August 2004 Minutes - Arizona Board of Regents

A meeting of the Arizona Board of Regents was held August 20, 2004, in the Havasupai Room, Northern Arizona University, Flagstaff, Arizona. President Stuart called the meeting to order at 9:37a.m. on August 20.

PRESENT:	Regent Fred Boice Regent Robert Bulla (By Telephone, Morning) Regent Ernest Calderón Regent Lorraine Frank Regent Ben Graff Regent Chris Herstam Regent Jack Jewett (Morning Only) Regent Wes McCalley Regent Gary Stuart
ABSENT:	Regent Christina Palacios Governor Janet Napolitano Superintendent Tom Horne

Also present were: President John Haeger, Dr. Elizabeth Grobsmith, Mr. David Lorenz, Dr. Jeanette Baker, Dr. John Burton, Dr. Pat Haeuser, Dr. David Cain, and Dr. M. J. McMahon, Northern Arizona University; President Michael Crow, Dr. Mernoy Harrison, Dr. Christine Wilkinson, and Mr. Paul Ward, Arizona State University; President Peter Likins, Dr. George Davis, Ms. Judith Leonard, Ms. Edith Auslander, Mr. Dick Roberts, Dr. Randy Groth, Mr. Greg Fahey, and Mr. Joel Valdez, University of Arizona; Executive Director Joel Sideman, Board Counsel Paulina Vasquez-Morris, Secretary to the Board Judy Garza, Dr. Art Ashton, Ms. Cathy McGonigle, Mr. Ted Gates, Ms. Stephanie Jacobson, Ms. Kathy Bedard, Ms. Gale Tebeau, Ms. Mary Jo Waits, Ms. Stella Galaviz, and Ms. Paulina Vasquez-Morris, Central Office; and Dr. Frances Bernat, Arizona Faculties Council.

All lists, reports, summaries, background materials, and other documents referred to in these minutes can be found in the August 20, 2004, Documents File.

Regent Graff led the Pledge of Allegiance. President Stuart welcomed Regent Graff to his first meeting as a Student Regent. Regent McCalley now becomes the voting Student Regent. He also welcomed Dr. Frances Bernat as the new Arizona Faculties Council representative.
President Stuart announced that Item 15, Approval to Purchase Property Located on Spence Avenue in Tempe, had been withdrawn from the Agenda at the request of ASU.

Barbara Becker, Director of the UA School of Planning, thanked the Board for its attention to the University of Arizona Planning, especially Past President Herstam for his courtesy during prior year’s Call to the Audiences. She also thanked President Likins and Provost Davis for their professionalism during this time. She spoke in favor of the proposal to move Planning into the Department of Geography and Regional Development in the College of Social and Behavioral Sciences.

Harold Vangilder, Casa Grande citizen, thanked the Regents for the current discussions on redesigning the universities in Arizona. He suggested the following attributes: autonomous structures, liberal arts institutions in the classical sense where quality products are delivered to diverse populations and they do not need to be entrepreneurial in spirit, and no new oversight system (continue with the current ABOR). He used to live in Sierra Vista and was the founding president of the foundation that built the UA South Campus. He believes the UA South Campus is an excellent model to follow.

Ken McCray, President of University of Arizona South Foundation, spoke in support of the proposed redesign of the universities in Arizona, particularly in regard to UA South and the proposed Southern Arizona University. He reminded the Board the community had raised millions of dollars in support of UA South. UA South now supports students in multiple locations in southern Arizona. Their model melds quality, flexibility, entrepreneurship, and access for all students, particularly Hispanic students. He believes the original proposed redesign is innovative, insightful, and timely, and the Foundation does not endorse the creation of additional governance boards.

Paula Travis, President Elect of the NAU Classified Staff Advisory Council, said the statewide Classified Staff Advisory Council was looking forward to meeting later in the day with Ms. Mary Jo Waits, the staff director of ABOR’s Feasibility and Planning Study Workgroup. She said the Council appreciates the chance to participate in this historical study.

Dr. Larry Mohrweis, President of the NAU Faculty Senate, said the Northern Arizona Task Force Reorganization Plan has been presented and it is hoped it will be given serious consideration. The Task Force believes this plan will provide a cost effective structure within the current infrastructure of the system. He suggested the directional names, such as Northern Arizona University, are not as relevant in this age of distance learning and asked that names such as University of Arizona at Flagstaff, Arizona University at Flagstaff, or John Wesley Powell University be considered. If the name is changed, the schools’s traditions should still be maintained, such as its mascot; and input from stakeholders such as alumni, community, and students should be considered.

Hari Kowtha, NAU Student Body President, expressed concern about the proposed mandatory meal plan. He said there is an “op out” provision, but it is not noted in the Board written material or in the publicity sent out by Sodexho, the NAU dining services operator. He asked that it be included. He also asked the Board to seriously consider all parts of the issue before authorizing the mandatory meal plan.

President Haeger introduced Dr. Cheryl Dyer, Associate Research Professor in the Department of Biology. She works with undergraduate students on issues of environmental exposure to uranium and long term health outcomes.

Dr. Dyer said uranium is a silvery, soft metal and is the heaviest natural element on the periodic table. It is a very toxic heavy metal and is radioactive. When it is put into glass and hit with black light, it fluoresces and this property can be used in the laboratory to see uranium within cells.

Dr. Dyer said NAU has a partnership with the UA through a grant from the National Cancer Institute which focuses on uranium contaminated food and water and how that impacts the risk for developing reproductive cancer. The three questions dealt with are, “What is the real life problem (uranium-contaminated water and food)? “What are the long term health outcomes from ingesting uranium-laced water and food (Dyer lab focus using cells and animals)? and, “What can be done to remedy the uranium-contaminated environment (plant remediation of soil and water)?

