January 2003 Minutes/Arizona Board of Regents

A meeting of the Arizona Board of Regents was held January 23 and 24, 2003, in the Catalina and Tucson Rooms, Student Union Memorial Center, University of Arizona, Tucson, Arizona. President Jewett called the meeting to order at 1:10 p.m.

PRESENT:

Regent Fred Boice
Regent Robert Bulla
Regent Chris Herstam
Regent Jack Jewett
Regent Matthew Meaker
Regent Kay McKay
Superintendent of Public Instruction Tom Horne
Regent Christina Palacios
Regent Danelle Kelling
Regent Gary Stuart
Regent Donald Ulrich
Governor Janet Napolitano (Friday Morning Only)

Also present were: President Peter Likins, Dr. George Davis, Dr. Saundra Taylor, Dr. Elizabeth Ervin, Mr. Joel Valdez, Dr. Patti Ota, Dr. Richard Powell, Ms. Judith Leonard, Dr. Randy Groth, and Mr. Greg Fahey, University of Arizona; President Michael Crow, Dr. Milton Glick, Dr. Mernoy Harrison, Dr. Kathleen Church, Mr. Paul Ward (Thursday Only), and Dr. Christine Wilkinson, Arizona State University; President John Haeger, Dr. M. J. McMahon, Dr. Elizabeth Grobsmith, and Dr. Jeanette Baker (Thursday Only), Northern Arizona University; Executive Director Linda Blessing, Board Counsel Joel Sideman, Secretary to the Board Judy Garza, Dr. Thomas Wickenden, Dr. Art Ashton, Ms. Louise Houseworth, Ms. Cathy McGonigle, Mr. Matt Ortega, and Ms. Norma Salas, Central Office Staff; and Dr. Wanda Howell, Arizona Faculties Council.

All lists, reports, summaries, background materials, and other documents referred to in these minutes can be found in the January 23 and 24, 2003, Documents File.

President Jewett recognized Dr. Wanda Howell for receiving the Distinguished Professor designation. He welcomed Mr. Tom Horne, the new Superintendent of Public Instruction, to his first regular meeting.

Dr. Patti Ota, Dr. Christine Wilkinson, Dr. M.J. McMahon, Dr. Tom Wickenden, and Dr. Kathy Church joined the meeting for this discussion.

President Jewett introduced the Study Session on Changing Directions. He said the topics today included tuition set-aside, tuition payment plan policy, and admissions policies. Regents are interested in the success of students, accessibility, and the quality the universities represent to Arizona and throughout the country. Regents plan to pair affordability with tuition increases through financial aid. Part of the program will also be to help the legislature realize there is more to be done with financial aid.

President Jewett reminded the Regents the universities had been instructed to move ahead on a number of fronts at the November Study Session on Changing Directions. They were to develop a consistent definition of unmet need and additional modeling to explain how increasing the amount of tuition revenue that is set aside to 14% would hold students with the greatest need unharmed.

Dr. Wickenden said the proposed changes would modify the policy on need-based financial aid by increasing the percentages of tuition revenues that are set-aside at each university for need-based aid. For ASU, the change would be from 8% currently to 14%, for UA it would also be from 8% to 14%, and for NAU it would be from 9% to 14%. The additional need-based financial aid resulting from the increases is intended to offset the impact of a significant increase in tuition. It should be noted, however, if tuition is not increased, it will be difficult for the universities to sustain the resulting reallocation of tuition revenue that is normally available for operations.

While the revenue resulting from this set-aside will be substantial, it will take more revenue than is provided to accomplish individual university and Board goals for financial aid. However, the policy currently provides discretion for the universities to propose and the Board to approve additional set-aside amounts. Also, the Board hopes to promote a state-funded, need-based financial aid program that will further reduce unmet need and make the universities more affordable.

Dr. Wickenden said there are two other changes to the policy. One allows the need-based grants to be provided in part as tuition credits or waivers. The other requires appropriate data to support an analysis of the extent to which each university’s financial aid set-aside has been allocated to maintain or improve affordability for resident undergraduates. The use of the funds during the next academic year and a report on the use of the funds during the preceding year will be given.

Dr. Church, based on directions from the November Study Session, explained a consistent definition of unmet need and additional tuition and financial aid modeling to study the impact upon unmet need of an increase to 14% in the set-aside.

To define unmet need, for the purposes of these marginal funds that will be created with the tuition increase and an increase in financial aid set-aside, two categories of students must be defined. One category is resident, undergraduate, Pell recipients with the calculated cost of attendance not met by expected family contribution, grants, scholarships, and waivers (gift aid). These are the students the universities have agreed best represent the most financially disadvantaged because there is a common definition formulated by the federal government. The second category is undergraduate students with cost of attendance not met after gift aid, subsidized loans, and federal work/study. This second category expands the number of students with unmet need.

There is a third definition of unmet need that will not be considered in the models, but it has appeared in the past in some of the financial aid reports. The third category is the calculated need unmet after gift aid, subsidized loans, federal work/’study, and unsubsidized loans have been considered.

Dr. Church reminded the Board there are two reasons for changing tuition policy and increasing tuition. The first one is to improve student affordability for financially disadvantaged students and is the one under discussion today. The second reason is to provide an enhanced revenue stream for other priorities.

The tuition scenarios to be discussed are a $1000 increase for resident undergraduates, a differential increase for other student categories, and a 14% set-aside for improved need-based aid. However, Dr. Church emphasized the presidents had not yet announced their tuition recommendations; these numbers were being used for the purpose of modeling.

The marginal revenue increase under this model would be $77.9M. An increase in tuition and set-aside percentage would result in incremental set-aside funds. Under this model, the funds from the tuition increase with the 8% set-aside would be $6.3M. With an increase in set-aside from 8% to 14%, the incremental would be $15.9M for a total incremental set-aside of $22.2M. Dr. Church explained how set-aside funds are calculated.

Dr. Church said $13.1M would be required to hold the Category 1 students unharmed by the proposed tuition increase. The total need for the Category 2 students would be $144.8M. The total need for the resident undergraduate students in Category 2 would be $104.1M. The dollars available within the 14% set-aside to reduce the unmet need for Category 2 students would be approximately $9.1M.

President Jewett thanked Dr. Church for her presentation. Regent Ulrich asked how work study programs fit in the mix and was told it is considered a federally subsidized program for the Category 2 students. Other employment is not calculated under the category of unmet need as the university has no control over outside employment.

Regent Bulla said he hoped the policy would be worded in a way that would encourage the universities to allot more than the 14% to financial aid when money was available.

Dr. Wickenden explained that the amount of funding that can be requested from the state because of enrollment growth is determined by the official count of fulltime equivalent enrollments, or FTE. Current Board policy includes in this count only those students who have paid tuition in full at the start of the year. However, tuition payment plans make paying tuition and fees more convenient for many students and their families. To allow the universities to offer these plans without being penalized, it is proposed the policy be modified by adding an additional exception to allow students who are enrolled in a university-approved payment plan to be included in the determination of the total fulltime equivalent student enrollment at that university.

Regent Meaker said he had talked to many students and had found the amount of tuition was not always the problem; sometimes it was making the payment all at once. He hoped this would be a solution for that problem. President Jewett acknowledged Regent Meaker’s initiative in bringing this issue to the table. President Crow said ASU was in the process of implementing a software system that would allow tuition to be paid in monthly installments.

President Jewett said this was an annual report and was included with the meeting materials as background information for the discussion of financial aid. The report shows that in 2001-2002, total financial aid in the university system amounted to $658.2 M, an increase of $57.8M or 9.6 percent over last year’s level. In the last year, the amount of self-help (loans and non-campus employment) has increased by $34.5M or 8.5 percent while gift aid (waivers, grants, and scholarships) has increased by $23.2M or 11.8 percent.

