked the Regents to ask someone outside NAU to look at his case to determine whether or nor the due process accorded his son was a fair process.

Pam Mulhearn, Tri-University Classified Staff Council, said employee morale directly mirrors the campus climate. As long-term plans for university development are made, the Council advocates more choices and better rates for employees in state employee health insurance negotiations. The Council recognizes the efforts made to minimize staff position losses in tight budget times and the costs absorbed and raises given where possible to support staff. As Changing Directions is implemented, the Council appreciates equal awareness for the human infrastructure of the institutions along with other needs.

Jane Jimenez, ASU Alumni, said instructors actively present personal political views as unsupported fact, restrict balanced debate, promote misinformation, and ridicule students with views that contradict their own. She said a representative of Planned Parenthood had made a presentation and the university had refused to allow someone to present the other side of the argument. She asked the Regents to return the universities to academic freedom founded on full intellectual inquiry.

Grady Gammage, Jr., a land use lawyer in Phoenix, spoke on behalf of the University of Arizona School of Planning. He said he thought placing the School into geography was a good idea.

Grace Evans, spoke on behalf of placing the School of Planning under the College of Behavioral Social and Behavioral Sciences within the School of Geography.

Rachel Burnham, spoke on behalf of assured admission for home schooled students. She asked the Regents to consider a guaranteed admission for home-schooled students as they won’t have guaranteed admissions if admission is based on class rank.

Mike Harrel, asked that class rank not be the determining factor for guaranteed admission for home-schooled students.

Dorie Duff, legislative liaison for Arizona Families for Home Education, asked the Regents to allow home-schooled students to have guaranteed admission through test scores. She stated this is only fair as other groups have guaranteed admission through class rank.

Christina Tefzger, a home-schooled student, asked the Regents to change the policy being considered as it discriminates against home-schooled students because they do not have a class rank.

Items on the Consent Agenda, which are marked in these minutes with an *, were considered as consent matters and were adopted upon the motion of Regent Palacios, seconded by Regent Bulla. There was no discussion of these items.

The Board approved the January 22 and 23, Executive Session, and the March 11 and 12, 2004, Regular Meeting minutes.

The Board approved a five-year employment contract for Joan Marie Bonvicini as University of Arizona Head Women’s Basketball Coach for the period beginning April 1, 2004, through March 31, 2009. Her salary will be $135,000 per annum, plus she may earn additional stated performance and academic-based incentives of up to $140,000.

The Board approved a multiple-year employment contract for Laura Kelly as Northern Arizona University Head Women’s Basketball Coach for the period July 1, 2004, through June 30, 2007. Her salary will be $82,000 per year, plus she may earn additional stated performance and academic-based incentives.

The Board approved an extension of the multiple-year employment contract for Thom Ortiz as Arizona State University Head Wrestling Coach for the period July 1, 2004, through June 30 2007. His salary will be $68,526 per year and he may earn additional stated performance and academic-based incentives.

The Board approved an extension of the multiple-year employment contract for Arizona State University Heat Soccer Coach Ray Leone for the period January 1, 2006, through December 31, 2008. His salary will be $88,957 per year and he may earn additional stated performance and academic-based incentives.

The Board approved the Fourth Amendment to the Board’s Optional Retirement Plan in order to comply with recent changes in the Internal Revenue Code, effective July 1, 1997, and to authorized the Executive Director to execute this Amendment. The proposed amendment more specifically defines “employee” to include “leased employees,” who are individuals who perform services pursuant to an agreement between the employer and a third party, under the primary direction or control of the employer on a full-time basis for at least one year.

The Board authorized the University of Arizona to enter into contracts with the Jet Propulsion Laboratory (JPL) and the National Aeronautics and Space Administration (NASA) in support of the Phoenix Project, a mission to Mars. The project total will amount to approximately $320M from September 15, 2003, through September 30, 2009. Many of these funds will be contracted by NASA and JPL directly out to other parties and will not flow through the University of Arizona. Currently, the UA anticipates receiving $41,772,110 from September 15, 2003, through September 30, 2007.

The Board, pursuant to A.R.S. §15-1635.01, authorized the University of Arizona to permit Dr. Paul A. Krieg, Professor of Cell Biology and Anatomy, to establish and maintain a substantial interest in Angionics, Inc., while continuing his employment at the University of Arizona. Angionics, Inc., is an early stage biotechnology company focused on developing novel and proprietary angiogenic therapeutics–specifically therapeutics that either inhibit or stimulate the apelin signaling pathway, a unique pathway involved in regulating blood vessel growth.

The Board, pursuant to A.R.S. §15-1635.01, authorized the University of Arizona to permit Dr. Lynn A. Joens, Professor of Veterinary Science and Microbiology, to establish and maintain a substantial interest in ANICURE while continuing his employment at the University of Arizona. ANICURE is a biotechnology company formed to engage in research, consulting, and diagnostic testing of human and animal pathogens found in food products.

