August 2003 Minutes - Arizona Board of Regents

A meeting of the Arizona Board of Regents was held August 15, 2003, in the Havasupai Room, Northern Arizona University, Flagstaff, Arizona. President Herstam called the meeting to order at 9:06 a.m.

PRESENT:	Regent Fred Boice Regent Robert Bulla Regent Chris Herstam Regent Jack Jewett Regent Danelle Kelling Regent Wes McCalley Regent Kay McKay Regent Christina Palacios Regent Gary Stuart Regent Donald Ulrich Superintendent of Public Instruction Tom Horne
ABSENT:	Governor Janet Napolitano

Also present were: President John Haeger, Dr. M. J. McMahon, and Dr. Elizabeth Grobsmith, Northern Arizona University; President Peter Likins, Mr. Joel Valdez, Dr. Patti Ota, Dr. Randy Groth, Dr. Richard Powell, Mr. Dick Roberts, and Mr. Greg Fahey, University of Arizona; President Michael Crow, Dr. Milton Glick, Dr. Mernoy Harrison, Dr. Kathleen Church, and Dr. Christine Wilkinson, Arizona State University; Executive Director Linda Blessing, Board Counsel Joel Sideman, Secretary to the Board Judy Garza, Dr. Tom Wickenden, Dr. Art Ashton, Ms. Cathy McGonigle, Ms. Kathy Bedard, Mr. Dave Harris, and Ms. Norma Salas, Central Office Staff; 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 August 15, 2003, Documents File.

President Herstam welcomed Regent Wes McCalley to his first official meeting as the new non-voting Student Regent.

Diane Bellock, representing the Tri-University Classified Staff Advisory Council, thanked the Regents for their efforts in working with legislators to preserve low health insurance premiums.

Barbara Strelke, a planning consultant in Tucson and the Director of the Southern Section of the Arizona Planning Association, spoke on behalf of the University of Arizona School of Planning. She said it would be difficult to advance the profession and assist the communities in Arizona with the challenges of “Growing Smarter” with the elimination of the UA Planning program. She does not believe the UA administration has presented a compelling argument for eliminating this excellent program and has not responded to critics of the elimination who have asked for a cost-benefit analysis.

Renee Red Dog, a member of the Pima County Board of Supervisors Planning and Zoning Commission, said she had hoped to earn her Masters Degree in Planning from the UA. She has been planning director for her tribe and hoped to get certification for her work. She believes the Board of Regents needs to reexamine its mission in terms of dealing with the rural communities and the tribal needs of the tribes within the State of Arizona.

Arlan Colton, a planning consultant representing the State of Arizona Growing Smarter Oversight Council, said he believed the decision to eliminate the School of Planning was made in a vacuum as the two fastest growing communities are in Southern Arizona. He believes more planners will be needed as the population grows.

Ruth Yabes, ASU School of Planning and member of many planning associations, said the UA program received full accreditation and its report has been used as an example for other programs to use when preparing for accreditation. She described the differences between the ASU program and the UA program.

Jerry Swanson, on behalf of the Arizona Planning Association, said there are not enough people with a Master of Planning degree to fill all the open positions.

Provost Grobsmith introduced the new Dean of Arts and Sciences, Laura Huenneke, and the new Interim Dean of the School of Forestry, David Patton.

President Haeger introduced engineering Professor Bill Auberlee, who works with a number of environmental programs. Professor Auberlee gave an overview of the energy and environmental research and development programs at NAU. He described how the bioscience and biotechnology programs were closely linked to the broader environmental research and development programs. He called the Board’s attention to the display in the lobby that explained programs in more detail. He said meaningful environmental research, specifically applied environmental research, is inherently interdisciplinary. He said many of the facilities and programs he had talked about were made possible by the use of Proposition 301 funds.

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

The Board approved the April 24 and 25, 2003, Executive Session, and the June 19, 2003, Regular Meeting Minutes.

The Action Plan is the primary annual planning document for the Board. The Action Plan for 2002-2003 included fourteen objectives. This has been an active year with a number of wide-ranging policy changes under the banner of the Changing /Directions project. The Board accepted the final report on its Action Plan 2002-2003 objectives.

This revision to Board Policy 6-201, “Conditions of Faculty Service,” provides additional multiple-year appointment classifications for non-tenure accruing faculty and increases the number of multiple-year appointments a university may offer. The revisions provide the opportunity to appoint qualified individuals to multiple-year terms, without tenure eligibility, whose experience and expertise can contribute to the success of the universities’ teaching research, and public service missions.

The revisions create new titles of “Professor of Practice,” “Research Professor,” and “Clinical Professor.” Persons appointed to these positions will have established themselves by expertise, achievements, and reputation over a sustained period of time to be distinguished professionals in an area of practice or discipline; but who may not have substantial academic experience. The appointments can be made for terms of one to three years and are subject to renewal. The total number of multiple-year appointments of lecturers, senior lecturers, professors of practice, research professors, and clinical professors will be limited to 15% of tenured or tenure eligible faculty at each university.

The Board approved the revisions to Board Policy 6-201, “Conditions of Faculty Service.”

The Board authorized ASU to enter into a multiple-year employment contract with Michael Chasson as Men’s and Women’s Swimming and Diving Head Coach according to the terms and conditions summarized below. The period of the contract is from its execution through June 30, 2008, with a salary of $100,000 per year, consisting of $99,000 of base salary and $1,000 of additional salary. The salary will be increased for the year commencing July 1, 2004, and on each July 1 thereafter in specified percentage increments based on specified milestones for the previous season.

Coach Chasson may receive Special Compensation annually, amounts designated as being for the Swimming Coach in agreements negotiated by ASU with manufacturers, retailers, wholesalers, vendors, and others relating to use and promotion of athletic equipment, athletic clothing, athletic shoes, and other athletic apparel. He may receive two one-time bonuses each year for specified academic performance of scholarship student athletes, one for the men’s team and one for the women’s team. He may receive the same for specified athletic performances.