Dr. Dyer said uranium mining occurred for over 50 years on Navajo lands. There are hundreds of abandoned mines that were not abandoned property and have allowed the contamination of water supplies and drinking water by uranium. You can get uranium in your system by drinking it in water, you can inhale it, or eat foodstuffs like livestock that has been contaminated.

This project has exposed mice to uranium in their drinking water at levels that are at or well above EPA safe levels but well within the contamination levels on the reservation. After 30 days of exposure, reproductive tissues are examined for changes. Uranium appears to act within the body as estrogen. The question now is how does this impact risk for developing reproductive cancers that are known to be driven by levels of estrogen, such as breast, ovarian, and uterine cancer. This is the work that was done with the Native American Cancer Research Partnership Pilot support money. It enabled the application for the Academic Research Enhancement Award (AREA) Grant that is available to NAU because of its focus on undergraduate research. This will allow undergraduates to participate in research to encourage them to pursue graduate studies in the health sciences. The grant funded by the National Institute of Environmental Health Sciences to study uranium’s estrogen-like activity by taking the original findings and start to characterize how uranium convinces tissues and cells to respond as if they have been treated with estrogen.

Dr. Dyer said there is chronic consumption of uranium-contaminated water on the Navajo Nation. It has been shown that reproductive cancers in Navajo teenage girls are 17-fold higher than normal. This project is to see if the contaminated water is the cause of the higher cancer rate. Dr. Dyer demonstrated the experimental approaches to show how the researchers test their hypotheses. She explained how plants can be used to filter uranium from the ground and water. President Stuart asked how the fact the uranium mines were all closed impact the study and was told there is no more mining, but there was no cleanup of the environment. All the tailings were left to blow in the wind and seep into ground water. Regent Boice asked if there was any percolation into the water from the uranium before the mines started and was told it can happen naturally. The highest uranium levels in private wells in the United States occur naturally in Bar Harbor, Maine.

Dr. Dyer said many people on the reservation have no other water source than the contaminated wells which the EPA have found to have many times the allowable amount of uranium. It may be that the levels aren’t so high in a source, but that chronic consumption leads to health problems. This research is to better understand the health problems that come from these water sources.

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 Boice, seconded by Regent Herstam. There was no discussion of these items.

The Board approved the April 29 and 30, 2004, Executive Session, the June 3, 2004 Special Meeting, and the June 24 and 25, 2004, Regular Meeting minutes.

The Board accepted the final report on Action Plan 2003-2004 objectives. The Board received a written final report on the progress made on the 20 Objectives that were addressed in its 2003-2004 Action Plan.

The Board approved the proposed amendment to Board Policy 4-317, “Resident Tuition Scholarships for Recipients of a Regents High Honors Endorsement.” This amendment will authorize the universities to award full tuition scholarships to high school students who satisfy criteria for high honors, as part of the Regents Honors Endorsement program.

The administration of this program was transferred to the Arizona Department of Education. When the program is implemented, the Department of Education will identify students receiving High Honors and recommend them to the universities for full tuition scholarships. The awarding of tuition scholarships will continue to be carried out under the authority of the universities, who will be authorized to award full tuition scholarships to students who receive a High Honors endorsement. The Board of Regents will continue to be responsible for all aspects of the program, including the approval of any changes to program criteria.

Criteria for awarding the Honors Endorsements and recommending tuition scholarships will be: Part 1. Students must complete all 16 Core Competency courses by graduation with a B or better in each course, and Part 2. Students must meet at least one of the following academic requirements–Option 1: GPA of 3.5 on a 4.0 scale or Option 2: Student must be in the top 5% of high school graduating class upon graduation; and Part 3. Student must meet at least one of the following options–Option 1: Exceed the Standards on 3 out of the 3 AIMS Tests, Option2: 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.

The Board approved the proposed policy revision regarding modification of membership in the Joint Conference Committee (JCC). Membership changes were implemented in response to the disestablishment of the State Board of Directors for Community Colleges of Arizona.

The JCC provides a university-community college forum intended to facilitate issues regarding transfer articulation between the community colleges and the universities. The Regents approached the Arizona Community College Association, a private organization comprised of the state’s community college presidents and boards of trustees, to request their interest and assistance in continuing the JCC. Through this joint effort, the new JCC was formed in the Fall 2003. In May 2004, the newly constituted JCC approved a mission and by-laws.

The new JCC will be composed of eight members, four representing the public universities and four representing the community colleges. University representatives include three Regents and one university president appointed by the Arizona Board of Regents. The Executive Director of the Arizona Board of Regents and the Executive Director of the Arizona Community College Association also serve as non-voting members.

The JCC shall meet at least twice, but not more than four times each year. The chairmanship alternates on a calendar year basis between a member designated by the Board of Regents and a community college representative. During each year, the agency or organization holding the chairmanship of the committee shall be responsible for making arrangements for meetings and providing for the taking and distribution of minutes. The Committee shall also convene, as necessary, meetings of representatives from the specific academic disciplines at the universities and community colleges to discuss articulation and planning for those disciplines.

The Board approved the changes proposed to Policy 2-102b, “Delegated Undergraduate Admission.” The proposed change will provide for the universities to consider a high school credit in career and technical education as part of the delegated admission process.

The Board approved the amendment to Board Policy 6-201 (C) and (D), “Conditions of Faculty Service,” to provide additional language that supports multiple-year appointment classifications for non-tenure accruing faculty positions. The amendment more clearly defines the levels of appointment to include assistant, associate, and full professors.