The average amount of undergraduate debt, which peaked in 1999-2000 at $18,271, has declined during the last two years to $17,408. Meanwhile, the average amount of graduate debt has risen from $28,460 in 1997-1998 to $31,669 in 2001-2002. In the last five years, private/other aid has increased by 39.7 percent, institutional aid has increased by 32.8 percent, federal aid has increased by 6.1 percent, and state aid has decreased by 50.2 percent.

In addition to tuition and financial aid, President Jewett said one of the topics included in the action plan for Changing Directions is the admissions policy. As the universities begin to differentiate their missions, they will need more flexibility in admissions to select and direct students in ways that match more closely with these changing missions.

Dr. Wickenden said the topic of admissions was as complicated and technical as the topic of financial aid. Some of the guiding principles the Board adopted in October dealt specifically with admissions. Dr. Wickenden mentioned four: student success (set minimum qualifications based upon potential to complete a four-year curriculum), equal access (ensure access for all qualified Arizona residents), enrollment management (allow universities to manage enrollments), and state needs (continue to serve all qualified resident students).

Each of these principles suggests an approach to admissions that helped frame the proposals for amendments to Board policy. As the universities strive for student success, there is a need for enrollment options that will address their learning needs and improve graduation rates. Equal access does not need to imply access to all universities by every applicant. Enrollment management would allow universities more discretion over which students they admit. The universities would continue to serve state needs for all qualified residents through increased cooperation among universities and between universities and community colleges.

Dr. Wickenden described the current admission policies. Students in the top 25% of their class or who have at least a 3.0 GPA, or score at least 1040 on the SAT or 22 on the ACT and have completed all the required courses shall be unconditionally admitted to any of the three universities. Students in at least the top 50% of their class or who have at least a 2.5 GPA and not more than 2 deficiencies in the required courses may be admitted to any of the three universities. Up to 10% of the freshman class may be admitted by exception; this is usually used for students with exceptional talents. Also, up to 10% of a resident freshman class may be deferred (required to complete classes at a community college as a condition of admission).

Dr. Wickenden explained the ways in which community college students are guaranteed admission to the universities and stated these will not be modified in any way during changing directions. This means students who are initially denied admission to a university still have ways to access a university education.

Dr. Wickenden explained the two proposed admission policy changes presented for discussion. Under Scenario #1, students would be eligible for options to the guaranteed admission category with one deficiency. Also, the word “shall” would be changed to “may” indicating the admission of the second category of students would be at the discretion of the university. Scenario #2 includes the proposed changes from Scenario #1, and eliminates the GPA and SAT/ACT scores as options for qualifying for the nondiscretionary admission category. Nondiscretionary admission would be limited to the top 25% in the graduating class of Arizona high schools. Students from high schools that do not rank their students would be considered if they have a GPA of at least 3.25.

Dr. Wickenden described what the proposed changes would mean to Arizona resident students applying to the universities. He described the decision-making responsibilities of the Regents and universities under the proposed scenarios. Regent Bulla asked if you would get a different picture if you took the total high school graduating class in Arizona and applied these new proposals. Also, looking at just ranking the top 25% and not taking into effect the quality or the competition in the high school, would probably mean the 25th ranking in one high school might be completely different than including GPA and test scores.

Dr. Wickenden said enrolled students are just one group that can be used in the modeling. The largest group would be high school students who are eligible, the second group would be the eligible students who apply. Of those who apply, there are those who enroll and those who are actually admitted. Each group gets smaller. He said at least one of the other groups has been modeled and Regent Bulla requested the Board be provided with that information.

Superintendent Horne said he had made a proposal to have differentiated high school diplomas based on AIMS test scores. This is modeled in part on the New York system where they have a diploma called the Regents’ diploma. If you obtain a Regents’ diploma, you can be admitted to a university in New York; if you obtain a different kind of diploma, you must go through a community college before entering a university. He would like to work with staff or Board members to see if the same system could be developed in Arizona. President Likins said university staffs are working with the State Department of Education to do the underlying analysis that should proceed a rational proposal for legislation. The fundamental question is, “To what degree does some indicator, such as a Regents’ diploma, predict performance in the university?” “Does it predict performance as well as GPA or SAT scores?” Dr. Likins says the AIMS test, as it is currently constituted, does not. With a gradation of performances, it does predict academic performance for freshman approximately as well as the SAT does, but not as well as the GPA does. From the current university perspective, the AIMS test is useful information, but it is premature to draw a sharp line and say it is the only indicator that should be used.

Superintendent Horne asked who should be working with the Department of Education on this issue and President Jewett suggested the work group at the table would be where to begin. Regent McKay suggested the effort be coordinated through Dr. Blessing at the Central Office.

Professor Howell asked if the students admitted under Scenario 1, nondiscretionary would be higher than the number admitted under Scenario 2 in that category. Dr. Wickenden said yes.

President Likins said the discussion sounded like there would be a change in admission standards and the discussion is only which judgments about admissions should be made by Regential policy and which judgments should be made by the universities. He said the Regents are considering prescribing the principles that must guide the universities’ admissions. For example, the principles of student success say the universities must graduate a higher percentage of the students that are admitted. The universities are going to be held accountable for meeting the principles. In order to be accountable for performing in a way that has outcomes, the universities must have more management discretion in pursing the goals. The universities will then be able to look at each student on an individual basis in more sophisticated ways, including using the knowledge of which high schools are better than others.

Regent Herstam asked why GPA’s were being eliminated in Scenario 2 when it was earlier stated GPA’s were the best single indicator of success in the universities. President Likins said grade inflation is a real phenomenon; being in the top quartile is not subject to changes or trends over time or any differences in GPA’s given in one institution versus another. Statistically, if averaged all together, GPA is the best indicator; but it is not an equally good indicator in every high school.

President Haeger said each of the universities would be reporting to the Board on admissions for every year, so it will be very easy to see what has transpired. Therefore, the accountability is almost immediate. He also said this system puts the onus on the universities to place the students so they will be successful.

President Likins described the principles for University of Arizona freshmen admissions decisions which would be made within Scenario 2. The first principle would be prediction of academic success (e.g., GPA, specific course grades, standardized test scores). The university would look individually at special populations whose academic success is not adequately predicted by traditional measures (e.g., ethnic minorities, first-generation college students, students with disabilities) and at leadership characteristics or special talents that contribute to the quality of the university experience for others. The university would also consider workforce needs in key professions (e.g., teaching, nursing, engineering). Geography should be considered for place-bound students and class size should be controlled to accommodate UA physical constraints.

Dr. Likins said the first class that would be impacted would be the class of Fall 2004 and the modification of UA behavior would probably be imperceptible. Five or ten years later, as the university grows, there could develop a further differentiation of the admission of the freshman class.

Regent Horne asked if there was data to support the statement there are special populations whose academic success is not adequately predicted by traditional measures and Dr. Likins said that data could be furnished. These will be individual students, not a large statistical base.

Regent Herstam asked if the universities would be able to establish new procedures which would incorporate the students referred to above by the Fall of 2004 and was told there probably would be few changes that soon. It would take longer than that to institute new, more sophisticated admission procedures.

President Haeger said he believed Changing Directions would allow each of the universities to have a slightly different perspective on admissions. This discussion has centered on the 18 to 21 year-old students entering the universities. There are, however, many other populations entering the universities. One of the fastest growing groups of students is the nontraditional, adult learner who will want access anytime from anywhere.

Dr. Haeger said NAU approaches the philosophy of admissions by putting Arizona students first. NAU is trying to be inclusive, not exclusive. They are trying to be inclusive in a way that allows them to place students in appropriate positions so they can succeed. They will be looking at a matrix of measures to place the students in appropriate courses and programs.

NAU will use financial aid strategically to meet university goals: quality, diversity, and access. There will also be a strategic use of undergraduate program sites, distance delivery, and ARU to reach place-bound students. The result of all this is a new paradigm of assessment and evaluation. There will be an annual report on diversity, accessibility, and quality, retention rates, and graduation rates. There will be a focus on student outcomes and there will be increased expectations.

