Arizona Board of Regents

The Arizona Board of Regents met in Retreat Session at the Kilted Kat in the Equestrian Estates in Flagstaff, Arizona, August 19, 2004. President Stuart called the meeting to order at 10:05 a.m.

PRESENT:	Regent Fred Boice Regent Ernest Calderón Regent Lorraine Frank Regent Benjamin Graff Regent Chris Herstam Regent Jack Jewett Regent Wes McCalley Regent Christina Palacios Regent Gary Stuart
ABSENT:	Regent Robert Bulla Governor Janet Napolitano Superintendent of Public Instruction Tom Horne

Also present were: President John Haeger, Dr. Pat Haeuser, Dr. John Burton, and Dr. Elizabeth Grobsmith, Northern Arizona University; President Peter Likins, Dr. George Davis, Ms. Judith Leonard, Ms. Edith Auslander, Mr. Greg Fahey, and Ms. Janet Bingham, University of Arizona; President Michael Crow, Dr. Milt Glick, Mr. Paul Ward, and Dr. Christine Wilkinson, Arizona State University; Executive Director Joel Sideman, Board Counsel Paulina Vazquez-Morris, Secretary to the Board Judy Garza, Ms. Mary Jo Waits, Ms. Stephanie Jacobson, Dr. Art Ashton, Mr. Dan Anderson, and Ms. Cathy McGonigle, Central Office Staff; 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 19, 2004, Documents File.

President Stuart said he had thought about ways the Board could do its work more efficiently as it moves into restructuring. He would like to work through some of these ideas with the other Board members as he believes the group will have modifications or other ideas to add to his thoughts to help make a better finished product.

President Stuart introduced Mr. Richard Novak of the Association of Governing Boards of Universities and Colleges (AGB) and Mr. William Weary of Fieldstone Consulting, who were present to facilitate a conversation on board and governance processes.

Mr. Novick said the Regents needed to determine the higher education needs of business and the citizens of Arizona. This is a governing board, not a coordinating board. He reported on the results of the Board Member Survey that was conducted by the AGB. The survey participants included current Regents, five former Regents, the current university presidents and one former university president.

Mr. Novick said there were six related themes/topics in the survey: 1) Policy and Operations, 2) Committee Structure, 2) Board Effectiveness, 4) Board Information for Decision Making, 5) Future Challenges, and 6) The Board Presidency.

Mr. Weary presented an overview of the survey results. It shows the Board believes it generally does a fairly good job at keeping an eye on policy, managing operations, getting the right information, communicating, knowing the state and its issues, listening to the public, and responding to it. The Board could delegate more, and there is some agreement on the areas in which it could do so. Attention should be paid to opportunities to improve, but the respondents would not want to throw out all there is and start over from scratch as there is a lot of good now.

Mr. Weary and Mr. Novack also conducted interviews with survey participants. Survey participants generally believe the Board has become transformed in the last couple of years and is focused on the best interests of the entire system. There is an openness to examining new ways of structuring committees. Those interviewed thought more could be delegated to the executive director, the staff, and the council of presidents. Definitions of operations and policy would benefit from review.

There were some worries about redesigning the system and the Board at the same time. There were real concerns expressed about the proposed Executive Committee. Mr. Weary said this was an exceptionally opportune time for the Board to address its structure and function, not only because of its current success, but also because governance and system structure go together. The state statute governs the Board’s size. The Board thus has some latitude to restructure itself and to delegate in new ways. If the Board is heavily engaged in operations, where is the administration?

Mr. Weary asked to what extent the proposals in “Focused Governance” were a very understandable response to a system whose “CEO Function” already was dispersed and increasingly struggling? To what extent is this a roundabout way of creating a chancellor without creating a chancellor? The Board oversees five different organizations--the central office, the three universities, and the system. Mr. Weary believes that committee and Board meetings address the needs and proposals of individual universities in most of its business and that the system as a system gets short-changed. Regent Herstam asked how the system was getting short changed and Mr. Weary said there are only so many hours in the day and there is not time enough for the Regents to talk about the system as a whole issues because they are engaged in the needs of each university. Regent Jewett said he believes the Board has taken a system perspective. The Regents rely on a superb staff and there is a good governance system in place now, but everything can get better. He would like to see improvement, but not an overhaul of the system.