Coach Chasson will have the right to use ASU facilities to conduct an off-season camp with certain restrictions. The contract contains termination clauses.

The Board authorized ASU to enter into a multiple-year employment contract with Sheila McInerney as Women’s Tennis Head Coach according to the terms and conditions summarized below. The period of the contract is from its execution through June 30, 2008, with a salary of $65,000 per year, consisting of $64,000 of base salary and $1,000 of additional salary. The salary will be increased for the year commencing July 1, 2004, and on each July 1 thereafter in specified percentage increments based on specified milestones for the previous season.

Coach McInerney may receive Special Compensation annually, amounts designated as being for the Swimming Coach in agreements negotiated by ASU with manufacturers, retailers, wholesalers, vendors, and others relating to use and promotion of athletic equipment, athletic clothing, athletic shoes, and other athletic apparel. She may receive Supplemental Compensation for specified academic and athletic performances.

Coach McInerney will have the right to use ASU facilities to conduct an off-season camp with certain restrictions. The contract contains termination clauses.

The Board authorized ASU to enter into a modification of the existing multiple-year employment contract with Eugene Dubois Smith as Executive Director of Intercollegiate Athletics according to the terms and conditions summarized below. Director Smith’s existing contract will be extended through June 30, 2008. The sport of Women’s Water Polo will be added to the current paragraph 6.1 concerning performance bonuses. The other terms of his contract will remain the same.

The Board authorized ASU to enter into a modification of the existing multiple-year employment contract with Dirk Koetter as Head Football Coach according to the terms and conditions summarized below. Coach Koetter’s existing contract will be extended through January 6, 2008. The other terms of his contact will remain the same.

The Board granted Project Approval to ASU Main for Parking Structure 7. There have been no scope or significant changes to this project since Project Implementation Approval was granted at the April 2003 meeting. This facility will provide a 1,500 space, multi-tiered parking structure on north campus adjacent to Wells Fargo Arena.

The Board granted Project Approval to ASU Main for the South Loop Infrastructure Project. This project will provide an extension of utilities to a new Residence Life facility on Lot 40 and to future facilities on Lot 42. Utilities provided include chilled water supply and return, steam, condensate return, primary electrical power, emergency power, telecommunications, and data. This project received Conceptual Approval from the Board in May of 2000 and has not changed in scope or budget since that time.

The Board granted permission to the UA to enter into a 20-year lease with Ash Tucson Properties, L.L.C., for approximately 4 acres of land and improvements, subject to approval of legal documents by University and Board Counsel as summarized below.

The university will lease the site to provide a centrally located Park and Ride lot to offset limited on-campus parking and in support of parking requirements for nearby university intramural athletic playing fields. Use of the existing quonset buildings on the property will provide storage for Park and Ride shuttle vehicles.

The first year base rent will be a rate of $4,500 per month; $54,000 per year plus applicable taxes, with a three percent increase every year thereafter. The source of funds is parking revenues.

The Board granted permission to the UA to purchase real property exceeding $250,000, located at 1415 North Sixth Avenue and outside the official University Planning Area, at the sales price of $4.2M, subject to approval of legal documents by University and Board Counsel as summarized below.

The subject property is approximately 2.94 acres of land improved with a 46,782 square foot facility including office and flex space with wet lab capacity. Ownership is currently in the name of 3333 Partners, L.L.C., who initiated the sale. The purchase requires a variance from existing university policy as the property is situated .8 miles from the current University Planning Area. The source of funds is Local Funds.

The Board authorized the UA to approve an amendment to Grant No. P42ES04940 from the National Institute of Environmental Health. The purpose of the amendment is to provide the remaining support for year four and year five of the Hazardous Waste Risk and Remediation in the Southwest Project. Additional tasks have been added to the ongoing research project. The amendments will bring the total amount of this award to $15,633,810. The anticipated life of the project will go through March 31, 2005.

The Board authorized the UA to approve a contract amendment to Contract No. SA01T2801GM from Lockheed Martin. The purpose of this effort is to support year three through year five of the Lockheed Martin Space Systems Company, Missiles and Space Operations Lotis 63.5 Meter Collimator Project. The amendments will bring the total amount of this award to $35M. The anticipated life of the project will be through June 16, 2008.

Dr. Tom Wickenden joined the meeting for this discussion. He said the legislature passed a bill in 1998 mandating the Board of Regents to design and implement a program to award Honors Endorsements to high school graduates who demonstrate an extraordinary level of knowledge as measured by tests in mathematics, English, science, and social studies. During the past five years, criteria were developed by a representative work group and approved by the Board. A pilot program was implemented involving students at a sample of high schools.

The current criteria requires students to meet performance and testing criteria. The Board is being asked to consider two possibilities for modifying the criteria and for transferring responsibility for the program. Superintendent Tom Horne has a proposal that would transfer the program to provide an incentive for high school students to study hard and score as high as possible on the AIMS test. The Arizona Business and Education Coalition, ABEC, has applied for a grant, with the support of the Superintendent, to develop a state scholars program that would provide incentives for high schools students to complete the core of courses required for admission to the universities.

Because the Honors Endorsement Program has more to do with K-12 than with higher education and because the program is an unfunded mandate for the Regents, the Board was asked to discuss and give direction on options for modifying the program. In addition, if the Board decides to consider some option to modify the program, the Regents were asked to consider seeking a change in legislation to transfer responsibility for the Honors Endorsement Program to the Department of Education.

Superintendent Horne presented his proposed modified criteria for the Honors Endorse-ment Program and tuition waivers. He would like to try to motivate and stimulate the brightest students to exceed standards on the AIMS test. The AIMS test needs to be a reasonable test so that reasonable skills and knowledge are needed to graduate and get a standard diploma. However, that reasonable standard should not be the only standard so the brightest students are aiming too low in their studies. He would like to offer an incentive for the brighter students to exceed the standards on all three parts of the AIMS test or on two parts plus two AP courses. He would like to see those students given tuition waivers as an incentive.