President Crow said the reconsideration of the admissions policy is critical for ASU as it considers how to evolve its multiple-campus institution. For example, how to move the engineering college on the main campus to national competitive status, while at the same time meeting increased student demand for the technology and engineering oriented education.

Under the ASU Model, the university will strive to be inclusive rather than exclusive; will focus on outcomes versus inputs, and will continue to admit most students in the top half of the high school graduating class, just in different ways.

Dr. Crow said the things required to keep the university on track are tuition revenues that allow the university to manage whatever growth these admission standards permit ASU to implement, continuous and dependable funding for enrollment growth, and funds available to expand the physical facilities to accommodate growth.

Dr. Crow said he was using Scenario 2 for this discussion. The top 25% of the high school graduating class with high school core courses completed shall be admitted to any Arizona university unconditionally. Students in the second 15% and students missing core high school courses shall be admitted to ASU, but may be admitted with conditions. They will be considered individually. Students in the third 10% may be admitted to ASU based on examination of expanded portfolio and an assessment of potential. This is how ASU would expect to admit the top 50% of Arizona graduates.

However, there may be other requirements for entry to individual majors. The model for admissions will vary according to the needs of individual schools; some will be more selective than others. For those students who have a high potential for academic success but are not necessarily qualified to participate in any of the individual programs, ASU intends to construct an entity called University College. It will serve all campuses and will have a special emphasis on student success, academic advising, tutoring services, career advising, and academic exploration. Dr. Crow believes the admission standards being considered by the Board will significantly help ASU build the kind of flexible admissions needed for success.

Regent Kelling thanked the presidents for their explanations of the issue and their focus on student needs. Regent Palacios asked what the timing and preparation would be for implementation. Dr. Crow said one year to plan and one year to implement for ASU. Dr. Likins said UA has been working on this for about one year and hopes to be ready to cautiously begin in the Fall of 2004. Dr. Haeger said NAU should also be ready by the Fall of 2004 as they have some plans in place.

Regent Bulla said he believes the real key will be the outcomes and the ability to monitor and evaluate what is produced. He believes there should be a discussion of the monitoring or accountability process and what component parts are included.

President Jewett said he believes, based on today’s discussion, there should be more analysis done on this issue. He asked the Work Group and the members of the Council of Presidents to analyze the impact of the proposals that were presented. He believes the community outreach for stakeholders is vital. He charged the Work Group with helping the Regents adopt performance measures, including access, persistence to graduation, and maintaining diversity. He asked for additional information to answer questions raised today and a draft policy for consideration at the next meeting.

The Study Session recessed at 3:22 p.m. and the regular meeting began immediately.

Provost George Davis introduced Dr. Vicki Chandler, a member of the National Academy of Science, who is a major contributor and coordinator of a $22M project involving several universities and has served on very significant National Science Foundation and National Institutes of Health advisory councils. Her fundamental area of research is gene regulation, particularly as related to plant sciences and maize. She has received many prestigious awards.

Dr. Chandler said we are now in the age of biology. Advances in molecular life sciences are going to impact our lives more in the next two decades than micro electronics have impacted our lives in the last century. She explained genome projects and used a project from her lab to demonstrate how students are taught.

The meeting recessed at 3:50 p.m. and President Jewett reconvened the meeting at 9:06 a.m. on Friday, January 24.

Doug Hartz, ASUA President, said the Board approved a student-initiated referendum five years ago to fund KAMP, the student broadcasting service. Last November the Student Senate approved the addition of a student referendum to the general election ballot in March. If the referendum is successful, it will be brought to the Board for approval.

Larry Hofreiter, second year graduate student from UA School of Planning, said the UA School of Planning works on community development projects throughout the state. He spoke on the benefits of continuing the Master of Planning degree.

Peter Morris, President of the UA Graduate and Professional Student Council, advised caution in the level and the timing of a tuition increase. He said American universities stand alone in the world on their reliance on graduate students for teaching and research and raising the tuition too high will mean they will go elsewhere.

Jennifer Runquist, College of Nursing, told the Regents about a survey she had conducted among graduate students concerning their expenses. She asked the Regents to increase tuition by a minimal amount and increase financial aid to graduate students.

Amy Hamilton, literature graduate student at UA and teacher of first-year composition, asked for tuition remissions to offset the tuition increase and to allow a living wage for graduate students.

Governor Napolitano joined the meeting. President Jewett welcomed her to the meeting and gave a brief summary of yesterday’s Changing Directions Study Session. Governor Napolitano said she supports the universities. She is working to amend the Constitution so the universities can be players in the commercial world through technology transfer.

David Cardamone, UA Physics Department Graduate Student Council, asked the Regents not to reduce the living wage of the graduate students.

Amanda Brobbel, a UA literature graduate student and composition teacher, said the graduate students are central to the functioning of the University of Arizona. They bear a huge portion of the teaching and research load. The proposed tuition increases will be a pay cut for the graduate students. She asked for the remission program to be continued.

Bob Bertolini, Senior Superintendent for Swinerton Builders, thanked the Regents for allowing Swinerton to be a part of the building of the Student Union Memorial Center. He described how the design-build process had been used successfully on this project.. He said Swinerton is very proud of this building.

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

The Board approved the September 26 and 27, 2002, Executive Session, the October 30, 2002, Special Study Session, and the November 21 and 22, 2002, Regular Meeting minutes.

The Board approved the proposed changes to Policy 2-205, “Off-Campus Courses and Programs.” These changes remove constraints upon the ability of the universities to offer off-campus programs throughout the state. Compensation issues will be addressed in individual university faculty personnel policies. In the absence of specific geographical constraints, the universities will have the authority to offer upper division courses and graduate programs at any off-campus location throughout the state.

The Board approved the proposed changes to Policy 4-104A, “Procedure for Setting Tuition and Fees,” and to Board Policy 4-101, “Authority to Set Tuition and Fees.” The Board has indicated it would retain, for the time being, the concept of an upper limit on undergraduate resident tuition and mandatory fees, “the amount required to maintain a position within the lower one-third of rates set by all other states for undergraduate resident fees.” This policy change specifies the use of the rate set at the “senior” public university in each state.

This change also allows additional forms of differentiation of tuition and mandatory fees, including students at different academic levels (e.g., undergraduate and graduate), students in different programs, and students taking courses provided through different delivery methods. The language about reducing the differences between the non-resident tuition rate for NAU and the rate for UA and ASU was eliminated and the contents of the report on the availability of financial aid was modified to include unmet need for various categories of students.

The Board approved the proposed changes to Policy 2-103, “Enrollment.” The change eliminates existing policies that limit the number of full-time non-resident students each university can admit to 25% of the total enrollment. The Board agreed to this proposal with the understanding the universities would be held accountable for ensuring access of qualified Arizona resident undergraduate students to programs and services. Also, the Board requested that the percentage of non-resident students at each campus continue to be monitored through the existing annual enrollment reports.

The Board authorized the University of Arizona to sell one or more series of Refunding Certificates of Participation in amounts to produce sufficient proceeds to refinance all or a portion of its Certificates of Participation, Series 1994A, 1997, 1999, 1999A, 1999B, 2000A, 2001A, 2001B, 2002A, and 2002B, and to pay costs of issuance of the COP’s, to take related actions and to enter into all necessary agreements, as provided in a resolution reviewed by Board Counsel and staff. The current low interest rate environment is the most advantageous time to undertake such refinancings to restructure the lease payment to enable UA to meet its payment obligations while minimizing impact on its other cash flow needs during the State’s current budget difficulties.

