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STUDY SESSION: REVIEW OF THE KNIGHT COMMISSION RECOMMENDATIONS
MINUTES OF A MEETING
ARIZONA BOARD OF REGENTS
September 25 and 26, 2001
A meeting of the Arizona Board of Regents was held September 25 and 26, 2001, at Arizona State University, Tempe, Arizona. President Kay McKay called the Study Session to order at 1:00 p.m. on Tuesday, September 25, in the Alumni Lounge of the Memorial Union.
| PRESENT: | Regent George H. Amos, III |
Also present were: President Lattie Coor, Dr. Milton Glick, Dr. Mernoy Harrison, Mr. Paul Ward, Mr. Steve Miller, Dr. Christine Wilkinson, and Dr. Gary Krahenbuhl, Arizona State University; President Owen Cargol, Dr. John Haeger, Dr. Jeanette Baker, Mr. Kurt Davis, Mr. Josh Allen, and Ms. Anne Barton, Northern Arizona University; President Peter Likins, Dr. George Davis, Dr. Patti Ota, Ms. Judith Leonard, Mr. Dick Roberts, Dr. Elizabeth Ervin, Dr. Saundra Taylor, Mr. Joel Valdez, Mr. Greg Fahey, and Ms. Janet Bingham, University of Arizona; Executive Director Linda Blessing, Board Counsel Joel Sideman, Secretary to the Board Judy Garza, Dr. Art Ashton, Dr. Thomas Wickenden, Mr. Matt Ortega, Ms. Louise Houseworth, Mr. Dave Harris, and Ms. Norma Salas, Central Office Staff; and Dr. Andrew Jackson, Arizona Faculties Council.
President McKay led the Pledge of Allegiance and asked for a moment of silence for those who had lost their lives in the September 11 terrorist attack.
President McKay thanked Regent Jewett for the work he did in preparing for the study session. She officially asked him to continue to take the lead on this subject and work with the members of the Council of Presidents and athletic directors as the Board looks at the ethics of athletics.
Regent Jewett welcomed the Athletic Directors: Mr. Jim Livengood from UA, Mr. Gene Smith ASU, and Mr. Steven Holton, NAU, and the Faculty Athletic Representatives: Dr. Jerry Kingston, ASU, Dr. Wayne Sjoberg, NAU, and Dr. Douglas Woodard, UA.
Regent Jewett said the Regents have discussed intercollegiate athletics at prior Board meetings, dealing with graduation rates and academic issues, among other things. Questions have been raised about some multiple-year coaching contracts. He said Regents Gignac, Amos, and Ulrich have raised issues that led to progress in terms of having a more consistent approach to coaching contract issues such as performance-based incentives and liquidated damages clauses. However, he believes what has been missing is a sustained and committed effort to look at, understand, and address the overall framework in which the intercollegiate athletic programs carry out their mission and objective.
A recent report of the Knight Commission on Intercollegiate Athletics, A Call to Action, highlighted the need for the study session. He believes the Regents, as trustees of Arizona's universities, should examine the findings of the Knight Report and determine what directions, if any, should be taken in response.
Regent Jewett welcomed Dr. John DiBiaggio, a member of the Knight Commission and recently retired president of Tufts University. Dr. DiBiaggio had also served as president of Michigan State University and president of the University of Connecticut. He also welcomed Mr. Michael Josephson, founder and president of the nonprofit Joseph and Edna Josephson Institute of Ethics in Marina del Rey, California. Regent Jewett commented that he had participated in a sports summit held in Kansas City last month called "Pursuing Victory with Honor: Men's and Boys' Basketball." Michael Josephson convened that summit which was also attended by Mr. Livengood and dozens of national leaders in college sports. It was thought it would be helpful to hear from people who have been intimately involved in recent efforts at national reform in intercollegiate athletics.
Mr. Josephson said there are pragmatic and practical issues to be considered as well as ethical and moral issues when making difficult decisions. Sports are a major social force that shape the quality and character of the American culture. Therefore, he believes the burden is not to simply run an efficient sports program at the universities. It is to utilize sports as an enormous asset, to have impact not only on the athletes going through the programs, but on all the people who will be impacted by the way those programs are conducted.
Mr. Josephson presented statistics on the violence in our society and said there is a need for leadership. He believes sports can be the place where the leadership can take place. He believes the current salary escalation problem comes from the obsession with winning. He said there should be an effort to be as good as you can be, not just to be better than the lowest common denominator. The essential elements of character building and ethics in sports are embodied in the concept of sportsmanship and six core principles--trustworthiness, respect, responsibility, fairness, caring, and good citizenship. He asked the Board to use these ethical standards as a screen to see if the responsibilities to all constituencies are being met.
Mr. Josephson said it is the duty of sports leadership to promote sportsmanship and foster good character by teaching, enforcing, advocating and modeling the ethical principles. If the Board agrees with this principle, he said the Regents and university officials should look closely at the people they are hiring to see if they are the type of people who will follow these principles.
Mr. Josephson outlined the four basic models of sport. The first model is recreation or fun; the second is education (learning about winning and losing with grace, self discipline, achieving success); the third is pure competition; and the fourth is business where sports is considered entertainment to generate revenues to do something else and to generate publicity and good public relations. He believes one of the central questions the Board should consider is, "What is the central mission of the athletic program?" He encouraged the Board to have the courage to do what is right, even if told it can't be done.
Dr. DiBiaggio encouraged everyone to read both the current and former Knight Commission reports. He summarized the history of the Knight Commission and said all the members of the Commission were supporters and fans of athletics. He reminded the Board of the standards which came out of the first Commission report and how more control of athletics was given to the university presidents. His biggest disappointment was how few university presidents took the time to effectively influence decision making in the NCAA. They depended upon those who represented them on the board of directors rather than engaging themselves.
Dr. DiBiaggio said he believed the certification process was functioning reasonably well. Some rules have been adopted relating to financial matters, but not all the Commission's suggestions were followed. One example is allowing some coaches to negotiate directly with shoe companies rather than having the money paid to the school and sharing part of the revenue with the institution. He does believe the Knight Commission has had an overall positive impact on college athletics.
On the other hand, the athletic system continues to be plagued by abuses, both real and perceived. Reports of student athletes being exploited have not diminished. Graduation rates have improved in some institutions, but questions remain as to the validity of the courses being taken by athletes, the grades they receive, and the legitimacy of the degrees they are awarded. Involvement of outside interests, such as shoe and clothing makers, in decision making extending down as far as middle schools, has intensified. Violence and criminal activity are associated with both professional and amateur athletes.
Dr. DiBiaggio said some of these problems are generic to society–from the breakdown of the traditional family to a general lack of civility and respect. We seem to be obsessed with sports, not merely enjoying the contest, but equating winning and losing somehow with life or death. He believes athletic issues can best be addressed at the institutional level. He would like to see Regents, presidents, and athletic directors apply the same standards to the athletic department that are applied in all other institutional matters. Athletes should meet the same standards as all other students, coaches' salaries should be in line with other administrators, and money generated from outside interests should be funneled into the institutional treasuries.
Dr. DiBiaggio said rules are often passed to prevent others from having an advantage, rather than because it was the right thing to do. He said there should be concern about graduation rates and the quality of life of student athletes. He agreed with Mr. Josephson; the Regents should decide what athletics is about. Is it entertainment, education, or a business? He called for a coalition of presidents and decision makers to work on the problem as he believed the pressures of alumni, elected officials, trustees, and community leaders make it almost impossible for presidents and athletic directors to make changes on their own. He would like to see faculty, administrators, athletic departments, and governing boards work together to do something about athletics. He does not believe one institution can make changes by itself; it will take conferences joining together. He believes it is a problem that will take a long time to resolve; but there should be movement in the right direction, one step at a time. He believes initiating athletic reforms will restore institutional integrity.
Mr. Josephson said we send messages by what we do; not just by what we say. He said there is increasing disparity between the academic qualifications required for top athletic recruits and regular students, especially in football and basketball. The Knight Commission has recommended the amount of practice time for student athletes be reduced and the length of time of the season be reduced. However, recently the PAC 10 voted to add another tournament day.