Superintendent Horne would like to see (Part 1) the students who complete all 16 Core Competency courses by graduation with a B or better in each course, and (Part 2) meet at least one of the following academic requirements: Cumulative GPA of 3.5 on a 4.0 scale or rank in the top 5% of high school graduating class upon graduation, and (Part 3) meet at least one of the following options: exceed the standards on 3 out of the 3 AIMS Tests or exceed the standards on 2 out of the 3 AIMS tests and get at least 3's on 2 of the AP or IB Tests. He asked the members of the Council of Presidents to consider his proposal.

President Likins said he appreciated the referral to the Council of Presidents so data can be obtained regarding the number of students that currently would qualify for this waiver, how many already receive waivers in this group, and how the AIMS test performance correlates with performance from other tests.

Regent Bulla agreed there is a need for additional research to see if this will add to the number of tuition waivers currently granted; and, if so, how many will be added. He sympathizes with the attempt to motivate students. He suggested it might be better to start with multiple criteria with the AIMS test highlighted in some manner. He would like to keep the Board of Regents involved due to the tuition waiver issues.

Regent Kelling expressed a concern with the number of high schools that offer AP and IB tests. She knows the larger high schools do, but is afraid many small high schools do not and is therefore concerned about making that one of the criteria. Regent Stuart asked if exceeding the standards on the AIMS test would be the same as scoring a 1300 on the SAT and was told there is a need to check the data to find out.

Superintendent Horne said that none of the AIMS tests currently had more than 10% of the students exceeding the standards. When the requirement becomes passing two or three of the tests, the percentage will decline. He believes most of the students that will qualify under the conditions listed will already be receiving tuition waivers and he is hoping the research will show the additional cost of this program will be marginal. He said he would also like this program to be used to encourage high schools to offer AP courses and for students to do well in these courses.

President Herstam agreed there is a need for more data, but he believes Superintendent Horne is headed in the right direction. He asked Executive Director Blessing to comment on the proposal to move this program from the Regents to the Department of Education. She said the program currently is an unfunded mandate from the legislature for students to receive a gold-seal on their high school diploma. The central office has done a pilot program in nine schools using policy analysts to run the program. The policy analyst positions have been eliminated due to budget cuts and she does not see how current staff can take this program to full scale. She would be pleased to work with Superintendent Horne to find a way to transfer the program to the Department of Education and still have the Regents engaged in some fashion.

Regent Boice asked the Council of Presidents to see if this program could be implement-ed. He welcomes the idea of doing something for bright students.

Regent Bulla said Northern Arizona University was requesting Board approval of its FY 2004 Capital Development Plan (CDP). Mr. Lorenz presented the NAU CDP. He said NAU had changed their plan, based on research infrastructure. The number one addition to their plan was the new College of Business Administration Building. He mentioned the projects that had been previously approved. Dr. Cain explained the new Business Building.

Upon motion of Regent Bulla, seconded by Regent McKay, the Board approved the Northern Arizona University FY 2004 Capital Development Plan and authorized NAU to proceed with the new College of Business Administration Building.

Mr. Joel Valdez joined the meeting for this discussion. Regent Bulla said the University of Arizona was requesting Board approval for an amendment to its FY 2004 Capital Development Plan. President Likins said the AHSC Clinical Research Facility is a “place holder” for what it is hoped will become a joint ASU-UA proposal for a single building that was being presented as a $27M building but that may increase in scope and cost if ASU is able to contribute its share. However, to meet the promises and obligations to the City of Phoenix, UA is beginning the approval process. Mr. Valdez explained this project and request for the Residence Life Building Renewal Phase I.

Regent Bulla asked if the proposed research facility would have a name other than the AHSC. President Likins said he believed a logo would be developed that would include the names of the three universities. President Crow said ASU plans to bring a request for $10M for the research project to the next Regents’ meeting.

Upon motion of Regent Bulla, seconded by Regent Boice, the Board granted approval for the requested amendment to the UA FY 2004 Capital Development Plan and authorized the UA to proceed with the AHSC Clinical Research Facility and Residence Life Building Renewal Phase I. The Board also authorized the UA to exceed advance planning and preliminary design limits for Residence Life Building Renewal Phase I and AHSC Clinical Research Facility.

Dr. Art Ashton joined the meeting for this discussion. Regent Bulla thanked the presidents and their staffs for their continuous improvement in preparing responsive and focused Five-Year Strategic Plans. He said the Board was being asked to review and approve the new Five-Year Strategic plans for the universities and the central office prior to their submission to the executive and legislative branches of government. Each university was asked to address Changing Directions accomplishments, enrollment management plans, and plans related to their recommendations in the Battelle Institute study titled: Positioning Arizona and its Research Universities: Science and Core Competencies Assessment.

President Haeger reported NAU had a productive year and highlighted some of the completed projects. This year the PeopleSoft software program was implemented in all the administrative systems in the university. The university successfully completed a North Central evaluation and moved its attention to undergraduate residential education. The Gateway Advisory Center was opened and the old central dining facility was renovated. More students were brought into the off-campus nursing and teaching programs. Because of the passage of the research bill, Proposition 301 money, and bonding authority, NAU is about to embark on the largest capital construction and renovation program in its history.

Dr. Haeger said the driving force for NAU for the next five years will be the understanding of its core mission–residential undergraduate education. There will be a few graduate work-force development courses that will be closely tied to undergraduate programs. The research mission will likely grow in focused areas. He believes NAU will serve place-bound students through various delivery systems and with strong relationships with community colleges. One of the chief needs noted is the increase of salaries over three to five years. Deferred maintenance and operating costs are also major issues and a dependable plan for both is needed. The next area of growth on the Flagstaff campus is the South Campus and NAU would like to reconstruct this part of the campus.