The Board approved the proposed amendments to Board Policy 2-205, Sections C, D, E, F, G, and I, “Off-Campus Courses and Programs” related to sites, centers, branch campuses, freestanding campuses, programs on Indian reservations, and military bases.

A working group of university and central office personnel reviewed the policies and found they were designed to constrain the growth of entities beyond the main campuses. With the advent of e-education and other electronic education delivery means, such policies provide unnecessary barriers to student access. In addition, population growth and student demand throughout Arizona encourage extensive and rapid deployment of education opportunities throughout the state. Based on these considerations, the work group recommended the elimination of ABOR Policy 2-205, Sections C. D. E. F. G, and I.

The Board approved the new Board Policy 6-709, “Mandatory Background Checks for Employees and Process for Hiring, Retaining, or Terminating Employees Convicted of a Felony Offense.” This policy requires the universities to develop policies incorporating a common set of principles that mandate comprehensive and appropriate background and reference checks on new and internal hires. It also requires the universities to develop policies that will result in prompt administrative actions, consistent with due process of law, for any employee who is convicted of a felony offense.

The current text of the policy has been modified since the first reading as follows: Paragraph E has added the clarification that a university may release the results of a reference check and background investigation only to another university under the jurisdiction of the Arizona Board of Regents.

The universities have identified two actions that will need to be pursued to be able to fully implement the ability to obtain comprehensive criminal history information on designated finalists. First, an executive order from the Office of the Governor will be required to enable the universities to receive Arizona criminal history from the Arizona Department of Public Safety. Second, a statutory provision authorizing the fingerprinting of designated employment categories at the universities will be required to enable the universities to receive a national criminal history report form the U.S. Department of Justice/Federal Bureau of Investigation.

The universities will be required to submit the policies developed pursuant to this policy to the Executive Director of the Board of Regents, and the policies shall be subject to review by Board Counsel for consistency with Board policy.

The Board approved the revised FY 2005 budget for the Arizona Area Health Education Centers (Arizona AHEC) to include $862,615 in Arizona State Lottery Funds. At its June 2004 meeting, the Board approved the FY 2005 budget for Arizona AHEC. However, on July 22, 2004, the Board of Regents central office was notified that Arizona State Lottery funds in the amount of $886,615 were being allocated to ABOR for Arizona AHEC. Therefore, the budget has been revised to include this funding.

The Board ratified the University Medical Center Corporation Schedule of Insurance as of July 1, 2004, as presented. The following coverages are in effect: Fleet Auto, Garage Keeper Liability, Aviation-Helipad, Crime, Primary Directors and Officers Coverage, Outside Directors Coverage, Fiduciary Liability, Special coverage, Underground Storage Tank Liability, Hospital Professional and General Liability, Property Insurance, and Workers’ Compensation. The insurance coverages currently in force meet or exceed the requirements of the Lease and Conveyance Agreement. The only material changes include a deductible for antitrust matters in the Primary Directors and Officers Coverage, and an increase in the limit of liability to $500M from $475M for Property Insurance.

The Board approved the proposed revision of Board Policy 3-701, “Authority and Responsibility” (aka central office internal audit charter) that formally documents the reporting relationships for the Assistant Executive Director for Audit Services in the central office.

Ms. Mary Jo Waits joined the meeting for this discussion. Regent Herstam said the Regents were pleased that the three representatives of the community college system have accepted the Regents’ invitation to be members of the Feasibility and Planning Study Work Group. They are Don Schoening, President of Arizona Western Community College District, Rufus Glasper, Chancellor of the Maricopa Community College District, and Roy Flores, Chancellor of the Pima Community College District. It is believed the participation and insight of these individuals will be beneficial as the feasibility and planning study is conducted.

Regent Herstam said each of the Board members should have received a binder that contained copies of the 15 alternative proposals to redesign the university system which were received by the August 1 deadline. He said he believed there is a great deal to consider in the alternative proposals and he feels confident the best from the proposals can be incorporated in the final recommendations.

Ms. Waits reported on the first Work Group meeting, held on July 20. An Action Plan, comprised of two phases, was adopted. Phase I is to collect data and information and Phase II is to assess proposals and make recommendations. The two-phase process will run from July 2004 through June 2005. As part of Phase I, members of the Work Group will meet with the stakeholder groups to learn about their issues, concerns, and expectations for the state’s university system.

The Work Group was divided into three subcommittees. The first subcommittee will develop an understanding of Arizona’s growing student enrollment and higher education needs through a needs assessment. The second study team will collect examples of other state’s university system design initiatives to see the opportunities and pitfalls. The third task force will develop a set of guiding questions and measures against which possible redesigns will be evaluated. Throughout the study, the Work Group will be asking the members of the state legislature and the Governor for their input.

Regent Herstam said all the meetings would be public meetings and any Regent who wanted to participate could. President Stuart said there would be a place on the ABOR Website for Redesign where information would be placed. He would like to see the schedule on that Website, also.

President Stuart said he noticed the Plan calls for looking at the demand side of the question, including the demand to provide services for part-time students. In the community college system, many of the students are part time. Also, some of the community college students do not intend to get a baccalaureate degree as they are looking for advanced training or certification for work force development. Even though he does not want to expand the redesign to all of higher education, he believes there is a need to know these things as part of the needs assessment. What percentage of the demand is baccalaureate driven would be important to the universities.

Dr. Bernat asked if the stakeholder groups would be reporting formally or informally. Ms. Waits said she was working with each stakeholder group to see what each one would prefer. She said someone from the Work Group would be at each stakeholder group and would bring the information back to the main group. She also has offered a template that each group could fill in to communicate information to the Work Group. However, if the group would like to prepare a white paper, that would be fine, also.