If the sports department is using a business model, he said there are some sports that are not economically viable because they cost too much per student. He mentioned examples of high expenditures and of athletes who come to the university to increase their chances of a professional career rather than for an education. He explained what that does to teamwork.
Regent Ulrich said he believed this is a very complex issue that is imbedded deeply within society. He said he believed this Board was being encouraged to stand up and take all the spears. That decision would change athletics at the three universities and would change many peoples' lives. He said he just wanted people to be aware of what could happen, as even opening the discussion could cause uneasiness in the athletic community.
Dr. DiBiaggio said he realized it would be very difficult for a single institution to make a change, but he believed it could be done collectively if the Arizona Regents were to join with other trustees from the PAC 10 and other conferences. The reality was the Knight Commission decided the regulatory approach was not working; a cultural change is required. That change must occur at the institutional level.
Mr. Livengood asked hypothetically whether a good coach should be retained even if attendance at games had dropped considerably. Mr. Josephson said there should be a decision as to whether the athletic department would be run as a business or as an educational unit. That would bring the rest of the decisions into line.
Regent Gignac said the Board is trying to deal with athletics as it exists, with contracts that are already in place. She would like the Board to get more information as to how Arizona institutions work within the context of the Knight Commission Report. She would like sports to work for the three Arizona universities and does not believe anything is black and white. Mr. Josephson agreed; but said he believed the Board should decide where it wants athletics to be. Then the Board should move deliberately in that direction.
Regent Amos joined the meeting. President Likins said he did not believe he had ever made a decision he felt was morally wrong because he was pressured to make that decision. He does not believe it is just a matter of university presidents facing up to pressure; he believes it is more complicated than that. There was a discussion of state-funded athletics and self-supporting athletic departments. Regent Herstam said he believed it was time for someone to stand up to the increasingly higher salaries for athletic coaches.
President Coor said he believed athletics should be mostly self supporting as the limited general fund support should go for academic needs. He said he believes athletics has always been important at ASU and is part of the ASU identity. He said everyone should understand the athletics programs in Arizona universities do rest on revenue. He believes the schools in Arizona are participants in good conferences and there has been some progress on issues such as eligibility and recruitment. He reminded the Board the anti-trust legislation in the United States prohibits universities from constraining salaries.
Mr. Josephson agreed, but said the Board could regulate salaries at its universities; the conference or the NCAA would not be allowed to regulate salaries. Dr. DiBiaggio said there are costs and abuses that could be eliminated without revamping the entire system, such as more academic requirements for athletes, more academic support for athletes, and eliminating things like keeping football players in a hotel the night before a game. Mr. Josephson suggested escalating salaries in the area of sports that are non-revenue generating be examined if athletics is supposed to be self-supporting. He also suggested the time will come when the student athletes will want to be paid if coaches are making large salaries and the sport is revenue generating.
President Likins said he believed there are things that can be done better, particularly academically. He said intercollegiate athletics is not managed like a business because all the resources that are generated go right back into the enterprise. He does believe salaries and costs are spiraling out of control; but he said any scaling back in the two principal revenue generating sports will have an impact on the rest of athletics. He said it is a very complex problem.
Mr. Josephson said he believed graduation rates are used as one of the measures of whether the universities have really recruited student athletes. There was a discussion of the use of graduation rates and ways they can be calculated. Dr. Woodard said he opposed academic incentives in coaches contracts as he believes it is the job of coaches, just like the remainder of the faculty, to make sure their students maintain an acceptable grade point average and graduation rate.
Mr. Josephson proposed there be a determination of whether a student athlete being recruited was seriously interested in receiving an education. He said university presidents and governing boards should review current admission practices and academic support programs and adopt whatever policies are necessary to assure those practices and programs are consistent with the stated missions of the institutions and the athletic programs. There should be a public policy statement regarding admission practices, including the general academic expectations for those admitted with athletic scholarships. Though some special consideration may be given in the admission of student athletes, admission practices should reflect the idea that nothing is more important to the academic institution than the type of students it admits. The administration and faculty must maintain control and oversight of this vital function and make sure that students enrolled not only have a reasonable chance for graduation, but should be able to take advantage of the academic opportunities available to all students and have a reasonable chance to successfully compete academically with the general student body.
Regent Ulrich said some athletes would never be able to attend college if it was not for their athletic scholarships and he believed that had some value. Mr. Josephson asked why athletes, who can help the university through their talents, should receive preference over deserving academic students. President Likins said he does believe the academic performance of athletes can be improved, but he believes graduation rates can be used to punish universities. He said the universities should generate and provide to Regents data on athletic graduation rates, the academic standing of athletes, the academic standing of athletes who leave the university, and reasons why the athletes leave.
Mr. Josephson said his role was to be the designated "taunter." His purpose was to stimulate discussion and raise possibilities. He thanked the Board for allowing him to participate in what he believed was the first governing board discussion on current athletic issues. He asked the Board to decide where it wanted to be in relation to athletic issues and to move slowly, intelligently, and deliberately in that direction. Mr. Josephson had to leave the meeting at 3:25 p.m. to catch a plane.
Dr. DiBiaggio said he believed President Likins' suggestion to gather and provide data would be a good first step. Regent Stuart said he believed the Board should retain its focus on learner-centered education rather than graduation rates and that should include athletes as well as the rest of the students. He believes instilling a life-long love of learning is more important than the graduation rates. He suggested the Board could deal with the astronomical escalation of coaches salaries and make policy decisions about cash incentives.
Regent Palacios said she would like to see the athletic statistics that had been mentioned earlier. She said she is very interested in having a Board discussion on where the Board wants to be in terms of athletics. Regent Jewett said he believed the data on the success of student athletes should be provided quickly.
Mr. Smith said he would like the Board to determine where it would like athletics to be at the Arizona universities as he would like to be able to tell his constituents. He hopes the Regents will reaffirm the Arizona membership in the PAC 10 as he believes it is a great conference. He believes the athletic departments benefit the universities and the graduation rates at the ASU athletic department will rise under the current leadership. He asked the Regents to allow the athletic directors to make some recommendations on ways to reduce expenditures. He said the Regents need to allow time for the new coaches to recruit athletes that will allow graduation rates to rise. They also need to know change will not happen overnight at the NCAA level and to be patient as their representatives try to initiate reforms.
Regent Gignac said she would like to see the Arizona schools remain in the PAC 10; she would just like to see athletic programs made better for the students. She said she would be willing to stop the academic incentives in coach's contracts if the athletic incentives were dropped as well. In the same way coaches should teach as part of their job, they should also strive to reach the levels of athletic success rewarded by athletic incentives.
President McKay said she would be interested in the reaction of other boards to the type of discussion the Regents are having. She asked the athletic directors to raise the issue with other schools and bring back their comments. Regent Meaker asked that student athletes be asked how they could be helped to be more successful.
Mr. Livengood said the discussion today would raise questions among the athletic constituency about change in the programs and that would scare people. People will listen and be afraid the Arizona universities will no longer be Division 1 schools. Regent Jewett said he would like to see change in the athletic programs as he believed these are educational institutions and the gap between athletics and the mission of the institutions should be closed. However, he does not believe the Regents want to make major changes and new policies next month.
President Likins said the perception of this discussion would have repercussions on recruiting for both athletes and coaches. He advised the Board to move rapidly to decide the direction they wish athletics to take in Arizona so people will know where they stand. He said it is not necessary to make policy changes immediately; it is just important to decide the direction the Board wishes to take.
Regent Herstam said he had not heard any Regent say they would like to leave the PAC 10. He said the Regents were talking about policy changes to make athletics what they would like it to be in the Arizona universities, perhaps lower salaries for coaches, removing incentives from contracts, raising graduation rates, but not leaving the PAC 10. Mr. Livengood said the conclusion that could be drawn from the discussion was that was where the Regents were headed. If the Regents made unilateral decisions, they would lower the competitive edge of the Arizona universities. Regent Herstam said he would like to be a leader in the area of improving athletics, but did not want to take the universities out of Division 1.