President Crow said there were three simultaneous efforts going on in strategic planning at ASU. They are dramatically increasing the size and scope and positioning the enterprise all at the same time. Strategic planning is focusing on 1) Enhancing the quality and access of the ASU of today; 2) Building an entrepreneurial culture of national academic competitiveness within the institution as it continues to emerge; and 3) Designing and launching both program and facility construction and development efforts on a very large scale (two 20,000 student branch campuses within the context of ASU in addition to moving the main campus to a more research intensive focus).

Dr. Crow said all critical numbers are at record positive levels–applications, quality of students, diversity of students, graduation rates, freshman retention rate, minority faculty hires, and national academy members added to the faculty. In addition, as a part of enhancing quality and access, ASU is committing to five and ten year objectives to allow the measurement of success on each of these measures, holding the deans, vice presidents and the president responsible.

Dr. Crow said research expenditures are at a record rate for ASU and the target is to take the research expenditure increase rate to a 20% growth rate per year. This is the only way for ASU to grow to 50th among all the major research universities in the country. The new senior hires this year illustrate the scale at which ASU has been able to recruit. President Crow explained ways the university was moving to accomplish its objectives.

President Likins said the written material included the University of Arizona’s Strategic Plan, including its mission statement with lists of strategic issues and goals. He focused on the accomplishments during the past year, saying the faculty and staff have achieved many great things. The university is larger than it has ever been and that is a signal of caution since the university intends to manage itself by remaining at a responsible capacity limit. Minority enrollment is at a higher level than ever. UA is focusing on the development of its Honor’s College and major investments were made in advising. There have also been major commitments in financial aid. Two residence halls were opened. These are many student centered accomplishments.

Dr. Likins said there had also been a commitment to strengthen the university’s research agenda and to “Focused Excellence.” There are several world-class institutes at the UA and it ranked 14th in the nation among public universities in the last NSF accounting of research expenditures. He expressed his appreciation for the policy changes made by the Board during the last year that granted more flexibility to the universities.

Regent Bulla complemented the universities on their accomplishments and on their planning efforts. Regent Jewett thanked Regent Bulla for his work in the planning area and said he believed the plans are much improved and more relevant.

Upon motion of Regent Bulla, seconded by Regent Jewett, the Board approved the Five-Year Strategic plans of the major budget units of NAU, ASU Main, ASU East, ASU West, UA Main, the Arizona Health Sciences Center, and the central office.

Dr. George Davis and Dr. Randy Groth joined the meeting for this discussion. Regent Boice said this proposal was a discussion item at the June meeting and was being brought back with additional information for Board approval. The proposal for increasing curricular autonomy at UA South is part of the Focused Excellence initiative, and it also provides a context for new degrees such as the Bachelor of Applied Science Degree that was approved for implementation at the June meeting. In response to Regent questions in June, the written material included additional information about the implications of the proposed increase in curricular autonomy for future budget requests, enrollments, degrees awarded, faculty hires, and the construction of facilities. It also compares the UA South curricular proposal with the curriculum development processes at ASU East and West and NAU Yuma.

Dr. Davis said UA South would continue to work with UA Main. Dr. Groth said authorizing this would allow UA South to better meet the needs of its rural constituents. Upon motion of Regent Boice, seconded by Regent McKay, the Board approved the plan for greater curricular autonomy for UA South.

Dr. Tom Wickenden and Dr. Jim Pritchard joined the meeting for this discussion. Regent Boice said the Board has reviewed and approved university plans for the awarding of financial aid resources since last year. This year’s plan reflects the changes in need-based financial aid that were approved at the meeting last March as part of Changing Directions. Dr. Wickenden gave a quick overview of the plan.

Regent Stuart asked what would happen to students with the changed Federal rules concerning Pell grants. Dr. Pritchard said the universities do not see a large number of students being disenfranchised because of the new rules and he does not believe there is a need for the universities to change their guidelines.

Regent Jewett said he believed the Regents should become familiar with the Congressional Reauthorization Act as the focus may not be aligned with Board policies concerning tuition and financial aid. There is a possibility it will put caps on tuition and there may be less money for Pell Grants.

Regent Jewett asked how the financial aid measures would keep the Board informed since there is a delay in the availability of data. Dr. Wickenden said a discussion has begun with the financial aid directors about providing some preliminary information on this year’s actual distribution of aid so the Board will see a followup to the Plans for 2004 in the actual report this Spring. He suggested the Board might like to see a plan for implementing all the changes in reporting measures that have been adopted the past year, which reports they will be incorporated in, and when they will come to the Board. Regent Jewett said that would be helpful. Regent Boice asked the members of the Council of Presidents to work on this plan.

President Likins said the new Pell Grant rules will be implemented next Fall, not this year. Regent Bulla encouraged the acceleration of the Board receiving information as there is still such a large amount of unmet need, even with the Board’s and the universities’ attempts to find additional revenue for financial aid. He sees this as a growing problem with the current economy. Dr. Pritchard said the Federal government is pushing the responsibility for funding higher education to the states and there is a need to try harder to get the state to increase its contribution rather than placing additional burdens on the students.

Upon motion of Regent Boice, seconded by Regent McKay, the Board approved the FY 2004 and FY 2005 Financial Aid Plans for the universities.

Provost Milt Glick and Provost Elizabeth Grobsmith joined the meeting for this discussion. Regent Boice said there were two requests for new centers and one request to implement a new academic program. Provost Glick explained ASU’s request for two new interdisciplinary centers that were initially funded and developed out of the office of strategic initiatives with the intent they will become self-supporting over a four-year period or less. They are consistent with President Crow’s expectations to develop centers that bring people together from different disciplines and take on important problems.