The Board, pursuant to A.R.S. §15-1635.01, authorized the University of Arizona to permit Dr. Michael W. Marcellin, Professor of Electrical and Computer Engineering, and Dr. Ali Bilgin, Assistant Research Professor of Electrical and Computer Engineering, to establish and maintain a substantial interest in DTS AZ Research LLC, while continuing their employment at the University of Arizona. DTS AZ Research LLC will develop products for creating, editing, and distributing digital video based upon Professors Marcellin’s and Bilgin’s research on JPEG2000, the latest international standard for image compression.

The Board, pursuant to A.R.S.§15-1635.01, authorized the University of Arizona to permit Dr. Stuart K. Williams, Professor of Biomedical Engineering, to establish and maintain a substantial interest in Pare Technologies, Inc., while continuing his employment at the University of Arizona. Pare Technologies, Inc., has developed a Plexiglas sterilization unit based on the production of chlorine dioxide gas in controlled amounts in a defined environment. When the complimentary device within the unit is activated, the chemicals mix to form a chlorine dioxide gas that kills any bacteria, molds, and spores on contact.

The Board approved the designated Managerial Group for the negotiation, execution, and administration of the Department of Defense and user Agency contracts as described in DoD 5220-22-M National Industrial Security Program Operating Manual. The persons occupying the following positions among the officers of the University of Arizona shall be known as the Managerial Group: Designated Regent Chris Herstam, President of the University of Arizona, UA Vice President of Research, Graduate Studies and Economic Development, and the UA Facility Security Officer.

The Board authorized Arizona State University to plan the Masters of Legal Studies degree; Northern Arizona University to plan the Master of Science in Applied Geographic Information Science and to implement the Master of Forestry, using the one-step expedited process; and the University of Arizona South to plan the Bachelor of Science in Commerce.

The Board also received a report on the changes to programs and organizational units that were approved by the ABOR Executive Director: Academic Program Name Title Change - ASU Main changed African-American Studies to African and African-American Studies and ASU East changed Environmental Resources (MS) to Applied Biological Sciences (MS); Transfer Academic Program - University of Arizona transferred Gerontology from the Graduate College to the College of Nursing, and Nutritional Sciences (PhD) from the Graduate College to the College of Agriculture and Life Sciences Department of Nutrition; Organizational Name Change - Arizona State University Main changed African American Studies Department to African and African American Studies Department and the University of Arizona changed the Eller College of Business and Administration to the Eller College of Management.

The Regents received a written report on the Enrollment for Spring Semester 2004. The report shows an undergraduate headcount of 83,215 and a graduate headcount of 25,781 for a total headcount of 108,996. It shows an undergraduate FTE of 78,701 and a graduate FTE of 18,376 for a total FTE of 97,077.

The Board granted project approval for the NAU Advantage Financial System Upgrade Project. The upgrade will greatly enhance the user interface for NAU’s many Advantage users, while offering additional features like paperless workflow of documents. It also eliminates the risky situation of using older hardware and keeping the NAU financial system on an unsupported version of the software. The total cost of the project will be $2.061M over a 5-year period.

The Board approved an investigation by ASU, through an RFP, of the economic feasibility of outsourcing its remote access modem pool and awarding a contact if a proposal is received that falls within the budget. ASU’s existing modem pool is reaching end of life. It is believed that a cost-effective method of offering enhanced dial-in, remote access could be realized by outsourcing this service. The expected cost over five years is $775,000.

The Board approved ASU’s Administration and Finance Business Interactive Services Web/Portal project. The growth and development of ASU and its campuses is straining the existing service delivery mechanisms for Administration and Finance departments. In addition, academic, research, and student service departments throughout ASU are struggling with an ever increasing workload caused in part by the many manual and difficult administrative tasks they must do. The proposed Business Interactive Services Web Portal will increase efficiency . The anticipated five-year cost of this project is $1.4M.

The Board authorized ASU to upgrade its current Avaya Definity PBX system. The central processing units in the system must be replaced to upgrade the operating system to the current version. The estimated five-year cost of operations is $1.06M.

The Board authorized ASU to move forward with another three-year contract renewal for IBM mainframe software license and hardware maintenance. It is estimated the project will cost $1.750M.

The Board authorized the UA to spend $1,803,854 for an IBM System Upgrade. The current IBM S/390 server platform has reached the end of its useful life and must be replaced. This system hosts a number of critical administrative applications that require a regular replacement upgrade cycle to assure the security of the data and the reliability of the processes.

Dr. Mark Denke, Dr. Milt Glick and Dr. George Davis joined the meeting for this discussion. Regent Palacios explained the Board was being asked to review and approve requests for special class fees, special program fees, special program fee ranges, and a common surcharge fee. Program fees are charges to the student that are added to regular tuition.