Regent Herstam said there would be public forums around the state after all the stakeholder groups had reported but before the Work Group made final recommendations to the Regents. Regent Jewett left the meeting at this time.

Regent Boice asked if complaints had been received about the August deadline for receipt of alternative proposals and was told no. Regent Herstam said he had been gratified by the positive comments that had come in the past several weeks.

Regent Bulla joined the meeting by telephone to chair the Strategic Planning Committee.

Regent Stuart reported on the Memorandum of Understanding Regarding the Expansion of Medical Education and Research in Phoenix. This agreement was signed on August 4, 2004, by Board of Regents President Gary Stuart, Arizona State University President Michael Crow, and University of Arizona President Peter Likins. It expresses the commitment of the parties to work together to expand medical education and research in Phoenix and delineates several First Principles critical to the planned expansion of the University of Arizona’s College of Medicine on the Phoenix Biomedical Campus of the Arizona University System. The addendum to the document identifies four areas of joint planning, design, and development essential to the success of the effort by both ASU and UA. Specifically, these four areas are the Phoenix Biomedical Campus of the Arizona University System, the University of Arizona College of Medicine, Arizona State University, and Telemedicine Teaching and Research.

President Stuart said what the Board wanted to accomplish as a system is a full, four-year program that involves two synergistically related campuses, one in Phoenix and one in Tucson. The campuses will be related by creating a new era medical school–a medical school environment that involves faculty and research scientists from two universities. This is a way to advance Arizona’s health care needs and expand biomedical education, research and technology.

He said the College of Medicine will continue to be the University of Arizona College of Medicine. In its Phoenix campus, it will have a new name. It will be the Phoenix Biomedical Campus of the Arizona University System. It will remain directly connected to the University of Arizona College of Medicine in every programmatic way imagined. It will involve research scientists from both universities, but in particular research scientists from Arizona State University.

President Stuart said it was a goal of the Regents to secure better management of the cost of delivering health care, biomedicine, medical research and bioinformatics. President Likins said this gives the University of Arizona College of Medicine a fully developed presence in Phoenix so there will be a four-year college of medicine available to students in Phoenix as there is now in Tucson, with a single dean, faculty, and curriculum. Now the faculty can have joint appointments, not only from other colleges at the UA, but also faculty from ASU.

President Likins said the Phoenix Biomedical Campus that the City of Phoenix has been trying for sometime to encourage the UA to create is a place, a body of land that will be developed jointly. It will include the UA College of Medicine, UA College of Pharmacy, ASU College of Nursing, and research facilities that are joint facilities. This is being built under the label Arizona Biomedical Collaborative and includes the TGen facilities. It is hoped other entities will then find it appropriate to build hospital facilities. President Crow said this is significant moment in history. He said ASU is committed to making this campus and medical school work in as positive and creative way as possible. He believes the ultimate goal of this expansion of the medical college is the enhancement of the quality of life of the people of Arizona. ASU will be expanding and evolving to be of greater service to the biomedical campus and the University of Arizona College of Medicine. He believes ASU now has significant assets to offer this expansion that would not have been available a few years ago.

Regent Bulla thanked everyone for their work on behalf of this Memorandum. Regent Boice said this is extremely gratifying and he is very pleased with the outcome. Regent Herstam stated he had a potential conflict of interest because of his medical clients and he would never be voting or discussing any Board items concerning the Phoenix Biomedical Campus. Upon motion of Regent Bulla, seconded by Regent McCalley, the Board ratified the Memorandum of Understanding Regarding the Expansion of Medical Education and Research in Phoenix.

Dr. Art Ashton and Mr. Ted Christensen joined the meeting for this discussion. Regent Bulla updated the Regents on the consultant studies being conducted for Arizona Regents University (ARU). The Board had previously authorized the expenditure of funds to retain two consulting firms to assist in identifying and directing the future development of ARU. There are more than 40,000 annual registrations for technology courses and in excess of 1700 courses offered yearly. ARU has come to a crossroads, however, where existing structure and management processes around ARU should be reconsidered.

Regent Bulla said he was pleased with what he had seen in a draft from Hezel Associates. He hoped to have both consultant studies by mid-September so a study session could be held at the September meeting so the Board could decide what direction it should take in regards to ARU.

Mr. Christensen said the WCET, the Western Cooperative for Educational Telecommunications), a division of WICHE (Western Interstate Commission for Higher Education), has completed the studies on each of the campuses. They were looking at all of the on-line student services that the distance student would encounter when trying to register for courses. WCET categorizes the processes on a scale of 1 to 4 according to how complex and supportive the processes are. Ten essential student services were identified to be examined on each campus. These services were looked at from a statewide perspective and WCET will make recommendations where they think student access, convenience and quality of service might be improved by making a system-wide service available. They will also give each university a report on how well their on-line student services are working. It is anticipated this report will be finished the first part of September.

Mr. Christensen said the report coming from Hezel Associates has gone through several drafts. It will be ready for use in discussion of future directions for ARU at the September meeting. A road map for ARU for five and ten years has been developed with four different scenarios. A recommendation will be made with a strategic plan to move toward the future.

Dr. Art Ashton, Dr. Mernoy Harrison, Mr. Ted Christensen, and Ms. Susan Madden joined the meeting for this discussion. Regent Bulla said ASU was asking for approval on a computer aided dispatch and records management system, CAD/RMS, for its Department of Public Safety. The system will cost $1.3M over the next five years and should be fully operational by April 2005. The item was presented to the Board since there was no ARU/IT Subcommittee meeting and there was a desire to move the item forward.