The Board authorized the University of Arizona to sell one or more series of System Revenue Refunding Bonds in amounts to produce sufficient proceeds to refinance all or a portion of its system Revenue Bonds Series 1992A, 1993, 1994, 1998, 2000, and 2002, and to pay costs related to the refinancing, and to take all related actions, enter into all necessary agreements, and execute all necessary documents as provided in the Supplemental Resolution, reviewed by Board Counsel and staff.

The Board granted Project Approval for the School of Communications Renovation at Northern Arizona University. This project is planned to be a complete renovation and modernization of the Communications Building, seeking to provide a fully functional and state-of-the-art communications teaching and laboratory facility. The estimated cost is $13M.

The Board granted approval to Arizona State University Main for Project Approval and Budget Increase for the University Services Building Backfill Project Phase 1 and USB build out of gray shell to white shell. ASU received Project Implementation Approval for the USB and associated backfill in September 2001. ASU received Project Approval for the USB in January 2002 and Revised Project Approval in October 2002. To accommodate completion of approximately 30,000 GSF of gray shell space to white shell space, the budget is being increased $300,000 from local accounts making the revised total project cost for the USB Backfill Project Phase 1, $3.5M.

The Board received a written report on the FY 2002 audited financial statements for the University Medical Center Corporation (UMCC). For FY 2002, UMCC reported $278.3M in operating revenues and $277.7M in operating expenses, resulting in an operating income of $0.6M. In addition, UMCC reported a net decrease in fair market value of investments of $4M, resulting in a decrease in net assets of $3.4M.

In comparison, for FY 2001 UMCC reported $268.6M in operating revenues and $271M in operating expenses, resulting in an operating loss of $2.4M. In addition, UMCC reported a net decrease in fair market value of investments of $4.3M, resulting in a decrease in net assets of $6.8M for FY 2001.

For FY 2003, UMCC projects operating revenues of $281.5M and operating expenses of $285.6M, resulting in an operating loss of $4.1M. The primary reason for this projected loss is the adoption of a 4:1 nursing ratio.

The Board appointed Matthew H. Miller, Bruce J. Nordstrom, William P. Reilly, Jr., Robert Ruiz, and Ben F. Williams, Jr., to the Board of Directors for UMCC for terms expiring in October 2006. These appointments were made at the request of the UMCC Board of Directors.

The Board authorized Arizona State University to enter into a multiple-year employment contract with Linda Wells as Head Softball Coach for the period January 1, 2003, through June 30, 2005, as generally summarized below.

Coach Wells’ salary will be $90,000 per year, consisting of $89,000 base salary and $1,000 additional salary. This will be for basic duties relating specifically to coaching softball and for additional duties consisting of participation in media programs, development activities, public relations activities, and endorsements and other promotional activities.

The salary will be increased for the year commencing July 1, 2003, and on each July 1 thereafter in percentage increments depending on achievement of prescribed performance milestones. If no milestones are achieved, the Director of Intercollegiate Athletics may give Coach Wells a percentage increase up to, but not exceeding, the increase of service professional employees during the year.

Coach Wells may receive, but is not assured, Special Compensation annually for 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.

Coach Wells may receive Supplemental Compensation annually consisting of one-time payment for described performance in a particular year. The percentages are applied to salary.

Coach Wells will receive tickets to ASU sporting events, use of one automobile, and golf privileges at the ASU Karsten Golf Course. She will have the right to use ASU facilities to conduct a softball summer camp, paying ASU for use of the facilities. The contract contains liquidated damages and termination clauses.

The Board authorized Arizona State University to enter into a multiple-year employment contract with Melissa McNamara as Head Women’s Golf Coach for the period from the execution of the contract through June 30, 2005, as generally summarized below.

Coach McNamara’s current annual salary is $70,000 and will remain the same under the multiple-year contract. It will consist of $69,000 base salary and $1,000 additional salary. This will be for basic duties relating specifically to coaching women’s golf and for additional duties consisting of participation in media programs, development activities, public relations activities, and endorsements and other promotional activities.

The salary will be increased for the year commencing July 1, 2003, and on each July 1 thereafter in percentage increments depending on achievement of prescribed performance milestones. If no milestones are achieved, the Director of Intercollegiate Athletics may give Coach McNamara a percentage increase up to but not exceeding the increase of service professional employees during the year.

Coach McNamara may receive, but is not assured, Special Compensation annually. Special Compensation is all amounts designated as being for the women’s golf coach in an agreement 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. Coach McNamara may receive Supplemental Compensation annually consisting of one-time payments for performance in a particular year for prescribed performances. The contract contains liquidated damages and termination clauses.

The Board approved the proposed terms of the severance agreement with Dr. Joyoytopaol Chaudhuri, a Professor of Political Science at ASU, providing him with severance pay in exchange for the voluntary release of his tenure and any right to future employment with the university.

The university proposes to pay Dr. Chaudhuri severance pay in the amount of $84,113 in two installments, $42,057 payable on August 16, 2003, and $42,056 payable on January 15, 2004. His effective date of retirement is August 16, 2003.

The Board authorized Northern Arizona University to promote Dr. Kiisa Nishikawa, Professor of Biological Sciences, and Mr. James D. Simmerman, Professor of English, to the rank of Regents’ Professor, effective July 1, 2003, and to award the $5,000 salary increase that customarily accompanies these appointments.

The Board received a written status report on the annual Action Plan objectives for FY 2003 that the Board adopted at its August 2002 Retreat.

The Board approved the proposed revisions to Board Policy 6-201 (L) and (M), “Conditions of Faculty Service,” to expand hearing procedures as required by a decision of the Arizona Supreme Court. The Court, in the ABOR v. Arizona State Personnel Board, et al case determined that university grievance policies and procedures are subject to specific procedural requirements of the Arizona Administrative Procedures Act. The additional required procedures are: 1) the right of the parties to be fully represented by legal counsel; 2) the provision of subpoena power to the hearing panel to compel the attendance of witnesses and production of documents; and 3) the right of the grievant to request reconsideration of the decision.

The Board approved the proposed deletion of Board Policy 3-702, “Audit Findings or Recommendations.” Policy 3-702 was established to define which of the Internal Audit report findings would be periodically reported to the full Board. With the recent approval of the Audit Committee Charter Policy 3-700, the Board delegated to the Committee the task of accepting internal audit reports and made the Committee responsible for reporting to the Board.

It is unnecessary for Internal Audit to dual report to the Audit Committee and to the full Board. The Audit Committee will make the determination as to which, if any, internal audit findings it should report to the Board for information or action, as may be appropriate in the circumstances.

The Arizona Regents University Committee has the authority to hear and approve requests for funding for new projects and programs associated with the development of ARU. The Arizona Regents University Committee is also obligated to report these funding decisions to the entire Board.

On November 23, 2002, the Arizona Regents University Board Committee heard and approved two new funding requests. The first one is Tri-University Tutoring Online Resource (TUTPR) Link that will develop and implement a comprehensive online, collaborative academic support program within the three state universities in Arizona. This is a three-year project with a total funding of $222,200.

The second request is for the Survey Research Laboratory at ASU and the Social Research Laboratory at NAU to organize nine focus groups throughout the state to hold structured conversations with members of targeted sectors to help in identifying and understanding the size and demand of markets for distance learning in Arizona. This project was funded at $70,000 and should be completed by summer 2003.

Regent Herstam reported on the first governing board meeting of the Translational Genomics Research Institute (TGen) on December 10. The three presidents, along with Regent Herstam, represent the university system on the 22 member board. The Governor is also on the board. Board members come from a variety of backgrounds, including private industry, government, and non-profit groups. National figures such as former U.S. Senator Mark Hatfield and author/speaker Hamilton Jordan are members as well. Jose Cardenas, the managing partner of the Lewis and Roca law firm, was named the Chairman of the governing board for 2002-2003.

Dr. Jeffrey Trent, an internationally recognized scientist in the field of genetics, will be the President and Chief Scientific Officer of the organization. He has envisioned an institute where many of the world’s leading scientists would turn breakthroughs in genetic research into medical advances benefitting patients and their families.