Regent Bulla said he supported the proposed Center for Affordable Homes and the Family as there is a great need for affordable housing in Phoenix and he believes help in this area is overdue. Regent Stuart suggested ASU to come back to the Board with a broader perspective of the Center for the Study of Religion and Conflict. He is curious who else in America is doing this, where they intend to go with the consequences of the study, and what the impacts of the research are likely to be both nationally and internationally. He believes it is a very exciting study. President Crow said senior members of the Center could be scheduled to give a presentation at one of the next Board meetings scheduled at ASU.

Regent Boice asked if there was any connection with Habitat for Humanity and the Center for Affordable Homes and was told the principle donor had been associated with Habitat. Provost Glick said this is an attempt to take the lessons learned at Habitat and build on a larger scale.

Upon motion of Regent Boice, seconded by Regent Kelling, the Board authorized Arizona State University to establish the Center for the Study of Religion and Conflict and the Stardust Center for Affordable Homes and the Family.

Dean of the NAU School of Communications Roger Lavery joined the meeting for this presentation. Provost Grobsmith explained NAU’s request for the implementation of a Master of Arts in Applied Communication which is a 36-credit graduate degree program to begin in the Fall of 2004. It is intended for students on campus, those who are place bound, and those who are working around the state. It offers career enhancement for those in leadership and managerial positions. This program will be the only one available to students outside the Tucson and Phoenix area.

Regent Stuart said the Regents are trying to stretch revenues by avoiding duplicative programs at the three universities. Even though he is not against this program, he would like to see the universities, in the planning process, avoid as many duplicative programs as possible. Upon motion of Regent Boice, seconded by Regent Stuart, the Board authorized Northern Arizona University to implement the Master of Arts in Applied Communication.

Mr. Josh Allen, Ms. Gale Tebeau, and Mr. Dick Roberts joined the meeting for this discussion. Ms. Tebeau explained the State Expenditure Authority and the Initial All Funds Operating Budget are usually adopted in June, prior to the beginning of the fiscal year. However, due to the lateness of the legislature this year, they are being presented now for adoption.

Ms. Tebeau explained the FY 2004 State Expenditure Authority request. The proposed FY 2004 Arizona university system state expenditure authority is $1.1B, which is a 3.8 percent increase over revised FY 2003 (from tuition increases) and includes $746.9M in state appropriations, which maintains the FY 2003 level after budget cuts, and $312.3M in state collections ($38.8M of 14.2 percent over FY 2003).

Upon motion of Regent Palacios, seconded by Regent Jewett, the Board approved the FY 2004 State Expenditure Authority for the universities and the central office as presented.

Mr. Josh Allen, Ms. Gale Tebeau, Mr. Dick Roberts, and Dr. Mernoy Harrison joined the meeting for this discussion. Regent Palacios said the Board was being asked to review and approve the FY 2004 Initial All Funds Operating Budget for the universities and the central office. Ms. Tebeau explained the All Funds Operating Budget combines the State Expenditure Authority and local funds in one comprehensive report that includes projected revenues, expenditures, and year-end balances. The initial All Funds includes reports on investment income, indirect cost recovery, plant fund projects, and gifts, grants, and contracts. It reflects changes since the spring update in April and includes accounts with deficits of $100,000 or more.

Regent Boice asked about the notation that the Intercollegiate Athletic Deficit at ASU is to be zeroed out by the end of 2005. President Crow said it should read 2004 as that was the agreement with the Board.

Upon motion of Regent Palacios, seconded by Regent Jewett, the Board approved the FY 2004 Initial All Funds Operating Budget for the universities and the central office.

Dr. Mernoy Harrison, Mr. Josh Allen, Ms. Gale Tebeau, and Mr. Dick Roberts joined the meeting for this discussion. Ms. Tebeau explained the preliminary State Operating Budget requests are being provided to give the Board an opportunity to provide guidance for the development of the final request that will come forward in September. The system requests total $1.184B, a $124.8M increase (11.8 percent) over the FY 2003 base, and a 16.7 percent increase over the FY 2003 general fund base.

Ms. Tebeau said $88M of the $124.8M is for the continuation component with the large
piece of that being enrollment growth, the 22 to 1, at $53M. Of the $53M, $43M is for ASU’s enrollment growth. It also includes $23.5M for health insurance and state retirement increases, $10.3M for new facilities support, and $1.2M for WICHE and the Arizona Financial Aid Trust Fund.

Ms. Tebeau said the request also includes $36.6M in decision package requests with a common theme of the Arizona 21st Century Fund, a strategic investment targeting the recruitment and retention of highly qualified faculty.

President Haeger said the NAU request is an effort to recognize NAU needs to constantly pay attention to its humans assets on campus, both faculty and staff. The largest single increase is money for faculty salaries; it is part of the Arizona 21st Century Fund. The second piece is for capital construction. There is also an attempt to equalize the money lost through health insurance costs.

President Crow said ASU’s focus is how to manage growth and enhance quality at the same time. Their budget request has been focused around the basic assumption there is a need for core support to handle the number of students arriving in the year ahead as well as the additional students from this year. This will also allow the building out of the west and east campuses to serve the growth of students expected on those campuses. Consistent with his remarks, he asked to amend the ASU budget request by withdrawing the strategic investment $15M request from the list and focusing all on core budget needs.

President Likins asked the Regents to look at the competitive salary request and the building renewal shortfall. The universities are required to submit the salary shortfall and building renewal request formula numbers each year, but they have not been funded for several years.

Dr. Likins said the UA budget request followed the same health insurance/ASRS retirement rate adjustments, enrollment growth formula, and operations and maintenance as the other two universities. He said the universities learned last year that cooperation on one request accomplished more with the legislature than individual requests. The universities decided to request strategic reinvestment money through the Arizona 21st Century Fund to fund key personnel.

President Herstam made three points on behalf of Governor Napolitano, who was unable to attend the meeting. She still strongly supports proper funding of the university system. However, the requested 16.7% increase from the general fund concerns her at a time when the state deficit could hit $400M this year. She asked the three presidents to keep looking for alternative funding as the demand for state general funds for other state services keeps increasing.