Dr. Denke explained the purpose of special class fees and described allowable expenses, and the criteria used to determine these fees. He said the request for the common surcharge fee for the three universities’ distance-delivered graduate engineering courses was an increase of $202, raising the surcharge fee to $402 per unit. Ms. Kathleen Gonzales-Landis updated the Regents on the Masters of Engineering program and explained the surcharge request. Regent Bulla said the unintended consequences of differential tuition is differing rates for the same course at different institutions. He asked the Board to take under advisement for future discussion a study of this consequence.

Upon motion of Regent Palacios, seconded by Regent Bulla, the Board authorized an increase from $200 to $402 per credit hour in the common surcharge fee for the distance delivered courses in the tri-university master of engineering degree program by unanimous roll call vote.

President Crow said some courses have unique expenses. All graduate programs are being moved to market for both tuition and fees. All undergraduate fees are dependent upon actual cash expenses that are part of delivering the courses. Full financial aid is available for those students who have financial need.

Provost Glick said ASU has not wanted to come to the Board every year to make minimal changes in fees that were established at $50; so the costs have been artificially kept down by not providing full services or the costs have been absorbed to the point it is no longer feasible. This is why there are a series of art course fee requests that deal with technology, with live models, or expendable materials. Dr. Glick explained that the requested increase in fees for the geography program is actual cost for room and board for students while they are at field camp. The fee in the construction course is a pass-through fee for the certified professional constructor exam that makes graduates eligible for special status.

Dr. Glick said the nutrition course request is a technical correction as only one number was approved last year and it is cross-listed. As part of the Agri-business degree at ASU East, students may be certified as a golf professional if certain requirements are met and they take three levels of PGA training. The fee is for the PGA training. The undergraduate golf program fees are for the development of a driving range and practice golf holes for the professional golf management program and access to indoor computerized swing labs. The students are presently paying to use commercial facilities. The professional flight program has aging flight training devices, and there are greater security issues than before. The fees are to cover the extraordinary costs of the program. The air transportation management fee is to develop a simulator to run an airport through a computer program. ASU would also like to charge the same fee for correspondence courses as is charged for other programs.

Provost Glick explained the MBA for Executives is an upscale program for executives, all of whom are nominated by their corporations who pay for the program. It includes trips, laptop computers, special software, etc. The proposed fee for the program is $26,000. Subparagraph C on Page 37 of the executive summary should be deleted as ASU will not contract with the ASU Foundation to cover some of the costs as all of the money will go to the university.

Dr. Glick said the Regents had approved three new programs in the last three years and ASU had indicated at the approval time there would be fees. The programs were a professional science master in computational biosciences that was subsidized for two years by the Sloan Foundation; a master in advanced science in GIS, and a doctor of nursing science. The master of architecture has been requested by the business community. The accelerated master of science in engineering is a fourteen-month weekend course and most of the people, if not all, will be covered by their employers. ASU does not believe it can subsidize further the master of science in nursing. None of these fees are as high as the costs.

Provost Davis said the UA had five proposals. The increased fees for the molecular and cellular biology course and for the course in analyzing financial information are for special costs such as for the lease on the Bloomburg Financial Services data terminal. The two program fees for architecture and landscape architecture are for the enhanced use of technology. The gerontology program is now imbedded in the College of Nursing and the fee will be used to recruit adjuncts and to create research modules.

Regent Stuart asked what, if any, the impact would be if the Board approved the requested increases for undergraduates, on the agreement to keep tuition and mandatory fees no higher than the top of the bottom third. President Crow said these fees are not counted as they are not mandatory for the entire university.

Regent Calderón asked if the students who qualified for financial aid would receive aid for these fees and was told yes. He asked President Crow if it was true some financial aid was being put in place for graduate students and was told yes. He asked if financial aid would be available to cover the requested fees for graduate courses and was told financial aid would be available on a need basis. Regent Calderón said if the fee requests were broken into two parts, one for undergraduates and one for graduates, he could support the requests for the graduate fees. He also said he did not support fees for facilities.

Regent Boice said he would support the fee requests; but he believes it is time for the universities to work on the cost of a college education, predicated on when a freshman comes to school, to give students some assurance of what it will cost over a four-year period.

Regent Palacios asked staff to include more information, such as the total cost of the program, the number of classes in the proposing department that already have fees, the number of students who will pay the fee, specific costs that are associated with the fee. etc., when fees are brought forward next year. Regent Bulla said he would like to have a common methodology to look at each fee.

Regent Palacios moved to approve the special class fees, the special program fees, and special program fee ranges for undergraduates as requested by Arizona State University. The motion was seconded by Regent Boice and passed by roll call vote with Regent Calderón voting no. Regent Palacios moved to approve the special class fees, the special program fees, and special program fee ranges for graduates as requested (except as amended ASU’s request to enter into a management services agreement with the ASU Foundation with respect to the Executive MBA program) by Arizona State University and the University of Arizona. The motion was seconded by Regent Boice and passed by unanimous roll call vote.

Regent Bulla asked if the universities could come back by the fall with the common format and President Herstam asked the members of the Council of Presidents to consider the problem of differential tuition causing differing costs for the same program when offered in common by the three universities. (This item continued on Page 20.)