President Stuart said he is trying to tighten up the Board’s focus. Regent Calderón said he believed the Board deals almost exclusively with the system and does not focus on the extremities. He believes the Regents rely too much on the members of the Council of Presidents. He does not like to read in the paper about things happening in the universities that he does not know about and he believes the Board should have knowledge of announcements from the presidents before they are asked questions by the media. Some-times now the presidents go to the Governor and the legislature before they get instructions from the Regents.

President Haeger said the system has been forced to become more entrepreneurial and must serve a varied student population. Therefore, the universities have to be able to be flexible and must be able to move quickly. Mr. Novak said the Regents have to find a balance between delegation and Board management. Mr. Weaver said there were some suggestions about additional items that might be delegated.

Regent Stuart asked how the Regents should respond to the public when something is announced by the presidents and they have no prior knowledge of the item. Mr. Weary said as the Board is more engaged in policy issues, there may be more management issues with which they are not familiar. Mr. Novak said some boards hear from their CEO’s once a week on upcoming issues. As the Board focuses more on policy issues, the more management issues will be pushed down to the campuses.

Regent Palacios said she did not believe Regents could know everything that reaches the newspapers. She agreed that as the Board focuses more on policy, this will happen more often. She would welcome a more active role for committees as she believes Regents with expertise in each area would know more about the individual items and could make recommendations the rest of the Board would feel comfortable accepting.

President Likins said the Board cannot limit itself to policy issues as it still has the responsibility for management. The world changes whether the Board and universities do or not. He believes the Board presidents, as individuals, have had more influence in the last several years. If additional universities are created, as he sees as inevitable, there will be changes in the way the Board functions or there are likely to be more boards created.

Regent Graff said close attention should be paid to the Open Meeting Law when changes in committee structure are considered. President Stuart said technological enhancements mean the Regents would not always have to be in one room to meet.

President Crow said he believed the Regents should be more concerned with why something was being announced than with what. A Regent should always be able to tell the public why something was done. The Board focus should be on overall planning so they know how something fits within the plan so they know why even when they do not know all the details.

Mr. Weary said having three exceptional, aggressive presidents will place pressure on the Regents. He referred to the ABOR Governance Handbook as signaling the Board’s interest in being involved in managerial decision-making. Executive Director Sideman said the governance documents were developed in the 90's when there was tension between the roles of the universities and the central office. He believed looking at individual items was part of the Board’s oversight role. There was a statutory change in the 90's that allowed the Board to delegate some operational matters to the presidents. Now is the time to see if there are more issues that could be delegated to the presidents.

Regent Frank asked how the community colleges fit into higher education and with the Board of Regents. President Stuart said there is a section of the statute that deals with community colleges and they were not designed to provide baccalaureate instruction. However, this is a problem the Board will have to face as the community colleges move in that direction. Regent Herstam said this is an issue that has surfaced in the proposals for system redesign.

It was suggested that a review of the governance handbook be undertaken. The Board needs to make sure they have an Executive Director that will work aggressively with the members of the Council of Presidents on complicated issues to relieve some of the time pressure from Regents.

The meeting recessed at 11:55 a.m. and reconvened at 12:20 p.m. Dr. Art Ashton and Ms. Cathy McGonigle joined the meeting for this discussion. Dr. Ashton said an important aspect to Focused Governance is to be able to focus the Board’s attention on important policy issues and “push down” operational decisions. By the introduction of technologies that are commonly used in business and the universities, Board members and their staff can reduce out-of-office travel time and improve the timeliness of communications and sharing of important information. Dr. Ashton went through the ABOR Technology Enhancements outlined in the Retreat materials. There was a discussion about putting all the Board meeting materials on the ABOR Web site.

Ms. McGonigle briefed the Board on the Public Awareness Action Plan, as presented in the Retreat materials, for the coming year. Regent Herstam said early balloting starts in six weeks. There is a need to begin to raise public awareness on the technology transfer issue that will appear on the ballot. President Stuart said the new Plan expands the focus on citizen and community outreach.

The meeting recessed at 12:50 p.m. and reconvened at 1:05 p.m. The Board discussed the proposed Focused Governance Recommendations.

Regent Boice said he did not like the proposed Executive Committee concept because he believes this is too small a board to need that type of system and he knew Regent Bulla feels the same way. He likes the idea of delegating more responsibility to the ARU/IT committee and could see the same type thing for a resources committee. He believes the staff is very good and would like to see how they could be made more effective, perhaps through use of technology as described. He believes Regents should lobby for good board members to be appointed. He would like to see no more than two-page recommendations for Board Items with additional pages put in an addendum in the back of the book where those interested can gain additional information.