President Coor said he believes being a Division 1 institution is absolutely essential. Regent Ulrich said one of the dangers of having someone like Mr. Josephson speak is creating an atmosphere where people move to radical positions immediately and the Board could be hurting the athletic programs by not making it crystal clear the Regents intend to remain competitive and in the PAC 10. He said he did not believe there was just the one business model presented by Mr. Josephson. He said there are many business models and some are for businesses that do not intend to make a profit.
Regent Ulrich said one of the things the Board needs to determine is whether graduation rates really matter. Athletes are not the only ones who leave the university for high salaries before they complete their education; many people left when the dot coms were offering large salaries. He would like to see the Regents take their time to see what needs to be done; but they should make it very obvious to everyone they are not talking about downgrading to a different division or changing to a different conference. President Cargol said it had been an interesting, thought-provoking discussion, but he wanted to say this discussion in no way meant Northern Arizona University had any plans to leave the Big Sky Conference.
Dr. DiBiaggio said he was encouraged by the discussion today. He agreed the Board should not rush into anything and should take time to understand the problems faced by athletic departments. At the same time, he believes there is a need for changes in the education of student athletes and there should be an attempt to see how athletes can fit within the educational mission. He believes people will eventually become disenchanted with college athletics and it will damage the institutions if there are not some changes made. He believes a leader is needed to begin making the changes and he believes the athletic directors can help the Regents by suggesting some places to start.
Regent Jewett said the program was designed to make people think. He believes it is a controversial group of subjects, but he believes there are some fundamentals that the Regents should bring to a deeper discussion and examination. He is gratified the athletic directors said there are some things that can be done. He said the question of where the Board wants to be requires further discussion. He said he would like to include faculty senate leaders, as well as faculty representatives, in the group discussion.
Regent Jewett asked staff to survey other boards of trustees in the west and throughout the country, perhaps getting assistance from the Association of Governing Boards (AGB). Some objectives for this survey need to be developed. Regent Jewett summarized some of the thoughts from the discussion: study student athlete progress towards degree, including but not limited to graduation rates; look at performance evaluation and the current revenue paradigm; pursue possible cost reduction strategies; and look at ethical behavior and the sportsmanship side of the business. He thanked everyone for participating. He said the enriching part of the educational experience is being able to sit down and talk about a controversial subject and gain from the discussion.
Regent Ulrich thanked Regent Jewett for taking on such a controversial subject and offered his full support for the discussion. President McKay thanked the athletic directors for their participation. The Study Session recessed at 4:10 p.m.
President McKay called the regular meeting to order at 10:00 a.m. on Wednesday, September 26. She led the Pledge of Allegiance and asked for a moment of silence to remember the September 11 tragedy. President McKay welcomed Dr. Andrew Jackson to his first meeting as the representative for the Arizona Faculties Council. Dr. Jackson is an Associate Professor in the Department of Aeronautical Management Technology at ASU.
Sara Halverson, Northern Arizona University ASA, reported the first student forum, entitled "What's Your Beef?" was held last week at NAU and the input from that forum was utilized when the year's program was decided. The students are now working on voter registration.
Cherie McGlynn, CoChair of the Pinal County Foundation, asked the Regents to preserve the funding for the Signal Peak building project with NAU. She understands the Governor has asked the universities to cut their budgets by 4%. She asked NAU to cut only $60,000 from the project and guaranteed the Foundation would raise an additional $60,000 to cover that reduction.
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 Gignac, seconded by Regent Palacios. There was no individual discussion of these items.
The Board approved the August 9 and 10, 2001, Regular Meeting, and June 28 and 29, 2001, Executive Session, minutes.
These revisions were proposed to streamline the capital development process while promoting and improving its integrity. The proposed changes will replace the Project Initiation step, which is a case-by-case Board submission, with a Capital Development Plan submission. The Capital Development Plan will be a comprehensive inventory of capital improvement projects proposed for the coming fiscal year. The annual Capital Development Plan, prepared in the spring of each year, will clarify each university's proposed program of capital improvements for the coming fiscal year. Projects submitted for consideration in the Capital Development Plan should, wherever possible, be forwarded from the previously approved Biennial Capital Improvement Plan that was submitted to the legislature and the Governor in October.
Under the proposed revisions, Board review of capital projects will be sequenced as follows: (1) In the Capital Development Plan (CDP) Approval step, each university will present its upcoming fiscal year's capital plans to the Board in the spring of each year. The CDP submissions will contain all the information now required for Project Initiation. Approval of a project in the Capital Development Plan will authorize the universities to proceed with the project to the Project Implementation Phase. A mid-year adjustment to the CDP will be allowed in accordance with a calendar approved by the Executive Director. (2) In the Project Implementation Approval step, the universities will present individual projects to the Board after conceptual design is completed and will cite any changes in project scope or cost since CDP approval. (3) In the Project Approval step, the universities will request Project Approval after final design is completed and the project is ready to go to bid. If there are no significant changes in project scope or budget, the Executive Director may grant Project Approval.
The Board approved the proposed revisions to Board Policies 7-101 through 7-115.
A.R.S. §15-1643 requires the Arizona Board of Regents to establish the Arizona Area Health Education Center system in the University of Arizona College of Medicine and requires the Board to appoint, among others, an AzAHEC system director who administers the five centers. The Board approved the appointment of Carlos C. (Kent) Campbell, M.D., M.P.H., University of Arizona College of Public Health, as AZAHEC System Director.
The Board received the Annual Space Management Reports and Campus Space Committees Status Reports. The Fall 2000 Space Management Reports display each university's space square footage (shortages) or overages in comparison to ABOR Fall 2000 Guidelines. The University of Arizona shows a relatively small deficiency in classroom space. However, Arizona State University Main and the University of Arizona report sizeable deficiencies in class laboratories, research laboratories, and libraries. The University of Arizona also reports a shortage of 79,143 square feet of office space. Northern Arizona University reports their space inventory is adequate; however, the quality of that space is questionable.
The FY 2002 Capital Development Plans of the universities generally focus on the inventory shortages reported as follows: ASU: Focus in on an Interdisciplinary Research Complex and a Library Storage Facility; UA: Focus on Biomedical Sciences and Biotechnology Building, Meinel Optical Sciences Building Expansion, and the Learning Services Building; NAU: Focus on the revitalization of existing facilities, including Health Professions renovation, University Union renovation, and the relocation of Creative Communications and related backfill.
Each university has in place a Campus Space Advisory Committee that is charged with the following tasks: reviewing proposals for new construction, renovation, and demolition; reviewing facility inventories; and reviewing classroom scheduling systems and conducting class length studies.
ASU currently has outstanding $119.5M principal amount of its Series 1992-A Bonds that could be refinanced with lower interest rate System Revenue Refunding Bonds in the current low interest rate environment. However, because the Series 1992-A Bonds refinanced earlier bond issues, federal tax-exempt bond rules prohibit the issuing of new refunding bonds until April 1, 2002.
In order to take advantage of the current interest rate environment, ASU will monitor interest rates and, at an appropriate time, either (1) sell fixed-rate refunding bonds to one or more of the investment banking firms previously selected through a competitive process, and enter into a bond purchase agreement fixing the interest rates for the bonds, but delaying the sale and/or delivery of the bonds until on or after April 1, 2002; or (2) issue variable-rate refunding bonds to one or more of the previously selected investment banking firms, for delivery on or after April 1, 2002, and also enter into a "forward starting" interest rate exchange (swap) agreement with one such firm, calling for ASU to pay a fixed interest rate (based on current rates at the time the swap agreement is executed) to the other party and to receive a variable rate on amounts and at levels that approximate ASU's variable rate obligation on the refunding bonds. This will allow ASU to lock-in estimated debt service savings at the then current rates.
In connection with the refinancing, ASU will be called upon to enter into various additional agreements, such as bond insurance, and bond purchase, depository trust, continuing disclosure, and liquidity agreements.
The Board authorized ASU to sell System Revenue Refunding Bonds in an amount not exceeding $135M to refinance the System Revenue Refunding Bonds, Series 1992-A and pay the costs of issuance related to the refinancing, and take all related actions and enter into all necessary agreements, as provided in the supplemental system revenue bond resolution for this refinancing, approved by Board Counsel and staff.