Ms. Gale Tebeau joined the meeting for this discussion. Regent Palacios said the Board was being asked to review and approve the Spring Update of the FY 2004 All Funds Operating Budget for the universities and the central office. Ms. Tebeau said there was a reduction of approximately $3.6M in NAU’s tuition collection estimate with corresponding decreases in expenditures. This is reflective of actual collections from Fall and Spring Semesters. There is an increase in State appropriations of just a little over $1M from the excess court fines that was legislatively directed to the General Fund to help pay increased health costs and state retirement funds. This is a one-time only allocation as the legislation was later repealed; so these funds will not be part of the base budget next year.

Regent Boice asked when the UA would be able to fix the UA Presents deficit. President Likins said the Executive Director was no longer with the university, but not as a consequence of failure to reduce the deficit. The UA is now recruiting a new Executive Director and the advisory board has slashed the programmatic offerings to a third of the previous schedule as they try to make each program covers its own costs. The UA is trying to make the program self sufficient.

Regent Boice asked President Crow if any progress had been made on reducing the deficit in the Intercollegiate Athletics (ICA) budget. Dr. Crow said they were on target to eliminate the deficit. He said ICA was being forced to retire the deficit on its own; the university had not transferred any money to help with the problem. The one matter that remains unresolved is the legal dispute with the Arizona Cardinals. Dr. Crow said the departure of the Cardinals from Sun Devil Stadium is in the financial plan going forward but the costs involved with the litigation are not included in planning as it is not known what those will be. The complicated long term issues related to ICA financing, especially related to facilities, are being addressed.

President Haeger reported the budget had been balanced in spite of lower than anticipated tuition collections.

Upon motion of Regent Palacios, seconded by Regent Bulla, the Board approved the Spring Update of the FY 2004 All Funds Operating Budget.

Mr. Scott Cole, Dr. Mernoy Harrison, and Mr. Ted Gates joined the meeting for this discussion. Regent Palacios said ASU was requesting Project Implementation Approval for Academic Renovations and Deferred Maintenance Phase I at an estimated cost of $10M.

Upon motion of Regent Palacios, seconded by Regent Bulla, the Board granted Project Implementation Approval to Arizona State University for the Academic Renovations and Deferred Maintenance Phase I Project.

Mr. Scott Cole, Dr. Mernoy Harrison, and Mr. Ted Gates joined the meeting for this discussion. Regent Palacios said ASU was requesting Project Approval for the University Archives Building Restoration. This is the first subproject of the Academic renovations and Deferred Maintenance, Phase 1, project for which Project Implementation Approval was granted in the prior item. This project will restore the University Archives Building to house the Virginia G. Piper Center for Creative Writing at an estimated cost of $1.2M. The project will be funded through System Revenue Bonds.

Upon motion of Regent Palacios, seconded by Regent Boice, the Board granted Project Approval to Arizona State University for the University Archives Building Restoration Project.

Mr. Scott Cole, Dr. Mernoy Harrison, and Mr. Ted Gates joined the meeting for this discussion. Regent Palacios said ASU was requesting Project Approval for Engineering Research Center Code Upgrades at an estimated cost of $2M. This project is part of the Instructional/Research Laboratory Renovations, Phase I, and will bring multiple laboratory areas into compliance with OSHA and AIHA Laboratory Health and Safety Committee standards. The project will be funded through System Revenue Bonds.

Upon motion of Regent Palacios, seconded by Regent Boice, the Board granted Project Approval to Arizona State University for the Engineering Research Center Code Upgrades Project.

Mr. Scott Cole, Dr. Mernoy Harrison, and Mr. Ted Gates joined the meeting for his discussion. Regent Palacios said ASU was requesting Project Implementation Approval for the Interdisciplinary Science and Technology Building Three at ASU East at an estimated cost of $12M. Regent Boice said he noticed the Design and Construction Phase Contingency was cut almost in half and asked if there was ample contingency left in the project. Mr. Cole said the university had guaranteed maximum price from the contractor, so there is enough contingency.

Upon motion of Regent Palacios, seconded by Regent Bulla, the Board granted Project Implementation Approval to Arizona State University East for the Interdisciplinary Science and Technology Building III Project.

Mr. Scott Cole, Dr. Mernoy Harrison, and Mr. Ted Gates joined the meeting for this discussion. Regent Palacios said ASU was requesting approval to sell System Revenue Bonds in an amount not to exceed $44.2M to finance four ASU capital projects. The four projects are The Instructional/Research Lab Renovations - Phase I, IT/Telecom Infrastructure Upgrades, Infrastructure Improvements Phase III, and AZ Biodesign Institute, Phase I. Regent Stuart asked if the Joint Committee on Capital Review had given approval to this project and was told yes.