Regent Boice asked if there were similar systems at the other two universities or if that would come later. Ms. Madden said there are technology upgrades required by Arizona

Department of Public Safety and by Homeland Security which are taking place over the next year. She said it could be the other two universities have more current technology than ASU. Dr. Harrison said he knew the other two universities had a dispatch and records management system; he did not know what system they used and how new either one was. Dr. Ashton said he would check with the other two universities and let Regent Boice know the status of their systems.

Upon motion of Regent Bulla, seconded by Regent Boice, the Board approved a Computer-Aided Dispatch and Records Management System for ASU’s Department of Public Safety to replace its existing system. Regent Bulla left the meeting at this time.

Dr. Jerry Jakubowski and Dr. George Davis joined the meeting for this discussion. President Crow introduced Dr. Jakubowski, the new provost at ASU Polytechnic (ASU East).

Dr. Jakubowski explained the Bachelor of Science in Engineering degree requested by ASU Polytechnic and the request for a new Department of Engineering in the College of Technology and Applied Science. He said the trend in engineering education for the last forty years has been to develop engineers who are highly specialized within very narrow engineering disciplines. The latest trend is to require engineers to be generalists. This degree will be in general engineering and will not duplicate what is being done on the Tempe campus.

Regent Frank asked how this would impact the enrollment at the Fulton School of Engineering on the Tempe Campus and what the enrollment was expected to be at the Polytechnic Campus. Dr. Jakubowski said the new enrollment was expected to be approximately 50 students that would be diverted from the Tempe Campus. The plan on the Tempe Campus is to eventually reduce the undergraduate engineering enrollment and shift some of those students to the Polytechnic Campus. Regent Frank asked if the current faculty at the Fulton School would teach at the Polytechnic Campus and was told five engineering faculty have volunteered to move to the Polytechnic Campus and will spend the following year developing the curriculum. The degree will be launched in 2005.

Regent Herstam asked if a student that had been denied acceptance at the Fulton School could than apply at the Polytechnic Campus. President Crow said he could. President Stuart said he would like to remind ASU that the Regents are resistant to program fees for undergraduates and he would not like to see a request for a program fee for this program come to the Board in a few years. He suggested that be kept in mind as the program is developed. President Crow said ASU will develop courses on a “menu” plan. Courses and their prices will be listed and students will choose, knowing the costs.

Upon motion of Regent Frank, seconded by Regent Herstam, the Board approved the implementation of the Bachelor of Science in Engineering with a major in general engineering and the establishment of the Department of Engineering in the College of Technology and Applied Science at Arizona Polytechnic.

Provost Davis said the UA had recommended disestablishment of the School of Planning in the School of Architecture. The time delay in asking for formal disestablishment was because many options were considered for this program. Today’s request is to disestablish the School of Planning but to preserve the degree program of the Master of Science in Planning in the Department of Geography and Regional Development in the College of Social Behavioral Sciences. The Drachman Institute will now be aligned with the School of Architecture. Dr. Davis explained placement of current faculty and recruiting and development of this program. Regent Frank asked if the same number of students would graduate from the program and was told it was expected that more students would graduate from the program after it was moved.

President Likins thanked everyone who had been involved with this program, especially Professor Becker for their professionalism. As part of the business plan, Provost Davis said the UA intended to come back for a program fee as this is a graduate professional program. Upon motion of Regent Frank, seconded by Regent Herstam, the Board approved the transfer of the Master of Science in Planning to the Department of Geography and Regional Development in the College of Social and Behavioral Sciences and the disestablishment of the School of Planning.

Mr. Sam Wheeler, Assistant Vice president of Administration and Finance, and Mr. Tim Philley, General Manager of Dining Services, joined the meeting for this discussion. Regent Boice said Northern Arizona University was requesting approval to initiate a required meal plan program for all first-time, full-time freshmen living in residence halls, effective fall semester 2004.

Mr. Wheeler said this was a change in direction for NAU. Most of the residence halls do not have kitchen facilities. Students now want to eat at different hours, especially late at night, have a larger selection, and have fresh food. Last year they worked with student government, the student food committee, residence hall staff, and the Residence Hall Association. He said 16 of the 17 NAU peers have some form of a required meal program. Meal plans are part of the financial aid packages that students receive and part of the program that builds community and socialization on the campuses. They plan to have a 24-hour, 7-day a week operation this fall. Students will have 19, 14 or 10 meal plans.

Mr. Wheeler said there was an appeal process built into the system for those who have financial hardship. Also, the longer hours mean more students can be hired. President Stuart asked for a comment concerning requiring students to pay this fee in addition to what is already required. Mr. Wheeler said students who don’t have a meal plan sometimes spend their money in other places and end up with little money to eat at the end of the semester. He said this allows parents to plan for meal expenditures and it can be part of the financial aid package.

President Stuart asked if the Pell Grant recipients would be held harmless and was told it would be part of their financial aid package. There is no additional or special money available for Pell Grant recipients to pay this fee. President Stuart said he would like the university to make every effort to indemnify Pell Grant recipients.

Regent Calderón asked if it would be safe to make the assumption that no student will be denied a waiver of this fee if it would preclude them from attending NAU and was told that assumption could be made.

President Crow said ASU plans to come to the Board with a similar program. ASU will not use the term waiver; they will say no student will somehow not have access to the university because of this fee. President Haeger said, on a campus that bills itself as a residential campus, the food services component is critical. Regent Calderón said he was satisfied this plan was reasonable as it is limited to freshmen and aid is provided.

President Haeger said this was a new school year. The administration had worked hard with students last year; but they now need to work with the current student leadership.