The Board received a written ASU Research Park Annual Report for 2000/2001. The ASU Research Park was selected by the Arizona Association for Economic Development for its "Best of Arizona" award. The Park hosted the Association of University Related Research Park's national "TechBuild" Conference. As a major supporter of the BSPED Bioindustry Cluster, the park hosted numerous cluster events as well as academic conferences and symposiums.
The Park has 65 remaining available acres for lease, with options on 25 acres. Positive net cash flow after bond debt service resulted in payments totaling $1,092,271 to ASU in FY 2001. This is significantly greater than the budgeted payment. In FY 2002, payments to ASU of $660,980 are anticipated. The 2002 fiscal budget anticipates Motorola vacating 22,000 square feet of space in the Lakeside Technology Center mid year, and factors in down time, commissions, and tenant improvement expenditures associated with obtaining a new tenant.
Pursuant to A.R.S. §15-1635.01, the Board of Regents authorized the University of Arizona to permit Drs. Michael Descour, Ronald Weinstein, James Wyant, and Peter Bartels to establish and maintain a substantial interest in Dmetrix, Inc., an S-Corporation established in the State of Arizona whose purpose is the development of novel digital microscopy systems for applications in telemedicine, biomedical research, proteomics, drug discovery, and industrial inspections while continuing their employment at the University of Arizona.
President Coor expressed his gratitude for the coming together of everyone on campus during the trying times since September 11. He said ASU was attempting to identify the persons who had participated in racial violence.
Dr. Coor introduced Professor Mike Diziki, College of Engineering and Applied Sciences, Professor of Electrical Engineering, and Director of the Center for Solid State Electronics Research. Dr. Diziki told the Regents about an example of entrepreneurship, technical transfer, and technology management. The Solid State Electronic Research Center at ASU came up with an idea for a new type of computer memory that can hold vast amounts of information, uses little power, and can be manufactured in a very cheap way. Axon Technologies Corporation was formed and raised the necessary seed capital for patents and other necessary legal expenses. Research is underway and a partnership was initiated with a large company in the semi-conductor industry, Micron Technology, for manufacturing and marketing. He explained the benefits to the state and to the university this technology will provide.
Dr. Daziki said biomedical technology spun out from the memory research, so biochip research was begun with funding from Proposition 301 funds. The first patent from this research was applied for last week.
President Coor showed to the Board the 1899 Arizona Territorial Football League Championship Cup which was awarded to the Arizona Territorial Normal School (ASU) for winning the football game against the University of Arizona. The trophy was exchanged for several years and then disappeared in storage. It is now registered with the NCAA as the oldest rivalry cup in America and will be presented this year to the winner of the UA-ASU football game.
Regent Jewett chaired this portion of the meeting.
Mr. Dean Cain, Mr. Josh Allen, and Mr. Dave Harris joined the meeting for this discussion. Regent Jewett reminded the Board that ASU and UA had presented their Capital Development Plans for the 2002 fiscal year at the June Board meeting. NAU had requested a delay at that time to allow President Cargol an opportunity to review the plan.
Mr. Cain outlined the NAU Capital Development Plan. The proposed new projects are: Creative Communications Relocation, Modular Swing Space, Applied Research Facility Site Preparation, Health Professions Renovation and Addition, Campus Infrastructure Upgrades, and University Union Projects. Regent Palacios asked if the leasing costs for modular units would be applied to whatever project had a need for the units and was told yes. Regent Gignac asked how the determination was made to order 23 units and was told there was no intention to build all 23 at first. They will be phased in as need arises, but the engineering will be done. Regent Gignac asked if programs moved to the modular units during renovations would stay there permanently and was told there would be incentives for the programs to move back to their own spaces.
President McKay said the current buildings show so much deterioration due to weather conditions in Flagstaff. She asked if this was being taken into consideration on renovation and new construction projects and was told there is an attempt to mitigate weather deterioration by using materials that are more weather friendly and in a manner that allow the materials to last longer.
Regent Gignac asked if money was available for the bonded projects and was told there was an appropriation for both principal and interest. Mr. Cain summarized the campus impacts of the projects by saying the plan adheres to the campus master plan by relocating non-academic units to the campus perimeter; it provides flexibility and temporary modular space for both academic and non-academic units for large scale renovations and facility upgrades; it advances greatly the condition of the major campus infrastructure systems; it promotes consolidation of the units into centralized locations which will improve service delivery to campus constituencies; and it places no upward pressure on tuition.
Mr. Cain said construction is underway on the residence hall and a Request for Proposals is about to be issued for the childcare facilityûboth projects that have received prior Board approval. Upon motion of Regent Jewett, seconded by Regent Palacios, the Board approved the NAU Capital Development Plan and authorized NAU to proceed with Creative Communications Relocation, Modular Swing Space, Applied Research Facility Site Preparation, Health Professions Renovation and Addition, Campus Infrastructure Upgrades, and University Union projects.
Regent Jewett noted NAU was requesting the Board review and approve its $63M Multi-Year Bonding Plan. NAU was also requesting the Board to authorize a waiver of Board policy to allow NAU to request authority to sell these bonds from the Joint Committee on Capital Review at its October 4 meeting. NAU has not yet received Project Implementation Approval from the Board, but plans to return to the Board at its November meeting for authorization to issue the bonds.
Regent Gignac asked what source of funds would be available to pay debt service on the the bonds, if they were sold in January, until funding would be available in July; and was told there would be arbitrage funds. Upon motion of Regent Jewett, seconded by Regent Gignac, the Board approved Northern Arizona University's Multi-Year Bonding Plan; authorized NAU to present the plan to the Joint Committee on Capital Review for review and to the Governor's Office for comment; and authorized NAU to proceed to the legislature for approval to issue bonds by waiving ABOR policy 7-105.D.3.
Dr. Art Ashton joined the meeting for this discussion. Regent Jewett said the universities and the Central Office were requesting the Board review and approve their Five-Year Strategic Plans before these plans were submitted to the Governor. These plans are updated annually and include a crosswalk from the Regent's Strategic Directions to university goals. In addition, highlights of accomplishments for the 2000-2001 year, missions, environmental scans, goals, objectives, strategies, and performance measures are provided. Approval of these plans does not alleviate the need for the universities to come back to the Board for specific, policy defined approvals.
President Likins explained the function of the Strategic Planning and Budget Advisory Committee (SPBAC) at the University of Arizona. SPBAC has been working on a restructure of the university plan for several years and this plan reflects this effort. Dr. Likins said the university feels good about its planning process, but would now like to be able to implement the plan. Therefore, strategic budgeting is now very important. The lack of money to meet the enrollment growth translates into things like fewer undergraduate students being taught by tenure and tenure track faculty as more part-time faculty are hired during time of tight budgets.
President Coor noted ASU enrollment is up 2400 students, the largest increase in its history. Improving the quality of education for more students at the same time as experiencing budget cuts is difficult. Dr. Coor said the new freshman class at ASU West was larger than was targeted and is rich in minorities and talented students. ASU East is on course with about 2400 students.
President Cargol said there was a typographical error on Page 8 of NAU's report. Under Goal No. 1, "To be a premier undergraduate residential learning community emphasizing superior undergraduate programs" should read, "To be the premier undergraduate..." Dr. Cargol said NAU is one of the ten largest institutions west of the Mississippi River located in a rural setting. He said enrollment and retention is not growing on the Mountain Campus and he plans to bring a further study that addresses this issue back to the Board in the future. President Cargol said NAU has been able to secure quite a large number of Federal grants for an institution of its size.
Regent Gignac said she was afraid the goals from all three universities were not realistic, given expected budget cuts. She asked that the strategic plans for University of Arizona South and the Arizona Health Sciences Center at least be included as Appendices to the overall document. She said she did not see learner-centered education in the strategic plans of the University of Arizona.
President Likins said the universities were moving forward to set their goals as they did not know at this time what the budget picture would bring. Dr. Likins said it was important to plan strategically for each of the components of the university, such as UA South, Health Sciences, etc., but they are all integrated as part of the University of Arizona. Regent Gignac said she was most concerned about how the documents would be used externally when forwarded to the Governor and the legislature. President Likins said the universities have been more focused on the internal use of the documents than the external use.