Upon motion of Regent Palacios, seconded by Regent Boice, the Board authorized Arizona State University to (1) sell one or more series of bonds, not exceeding a $44.2M principal amount, for the purpose of financing the projects previously described; (2) pay the costs of issuance of the bonds; and (3) take all actions, and enter into all necessary agreements related to the bonds, as provided in a resolution approved by Board Counsel and staff prior to Board approval.

Mr. Scott Cole, Dr. Mernoy Harrison, and Mr. Ted Gates joined the meeting for this discussion. Regent Palacios said ASU was requesting approval to sell lease purchase Certificates of Participation in an amount not to exceed $183.1M to finance three ASU research infrastructure capital projects. The three projects are AZ Biodesign Institute - Phase II, Interdisciplinary Science and Technology Building I, and Interdisciplinary Science and Technology Building II.

Upon motion of Regent Palacios, seconded by Regent Boice, the Board authorized Arizona State University to: (1) sell one or more series of COPs, not exceeding a $183.1M principal amount, contingent upon favorable review by JCCR, for the purpose of financing the projects previously described, (2) pay the costs of issuance of the COPs, and (3) take all actions, and enter into all necessary agreements as provided in a resolution to be approved by Board Counsel and staff prior to Board approval.

Mr. Scott Cole, Dr. Mernoy Harrison, and Mr. Ted Gates joined the meeting for this discussion. Regent Palacios declared she may have a conflict of interest on this item and she would not participate in the discussion or the vote. President Herstam chaired the item.

President Herstam said Arizona State University was requesting approval to ground lease a 2.5 acre parcel to Sun Devil Energy Center for the construction and operation of a combined heat and power plant. Regent Boice said he believed there were too many people from the university listed as able to sign the documents when this amount of money is involved. There was a discussion on who should be authorized to sign the documents as well as the scope of authority to modify the proposed terms and conditions of the ground lease. Board Counsel Sideman suggested the language in the recommendation be changed by striking everything that follows the last “connection”, which removes the last phrase, and insert “in substantial conformance with the terms described in this executive summary.”

Upon motion of President Herstam, seconded by Regent Boice, the Board approved (1) the issuance by a limited liability company formed by Arizona Capital Facilities Finance Corporation of tax-exempt revenue bonds in a sufficient amount to build the CHP Facility at ASU’s Main Campus and pay for related financial costs, including capitalization of interest during construction and initial start up, and (2) a ground lease agreement with the limited liability company for the construction and maintenance of a combined heat and power facility to serve the ASU Main Campus.

The Board also authorized the President of the University, the Executive Vice President for Administration and Finance, the Associate Vice President for Administration, or the Associate Vice President for Finance and Treasurer, to take all appropriate actions to negotiate, sign, and enter into a ground lease agreement with the LLC for the construction, operation, and maintenance of a combined heat and power facility to serve the ASU main campus on the terms described herein, and any other necessary or appropriate documents in connection with the transaction and related financing, and to take all necessary and appropriate action in this connection in substantial conformance with the terms described in this executive summary.

Regent Palacios said the UA was requesting approval to amend the multiple-year employment contract for Lute Olson as Head Men’s Basketball Coach. President Likins said there had been an error in preparing the executive summary and the amount in line three of the second bullet should be $355,000 rather than $340,000.

Upon motion of Regent Palacios, seconded by Regent Boice, the Board approved an amendment to the multiple-year employment contract of Head Men’s Basketball Coach Robert Luther Olson for the period beginning April 1, 2004, through April 30, 2009. Coach Olson’s base salary and related compensation will remain $700,000 per annum, plus additional performance incentive compensation of up to $355,000. The amended multiple-year employment contract salary and incentive compensation will be paid entirely from revenue generated by the Athletics Department, not from appropriated funds.

Regent Palacios said when she asked the question as to whether the UA had any undergraduate fees in Item 3, she was told no. However, there is one. To correct that error, Regent Palacios moved that the Board approve the Special Class Fees, Special Program Fees, and Special Fee Ranges for undergraduates, as requested by Arizona State University and the University of Arizona. The motion was seconded by Regent Boice and passed by roll call vote, with Regent Calderón voting no.

The meeting recessed at 5:45 p.m. and reconvened at 10:40 a.m. on Friday, April 30.

President Crow said he thought it would be a good idea for the Regents to hear directly from one of the new institutional leaders who is advancing one of the most important colleges, the College of Architecture and Environmental Design, which is a critical intellectual component of the university’s future. Dr. Crow introduced the new Dean of this College, Wellington “Duke” Reiter, who came to ASU as a faculty member from the Massachusetts Institute of Technology and as a practicing architect and artist. He is committed to the notion that the university will have the greatest value if it is deeply connected to the place in which it is located.

Dean Reiter walked the Regents through how a new Dean analyzes a college, observes what is there, what the opportunities are, and how to advance the role of the college both within the university and the community.

Dr. Reiter informed the Regents that a team of students from ASU had won this year’s Urban Land Institute’s $50,000 competition in urban design. He said this was a representation of the quality and training of the student body from the college as well as interdisciplinary work. There were planning and economic students as well as architecture students on the team.