As an umbrella structure for its numerous research functions, TGen will have five overall infrastructure units, including the Office of Science Education and Outreach which includes a major focus on public education. A technology transfer office will also be a primary focus. Staffing issues are being efficiently handled within the organization as a number of key positions have been filled.

Thanks to the cooperation and collaboration of its partners and supporters, TGen is operating with interim office space which was donated by APS. TGen’s interim laboratory space is expected to be ready by the end of 2003.

In the Fall of 2004, the TGen International Genomics Building and Headquarters will be available for move-in. This facility, when completed, will be up to 150,000 gross square feet, six stories in height , and will reflect the “world class” research that will be conducted. The next TGen meeting is March 17 and 18.

Regent Bulla asked what kinds of audit or oversight capabilities are being prepared to assure the Regents and the general public that public money is being correctly used. President Likins said he couldn’t comment on the broader picture, but Proposition 301 dollars don’t go to TGen, they go to the university for investments that will facilitate the development of TGen. Regent Herstam said committees are being organized and he believes there will be an audit committee. President Crow said TGen is a 501(C)(3) corporation which will have appropriate auditing and review.

Mr. Matt Ortega joined the meeting for this discussion. Regent Herstam said Changing Directions has heavily influenced the legislative agenda, specifically in the areas of state financial aid, tuition, technology transfer and economic development, and state budget mechanisms and revenue streams.

Mr. Ortega presented the Information Summary for State Lawmakers. Under State Financial Aid, the legislative proposals include State general fund support with other possibilities including state trust land revenues and commitments from the business community for specialized programs; funding for a need-based scholarship program; financial aid for special workforce development needs; and an increased state match for Arizona Financial Aid Trust program.

Under Tuition, legislative proposals include allowing the university system to retain all of the FY 04 incremental tuition collections resulting from tuition increases for the FY 2003-2004 academic year in addition to existing locally retained collections for financial aid, plant funds, debt service, and miscellaneous student related activities and programs; and making sure any increases in incremental tuition collections would not be offset by reductions to the universities’ general fund appropriations.

Under State Budget Mechanisms, the legislative proposals include maintaining the existing formula and encouraging the legislature to fully fund the formula; revising the formula to weight students enrolled in each academic program based on the costs to deliver that program; adopting an alternative enrollment growth formula that takes into account issues such as building renewal, research needs, and faculty salaries; adopting a funding approach for universities that is tied to a market-based analysis using benchmark data from peer institutions; studying the problem of start-up funding for universities; adopting a consistent funding approach within the continuation budget for mature campuses based on analysis of the marketplace in which the universities must successfully compete; and examining ways to develop a funding formula, in addition to the current enrollment growth formula, that would provide financial incentives for universities to graduate students.

Under State Revenue Streams, the legislative proposals include determining a more prudent method of protecting the state’s revenue base through current efforts involving state-tax policy review. Governor Napolitano said the first meeting of the Citizen’s Finance Review Commission was held this week. She has charged the Commission with looking at the entire tax base and how it is structured with the challenge to give recommendations to her no later than next October.

Regent Boice said he believed the rewrite of the tax code was long overdue. He asked for a clarification on the legislative option “to study the problem of start-up funding for universities.” Mr. Ortega said that was specifically to address the issue such as ASU East and West where the enrollment growth formula does not apply to those universities until you reach an enrollment of 5,000. Any other type of ventures that would result from the Changing Directions process that would involve the possibility of new campuses or meeting the needs of specific communities would also encounter this problem.

Under Technology Transfer Initiative Requiring Legislation, the legislative proposal is to refer to the voters, through the legislative process, a ballot proposition that would remove any constitutional prohibitions to university equity/ownership.

Upon motion of Regent Herstam, seconded by Regent Bulla, the Board approved the proposed legislative agenda for the Arizona University System.

Mr. Matt Ortega, Dr. Richard Powell, Dr. Jonathan Fink, and Dr. Carl Fox joined the meeting for this discussion. Regent Herstam said Board policy requires the universities to submit an annual report on their technology transfer activities.

Dr. Powell said the University of Arizona has been working diligently to improve its tech transfer enterprise. Policies and procedures have been changed, new people have been hired, and new resources, including Proposition 301 funds, have been expended. This has culminated this fall with the hiring of a new Director of Technology Transfer, Dr. Patrick Jones. The UA has an advisory committee on tech transfer policies and procedures, made up of local businessmen, entrepreneurs, and venture capitalists. They also have outside committees, local experts who have had distinguished careers in these fields, on tech evaluation in life sciences and physical sciences. They are partnering with the Eller College of Business Entrepreneurship Program.

Dr. Powell said the Board of Regents had approved eight spin-off companies from the UA last year. Not all of those will be successful, but if even one succeeds, it will make an impact on the local economy. One of these is a joint venture among the engineers, optical sciences, and medical doctors to make pathology information on a chip. They have gone from conceptual design to a product in less than a year. This is a platform technology that can be used for many products.

Dr. Powell said most of the universities’ tech transfer activities are in patenting and licensing new technologies. He highlighted a technique developed by UA chemists to use service plasma and resonance to develop a diagnostic technique that is useful for drug development activities and the screening of new drugs that were licensed to a company in New Jersey. The UA is excited about a new congestive heart failure drug that is in Phase 2 clinical trials at the VA Center. The medical research team is working on patents donated to the university by Procter and Gamble.

Dr. Fink said ASU, for the size of its research operation, has done very well in technology transfer the last several years. He said ASU is moving from technology transfer to technology venture orientation. They have shifted from simply licensing inventions to having more of the start-up company generation and alliances with other universities and industry as a more direct goal for operations. These changes have been made possible by funding from Proposition 301.

This is also a response to the changing community expectations about the role of research universities. The goal is to offer larger economic impact and greater financial return, both to the community and to the university, and expanded services for the faculty. These changes were started over the last couple of years, but there is now a push to accelerate the process.

Dr. Fink said ASU has contracted with outside technology commercialization firms to do more careful assessments of the inventions and to help ASU better market them nationally. They are also actively building relationships with venture capitalists and investors from Arizona and around the country. In terms of offering more opportunities for faculty and students, they have regular workshops with a couple of groups in the Phoenix Metro area for the faculty so they can learn about what is available. They also are working with students in the colleges and partnering with the College of Business to further opportunities.

Dr. Fink said there has been a lack of “gap” funding available and Proposition 301 has allowed a program for Proof-of-Concept grants. This happens when a professor has developed something that looks like it has promise, but it is not developed far enough for a company to take it seriously and invest in the intermediate stage of development. ASU has been making grants of $30,000 each to faculty who have promising inventions so they can get them to the point where companies will have more interest. Last year there were 29 proposals and 5 were funded; this year 22 proposals were received and 6 were funded. Two already have spin out companies formed.

Dr. Fox said tech transfer had not been on the radar screen at NAU for many years. They have almost tripled the kinds of tech transfer activities over the last year. This is largely attributable to the Proposition 301 funding.

Dr. Fox provided examples of two technologies that are perhaps the furthest developed. The first was called The Eccentric Ergometer and was developed by Stan Lindstedt of the Department of Biological Sciences and Paul LaStayo of the Department of Physical Therapy with the assistance of the UA Heart Institute. They developed an exercise devise that provides resistance rather than pushing like most bicycles. It is important because it is similar to walking down hill where you build muscle tone with less effort. This is important for people who need to exercise but don’t have cardiovascular ability, such as heart patients.

Dr. Fox also described a device that uses a polymer to sense both chemical and biological agents. Certain polymers have different characteristics based on whatever they are exposed to that changed their shape. Measuring what that change is developed a powerful tool for sensing a particular compound. The Piesoresistive Microcantilevers Sensor was developed by Timothy Porter from the Department of Physics and Astronomy and Michael Eastman and Danielle Pace from the Department of Chemistry. This device is very small; up to 100 individual sensors can be mounted on a single white centimeter chip. This device can be sent out in the field to determine whether it is safe to send soldiers into the area.