President Coor said he believes it is important to strive for the goals as set and let the legislature know what the universities are trying to do. He believes the budget cuts are a separate issue. Regent Gignac asked why the plans did not include athletics and was told they are included in the larger version strategic plan that is listed on the ASU Web page as part of the student experience.
President Coor said the universities will do everything they can to contribute their share to help the budget problems. However, they also want to find a way to honorably make state leadership understand the consequences of these budget cuts.
Regent Jewett agreed. He said the Board and the universities do not intend to resist their fair share of budget cuts; however, he would like to return to the kinds of positive discussions held in the 1980's about the universities. President Cargol said it would be necessary to have a future discussion about who will pay for quality education in Arizona.
Upon motion of Regent Palacios, seconded by Regent Gignac, the Board approved the university and Central Office five-year strategic plans for submission to the Governor's Office of Strategic Planning and Budgeting.
Dr. Art Ashton, Mr. Fred Estrella, Mr. Pete Perona, and Dr. Jeremy Rowe joined the meeting for this discussion. Regent Jewett said the universities were requesting the Board review and approve their Information Technology Strategic Plans. It was his understanding the Board will be asked in its Sunset Review Performance Audit to become more involved with the information technology planning and review process. Regent Jewett said the members of the Council of Presidents would be appointing a team to review the recommendations when they are issued and to develop new planning and project review processes for information technology. The processes of other government agencies, such as Government Information Technology Agency (GITA) and Information Technology Authorization Commission (ITAC), will be taken into consideration. The team should report back to the Board early next year.
Regent Jewett said these plans will be submitted to the Governor after the Board's review and approval. Regent Palacios said the plans, as presented, did not help her understand information technology at the universities. It would be helpful for her to know what initiatives are currently underway--the scope of the project, how much does it cost, who is involved, why is it important, what will happen if it is not pursued. She would also like to know what initiatives are planned for the future. Being new to the process, it would be helpful for her to understand what the information technology picture is–what is out there in terms of major systems and major challenges. She is not looking for twenty pages, just a few bullet points. She would also like to see more financial information. Regent Gignac agreed the information in the book was not helpful for Regents to understand the issue. She would like to have a better understanding of information technology on the non-technical level such as security and collaboration. Regent Jewett said he believed these comments would help the information technology team develop a more user friendly report. President Likins suggested a more in-depth discussion or a study session to bring the Regents up to speed on what is happening at the universities in this domain might be helpful.
Upon motion of Regent Jewett, seconded by Regent Palacios, the Board authorized the conveyance of the university Information Technology Strategic Plan Executive Summaries and the detailed university Information Technology Plans to the Governor and Legislature.
Dr. Art Ashton joined the meeting for this discussion. Regent Jewett said the Action plan was developed at the August 9th Retreat and was now coming to the Board for approval. The Plan contains the following objectives: ASU Presidential Search, Collaborative Board Activities, Innovation Fund, Arizona Regents University, Sunset Review Recommendations, Audit Policy and Procedures, Learner-Centered Education, Teacher Education, Undergraduate Consolidated Activity Report (UCAR), Honors Endorsement Program, Public Awareness Plan, Legislative Action Plan, Knight Commission Review, Budget Process, Faculty and Staff Salaries, Tuition and Financial Aid, Proposition 301 Assessment Planning, Revised Capital Development Process, Information Technology, and Recommendations from 2000 Arizona Town Hall and Governor's Task Force on Higher Education. Upon motion of Regent Jewett, seconded by Regent Gignac, the Board adopted the Arizona Board of Regents Action Plan for 2001-2002.
In honor of President Coor's birthday, the Regents sang Happy Birthday and a cake was cut for everyone. The meeting recessed at 12:10 p.m. and reconvened at 12:50 p.m.
Regent Stuart chaired this portion of the meeting.
Provosts Glick, Davis, and Haeger, Dr. Wickenden, and Ms. Kate Dillon Hogan joined the meeting for this discussion. Regent Stuart said these recommendations were developed by the Learner-Centered Education (LCE) Team in response to the discussion and direction from the Board at the March 2001 meeting.
Ms. Hogan presented a chronology of the Undergraduate Consolidated Accountability Report (UCAR), looked at the concerns expressed by the Regents in March, the LCE Team response to the concerns, proposed revisions to the UCAR and made recommendations for the next steps in the process.
In March 2001 the Board saw the first complete UCAR and tasked the work group to address how the UCAR could more appropriately reflect the Board's priorities on learner-centered education. Today's proposed changes, if approved, will be included in the report the Board will see in March 2002.
The Board had expressed concern with measures that fall below the baseline, that the measures be appropriate and applicable to learner-centered education, assess student performance, provide institutional accountability at various times during a students' academic career, not just at graduation, and that common measures have similar methodology for collecting data. The LCE team proposes to add learning outcomes, assessments, and evaluation of these outcomes, to modify the report format and develop data definitions for all measures, to include student input, and to conduct a survey of employers to assess the level of excellence of student preparation for the work force.
The proposed structure in the revisions would include a narrative summary at the beginning of the UCAR which would allow the universities to explain progress towards goals, bench marking against national goals, and to provide highlights of achievements. The new proposal has eliminated process and outcome distinctions and has allowed the reformatting of the report into a sequential numbering of common and unique measures to make the report easier to read. The new categories that replace process and outcomes are parallel with the students' academic careers and include general education and lower division course work, academic major and graduation, overall support for the learning environment, and monitoring and information. The use of common and unique measures has been continued, the number of common measures has increased to twenty-six, and all the previous common measures have been included. Ms. Hogan described the new measures in more detail.
One of the opportunities provided now for the UCAR is the ability to use ASSIST, the Arizona Statewide System Information System to track transfers. This will also allow the tracking of students who move among the three universities and the community colleges. In summary, the Spring 2002 Report will include the narrative summary, baseline years, goals and goal years for unchanged and existing measures, baseline data and goals for the new measures that are data driven, and definitions for unique measures. The Spring Report 2003 will include baseline data and goals for all the new survey based measures. An additional measure regarding student satisfaction with access to advisors will be developed with input from student members of the learner-centered education team. The universities will also develop a measure that looks at the faculty-based assessment of student learning which are proposed as unique measures as there are program differences at the different universities.
The measures proposed for deletion will be deleted only if the Board accepts the proposed new measures because in many cases these measures are unique measures that have been replaced by common measures. Ms. Hogan said the Board was being asked to approve the new categories and format, the new measures, the deletion of the measures based on available data, and the concept of a centrally administered survey of employers to rate employer satisfaction with student preparation.
Regent Stuart said looking all through the measures that have been changed, added, deleted, or modified gives him a comfortable sense that this is institutionalizing learner-centered education. Regent Molera asked about information concerning where undergraduate students are coming from and how they are performing at the universities. Provost Glick said that information is provided in the High School Report Card to all the high schools and it could be provided to the Department of Education as well. Regent Molera said he would like data on charter schools as well.
Regent Amos asked why the standard was six years instead of five for graduation and was told that is the national data that is available and that is what the NCAA reports; so it is useful for comparison data. The universities do also have data on four and five year graduation rates. Regent Amos recommended the Report use five years instead of six.
Regent Gignac said she believed six years has been used in other measurements, beginning with the Hurwitz measures. She supported six years as the appropriate measure until Arizona is in the position to be of more assistance to students financially. Regent Gignac asked why the measure of accessibility to student advising could not be included in this Report and was told the University of Arizona was adding the president of ASUA, who is also co-chair of the university advising task force, to its LCE team for better help in creating the measure. It was explained there had not been enough time since August to have student involvement in developing the measure.
Governor Jane Hull was welcomed to the meeting at this time.
Regent Gignac asked if the narrative would include the reasoning behind unique measures and was told it would. Regent Herstam said he did not believe the Board should base its measures on what the NCAA does and was told that is how the national data base was developed. It is used to compare athletes with the rest of the student population. Regent Amos said he still believes the Regents should use five years as a measure rather than six so improvement in graduation can be more easily tracked.
Upon motion of Regent Stuart, seconded by Regent Gignac, the Board accepted the proposed revisions to the Undergraduate Consolidated Accountability Report to include new categories, new measures, deletion of measures, and the new centrally-administered employer survey.