Mr. Novak agreed the selection of Regents is critical for a good Board. AGB has worked in other states to set up selection committees that make recommendations to the Governor and the Governor could be approached to see if there is any interest in establishing that process here. President Stuart said he would be in touch with AGB for more suggestions on that issue.

Mr. Novak said there should be a clear division of responsibility among the presidents, Executive Director, the Regents, and any committees. The quality of the people in the system is so good now that it would be a good time to put a structure in place that puts a floor under the Board for when the good people are not there. There needs to be a distinction between setting policy by which others make decisions and the Regents making decisions themselves. More could be delegated to the presidents and then they should be made accountable for their decisions.

Mr. Weary described the “Focused Governance” proposal developed by Regent Stuart as a means to reorganize the system so Governance would consist of ABOR, Committees, and Ad hoc committees. The CEO’s of the system would be ABOR, Board President, the new Executive Committee, and three new Vice Presidents of the Board. The Direct reports would be the Council of Presidents, the Executive Director, and the University Presidents. Alternative One, proposed by Mr. Weary, would be Governance composed of ABOR and ABOR Committees. The CEO would be the Council of Presidents with the Board President, the Executive Director and the three University Presidents within their own universities, and the Direct Reports would be the Central Office and the three universities. Alternative Two would be the current system where the Governance is composed of ABOR and its Committees. The CEO is the Executive Director, working with the Council of Presidents, and the Direct Reports are the University Presidents and the Central Office.

President Likins said the Board President must be a strong leader. The Board should either empower the Board President or an Executive Committee as he believes the Board meeting as a whole won’t be able to meet the university needs on a timely basis. Former President Herstam and President Stuart have convened the members of the Council of Presidents when necessary. President Crow said he believed the Board should have time to address big picture needs such as the design of the state tax structure and providing resources for higher education.

An alternative would be for the Board to have robust, defined committees to report to ABOR with recommendations. There would be a hybrid form of chancellor system with the Executive Director reporting to the Board and the committees. The campus CEO’s would still be direct reports.

President Haeger said he didn’t want to lose the simplicity and informality of the current system. The Board should be careful in establishing committees to avoid creating a bigger bureaucracy. Today’s universities are more entrepreneurial and that requires them to move faster then in the past. He believes the Board has taken on major issues, such as tuition and financial aid, and made progress on the issues. The Board president has been key in directing the focus. Each university has defined their objectives and where they are headed. Board staff will be more involved with each institution and university staffs as they deal with complexities.

President Likins said the Board cannot delegate its fiduciary responsibility. Matters of finance should be undertaken by the entire Board. Regent Calderón said the Board needs to work smarter so it can take on more issues. Perhaps each Regent could have a hired aid to help them manage the paperwork. Public service volunteers might be helpful in the system. Perhaps an Executive Committee could meet but not make decisions. It was suggested each university have a Regent that can act on certain items.

Regent Jewett said he believed the recent successes were because the Board President was able to speak with confidence as he had the consensus of the committee of the whole. He does not want the Board to become too bureaucratic. He would like to see the Board President, President Stuart, continue to represent the Board. ASU had reviewed the policy existing policy manual and made suggestions on changes that could be made. President Stuart asked the other two universities to do the same thing. Then a work group could review the suggestions and make recommendations to the Board. The work group should consider what is policy and what is operations, using the suggestions from the universities. At the same time, the work group should look at the operational alternatives suggested today. This group should report back to the Board at the November meeting. Regent Palacios said she would also like the group to consider establishing committees composed of more than one person rather than just a Chair of Resources, etc. Regent Boice suggested perhaps people besides Board members might be on a Resources Committee.

President Stuart said he would like to keep AGB involved with the Work Group. He said he would like to have recommendations on Board structure in November to vote up or down or to tinker with. There will be a discussion on what policies need to be changed to make the system more efficient.

Regent McCalley commented that changing the terms of Board officers to a fiscal year from a calendar year would impact the Student Regent as they are not selected until spring. There was a discussion on work group members and it was determined the Focused Governance Work Group would be composed of former Regent Jack Pfister, the three university presidents, three Regents, the Executive Director, and the voting Student Regent.

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