Dean Reiter explained the possibilities he saw for the future of the College of Architecture and how he believed different colleges could work together to make a difference in the real world. He talked about his assignment to work out how ASU will fit in downtown Phoenix and described some programs that might work downtown. He described how landscape architecture could make a difference in the state and the new equipment that is needed to deal with new technology in architecture.

Ms. Cathy McGonigle joined the meeting for this discussion. Regent Boice said the Board was being asked to consider this policy at a first reading. Ms. McGonigle said the proposed new Board policy will require the universities to develop a common set of policies that mandate background and reference checking and that will result in prompt administrative actions, consistent with due process of law, for any employees convicted of a felony offense. Regent Stuart met with a legislator who was sponsoring a bill to deal with this issue. It was agreed legislation would not be necessary if the Board developed an appropriate policy.

Dr. Tom Wickenden and Dr. Tim Desch joined the meeting for this discussion. Regent Boice said this was also a first reading and would not be voted on today.

Dr. Wickenden reminded the Regents the revised admission policy approved last Spring included a category of assured admission for students who graduate in the top 25% of their high school class. Home School advocates have noted that when this new process is introduced for the Fall of 2006, home-school students will not be assured admission because they do not have a class rank. This Spring, Senator Tim Bee, with the support of advocates for Arizona’s home schooled students, introduced a bill requiring the universities to provide an admission’ process that is fair to home-schooled students. He subsequently agreed to hold the bill, provided the Regents adopt this policy for the special admission of home-schooled students.

The proposed policy will introduce the word “fair” into the section of Board policy requiring each university to establish admission requirements for home-schooled students. There is still disagreement, however, over what kind of process would be fair. The home-school advocates believe that it is, in principle, discriminatory to have procedures that provide the opportunity for assured admission based on certain criteria to all Arizona students except those from home schooling. The universities point out that the process of admitting home- schooled students is fair as they currently admit a very large percentage of home-schooled students that apply--larger than the percentage of public-school students that are admitted–and they expect this process to continue under the new delegated admission process. It should also be noted that the universities, in compliance with legislation passed several years ago, currently assure fair access to tuition scholarships for home-schooled students by providing a scholarship to any student whose SAT or ACT scores are equivalent to those of all others students in the top 10% of their classes. Cut scores for these awards is reviewed each year and adjusted as necessary.

However, the universities point out that if special criteria, such as ACT or SAT scores alone were established to assure admission of home-schooled students, it would be unfair to all those other Arizona students, probably a larger number than the home-schooled students, who do not qualify for assured admission but whose test scores could also exceed the standard for home-schooled students. The Board was asked to discuss the proposal that admission of home-schooled students should be fair and how this might be accomplished.

President Likins said home-schooled students are accepted at a higher rate than other categories of students because their performance warrants that acceptance. However, it appears the home-schooled students want assurances of admission. If this is done on the basis of test scores, how do the universities deal with the thousands of other students that will not have assured admission based on their test scores? The universities believe it is better to rely on past data of admissions that will not be modified when it comes to accepting such outstanding students.

Regent Stuart said he believed the proposed policy would stand the test of fairness. Regent Boice requested the universities provide an annual report on the delegated admission of home-schooled students so the Regents can see if the number of home-schooled students continues to be high.

Mr. Dan Anderson and Dr. Tom Wickenden joined the meeting for this discussion. Mr. Anderson said legislation was signed in 1998 that required the Board to have an Honors Endorsement Program. Since that time, the central office has been working with the high schools on a pilot basis for a limited number of graduates to receive a seal on their diploma and a notation on their transcript that they have received high academic excellence. Superintendent Horne has proposed changes to that program. The first was a change in academic standards requiring B’s or better in all 16 core academic classes. The second was to use the AIMS test as one of the criteria. The third states the student must meet at least one of these options–exceed the standards on all 3 AIMS Tests, or exceed the standards on 2 out of the 3 AIMS tests, meet the standards on the 3rd part, and get at least 3's on 2 of the Advanced Placement or International Baccalaureate tests. If all three of the criteria are met or exceeded , the student would receive a tuition scholarship.

Last summer, the Regents had directed the universities to determine the fiscal impact of Regents Horne’s proposal by analyzing the difference, if any, between the scholarships that had been awarded to students entering the universities in the Fall of 2003 and the tuition scholarship that would have been awarded using the proposed criteria. Mr. Anderson described the results of that analysis. He said that the review of data for the Fall 2003 Freshman class and the AIMS test scores of those students and found 2500 students exceeded all 3 criteria or exceeded 2 criteria and met the 3rd criteria. The next consideration was whether this group received passing scores in two classes that were advanced placement or international baccalaureate and have B’s or better in all their academic classes and to see if they had a GPA of 3.5 or higher or were in the top 5% of their class. Of those students, 389 enrolled in the Fall Semester and 383 of those students received a tuition scholarship.