President McKay announced Ms. Hogan would be leaving her present job for a position with the community colleges. She thanked Ms. Hogan for her work and wished her well in her new position.
Regent Herstam chaired this portion of the meeting.
Regent Herstam said the Board was being requested to approve or provide guidance to the universities with respect to development of their budget reduction plans in response to the Governor's request that state agencies outline ways to reduce their non-entitlement expenditures by 4 percent.
Governor Hull expressed her appreciation to her fellow Regents for the work they do on behalf of the universities. She said she believed the budget reductions would have to be more than was originally announced. She said she had been meeting with all the major agencies. She believes programs that have not yet been implemented should come off the budget first as that will cause less impact on the public. She believes the universities might be able to cut back on student services. The Governor said this is a difficult time for all Americans as there was a recession before the bombing and that has only made it worse. Things will get better, but right now the budget problem is as big as she has ever seen during her years in state government.
Mr. Thomas Betlach, Executive Director of the Governor's Office of Planning and Budgeting, gave the Board a historical perspective and a view of the budget picture. Governor Hull said the picture painted by Mr. Betlach was using data gathered before September 11; the budget numbers look worse now. She also said cities and towns and community colleges have been asked to cut their budgets as well as the other state agencies. She asked that tuition and fees not be increased as she put that in the same category as raising taxes when people have less money.
President Coor said the universities were putting forth their respective plans for a 4 percent budget cut. Dr. Coor said he appreciated the fact the Governor had gone back to review even some of the categories that had been protected to see if any additional money could come from there. He knows the universities want to work with the Governor in this budget crunch. President Coor summarized ASU's planned budget cuts. President Cargol summarized NAU's planned budget cuts. Dr. Cargol said NAU, too, looks forward to better times. President Likins summarized UA's planned budget cuts.
Regent Gignac said she agreed with the Governor's statement tuition shouldn't be raised in these hard times and she believes the presidents have made wise choices in their budget cuts. She also believes the universities should help make the 4 percent budget cuts, but hopes it does not have to go deeper as that might erode the quality of the universities.
Regent Meaker thanked Governor Hull and Regent Gignac for their comments on tuition. He encouraged the presidents to continue their dialogues with students when considering budget cuts. President Likins said these cuts would impair quality; the trick is to position the universities so the damage is short term so the universities can emerge out of this difficult period in position to grow strong again. Regent Stuart thanked the Governor for her support and said the universities have much support at the legislature. He encouraged everyone to work together to get through the hard times.
Regent Amos said the state should consider where it will get the most for its money and the universities are economic engines for the state. He believes K-12 should be included in the budget cuts. Regent Palacios said this will test the management skills in the university system to think of other ways to do things and do them better with less money to get through this difficult time. President Cargol said NAU was looking forward to the time when the economy turns around so the building at Signal Peak can be funded.
Upon motion of Regent Herstam, seconded by Regent Gignac, the Board approved the submission of the budget reduction plans as requested. The Governor left the meeting.
The meeting recessed at 2:35 p.m. and reconvened at 2:50 p.m.
Mr. Dick Roberts, Mr. Josh Allen, Mr. Alan Carroll, Ms. Louise Houseworth, and Ms. Gale Tebeau joined the meeting for this discussion. Regent Herstam said that when the current two-year budget was passed, the legislature specifically said, "It is the intent of the legislature that adjustments to student enrollment funding for FY 2002-2003 may be considered for each university during the second regular session of the 45th legislature." To be considered, it is necessary for the universities to submit supplemental requests.
Regent Herstam questioned the UA Highland Commons Project. Mr. Roberts said the University of Arizona had brought to the Board an adjustment to the Highland Commons Project after the biennial budget for this current cycle had been submitted. The original project size had been submitted in the original budget submission and the legislature did backfill the debt service requirement for that component. So this is to catch up with the change to the project.
Regent Amos said he believed the Board should work to keep the budget cuts for the universities to the lowest possible level as the universities are the economic engine for the state. Regent Jewett suggested the business community be asked to support the removal of ceratin sales tax exemptions that have eroded the tax base over the years. Regent Amos agreed, as he said he believed everything should be on the table to solve the budget problem. Regent Herstam said he could not agree to the premise that the universities would contribute no more than a 4 percent cut until he saw the sales tax numbers and knew how big the budget problem would be in the end.
Regent Amos suggested the Regents offer scholarships to the children of the victims of the September 11 tragedy. He said it might cause other universities across the country to consider doing the same thing. Regent Gignac said she could support asking the Council of Presidents look into the matter to see the cost and how it would affect Arizona students. President McKay asked the members of the Council of Presidents to look into the Regent Amos's suggestion.
Upon motion of Regent Herstam, seconded by Regent Jewett, the Board approved the Supplemental State Budget Requests for FY 2003 for submission to the Governor and Legislature.
Regent Herstam said all three universities were in the budget reduction process together and he asked the universities to speak with one voice and to stick together during the legislative session on budget reduction. He asked them to resist the temptation to respond to individual legislators offering to help secure certain favorite projects.
Ms. Cathy McGonigle joined the meeting for this discussion. Regent Herstam said the Board was being asked to establish general guidelines for the distribution of salary adjustments for the Arizona System. Upon motion of Regent Herstam, seconded by Regent Stuart, the Board approved general guidelines for the distribution of salary adjustments for the Arizona University System.
Each university shall develop and submit to the Executive Director a plan for distribution of the funds for salary adjustments. The plans shall specify that each full-time employee will receive a minimum increase of $1,500 (prorated for less than full-time employees). Each university and the Central Office has developed a recommendation as follows for further distribution of the salary increase funds: ASU recommends a distribution on the basis of merit, market, and equity (but not less than $1,500 for each full-time employee); NAU recommends a 5% across-the-board increase (but not less than $1,500 for each full-time employee); UA recommends a distribution on the basis of merit, market, and equity (but not less than $1,500 for each full-time employee); Central Office recommends a 5% across-the-board increase (but not less than $1,500 for each full-time employee). By April 30, 2002, the universities shall submit a report to the Board, in a format to be determined by the Executive Director, regarding the distribution of salary increases.
Ms. Cathy McGonigle joined the meeting for this discussion. Regent Herstam said this is a statutorily required item. The Board was being asked to review and approved the Annual Personnel Report for the Arizona university system. Ms. McGonigle said the major focus is on employees' salaries. Since this is the mid-point of the biennial budget cycle, this is not a salary recommendation. She presented a picture of the salary situation and a projection of the unmet salary need at the end of FY 2003. Faculty retention and staff turnovers were emphasized. Regent Palacios said she believed the universities would be better served to compartmentalize or separate the reasons people leave and the low salaries.
Upon motion of Regent Herstam, seconded by Regent Jewett, the Board approved the Annual Personnel Report for the Arizona University System.
Mr. David Cain, Mr. Josh Allen, and Mr. Dave Harris joined the meeting for this discussion. Regent Herstam said the Board was being requested to grant Project Implementation Approval to NAU for the relocation of Creative Communications to Building 77, which currently houses Capital Assets and Services, at an estimated cost of $1.2M. This project was included in NAU's Capital Development Plan submitted for Board consideration at this meeting. Relocation of this unit will consolidate commercial traffic on campus and offer the vacated space to more appropriate uses.
Upon motion of Regent Herstam, seconded by Regent Palacios, the Board granted Project Implementation Approval to NAU for the relocation of Creative Communications. NAU was authorized to proceed to complete design and construction documentation and then proceed to bid and construct the proposed project.
Mr. David Cain, Mr. Josh Allen, and Mr. Dave Harris joined the meeting for this discussion. Regent Herstam said the Board was being requested to grant Project Implementation Approval to NAU for the construction of modular swing space at an estimated cost of $1.6M. This project was also included in NAU's Capital Development Plan submitted to the Board for consideration at this meeting. NAU is planning to renovate over 20 of its campus buildings in the next three to five years. In order to accomplish this task, numerous academic departments will need to be temporarily relocated while their facilities are being renovated. The purpose of this project is to construct concrete pads and extend infrastructure in order to house 23 modular buildings and 2 modular storage units.