Regent McCalley asked if the meal plan could be approved at this point during the year as this appears in one form that is included in the financial aid package. He was told it could. He said he believed this is a good plan and he supports it; however, he would like future requests to come through the tuition and fee process. Regent Graff said he was concerned with students already filling out many forms having to fill out one more to get out of a mandatory meal plan. He also does not know why it is called mandatory when students can opt out for financial reasons and he agreed with Regent McCalley concerning future requests. He asked if the universities were allowed to compete with local restaurants and cut off their business by requiring mandatory meal plans.

President Crow said the objective in the design of the program ASU will be advancing is an obsession with graduation rates. One of the reasons students don’t return is living environment and quality of life. Also, competing institutions all have a meal plan. Regent McCalley requested a roll call vote be taken on this issue.

Upon motion of Regent Boice, seconded by Regent Calderón, the Board authorized Northern University to initiate a required meal plan program for the first-time, full-time freshmen living in residence halls, effective Fall 2004, as presented in the Executive Summary. The motion passed with all Regents voting yes on a roll call vote.

Regent Boice said the Board was being asked to consider a proposed extension and amendment to the multiple-year employment contract of NAU President John D. Haeger to extend the term of his contract to June 30, 2007, and to add a provision regarding mileage reimbursement. All other elements of President Haeger’s compensation package remain the same, including his housing allowance of $46,993. President Stuart voiced the support of the Board for President Haeger. He said NAU was operating with a balanced budget for the first time in ten years.

Upon motion of Regent Boice, seconded by Regent Calderón, the Board authorized the Board President to execute an extension and amendment to President Haeger’s multiple-year employment contract as presented in this Executive Summary and approved as to form by Board Counsel.

Ms. Paulina Vasquez-Morris joined the meeting for this discussion. Regent Boice said the Board was being asked to review, on first reading, a policy revision to expand the availability of tuition scholarships. Ms. Vasquez-Morris said Board Policy 4-308 provides tuition waivers for children and spouses of slain Arizona peace officers, fire fighters, emergency paramedics, and military service personnel. The Board is asked to review a revision to this policy which conforms to Senate Bill 1158 and adds tuition scholarships for the children and spouses of Arizona correctional officers and national guard members killed in the line of duty. Regent Boice said this policy change would be brought back to the Board in September for action.

Dr. Mernoy Harrison and Mr. Scott Cole joined the meeting for this discussion. Regent Boice said Arizona State University was requesting Project Implementation Approval for the Decision Center for the New Arizona, located at the Brickyard in downtown Tempe, at a revised estimated cost of $4.8M. Upon motion of Regent Boice, seconded by Regent Herstam, the Board granted Arizona State University Project Implementation Approval for the Decision Center for the New Arizona Center as presented in the Executive Summary.

Dr. Mernoy Harrison and Mr. Scott Cole joined the meeting for this discussion. Regent Boice said Arizona State University was requesting Project Implementation Approval for the Instructional/Research Laboratory Renovations Phase II project at a total estimated cost of $20M.

Dr. Harrison said this was the second phase of the Instructional/Research Laboratory Renovation. With the increase in research taking place on campus and the relocation of some of the researchers to other facilities, there is a substantial amount of renovation that needs to take place in the existing facilities. Any individual project that exceeds $!M will be brought back to the Board. The funding source is a combination of indirect cost recovery, tuition, and local funds.

Regent Boice said he had reservations about ASU’s capital plan. He said President Crow has told him ASU is conducting a study of their financial plans and the implementation of those plans and the Board will have the results in a short time.

Upon motion of Regent Boice, seconded by Regent Calderón, the Board granted Arizona State University Project Implementation Approval for the Instructional/Research Laboratory Renovations Phase II project as presented in the Executive Summary.

Ms. Gale Tebeau joined the meeting for this discussion. Regent Boice said the Board was being asked to review and approve the FY 2005 Initial All Funds Operating Budget for the universities and the central office.

Ms. Tebeau said the Initial All Funds Operating Budget reflects changes since the Spring Update presented to the Board in April and any accounts with projected year end deficits of $100,000 or more. She said ASU was still reporting three deficits: Stadium Management, Intercollegiate Athletic Department (ICA),and Investment Income. The UA was expecting to reduce the deficit in UA Presents substantially in FY 2005 from about $600,000 to $150,000 by increasing cost efficiencies.

President Stuart asked the difference between the Stadium Management Department and the ICA. Ms. Tebeau said the Stadium Management was at one time part of ICA, but as more events started and the Cardinals came, the two accounts were separated. The Stadium Management is supported by user fees and concessions and the ICA is supported by ticket sales and individual college events.

President Stuart asked when the deficits in these two categories at ASU would be under control. President Crow said Stadium Management was an entity created by the university to avoid conflict with the NCAA, largely in regards to the ASU association with the Arizona Cardinals. With the close out of the agreement with the Cardinals in two years and the new current arrangement with the Cardinals, there is hope this account will not be in deficit at the end of the two years. If it is, ASU will take care of it at that time.

President Crow said ICA is not running an annual deficit; it is paying back a debt internal to the university. The debt it is paying back is a series of expenditures that were made in the previous athletic department administration for which revenues have been insufficient through competitive programs to cover those costs. They are being reduced as much as possible by ICA, but ASU has so far declined to relieve ICA of this responsibility by using internal funds. Dr. Crow said he did not believe it was a problem because the accounts are not running an annual deficit; they are trying to make up past deficits.