The data shows the best predictor of success at the universities is the students GPA in high school. The next predictor is a standardized test. These scholarships represents about 11% of all the resident undergraduate tuition scholarships offered.

Dr. Wickenden said the data demonstrates the proposed changes will have no fiscal impact on the universities for the foreseeable future. On the basis of that fact, the recommendation is to approve the changes as proposed by Superintendent Horne and transfer program administration to the Department of Education while retaining control of the program at the Board of Regents and control of the scholarships at the universities. In addition, a new Board policy will be needed. This new policy can be used as a recruiting tool as it will tell freshmen they would be eligible for a college scholarship if they meet this criteria.

This would be the second time in a year the Regents have worked with Superintendent Horne to strengthen the educational system in Arizona. Superintendent Horne expressed thanks to the university presidents, Dr. Blessing, President Herstam, and Dr. Wickenden for working with his staff and their support of this proposal. He believes this will help send the message that education is a seamless continuum from kindergarten through college. He sees this proposal as a way to motivate students to achieve higher academic levels so better qualified students can be produced in K-12.

Regent Bulla asked what the tuition scholarship would be based on and was told a combination of all three criteria. He asked if the numbers that would receive a tuition scholarship if it were based on the former language of the GPA of 3.5 rather than the strengthened criteria would change and was told that was not considered. President Likins said he believed this would assure students they will receive a scholarship if they meet this criteria.

Regent Stuart said the policy used scholarship in several places and waivers in others and he believed the language should be consistent. He asked that thought be given to allowing the students more than one year to accept the scholarships as is done in the policy giving waivers to community college honor students. Regent Calderón asked if the AIMS test is now considered an objective measurement of students’ abilities and was told there is no statistical difference between the AIMS test and the SAT or ACT results as predictors of university success.

President Likins agreed with Regent Stuart that Sections D and E should say scholarships, not waivers. He said he had a problem with the double negative language in Section F where it states, “.. . .shall be designed to minimize the likelihood that the qualifying students will not also qualify for tuition scholarships.. .” Dr Wickenden said the work group had considered whether to use a positive statement or to state the double negative and chose the latter because you could maximize the likelihood by raising the standards until there are only 4 students who would apply. President Likins said he agreed with the policy as written.

Upon motion of Regent Boice, seconded by Regent Palacios, the Board approved the revisions to the program criteria as proposed by Superintendent Horne, directed staff to transfer administration of the program to the Department of Education, authorized that students receiving High Honors endorsements, as defined in the attached criteria, be recommended to the universities for full tuition scholarships, and requested the presidents to develop a policy describing these tuition scholarships for a firs reading in June and final action in August.

Dr. Tom Wickenden and Provost Grobsmith joined the meeting for this discussion. Dr. Grobsmith said NAU was seeking an exception to Board Policy to enable NAU to allow students who live within a 75-mile radius of the Arizona-California border to attend NAU-Yuma for resident rates. There are a fair number of students from the Imperial Valley Community College in the El Centro area, many of who are from socio-economically disadvantaged families and from under-represented ethnic groups. They are presently allowed to take 6 credits during each of the Fall and Spring semesters and a full load in the Summer semester at resident rates. These are currently 23 students enrolled at NAU-Yuma who live within 75 miles of the Arizona/California border.

Upon motion of Regent Boice, seconded by Regent Palacios, the Board approved an exception to ABOR Policy 4-203 to allow California residents, who begin a program during a three-year period beginning Fall 2004 through Spring 2007 and who live within 75 miles of the Arizona/California border, to take a full academic load of classes at resident tuition rates during any semester beginning with the Fall 2004 term and continuing until the student has completed his/her program, not to exceed a reasonable time frame for completion of the program unless the student can provide documentation of extenuating circumstances. NAU expects to review the effect of and need for this exception during the Fall 2006 term.

Dr. Art Ashton joined the meeting for this discussion. Regent Bulla said the university Five Year Strategic Plans come for approval once a year and Master Plans come less frequently. However, major changes to these plans can occur at any time. The Board needs a process to review these major changes, such as the universities’ reorganization plans, both at an initial Conceptual Phase and at an Implementation Phase. That is what this Enabling Process is designed to do.

Upon motion of Regent Bulla, seconded by Regent Palacios, the Board approved the pilot Strategic Planning enabling process and recommended the members of the Council of Presidents appoint a work group to refine the criteria.

Regent Bulla said the Board intended to have a study session for a more in-depth discussion on the NAU Reorganization Plan at the June meeting and the Regents may vote on the issue then. President Haeger explained the drivers for the change at NAU are funding issues, student demographics, and stable enrollment. He said the university, over the last several years, has dealt with state budget cuts in one at a time ways. Last fall, when there were not only enrollment declines but shifts to the universities of things like retirement and health care costs, it became obvious the university needed to take a look at how it could best fulfill its primary mission. Dr. Haeger said residential undergraduate education needs to drive the university with graduate programs and research tied clearly to the undergraduate mission.