Upon motion of Regent Amos, seconded by Regent Gignac, the Board granted Project Implementation Approval to NAU for the Modular Swing Space Project and authorized NAU to proceed to complete design and construction documents and then prepare to bid the proposed project.
Dr. Mernoy Harrison and Mr. Dave Harris joined the meeting for this discussion. Regent Herstam said the Board was being requested to grant Project Implementation Approval to ASU for the construction of the Mediated Classroom and Social Sciences Building at an estimated cost of $58.7M. This project combines the previously approved Mediated Classroom Building with a new addition designed to replace the existing Social Sciences Building which has developed structural problems. The addition of the Social Sciences element will increase the square footage of the complex from 173,000 square feet to 276,600 square feet.
Upon motion of Regent Herstam, seconded by Regent Jewett, the Board granted Revised Project Implementation Approval to ASU Main for the Mediated Classroom and Social Sciences Building.
Dr. Mernoy Harrison and Mr. Dave Harris joined the meeting for this discussion. Regent Herstam said the Board was being requested to grant Project Implementation Approval to ASU for the construction of a Library Storage Facility at an estimated cost of $2.8M. The 15,000 square foot facility is proposed to be constructed on the campus of ASU East and will be utilized to store lesser-used materials presently housed at the Hayden Library on ASU Main campus.
Regent Herstam said he believed this project was unusual in that it was being financed by Certificates of Participation (COP's) and the annual debt service payment was being covered by tuition revenues. Dr. Harrison said the source of revenue utilized for either COP's or bonds was similar. He said one of the issues has been that COP's have a different legislative approval process and somehow that makes the use of tuition questionable. However, if ASU had additional bonding authority and sold bonds for the project and used tuition, it would not change the funding. He pointed out all the projects funded by COP's were reviewed by the Joint Committee on Capital Review (JCCR), just as they review the bond projects. This project has been reviewed by the JCCR and was approved with the understanding it would be financed by locally retained tuition revenues. Dr. Harrison said this project has been through all the same steps it would go through for bonding approval except for the legislature acting on the bonding authority.
Regent Herstam said that was his concern; this was a way to get around legislative bonding authority. Dr. Harrison said the project did not go around the legislature; it still went through the JCCR. Regent Herstam said he had understood the JCCR had requested from the Board of Regents a policy on the useage of COP's versus bonding authority. Regent Herstam asked if it was more expensive to use COP's instead of bonding authority and was told it is slightly more. Regent Herstam asked if we were going the more expensive route because we don't have bonding authority and was told that was the primary reason. Dr. Harrison said the university always goes through a decision process to determine whether to use COP's or bonding.
Regent Gignac said asking for bonding authority goes through the entire legislature and is signed by the Governor; so it goes through a different process than simply getting approval from JCCR. Then with the bonding authority, you have to get JCCR approval for the individual projects. She believed the unwritten Board policy in the past, with the exception of ASU West in which there was actual funding legislation for the COP's, COP's were used because there is an auxiliary revenue stream to pay the debt. She asked if the universities intended to go to the legislature this year and ask for additional bonding authority and was told yes. Regent Gignac asked if the COP's could be sold for the other projects and the bonding could be done later for this one after additional bonding authority was secured.
Dr. Harrison said ASU had to make some funding changes when there was a need to increase the size and scope of the Mediated Classroom Project because of the Social Studies Building problem. ASU has a fairly sizeable infrastructure program underway and COP's cannot be used for infrastructure, so they were switched to this project. Regent Herstam asked if the other two universities had ever issued a COP tied into tuition repayment and was told no; but the University of Arizona had an issue on one of its projects on the Agenda later today.
Regent Robinson asked how this project would affect future tuition and was told ASU believes it has enough in tuition retention and there will be a great enough reduction in debt to pay for this project without raising tuition. Regent Robinson asked if this use of tuition revenues had been discussed with student leadership and was told no. She said she thought it was important for the students to be informed; not to say yes or no to a project, but to know the use of student money. President Coor said her point was well taken.
Regent Gignac suggested the approval for this project be postponed until the next meeting when there might be a better idea of what the request for bonding authority would be. President McKay moved to approve the Library Storage Building, but the motion died for lack of a second.
Regent Gignac suggested the Board discuss the UA request to sell $26.4M in Certificates of Participation before a decision was reached on the Library Storage Building. President Likins said the UA did plan to use tuition revenue to pay off COP's in 2011. Other debt will be paid off that year, thus freeing tuition revenues to pay debt for the student union.
Regent Gignac said she understands the Board does not have a policy on when to use COP's; thus she does not believe the university would have had any reason to know the Board would not support this project. For that reason, she will support this project; but she does not want to see any more COP projects using tuition revenue coming forward after today until there is a Board policy.
Regent Jewett asked if the paying off of some debt would release money to pay for this project. Mr. Kurt Freund, university financial advisor, said you could finance with COP's and then refinance with system revenue bonds. However, he would not recommend that because shortening the call feature on COP's would cause a higher interest rate and you would be issuing debt twice so would pay twice the issuance costs.
Regent Gignac moved to grant Project Implementation to Arizona State University Main Campus for the High Density Library Storage Facility. The motion was seconded by Regent McKay and passed with Regents Amos and Herstam voting no and Regent Robinson abstaining.
Dr. Mernoy Harrison and Mr. Dave Harris joined the meeting for this discussion. Regent Herstam said the Board was being requested to grant Project Implementation Approval to ASU for the construction of the University Services Building and the renovation of related backfill space at an estimated cost of $14.4M. The project is proposed to free up and renovate approximately 126,000 square feet of space in seven core campus buildings by constructing a 120,000 square foot University Services Building on the site of the old PennMor Building. Programs to be relocated to this building include Facilities Management and Administration, Risk Management, and Human Resources.
Dr. Harrison said ASU would be asking the legislature for funding for this project; however, it is understood the funding may not be granted. ASU would then have to take the debt funding from elsewhere in its budget. He said ASU would probably have chosen COP's for this project even if bonding authority would have been available.
Upon motion of Regent Herstam, seconded by Regent Gignac, the Board granted Project Implementation Approval to Arizona State University Main for the University Services Building and the associated backfill.
Mr. Terry Isaacson, Dr. Mernoy Harrison, and Mr. Dave Harris joined the meeting for this discussion. Regent Herstam said the Board was being requested to grant Project Implementation Approval to ASU East for the construction of the Flightline Facility on the north apron of Williams Gateway Airport at an estimated cost of $3.2M. The scope of this project has been revised since it was approved in ASU East's Capital Development Plan in order to comply with the design guidelines of Williams Gateway Airport. The square footage of the building was decreased from 42,000 square feet, parking and landscaping were increased, and apron space for aircraft parking was increased.
Mr. Isaacson said the cost of the project did not decrease with the decreased square footage due to the landscaping and parking increase. He said this project has the blessing of all the flight training students. Upon motion of Regent Herstam, seconded by Regent Jewett, the Board granted Project Implementation Approval to Arizona State University East for the Flightline Facility at Williams Gateway Airport.
Dr. Mernoy Harrison and Mr. Dave Harris were present for this discussion. Regent Herstam said the Board was being asked to grant authority to ASU to sell Certificates of Participation in an amount not to exceed $135.2M and to pay the costs of issuance. Proceeds from the sale of these COP's will be utilized to finance the construction of facilities at ASU East and West ($49.1M); the Memorial Union Expansion ($38.8M); Intercollegiate Athletics, Wells Fargo Arena, and Packard Stadium modifications ($30.1M); the construction of the University Services Building at ASU Main ($14.4M); and the construction of a Library Storage Facility at ASU East for use by ASU Main ($2.8M).
In light of the previous discussion, President Coor told the Board that about $9M of the $38.8M for the Memorial Union will be funded by retained tuition. The balance is auxiliary funds and is for the academic space within the Union. Upon motion of Regent Herstam, seconded by Regent Gignac, the Board authorized Arizona State University to (1) sell one or more series of Certificates of Participation, not exceeding $135.2M principal amount, for the purpose of financing the projects previously described; (2) pay the costs of issuance of the COP's; and (3) take all related actions and enter into all necessary agreements, as provided in a resolution approved by Board Counsel and staff. Regent Herstam abstained from voting.