Regent Stuart asked if the Investment Income Account was connected to the ASU Foundation and was told it was as a matter of expenditures. Dr. Crow said this account is the income the university generates from its cash balances and it is a projected amount of money that comes in on an annual basis. For many previous years, items have been assigned to that revenue source as expenditures. Among those items have been things like some of the university’s investment in the ASU Foundation. In the year 2000-2001, these revenue sources went down dramatically. This is an account deficit; not a university deficit. As the year goes forward, all expenditures have been eliminated out of this account, except one or two small expenditures. Therefore, the account will recover from the investment income coming in down the road. Also, another revenue source is that internal loans within the university are paid back to this account. Regent Boice asked what purpose this account serves and was told it is basically an account discipline.

Regent Boice asked why the ICA deficit had grown larger and was told it did accrue an internal interest rate and the athletic department did underperform its revenue projections last year. Regent Boice asked Ms. Tebeau if she had a way of isolating uncommitted carry-over monies in the All Fund Budget. She said not in the Initial All Funds since it is prepared before end-of-year close out. The carry-forward will be included in the Fall Update. It will show in the universities’ summary pages.

Regent Boice asked how the unspent money was used at each university. President Likins said he had worked at a university that swept all accounts at the end of the fiscal year. Therefore, all account managers made sure they spent the money before the end of the year. Almost everyone now assures the account manager, such as a dean or a vice president, that they can keep the carry-forward if they are able to reduce expenditures and ‘beat” the budget. They do have to submit an expenditure plan to tell what they will do with the money. President Haeger said NAU has a similar system. If money is swept every year, it is impossible to save over several years for expensive equipment.

Regent Boice asked if the university president had the right at the end of any year to sweep fund balances if he so chose and was told yes. President Crow said ASU had a similar system with three modifiers. The budget system is more centralized than the other two universities. ASU is in the beginning stages of transitioning from the agency model to the enterprise model, and as a part of that, ASU has mechanisms to give unit leaders incentives to raise more revenue. ASU is implementing a dramatically altered budget model as a tool for the enterprise model that establishes guidelines for allocation of investments through fund balances, etc.

President Likins said presidents can only sweep unrestricted fund balances, not those such as gift dollars or research dollars. Upon motion of Regent Boice, seconded by Regent Frank, the Board approved the FY 2005 Initial All Funds Operating Budget as presented in the Executive Summary.

Ms. Gale Tebeau and Provost George Davis joined the meeting for this discussion. Regent Boice said the universities and central office were presenting their preliminary FY 2006 State Operating Budget Requests for review and to receive guidance. Ms. Tebeau said this is presented for the Board’s review and guidance. The final request will be forwarded to the Governor and the legislature on October 4.

The system request totals an incremental increase of $135.4M which is an overall increase of 11.9% and a 17.2% increase in general fund appropriation. Of the $135M, $90M is for the continuation budget with the largest component being the 22 to 1 enrollment growth formula at $50.6M. For the FY 06 request, ASU 22 to 1 formula is $19M, UA is $1.9M, and NAU will not be requesting any enrollment growth funding this year. In addition to this year’s enrollment growth, both UA and ASU have included the unfunded portion of their FY 05 and FY 04 enrollment requests. That is $23M for ASU and $6.6M for UA. Since NAU is not requesting any enrollment growth funding, they are requesting $5M as part of their continuation budget for academic program development.

Ms. Tebeau said notification had been received that an additional $7.6M in general fund appropriations for a portion of the increased health insurance costs will be received as the trigger was reached. Part of the budget request includes annualization of this appropriation. In addition, each university, as part of their continuation, has included funds for performance funding with very preliminary numbers as some of the performance measures have not been finalized because last year will be the base year.

Ms. Tebeau said the universities had received feedback from the Governor’s office on performance measures that had suggested additional performance measures be included. Those additional measures will be incorporated when the final budget request is submitted to the Board in September. Also provided in the continuation budget are costs for facilities planning to open in FY 2006 as well as buildings that opened in FY 2004 and FY 2005 that did not receive any operating funds.

Ms. Tebeau said the Central Office request included $4.8M for the Arizona Financial Aid Trust (AFAT), the 2 to 1 matching funds included in the state funding model.

She said the requests also include $45M in decision packages, $20M at the UA to support the health sciences and health delivery, $20M at ASU for research investment and university initiatives, and $5M at NAU for faculty and staff retention.

President Haeger said NAU’s budget request for FY 2006 was in a process of change. He explained the request for enrollment growth funding is less than a 1% increase, but the number may change with the Fall enrollment numbers. The Academic Program Development request is extremely important as an effort to catch up with budget needs. It recognizes that NAU has been funded lower than the other two universities for over 20 years and that undergraduate education with lower class sizes is expensive. NAU’s expectation for performance funding is about an additional $400,000 for the budget. It is possible the FY 2005 health insurance request will be removed since the trigger was reached and some funds will be received. It is not in the current request, but new facilities support in the neighborhood of $3M will be requested. There is a potential budget request of an additional $15M for various building projects on the campus with a request to the legislature for backfill money to offset debt service. NAU has a decision package for faculty and staff retention for $5M and intends to also ask for $1.5M for support for the Governor’s agenda for K-12 education.

President Crow said this request was a reflection of ASU’s needs and he was seeking guidance from the Board as to its priorities relative to those needs. He again stated that ASU was in transition from an agency-based model to the enterprise-based model. This means investment is being sought from a range of investors, including the people of the State of Arizona. However, there is a very high demand for services from ASU; a demand that exceeds all funding models that exist to support the university.

Dr. Crow said ASU’s request for enrollment growth is $42M, but it is divided into two parts. One part is for enrollment growth to come and one part is for $23M of unfunded enrollment growth for the last two years. He asked if the Regents would prefer that ASU move forward and work this out over time in some other way or leave it as it is. The same is true for facilities support. ASU has decision packages of $21M for faculty start-up packages and for specific initiatives concentrated in biomedical, energy, education, and water.