Mr. Matt Ortega joined the meeting for this discussion. Regent Herstam said Item 12 was a review of the FY 2002-2003 Public Awareness Plan to date. This year the Public Awareness Plan focus is the Changing Directions project. The Executive Summary details some of the outreach activities that have taken place to date.

Dr. Milton Glick, Dr. George Davis, Dr. Jonathan Fink, Dr. Richard Powell, Dr. Tom Wickenden, Dr. Elizabeth Grobsmith, and Ms. Kathy Bedard joined the meeting for this discussion.

Dr. Powell said the business plans presented for approval by the UA represent exactly the same intellectual content as the initial TRIF proposals that were formerly submitted and approved by the Board over 1½ years ago. They are now in the form of traditional business plans instead of the research form. The Business Advisory Team was extremely helpful in reviewing the plans and helping put together better ideas of how to implement what had been suggested. In terms of the budget changes before the Regents for approval, there are no major changes in project funding; there are minor changes simply associated with the normal uncertainties of starting new programs.

Dr. Powell said the UA chose to invest TRIF funding in areas where they have already built significant strength and that directly overlap with GSpeed cluster industry company areas so they can use their TRIF funding to help the university impact economic development in the state. He said they have seven initiatives, four research ones--optics, biotech, internet technology and water--and three support areas–tech transfer, educational development plan and on-line content and infrastructure. He described the activities that have taken place.

Dr. Powell said these are very successful initiatives that are meeting or surpassing the outcomes projected. The TRIF money has been of critical importance to the university to allow development of new programs in times of budgetary crisis and the money is being used to help the universities get involved in technology transfer and economic development in general, one of the major goals of Proposition 301.

Governor Napolitano asked the universities to share research in water technology and water conservation with her office as they are beginning to look at a long-term water strategy for Arizona.

President Haeger said the TRIF funding has had an amazing impact on the universities and the cooperation among the universities has been greatly increased.

Dr. Fox said NAU aligned their projects with the original Proposition 301 criteria when they began. As they proceeded during the past year to look at more of a business approach to what they were doing, it allowed them to enhance their Proposition 301 activities. It allowed them to focus on people for workforce development, products, and partnerships with business, industry, and the other universities.

NAU has five major areas under the TRIF initiative: biosciences/biotechnology; ERDENE–environmental research, development, and education for the new economy; access/workforce development; e-learning; and capital projects. Dr. Fox described common outcomes from the TRIF projects. New knowledge has been developed with practical solutions and value to society, There has been an increase in core competencies and workforce training and development. There has been business development, partnerships, and the leveraging of state resources to provide a return on investment. There has been a high technology focus to research and education. He described what has been happening with the initiatives and the outcomes of these initiatives. He explained the use of funds to the Regents.

President Crow said ASU has established the Office of the Vice President for Research and Economic Affairs and has charged that office with a new set of objectives focused on building a research venturing capacity, technology venturing capacity, and linking both of those capacities with new economic objectives. ASU has focused its Proposition 301 investments to move toward national status. ASU has designed and is about to deploy a new process for technology venturing with a new team. They have launched the Arizona BioDesign Institute with a $110M start-up package and have launched both a private sector and public sector fund-raising campaign to raise $500M additional dollars to help the Arizona BioDesign Institute actually be a competitive national institute.

Dr. Fink reemphasized how crucial the Proposition 301 money has been to ASU and said they were trying to heavily leverage the funds. He said the meetings with the Business Advisory Team had helped the university sharpen what it was trying to accomplish.

Dr. Fink said ASU had been focusing the six separate initiatives under Proposition 301 into one main project which is the Arizona BioDesign Institute. Before, ASU had separate initiatives in biosciences, information technology, materials research, and manufacturing along with access, workforce programs and technology transfer enhancement. It was decided it would be very challenging to ASU, even with all the funding from 301, to really compete with other states and private universities. The solution was to put the areas together and try to build the strongest individual program possible to be able to make an impact. The BioDesign Institute incorporates many of the earlier projects. There are still some projects that don’t completely fall under the Arizona BioDesign Institute heading that are being carried forward from earlier reviews.

Dr. Fink listed accomplishments that have happened in the seven months the Arizona BioDesign Institute has been established.

Executive Director Blessing reported the Central Office staff manages two TRIF initiatives on behalf of the Board, the Arizona Regents University and the Regents Innovation Fund. Working with the Business Advisory Team, business plans have been prepared for both initiatives. For the Regents Innovation Fund, the primary project has been Learner Centered Education grants.

Dr. Blessing said, for 2003, there have been three new projects proposed for the Regents Innovation Fund. Dr. Wickenden described the three initiatives and the Arizona Regents University fund.

Regent Ulrich thanked the three university presidents for their handling of this issue and the Vice Presidents for Research for their work with the Business Advisory Team. Regent Boice asked for future business plans to be briefer and said he is looking forward to outcomes. There was a discussion of return on investment from research dollars and how the money is returned to the community. There was a discussion on whether it is expected research with a high return on investment should be done at the total expense of research that would benefit society, such as water programs. Regent Ulrich said it was his under-standing both types of research would be undertaken. He also believes quality of life issues are directly related to economic development.

Upon motion of Regent Stuart, seconded by Regent Bulla, the Board gave conceptual approval to the TRIF Business Plans. Upon motion of Regent Stuart, seconded by Regent Boice, the Board approved university and central office revised FY 2003 TRIF budgets and performance measures, including reallocation of unexpended prior-year funds.

Ms. Louise Houseworth joined the meeting for this discussion. Regent Stuart said this is the calendar for setting tuition for the FY 2003-2004 academic year. It is anticipated the Board will set tuition and residence hall rates at the March 6-7 meeting and fees at the April 24-25 meeting. He emphasized the importance of the tuition hearing scheduled for February 27, from 4:30 to 7:00 p.m., that will be held on all main and branch campuses via closed-circuit television.

Upon motion of Regent Stuart, seconded by Regent Ulrich, the Board approved the calendar for setting tuition for the 2003-2004 academic year.

Dr. Mernoy Harrison and Dr. Dave Harris joined the meeting for this discussion. Regent Stuart said ASU was requesting Project-Approval for the AZ BioDesign Institute, Phase 1. It is a 170,000 square foot facility with an estimated cost of $69M and will be funded with system revenue bonds, with debt service being provided from Proposition 301 revenues, indirect cost recovery, and other local funds and federal grants.

Dr. Harrison said this is the first phase of what will be a multi-phased AZ Biodesign corridor on the east side of the ASU campus. They have received a guaranteed maximum price bid from the contractor at the $69M level. Regent Boice asked if the debt service for Phase 1 came from tuition or state funding and was told it would come from Proposition 301 funds, indirect cost recovery funds, and other local funds such as money from the ASU Research Park. Phase 2 anticipates some funding from general funds.

Upon motion of Regent Stuart, seconded by Regent Herstam, the Board granted Project Approval to Arizona State University Main Campus for the AZ BioDesign Institute-Phase 1 Project.

Regent Stuart said this is a first reading on a proposed amendment to Board policy that would allow the universities to treat tuition waivers and remissions for graduate teaching and research assistants and associates as tax exempt, and to properly charge tuition benefits to federal grant or contracts. This proposed amendment will return for Board action at the March 2003 Board meeting.

Dr. Art Ashton joined the meeting for this discussion. Regent Stuart said this was a first reading of a proposed amendment that would delegate responsibility for the selection of consultants and a student health insurance provider to the Student Health Insurance Advisory Committee, in consultation with the Council of Presidents. The modification delegates a variety of administrative functions to the existing Student Health Insurance Advisory Committee. In addition, the policy will be modified to give the Committee the option of retaining a leading health insurance consulting firm to advise and assist in working with the health insurance industry. The Council of Presidents will review the Student Health Insurance Advisory Committee recommendations. This proposed amendment will return for Board action at the March 2003 Board meeting.