Regent Bulla said the deletion of the 21st Century Fund from the ASU budget makes ASU different from the other two universities. President Crow said each university is in a different stage in their development and competitive position. ASU must focus its energy on building out the east and west campuses, managing enrollment growth, and enhancing quality on the main campus. To do this, they must be successfully funded at the core level.

Regent Bulla asked if the funding of the enrollment growth was a higher priority for ASU than the 21st Century Fund and was told growth driven revenues give more flexibility than the 21st Century Fund. It is hoped salary adjustments can be made with other mechanisms. Regent Bulla asked if the budget assumptions were based on the tuition being raised to the top of the bottom third. The presidents said they had used the best-guess numbers for that position, but until the increases were known for other universities, it was just a guess.

Regent Boice asked for a description of “the core.” President Crow said it was those dollars that go to the base operations of the university relating to the undergraduate students coming to the university and the core support is made up of enrollment growth and the kinds of new facilities support that was listed. The Federal government and donors do not provide enrollment growth funding.

Regent Palacios directed the Board’s attention to the single page behind the last tab in the Board Book titled, “Capital Development Process.” That page presented the impact of the capital projects proposed at this meeting on each university’s debt ratio.

Mr. Dave Harris, Mr. Dave Lorenz, and Dr. David Cain joined the meeting for this discussion. Regent Palacios said Northern Arizona University was requesting Project Implementation Approval for a new College of Business Administration building. This 100,000 square foot building, with an estimated cost of $22M, was presented in detail earlier in NAU’ s Capital Development Plan.

Upon motion of Regent Palacios, seconded by Regent Bulla, the Board granted Project Implementation Approval for the College of Business Administration and authorized NAU to proceed to complete design and construction documentation.

Mr. Dave Harris, Mr. Dave Lorenz, and Dr. David Cain joined the meeting for this discussion. Regent Palacios said Northern Arizona University was requesting Revised Project Approval for Campus Infrastructure Upgrades with a budget increase of $5M.

The total estimated cost of the project is $17.6M. This project will extend infrastructure upgrades recently completed on North Campus to South Campus and will accommodate anticipated new construction as a result of the research funding recently approved by the legislature.

Upon motion of Regent McKay, seconded by Regent Bulla, the Board granted Revised Project Approval with a budget increase to Northern Arizona University for Campus Infrastructure Upgrades.

Mr. Dave Harris and Mr. Joel Valdez joined the meeting for this discussion. Regent Palacios said the next two University of Arizona projects represent the first projects proposed to be funded from state appropriations for research infrastructure. Since these appropriations would not be available until FY 2008, she asked Mr. Valdez to describe how the university intended to finance debt service in the interim.

Mr. Valdez said the university intends to capitalize interest for four years, using dollars the university has banked. They have $3M from the Federal government with another $2M coming in October. There is also $10M from the Ag Endowment Fund.

Regent Boice asked where the capital for the building would come from and was told they planned to sell Certificates of Participation. The debts would be retired as described above. Regent Boice asked that this be listed under the funding source in future paperwork. The total estimated cost of this project is $54.4M.

Upon motion of Regent Palacios, seconded by Regent Jewett, the Board granted Project Approval to the University of Arizona for the Medical Research project.

Mr. Dave Harris and Mr. Joel Valdez joined the meeting for this discussion. Regent Palacios said the University of Arizona was requesting Project Approval for the 89,000 square foot expansion of the Chemistry Building at an estimated cost of $45M. The project will include research laboratories and faculty offices.

Upon motion of Regent Palacios, seconded by Regent Boice, the Board granted Project Approval to the University of Arizona for the Chemistry Building Expansion project.

Mr. Dave Harris and Mr. Joel Valdez joined the meeting for this discussion. Regent Palacios said the University of Arizona was requesting Project Approval for the 113,000 square foot Drachman Hall at an estimated cost of $30M. The project will provide space for the Colleges of Public Health, Pharmacy, and Nursing.

Upon motion of Regent Palacios, seconded by Regent McKay, the Board granted Project Approval to the University of Arizona for the Drachman Hall project.

Mr. Dave Harris and Mr. Joel Valdez joined the meeting for this discussion. Regent Palacios said the University of Arizona was requesting authority to proceed with eminent domain, if necessary, to acquire a property located at 1244 North Cherry Avenue in Tucson. This action was necessary in order to construct the Institute for Biomedical Sciences and Biotechnology Building. The appraised value of the property is $133,000.

Mr. Valdez said this is the last parcel in this particular block that will be used to build the Institute. The property is owned by two brothers and one has agreed to the sale. The other brother believes the property should have been zoned for commercial use and should sell for more. However, the brothers granted permission to demolish the house on the property and the university has taken it down. Mr. Valdez said he believed both brothers would agree to the sale when they realized the Board had authorized eminent domain proceedings.

Upon motion of Regent Palacios, seconded by Regent Boice, the Board granted permission to the University of Arizona to initiate eminent domain proceedings, if necessary, to acquire the property located at 1244 North Cherry Avenue, subject to approval of legal documents by University and Board Counsel.

Mr. Dave Harris and Mr. Joel Valdez joined the meeting for this discussion. Regent Palacios said the University of Arizona was requesting authority to purchase or to initiate eminent domain proceedings, if necessary, in order to acquire property located at 1215 North Vine Avenue in Tucson in order to construct the Highland Avenue Parking Structure.

Mr. Valdez said the university was in the process of purchasing this property when it was sold to someone else. The new owners have changed the property from a single family home to apartments and are in the process of trying to secure some zoning variances from the City of Tucson. The original appraisal was $250,000 for the single family home. The appraisal since the conversion is approximately $920,000. This property is necessary for the Highland Avenue Parking Structure project. The university is currently waiting to see the results of the property owner’s request for zoning variances.