President Haeger called the Board’s attention to the current academic structure of NAU which is 10 schools and colleges, 34 departments, and close to 40 research and outreach centers and institutes. This organization had grown up over the years, not necessarily in a planned way, and it did not allow NAU to clearly direct resources to the priorities of the institution. There are isolated silos of academic programming, research, and teaching; it’s a very decentralized campus focused on individual units and an array of centers and institutes with inadequate oversight. The growth was historical rather than planned. Salary and benefits take 93% of the budget, leaving only 6% to operate high quality programs and 1% for capital needs.

In November President Haeger appointed a blue-ribbon restructuring committee composed of leading faculty, administrators, and staff to look at the problem. He asked the committee to consider whether the university needed changes. If they believed it did, he asked them to recommend restructuring plans. The committee presented its plan in February.

An administrative leadership retreat was then held as well, and the participants were asked the same thing. All but two of the participants in the retreat believed the university should change and made recommendations. The campus has had discussions in all areas over the last 7 to 10 weeks on the two recommended plans.

In April, after all the discussion, President Haeger announced the new NAU plan which is before the Regents in a document titled, “Northern Arizona University, A University for the 21st Century.” The plan reduces the number of schools and colleges to 6; it integrates all of the research centers into the colleges; aligns disciplines to forge new synergies in academic programming; and it maintains and enhances the professional schools in a unique consortium of professional schools. Dr. Haeger said they were trying to create an effective administrative structure, centralized around the key goals of the university. It is hoped there will be significant dollar savings within a couple of years with this plan.

Dr. Haeger said this plan will create a new institutional culture in which NAU will be a university rather than a set of independent units.

Regent Bulla said the Regents would spend more time in the June meeting on this plan. He complimented the blue-ribbon committee and the faculty and administration for coming forth with a creative concept.

President Crow said this was the latest iteration in what he is calling a design build process where ASU is designing and building, sometimes at the same instant and sometimes in steps. The objective of the design process is to build a comprehensive metropolitan research university that is an unparalleled combination of academic excellence and commitment to its social, economic, cultural, and environmental setting. ASU is facing the challenges of rapid socio/economic change, increased global competition, rapid cultural diversification, limited higher education infrastructure, and an underperforming pre K-20 education system.

Dr. Crow explained the design imperatives and how to build on existing strengths of ASU. He explained the college/school centric approach. University success will be driven by academic excellence, social, economic and cultural impact, and creativity attained by communities of students, faculty, and staff driven to compete at the highest level. ASU will encourage and allow new designs and new directions to gain distinctive differentiation for ASU colleges/schools and empower each college/school to compete at the highest level for students, faculty, and resources.

President Crow described the transformation to the new ASU model. Existing colleges/schools will have incremental changes after careful planning. There will be new directions, new models, and new space for many and new and differentiated names. The re-designed and new colleges/schools will have interdisciplinary initiatives, transdisciplinary initiatives, and new environments for intellectual fusion. Examples of new colleges and schools are the School of Life Sciences on the Tempe campus, the School of Criminal Justice on the West campus, the University College at the Capital Center campus, and the School of Industrial Administration at the Polytechnic campus.

President Crow said the implementation will be in phases. Phase 0 is the design and planning in 2004-2006, depending on the program. Phase 1 will be implementation in 2005 - 2009, depending on programs and facility needs, and Phase 2 will be the university integration and linkage from 2007 to 2012, depending on the program. By 2012 the university will be on a path to be the next great university of America, shaped by its era, its place, and its environment.

Dr. Art Ashton joined the meeting for this discussion. Regent Bulla reported the ARU/IT Subcommittee met on April 22 and discussed the pricing policy on the Masters of Engineering program. He reported the consultants are engaged in a study of ARU and it is hoped some studies will be out by late summer or early fall that will help chart the future of distance learning. Seven IT projects were considered and he is pleased with the progress being made at all three universities in their IT departments.

Dr. Art Ashton joined the meeting for this discussion. Regent Bulla said the three universities were requesting approval to collaborate to purchase a network access management system at a cost of $268,000 to help prevent computers that might be infected with a virus or not properly updated with security patches from gaining access to university networks. The Board had previously approved FY 2004 TRIF Regents Innovation Funds of $168,000 for IT projects and this money now needs to be directed to this project. An additional $100,000 is also needed and can be secured through an amendment of the Innovation Fund budget.

Upon motion of Regent Bulla, seconded by Regent Calderòn, the Board amended the FY 2004 TRIF Regents Innovation Fund budget to allocate an additional $100,000 to the Information Technology collaborative project. This reallocation is possible because another previously approved project does not require funding until FY 2005. The Board also approved the proposed use of up to $268,000 in available FY 04 TRIF Funding for a Tri-U project to safeguard campus computers.

On behalf of the entire Board, President Herstam thanked President Crow and his staff for their hospitality.

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