Regent Stuart said both this item and the following one involve appointments of new Vice Presidents that are needed to accomplish the goals that have been discussed here today. Even in financially stressful times, it is necessary to have excellent executive-level staff for decision making. It is imperative that our presidents continue to hire the most highly qualified executives that we can, and that salaries be paid that are both reasonable and competitive in the markets in which we compete for executive-level talent. We know the presidents are sensitive to these considerations, and we remind all three presidents and our executive director of the Board’s need to get a head’s up on your plans with respect to new hires and salary adjustments. President Haeger said he had been in the process of reorganizing the direct reports to the president in the past year to pursue priorities. The changes they have made, including this position, still result in savings of over $250,000 in executive level appointments. This salary is competitive with other universities.

Upon motion of Regent Stuart, seconded by Regent McKay, the Board approved the appointment of David Bousquet as Vice President for Enrollment Management and Student Affairs effective as early as March 1, 2003, but no later than April 1, 2003, at a fiscal year salary of $149,000.

Regent Stuart said this was the ratification of the reorganization of ASU’s executive leadership and three vice presidential appointments. President Crow said this reorganization was part of an overall strategy to invest in key people at the executive leadership level, key faculty, key staff, and new programmatic initiatives. In the case of this set of appointments, they fall within the existing budget.

Upon motion of Regent Stuart, seconded by Regent Boice, the Board ratified Arizona State University’s executive organization and the following three Vice Presidential appointments: Christine Wilkinson, Senior Vice President and Secretary of the University, effective October 1, 2002, at a fiscal-year salary of $195,000; Mernoy Harrison, Executive
Vice President for Administration and Finance, effective July 1, 2002, at a fiscal-year salary of $200,000; and Jonathan Fink, Vice President for Research and Economic Affairs, effective July 1, 2002, at a fiscal-year salary of 195,000.

Mr. Joel Sideman joined the meeting for this discussion. Regent Stuart said this is the report of the hearing officer on the complaint of Edmund Kahn and Charles Josephson, dba Print Well, against the University of Arizona Bookstore under the statute and Board policy regarding competition with private enterprise. Mr. Sideman said Board policy follows statutory framework and the Board is required to resolve complaints alleging unfair competition by any of the universities. The complaints are very infrequent.

This case involves a local shop that provides print services, graphic design services, and the sale of a limited number of books that has filed a complaint against the bookstore at the UA. The UA and the Plaintiffs were both represented by Counsel at the administrative hearing. If the Board approves the recommendation, the Plaintiffs are entitled to pursue a review of the decision in court.

The findings of fact in this matter were: Complainant Edmund Kahn does not conduct any business enterprise whose goods and services are also provided by the UA bookstore; complainant Charles Josephson conducts the business known as The Print Well whose primary goods and services are commercial printing, photocopying, and typesetting and design. In addition, complainant sells approximately a dozen books which are either written by a relative or are published by complainant; the bookstore does not conduct any business in the fields of commercial printing, photocopying, nor typesetting and design; and while the bookstore is capable of selling the same books as the complainant, there is no evidence that it is currently or has ever in the past sold the same books as complainant.

Upon motion of Regent Stuart, seconded by Regent McKay, the Board approved the decision of the Hearing Officer on the complaint of Charles Josephson and Edmund Kahn against the University of Arizona Bookstore under A.R.S. §41-2753 and ABOR Policy 1-105. The Hearing Officer found the bookstore of the University of Arizona was not in competition with the complainants in violation of Arizona law nor of the policies of the Arizona Board of Regents.The meeting recessed at 11:45 a.m. and reconvened at 1:13 p.m. Regent Ulrich left the meeting at this time.

Dr. Art Ashton, Dr. Sally Jackson, Dr. Bill Lewis, and Mr. Fred Estrella joined the meeting for this discussion. Regent Bulla said the first report of Information Technology (IT) expenditures covering FY 2002, along with IT projects over $500,000 was being presented for approval. The plans include reports on total information technology expenditures and major projects.

Dr. Ashton said this is the first report on total IT expenditures. Overall the university system expenditures for IT were $175.1M in FY 2002. IT represents approximately 7.5% of university expenditures on a systemwide basis. ASU IT expenditures were $61.6M of which $27.1M or 44% were in central computing operations; NAU expenditures were $35.2M of which $20.7M or 58% were in central computing expenditures; UA expenditures were $78M of which $27.9M or 36% were central computing expenditures. Clearly IT is an important part of the university operations and is growing.

Regent Bulla said this is a very decentralized environment and it is hard to pull all the figures together. The Board IT process will continue to be refined.

Dr. Jackson reported on IT at the University of Arizona. She said she had three main priorities: The first is network security and all three universities are working together on this. The second is network stability, not only technical stability and assurance of service, but also financial stability. The third goal is advancement of service delivered to the campus. Dr. Jackson described the three IT projects being presented for approval from the UA: Supercomputer Replacement Project, Data Network Improvement Project, and Cosmos Project Completion.

Regent Bulla said the Cosmos Project taught several lessons about major projects. Time must be spent at the beginning of a project with user groups to define the project. A major project, especially in a decentralized environment, needs expert project management. He said the IT subcommittee would continue to monitor the Cosmos Project.

Upon motion of Regent Bulla, seconded by Regent McKay, the Board approved the University of Arizona’s Information Technology Implementation Plan with the specified quarterly progress reports.

Regent Bulla said NAU had no new projects for approval, but did include their current implementation of PeopleSoft. Mr. Fred Estrella explained the project. NAU has started two pilot IT projects. One is the planning for wireless laptop connectivity for students in the student union and a few other common areas across campus. The second is the development of a university portal, which will have pilot portals for students and staff/faculty ready to be previewed in FY 03.

Upon motion of Regent Bulla, seconded by Regent McKay, the Board approved Northern Arizona University’s Information Technology Implementation Plan.

Regent Bulla said an emergency situation had developed since the last meeting and it was discovered there was no emergency protocol in place. One is under development by the sub group of Regents on the IT Subcommittee.

Dr. Bill Lewis explained the three ASU projects: HR System replacement, Emergency Upgrade of Border Router Complex, and TGen Computational Facility. Dr. Lewis explained the emergency need for the upgrade of the border router complex and why it was necessary to do the project over the Christmas break. Regent Bulla said the presidents are now able to authorize emergency needs between Board meetings, but it is anticipated these will be very infrequent.

Upon motion of Regent Bulla, seconded by Regent Stuart, the Board approved Arizona State University’s Information Technology Implementation Plan. Regent Bulla said the university Chief Information Technology Officers (CIOs) will be working with CIOs throughout Arizona as private sector CIOs have volunteered to lend their expertise to the universities.

Regent Bulla said this item was a request for revisions to the FY 2002-2003 university Capital Development Plans.

Mr. Dave Harris, Mr. David Duffy, and Mr. Joel Valdez joined the meeting for this discussion. Regent Bulla said the UA was proposing the addition of two new projects with a total cost of $26.1M. Mr. Duffy explained the Infrastructure Phase VI (Drachman Hall, Biomedical Science and Biotechnology Building and Medical Research Building) and the Agriculture Research Complex - Finish Shell Space. Regent Bulla asked for the debt ratio after all of this was finished and was told it would be 5.66 according to the State debt ratio law and under the ABOR rules it would be 8.95.

Upon motion of Regent Bulla, seconded by President Jewett, the Board granted approval for the FY 2003 Capital Development Plan Update and authorized the UA to proceed with Infrastructure Phase VI, and Agriculture Research Complex - Finish Shell Space. It also authorized the university to exceed the advance planning and preliminary design limit for the Medical Research Building.