Mr. Joel Valdez and Mr. Dave Harris joined the meeting for this discussion. Regent Herstam said the Board was being requested to grant Project Implementation Approval for the expansion of the Meinel Optical Sciences building at an estimated cost of $17.2M. This project will provide for growth in the Optical Sciences Center's academic program and also will locate all optical sciences programs in one centralized campus location.
Upon motion of Regent Herstam, seconded by Regent Jewett, the Board granted Project Implementation Approval to the University of Arizona for the Meinel Optical Sciences Expansion Project.
Mr. Joel Valdez and Mr. Dave Harris joined the meeting for this discussion. Regent Herstam said the Board was being requested to authorize the University of Arizona to sell Certificates of Participation (COP's) in an amount not to exceed $26.4M and to pay the costs of issuance. Proceeds for the sale of these COP's will be utilized to construct the Gittings Expansion Project ($3M), the Highland District Planning and Site Preparation Project ($7.5M), the Finish Shell Space Project ($10.5M), and the relocation of Arizona International Campus ($5.4M).
There is a discrepancy between the agenda and the Executive Summary regarding the amount to be financed and the source of debt service for the Gittings Expansion Project. Mr. Valdez said an earlier communication had indicated the university intended to sell $6M for the Gittings Expansion and the correct figure is $3M. In addition, it was planned to use tuition-backed bonding for the $3M portion, but JCCR, JLBC, and the legislature have already back filled that into the base budget to retire that debt. Mr. Valdez said there will be no upward pressure on tuition because the legislature has already authorized retained tuition for bonding which will now be used for the COP's.
Upon motion of Regent Herstam, seconded by Regent Gignac, the Board authorized the University of Arizona to sell one or more series of Certificates of Participation not to exceed $26.4M to produce sufficient proceeds to finance the acquisition, construction and improvement budgets for the Gittings Expansion Project, the Highland District Planning and Site Preparation Project, the Finish Shell Space Phase II and replace Plaza Deck Project, and the Arizona International College Project, 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 approved by Board Counsel and staff. The Board also agreed, at the request of the University of Arizona, to change the name of the Arizona International College Project to University of Arizona North Campus. President Likins said the UA North Campus facility would be needed for enrollment growth, but the enrollment was not increasing at Arizona International College to the point the facility would be justified just for that program. The name change more accurately describes the use of the facility.
Approval of Multiple-Year Employment Contract for Head Baseball Coach (UA)
Regent Herstam said the Board was being asked to approve a multiple-year employment contract for Andrew Lopez, Head Baseball Coach, for the period November 2, 2001, through June 30, 2006. Coach Lopez's proposed contract salary is $85,000 per annum for duties related to coaching baseball and will be paid entirely from revenue generated by the Athletics Department. The salary may be increased by an amount not to exceed the percentage increase available annually for employees of the university employed subject to the Conditions of Administrative Service.
In addition to salary, Coach Lopez shall receive additional compensation in an amount equal to one-twelfth the annual salary, or $7,083, for designated athletic accomplishments. He may also receive additional compensation in designated amounts for designated academic accomplishments. The contract contains liquidated damages clauses.
Upon motion of Regent Herstam, seconded by Regent Gignac, the Board authorized the University of Arizona to enter into a multiple-year employment contract with Andrew Lopez according to the terms and conditions as summarized above.
Regent Palacios chaired this portion of the meeting.
Mr. Matt Ortega joined the meeting for this discussion. Regent Palacios said the Board's proposed Public Awareness Plan for 2001-2002 was a product of the Board's Sixth Strategic Direction, direction from President McKay on her major areas of focus this year; discussion from the August Board Retreat, and meetings conducted with staff. In general it is a working document and she asked for Regent input over time as specifics in certain areas were developed. There is an expectation that staff will identify "strategic" communication activities; that is, identify various governmental, educational, and other constituent groups and evaluate the appropriate level and type of communication activities for these groups so they are better informed about our university system. Staff is expected to update the Board on a regular basis. Also, she has directed staff to make this Plan available in multi-media formats, including adaptation of the Plan's five major areas into web versions, fact sheets, fact cards, brochures, press releases, or any format deemed appropriate.
Regent Palacios said the Plan focuses on the primary areas of ensuring excellent presidential leadership, with an emphasis on the recently completed NAU search and ongoing ASU search; improving public accountability with the development of a new and improved annual report and other measures; effective use of Proposition 301 funds; advancement of Arizona Regents University; and ongoing legislative advocacy for university system priorities.
Regent Palacios said the Regents discussed a comprehensive communication plan at their Retreat in August. The possibility of using university talent to do that was also discussed. She believes there is some university reticence to this idea; so she asked the other Regents to let her know if they believed this is something that is important to accomplish. If so, she volunteered to try to get someone to help with the plan pro bono.
Mr. Ortega said he believed it had been hard for the universities to accept a "one size fits all" type plan as they each have their own communication plans. He said it was not the intent of Regent Palacios or the Central Office staff to infringe on the communication efforts of the individual universities. Also, in the past, there has been cooperation on system issues such as Proposition 301 and there is currently cooperation on the budget shortfall issue. He said the Regents would see the results of the current group as soon as the next Board meeting.
Regent Amos said the Board has been discussing the possibility of having a coordinated marketing plan for the universities for several years. He believes there should be a coordinated plan and focus groups should be used to see what elements should be included in the plan. He believes this will help with sending one message to the legislature. Regent Amos said he believes an outside consultant should either be secured pro bono or paid by foundation funds to produce such a plan.
President Likins said the discussion helped him better understand the issue. Each university does have and needs its own plan; but he agreed there should also be a coordinated plan. He believes the vice presidents should be instructed by the Regents and the presidents to think through ways the individual strategies can be most effectively coordinated and when appropriate, combined. He said he did not want to be terminating people due to budget cuts while the Regents were hiring marketing consultants. He would welcome pro bono help, but would not like to be instructed to spend money on consultants right now.
Regent Palacios said she did not want to force people to participate in a project they do not support. President Likins said he believed the presidents would instruct appropriate people to participate in the project. President Cargol agreed with President Likins. President Coor said the Regents should consider the instructions given.
Upon motion of Regent Palacios, seconded by Regent Gignac, the Board adopted the proposed 2001-2002 Public Awareness Plan. Regent Amos suggested Regent Palacios see if she could get an outside consultant to work on the plan pro bono as that would add an outside perspective to work with our university people. President McKay said she has believed for years the public does not have a good perception of the value the universities add to the state and she believes this type of plan would be valuable.
President McKay said the Board was being asked to review and adopt the proposed guidelines for the conduct of the Arizona State University presidential search process. The guidelines were reviewed by the ASU Presidential Search Committee at its September 6 meeting. The guidelines are similar to those approved in prior searches. Upon motion of Regent Gignac, seconded by Regent Herstam, the Board approved the guidelines for the conduct of the Arizona State University presidential search as proposed.
Regent Gignac stated there had not been a meeting of the State Board of Directors for Community Colleges since the last Regents' meeting; therefore, she had no report.
Dr. Andrew Jackson reported the Arizona Faculties Council (AFC) asked the Regents to continue to support the development of a high quality educational system in Arizona. To this end, the AFC believes there should be a long-term or strategic development of a supportable, sustainable funding policy for the universities.
The AFC believes the support given to the Proposition 301 projects is a big first step in learner-centered education and they applaud the effort. He said faculty have a major concern how the development of on-line course content will count towards their professional development and tenure. Regent Gignac said the leaner-centered work group had been assured the ABOR policies were not a problem; there was a need for the universities to review their policies. She asked if this was still true and was told yes. President Likins said he did not believe it was a matter of a problem with the university policies; he believed it was a matter of a problem with the university practices.
Regent Robinson said she believed the university funding formula should be reviewed as it is critical in times like these. Regent Amos agreed funding was a very important issue now and said it would be good for the presidents to start working on this issue.
The meeting adjourned at 4:47 p.m.
SUBMITTED BY:
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Judy E. Garza
Secretary to the BoardAPPROVED BY:
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Kay J. McKay
President
ATTEST:
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Gary Stuart
Secretary