Upon motion of Regent Palacios, seconded by Regent Jewett, the Board gave permission to the University of Arizona to purchase and, if necessary, to initiate eminent domain proceedings to acquire the property located at 1215 North Vine Avenue, Tucson, subject to approval of legal documents by University and Board Counsel.

Mr. Dave Harris, Dr. Mernoy Harrison, Mr. Scott Cole, Mr. Grady Gammage, Jr., and Mr. Richard Parker joined the meeting for this discussion. Regent Palacios said Arizona State University Main was requesting authority to ground lease an approximately 3.4 acre parcel to ASUF, LLC, an Arizona limited liability company to be formed by the ASU Foundation, and approval to lease approximately 90,000 square feet of office space and a related parking structure from ASUF, LLC.

President Crow said this was a move on the part of the ASU Foundation to build a headquarters building for the Foundation, two floors of which would be available to the Foundation and four floors of which would be available to ASU for a range of academic purposes. It will be positioned in a strategic location as the university’s physical identity changes over time and shifts from its present location to more toward the center of downtown Tempe.

Dr. Harrison introduced Mr. Richard Parker, the past chair of the ASU Foundation Board of Directors, and Mr. Grady Gammage, Jr., Chair of the ASU Foundation Real Estate Committee. Mr. Gammage said the Foundation was excited by this project. The Foundation is donating some land to the university, leasing it back from the university, building a building on that land, occupying some of that building, and leasing some of the building back to the university. They are using a fee developer for the project and have done an extensive interview and RFP to hire the contractor, the developer, the architects, and the other aspects of the project. This has been done by volunteers from the Foundation Board.

Regent Stuart said he heard President Crow say earlier that entrepreneurial does not mean a business or even acting like a business; it means a competitive focus and achieving a competitive advantage within the higher education world. This proves two not-for-profit entities can be entrepreneurial. He believes this is a wonderful project.

Regent Ulrich thanked the Foundation for their participation in this project. Regent Boice asked for an explanation of the numbers and Mr. Harris explained what was included in the number listed in the book for square footage.

President Crow introduced Mr. Scott Cole, who was recently promoted to Deputy Vice President for University Services. He will be coordinating, as part of Dr. Harrison’s team, all the universities’ activities related to facilities, construction, and real estate. Dr. Harrison said Mr. Cole’s role is university wide, including all three campuses, the Downtown Center, and all capital facility projects and planning.

Upon motion of Regent Palacios, seconded by Regent Bulla, the Board authorized the President, Executive Vice President for Administration and Finance, and the Associate Vice President for Administration from Arizona State University to take all appropriate actions to negotiate, sign, and enter into the Ground Lease with ASUF, LLC, for the approximately 3.4 acre Development Site on substantially the terms described here.

The Board also authorized the President, Executive Vice President for Administration and Finance, and the Associate Vice President for Administration of ASU to take all appropriate actions to negotiate, sign, and enter into the Office Lease with ASUF, LLC, for approximately 90,000 rental square feet of space in the Office Building on substantially the terms described herein, and for the lease of the parking structure on substantially the terms described herein.

The Board also authorized the President, Executive Vice President for Administration and Finance, and the Associate Vice President for Finance and Treasurer for ASU to execute and deliver a continuing disclosure understanding and such other certificates or documents as may be necessary and proper in conjunction with the ASUF, LLC financing.

Mr. Dave Harris, Dr. Mernoy Harrison, and Mr. Scott Cole joined the meeting for this discussion. Regent Palacios said Arizona State University East was requesting Project Approval with a budget increase of approximately $800,000 for the renovation of Building 785 into the Agribusiness Center. The total project cost has increased to $6.5M from the estimate of $5.7M included in the 2003 Capital Development Plan.

Mr. Cole said ASU East is in the process of renovating Building 785, which came to ASU from the Air Force, into an agribusiness center that will be mainly an instructional building. Upon motion of Regent Palacios, seconded by Regent Stuart, the Board granted Project Approval and an $827,092 budget increase to renovate Building 785 at ASU East.

Regent Ulrich asked for a report on how many buildings at ASU East could be renovated, what the square footage would be, and what they could be used for. President Crow said ASU had launched an all campus, all university, comprehensive development plan that will identify for Regents exactly where ASU plans to take Williams Gateway, how it will be evolved to the 20,000 students, and identify the kinds of facilities that ASU will be moving forward. He plans to set the context at the September meeting and follow in January with an update on the comprehensive development plan. He believes the master plan will be ready to come to the Regents in April 2004.

Dr. Harrison said his preliminary estimate of how many buildings are available for renovation that have not been already renovated is about two.

Regent Palacios said Arizona State University Main was requesting the authority to 1) Sell System Revenue Bonds in an amount not to exceed $103M for the purpose of financing several ASU capital projects; 2) Pay the costs of issuance for the bonds; and 3) Take all actions and enter into all necessary agreements related to the bonds.

Dr. Harrison said the projects to be financed with the bonds are AZ Biodesign Institute, Phase I; Parking Structure 7; Infrastructure Improvements; USB Backfill, Phase II; and Grady Gammage Memorial Auditorium Rigging. This is the first bond issue to be done on a university-wide basis. As a result, revenues from ASU East and ASU West will be included as part of the bond capacity. President Herstam asked if all these projects had already received Board approval 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 $103M 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, including the change in pledged revenues from ASU Main only to the total university, as provided in a resolution approved by Board Counsel and staff prior to Board approval.

Ms. Kathy Bedard, Dr. Tom Wickenden, Dr. Richard Powell, Dr. Carl Fox, and Dr. Jonathan Fink joined the meeting for this discussion. Regent Palacios said the Board was being asked to review and approve the Technology and Research Initiative Fund (TRIF) Annual Report for the year ended June 30, 2003. The approved report will be submitted to the Governor and Legislature by September 1 as required by statute. The Board is also asked to review and approve the revised TRIF budgets for FY 2004-2006.