Dr. David Cain, Mr. Dave Harris and Mr. David Lorenz joined the meeting for this discussion. Regent Bulla said NAU was asking for an addition of five new projects at a total cost of $57.1M. President Haeger said he couldn’t overemphasize the importance of this money that NAU needs to invest in infrastructure on its campus. The recent engineering studies that were done on campus have shown that most of the major buildings are in dire need of renovation.

Dr. Haeger said the original $4M from the state for debt service assumed a large number of projects and no new buildings. NAU has considerably reduced the number of projects because the capital infrastructure is so bad a large number of projects could not be done. Also, when the planning began for the biology chemistry facility, it was determined the two facilities could not be renovated; it would be a waste of money because the labs cannot be renovated to meet modern codes. NAU will be going back to JCCR for approval to build a lab facility now and come back later to renovate the biology chemistry buildings as teaching facilities with no labs.

Dr. Cain described NAU’s five projects: Modular Swing Space Phase II, College of Engineering and Technology Renovation, Lab Facility, Applied Research and Development, and Campus Heights Student Residential Complex. He said the State debt ratio will be 4.47 and the ABOR ratio will be 5.56.

Upon motion of Regent Bulla, seconded by Stuart, the Board granted approval for the Revised 2003 Capital Development Plan and authorized NAU to proceed with Modular Swing Space Phase II, College of Engineering and Technology Renovation, Lab Facility, Applied Research Facility, and Campus Heights Student Residential Complex. The College of Business Structural Stabilization Project is being included as an informational item.

Dr. Mernoy Harrison and Mr. Dave Harris joined the meeting for this discussion. Regent Bulla said ASU was asking for the addition of seven new projects and the deletion of four previously approved projects for a net cost increase of $!01M. Dr. Harrison described ASU’s seven projects: AZ BioDesign Institute Phase II, Parking Structure 7, McAllister Residential Life Housing 1 at ASU Main, Human Factors Institute, Healthy Lifestyles Institute/Nutrition, Applied Biological Sciences Research Complex at ASU East, and Research and Instruction Building at ASU West. He said the State debt ratio would be 6.4 and the ABOR ratio would be 8.

Regent Boice asked what size student body the ASU East project would accommodate and was told approximately 10,000 students.

Upon motion of Regent Bulla, seconded by Regent Meaker, the Board granted approval to Arizona State University for the Revised 2003 Capital Development Plan and authorized ASU to proceed with the AZ BioDesign Institute Phase II, Parking Structure 7, McAllister Residential Life Housing 1, Human Factors Institute, Healthy Lifestyles Institute/Nutrition, Applied Biological Sciences Research Complex, and Research and Instruction Building.

Mr. Dave Harris, Mr. David Duffy, Dr. David Cain, and Dr. Mernoy Harrison joined the meeting for this discussion. Regent Bulla said the universities presented a report on the condition of each of their academic facilities at the November 2002 meeting. This report involved an analysis of each building by placing it in one of five categories from Category 1 (Highly Functional) to Category 5 (Unsatisfactory). This is a follow-up report that brings an estimate of the cost involved in bringing the unsatisfactory buildings up to a satisfactory condition by renovation or replacement.

Mr. Duffy reported UA had no buildings in Category 3 or 4. The UA intends to demolish the Category 5 buildings, which are mostly the old single-family structures the UA has adaptively used over the years for offices. It also includes the Franklin Building. The cost of demolition is estimated at $2.7M.

Dr. Mernoy Harrison said ASU had 28 buildings in Category 3 that would be renovated, mostly at ASU East, at an approximate cost of $6.9M. There are 7 building in Category 4 that would be renovated at an approximate cost of $1.9M. There are 41 buildings in Category 5, fourteen at ASU East, that would be renovated or demolished at an approximate cost of $58.1M. This is a total estimated cost of $66.9M.

President Crow said the land at ASU East had been coming to the university piecemeal and they intend to acquire the rest of it as soon as possible to add more flexibility to use and planning.

Dr. David Cain said NAU had 10 buildings in Category 5 at an estimated cost of $102M. They plan to demolish 5 of those buildings. There are 15 buildings in Category 4 at an estimated cost of $89M and there are 18 buildings in Category 3 at an estimated cost of $138.6M. The total would be $331M.

Regent Stuart asked for a matrix that would show how all three universities, over a 10-year period, fell this far behind in building renewal. He believes this would demonstrate the fact the universities did not get the necessary money for building renewal during times when the state had money.

Regent Bulla said the progress report on the Board’s Action Plan was received on the Consent Agenda. The Board will visit this Plan at its April meeting.

Dr. Milton Glick joined the meeting for this discussion. Regent Palacios said this was a request from ASU to implement one new degree program. Dr. Glick explained the request for an M.S. in Applied Psychology at ASU East. Upon motion of Regent Palacios, seconded by Regent Meaker, the Board authorized Arizona State University to implement the M.S. in Applied Psychology degree.

Ms. Stephanie Jacobson, Dr. George Davis, Dr. Elizabeth Grobsmith, and Dr. Milton Glick joined the meeting for this discussion. Ms. Jacobson said this report was presented annually to the Board. This year it is presented in three sections: an audit of the universities’ tenure review process, a summary of the post-tenure review process for FY 2000-2001, and a faculty tenure audit history for each university.

Regent Palacios asked why the figures for women achieving tenure were so small. Dr. Glick said ASU is working on this problem and has had a consultant review the issue. He said it appears female faculty members volunteer for more student-type obligations and the increase in students has added more pressure to these people. ASU has developed some intervention techniques to help with climate problems. However, some women leave for the same reasons as men–higher salaries.

Provost Davis said an ancillary important question is how do the number of women who receive tenure relate to faculty in general. The university has improved its ability to keep women faculty who are being recruited by moving money from all-funds budgeting. Through the exit interviews, the university believes the reasons some women faculty are leaving are similar to tenure eligible men. The university, under the Millennium Project, has an initiative on this issue and needs to do a better job of educating its deans.

Provost Grobsmith said she believed NAU was similar to the rest of the system, but probably a little better in the category of women. NAU has a greater departure of minority faculty prior to receiving tenure and she believes it was caused by partners getting better salaries, competitive salaries elsewhere, and leadership. She said she would like to see a systemwide dual-career accommodation plan to help in keeping tenured women faculty whose spouses receive a job in the system.

President Jewett reported that the Audit Committee, composed of Regents McKay, Stuart, Meaker and himself, held its third meeting yesterday morning. They received a report on the UA annual financials, reviewed recently issued internal audit reports, and the status of the audit plans. A new audit standard requires universities to include audited financial statements of affiliated organizations in their annual financial report in two years. He reported the auditors are working on a process for insuring significant improprieties that may occur from time to time are reported to the audit committee.

Dr. Wanda Howell said the AFC supported flexibility in admission policies as they favor any effort for student success. They are not completely supportive of the policies as presented, but look forward to more scenarios. They are hoping any changes that are adopted will have specific goals and accountability measures, especially relating to graduation rates.

The AFC has been asked to help develop a coalition for intercollegiate athletics consisting of faculty leader representation from several of the conferences. This will be a dialogue which will eventually present potential reforms to the NCAA. Dr. Morton Munk will be the representative on this coalition. President Jewett said he would like to be involved in this effort, especially after his term as President.

Regent Stuart reported the proposed State budget for the next fiscal year recommends the SDBCC be dissolved.

Regents and presidents thanked President Likins for hosting the meeting and expressed their appreciation of the Regents Professor ceremony from the evening before and the faculty breakfast. They also expressed their appreciation for the new Student Union Memorial Center. Regent Boice said he believed the Regents had an obligation to higher education and the Regents should not turn their backs on the State Board for Community Colleges. Regent Meaker thanked the UA for the open, collaborative process taking place on campus concerning program changes.

MINUTES