President Likins described how UA’s unrestricted revenues had remained flat for the last two years. He noted the UA had a request like the other two universities for building renewal and needed guidance as to whether prior unfunded building renewal could be requested. There is also the question of backfill for debt service. Preside Likins said UA’s strategic investment request was $20M for supporting the foundations of the health sciences and health care delivery system. This is not for capital facilities in Phoenix, but is related to the Battelle Report and he explained how the money would be used. If the Regents believe it is timely for him to make a request for capital facilities in Phoenix, he will also make that request.

Regent Stuart asked if any of the preliminary requests from either ASU or UA would be used for the expansion of the medical school campus in Phoenix. Dr. Crow said ASU had set aside between $8M and $10M to begin launching the biomedical infomatics unit in the third element of the plan associated with the development of the expansion of the medical school. President Likins said all $20M is germane to the expansion in Phoenix even thought it will not be spent in Phoenix. Regent Stuart said it would be helpful if the final budget proposal was more specific about how the money being presently spent on both campuses helps get ready for the medical school expansion.

President Stuart said he did not believe it would be a good strategy to ask for unfunded enrollment growth money; the universities should look forward, not backward. However, he did not feel the same way about general fund backfill. President Likins asked whether the universities should ask for building renewal money that was not funded in the past, money for operations and maintenance for buildings that have opened but not funded in the past, and backfill for tuition debt service. If it is all right to ask for this money, how far back should the universities go?

Regent Stuart said he was focused on money for enrollment growth, not on other categories of backfill. Regent Calderón said he agreed with only asking for forward money for enrollment growth. He did not believe backfilling the other categories would be successful, either, and would prefer the universities ask for prospective funding. Regent Herstam concurred with the guidance of not asking for previous year’s unfunded enrollment growth money. There may be a chance at a later date for a specific request that could be focused on a crisis that has arisen because of unfunded enrollment growth, but now the focus should be forward. In regards to backfill to offset debt service, this hasn’t been done for several years and when it was done in the past, it was done within the complicated legislative process. If this is included in the September request, he believes there should be discussion of what strategy to use to pursue this. He did believe putting the request in the draft request was the correct thing to do as it highlights the problem. He does not think it will be possible to go back on any of the categories; he believes the budget should only go forward.

President Likins said he agreed with the advice as he believes the likelihood of success is better when the universities talk about strategic investments rather than when looking back. President Crow said the guidance has been extremely helpful. He does not believe the 22 to 1 formula has ever been helpful and is an antiquated model that doesn’t work. He believes the universities should move forward with the new funding model. However, this will require the Regents to seriously consider tuition increases in various programs and at various levels as well as the universities’ ability to request strategic investment in areas they are pursuing.

Dr. Bernat asked if building renewal that has not been paid in the past had been paid out of current university budgets for which the universities are seeking redress, or has it compounded year in and year out by underfunding? Regent Boice said recently buildings have been built by bonding rather than by appropriations. President Crow said the universities have been debt financing their buildings and deferred maintenance and all of this is a highly compounded problem.

President Haeger said the 22 to 1 model will stay in place with the new funding model; it has just been modified. He said the Governor and the legislature have been supportive with the amount of money they have had available. The proposed budgets must be in line with the money that will be reasonably available. Regent Boice said he believed relying on the entrepreneurial model means demonstrating and being specific about where money comes from. He does not believe asking for past money will be productive; the universities must go forward.

Executive Director Sideman said the Central Office budget request was oriented toward increasing general fund support for the Arizona Financial Aid Trust program. In the context of talking about the model with Governor’s staff and legislative staff, it has been well received.

Regent Boice said he believes this is to be more an ABOR budget than in the past when it was more each individual university. He looks forward to seeing the presentation in September.

Ms. Kathy Bedard joined the meeting for this discussion. Regent Boice said the Board was being asked to review and approve the Technology and Research Initiative Fund Annual report for the fiscal year ended June 30, 2004, including the revised TRIF budget for FY 2005. Ms. Bedard said the original TRIF budget projected $49.8M in new revenue. For the first time in the three-year history of TRIF funding, the revenue projection was exceeded by $500,000 or 1%. The complete report was not included with the Board materials, but is available upon request and will be on the ABOR web site.

Ms. Bedard said performance outcomes are not being presented as the Vice Presidents for Research are currently working on a plan to evaluate the first three years of TRIF funding and to develop the budgets for the second five-year cycle. They plan to come to the Board in November with the plan.

Upon motion of Regent Boice, seconded by Regent Calderón, the Board approved the FY 2004 Technology and Research Initiative Fund Annual Report, including the revised FY 2005 TRIF budget, as summarized in the Executive Summary, for submission to the Governor and the Legislature on September 1.

Dr. Bernat said the Arizona Faculties Council (AFC) had approved new bylaws at its June meeting. They are working to formalize and professionalize the AFC. They are still concerned with salary compensation and compression issues and they are still working on data for that issue. The AFC will be helping ABOR select reviewers for the Learner Centered grants. The AFC met with Ms. Waits to discuss the redesign process and is looking forward to working with her on that issue.

Regent Graff thanked everyone for their help and their warm welcome. Dr. Haeger received congratulations on the new Communications Building and thanks for his hospitality and the work of his staff. Dr. Haeger thanked the Regents for their statements of support for NAU. Regent Boice thanked the presidents and President Stuart for their work on the medical presence in Phoenix. Executive Director Sideman thanked everyone for their help as he has begun his new position.

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