Ms. Bedard summarized the annual report of TRIF expenditures and outcomes for FY 2003. The original budget projected $47.9M in new TRIF revenues for 2003 and $46.2M was received, a 3½% revenue shortfall. The universities and central office expended 81% of available TRIF funds during 2003, up considerably from the prior year when only 54% of available funds were expended.

Each of the Vice Presidents for Research and Dr. Wickenden highlighted their TRIF initiatives. Regent Ulrich asked if all of the programs were up for review in 2004 and was told yes. He asked to see the return on investment on each of the programs as was discussed in the business plans when it comes for review. Regent Palacios said it was an excellent report and presentation, but she recommended a more streamlined written report that emphasizes results and is not quite as long as the 105 pages from this year.

Upon motion of Regent Palacios, seconded by Regent Boice, the Board approved the FY 2003 Technology and Research Initiative Fund (TRIF) annual report, including revised FY 2004-2006 budgets, for submission to the Governor and the Legislature on September 1, 2003.

Regent Palacios said the Board was being asked to approve the appointment of Frederick Hurst to the position of Interim Vice President for Extended Programs and Dean of Distance Learning. The Board’s Assessment and Compensation Committee met on August 8, and reviewed President Haeger’s recommendation for this appointment.

President Haeger said one of the major changes in Changing Directions emphasis is the firm recognition of distributed learning and extended programs to the future of the university. At this point in time, distance education has a budget of $11M and is capitalizing investments that the university has made over ten or eleven years that total $50M. It counts for ¼ of all student credit hours generated by NAU. In this environment of distributed learning and distance education programming, NAU needs to be a fast-acting, highly entrepreneurial part of the university and there needs to be a direct reporting line to the president for this position.

The title of Dean remains with Mr. Hurst as the issues relating to faculty development and curricular control will still be reported to the provost rather than directly to the president. Upon motion of Regent Palacios, seconded by Regent McKay, the Board approved the appointment of Frederick Hurst to the position of Interim Vice President for Extended Programs and Dean of Distance Learning at Northern Arizona University at an annual salary of $136,000.

Regent Palacios said the University of Arizona was requesting approval of a proposed new management structure for the central administration, including the establishment of a Senior Executive team. When the Board’s Assessment and Compensation Committee met on August 8, it reviewed President Likins’ recommendation for these appointments.

President Likins said he was recommending two substantial changes in the senior management structure of the university. One is to identify a senior executive team consisting of Dr. George Davis as Executive Vice President, Mr. Joel Valdez as Senior Vice President, and Dr. Saundra Taylor as Senior Vice President. He is also creating a position called Vice President for Enrollment Management and asking Dr. Patti Ota to assume that responsibility. He proposes to fill the position vacated by Dr. Ota, Vice President and Senior Associate to the President, with Ms. Edith Auslander. Dr. Sally Jackson will change from the Vice Provost to Vice President for Learning and Information Technology and Chief Information Officer. Dr. Likins has eliminated the position of Vice President for Undergraduate Education and the Dean of the Graduate School, abandoning a structure that focuses separately on graduates and undergraduates. The position of the Vice President for Enrollment Management will be concerned with all students.

Upon motion of Regent Palacios, seconded by Regent McKay, the Board granted the University of Arizona approval to proceed with the reorganization of its central administration and approval of the vice-presidential appointments as presented, with annual salaries as follows: Dr. George Davis, Executive Vice President and Provost, $225,000; Dr. Saundra Taylor, Senior Vice President for Campus Life, $171,000, Dr. Patti Ota, Vice President for Enrollment Management, $152,000, Ms. Edith Auslander, Vice President and Senior Associate to the President, $148,000, and Dr. Sally Jackson, Vice President for Learning and Information Technology and Chief Information Officer, $168,000.

Regent Bulla chaired this portion of the meeting. Regent Bulla said this was a request for funding approval for an electronic library project. The $1,301,456 project provides access to all students throughout the tri-university system to previous files of professional journals, e-books, and scholarly monographs. The project supports ARU programs in engineering, math, and teacher education. The purchase of this library, coupled with the current periodicals and books, will make this the richest distance learning library available anywhere in the United States.

Upon motion of Regent Bulla, seconded by Regent Boice, the Board approved $1,301,456 in funding for the Tri-University ARU Electronic Library Project.

Dr. David Camacho reported the Arizona Faculties Council (AFC) said their agenda for the next year would be to continue to participate in the Learner Centered Program grant program. The AFC would like to continue its relationship with the central office staff and Dr. Camacho praised Dr. Wickenden and Ms. Stephanie Jacobson for their help during the past year. He reported the AFC would like to increase its direct participation with members of the Board in such areas as the Strategic Planning Committee. He thanked the Regents for the invitation to participate in the annual retreat. A future agenda item may deal with faculty salaries and compensation packages. He expressed appreciation to the presidents for making faculty compensation a high priority.

Regent Stuart reported the Joint Conference Committee will meet next month. There will be new membership as the old committee consisted of four ABOR representatives and four Community College Board members. Since there is no longer a Community College Board, the group has been reformatted with three Regents, one university president, (Regent Stuart, Regent Boice, Regent Kelling, President Haeger), two community college trustees, and two community college presidents as members.

A new mission statement will be drafted at the September meeting that will honor the integrity of the joint transfer articulation agreement.

Regent Boice reported he was the Board’s representative to the University Medical Center Corporation Board of Directors. He expressed some concerns about the separateness of the various health entities in the Health Sciences Center and stated he believed the medical school is too small.

President Haeger and his staff received compliments for their hospitality. Executive Director Blessing complimented Regent Kelling on her job offer for when she graduates and passes the Bar. Dr. Blessing also introduced Stella Galaviz, a new part-time staffer at the central office. Ms. Galaviz will support Regents on certain boards and other appointments like the K-12 Center and Work Force Development Council. President Herstam was complimented for his management of his first meeting.

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