September 2002 Minutes/Arizona Board of Regents

A meeting of the Arizona Board of Regents was held September 26 and 27, 2002, in the Alumni Lounge, Memorial Union, Arizona State University, Tempe, Arizona. President Jewett called the meeting to order at 10:04 a.m.

PRESENT:	Regent Fred Boice Regent Robert Bulla Regent Chris Herstam Regent Jack Jewett Regent Matthew Meaker Regent Kay McKay Superintendent of Public Instruction Jaime Molera (Thursday Afternoon Only) Regent Christina Palacios (Thursday Only) Regent Danelle Peterson-Kelling (Thursday Only) Regent Gary Stuart Regent Donald Ulrich (Friday Only)
ABSENT:	Governor Jane Dee Hull

Also present were: President Michael Crow, Dr. Milton Glick, Dr. Mernoy Harrison, Dr. Elaine Maimon, Mr. Paul Ward (Thursday Only), Dr. Christine Wilkinson, Dr. Jim Rund, and Mr. Steve Miller, Arizona State University; President John Haeger, Dr. M. J. McMahon, Dr. Elizabeth Grobsmith, and Dr. Jeanette Baker, Northern Arizona University; President Peter Likins, Dr. George Davis, Dr. Elizabeth Ervin, Mr. Joel Valdez, Dr. Patti Ota, and Mr. Greg Fahey, University of Arizona; Executive Director Linda Blessing, Board Counsel Joel Sideman, Secretary to the Board Judy Garza, Dr. Thomas Wickenden, Dr. Art Ashton, Ms. Louise Houseworth, 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 September 26 and 27, 2002, Documents File.

The meeting began with a Study Session on Intercollegiate Athletics. President Jewett reported he had asked Regent Herstam to Chair the Intercollegiate Athletics Subcommittee for the coming year and turned the Chair of the Study Session over to
Regent Herstam. Joining the meeting for this study session were the athletic directors from the three universities: Mr. Steve Holton from NAU, Mr. Jim Livengood from UA, and Mr. Gene Smith from ASU.

Regent Herstam reminded the Regents that one year ago, in response to findings of the Knight Commission on Intercollegiate Athletics, the Board had undertaken an extensive study of athletics under the leadership of Regents McKay and Jewett. The Knight Commission’s findings spoke on the issues of student athlete graduation rates, student-athlete behavior on and off the field, and the rising costs of coaching contracts.

Over the past year, through the use of study sessions and a subcommittee comprised of Regents Jewett, Ulrich, and Herstam, the Board took a comprehensive look at the status of each athletic department. Regent Herstam reported the full cooperation of the Athletic Directors and their staff in the effort.

A major goal of the study effort was for the Board to better understand the role of the Athletic Departments and how they work within the academic mission of the Arizona schools. Regent Herstam reported this session was to provide an update on NCAA reforms and conference working groups.

Mr. Smith introduced Vice President for Membership Services Kevin Lennon and Director of Research Todd Petr from the NCAA. Both had been heavily involved in helping the various NCAA committees work on academic reform.

Mr. Lennon shared the academic reform initiatives the NCAA has been considering with the Board and talked about the process for review, the time line, and other key issues. Mr. Lennon said the reasons the NCAA undertook the review of academics were the NCAA is always committed to studying the impact of its rules on young people, the disappointing graduation rates in some sports such as 1A basketball (even though the overall graduation rate for athletes is higher than the student body in general), data is now available for the first class that came under the higher academic standards, and the courts have ruled favorably about higher education being able to make decisions about standards.

Mr. Lennon said the NCAA Board of Directors charged a group of academic consultants in 1999 to identify standards that would maximize the graduation rates while minimizing the adverse impact of those standards on young people, particularly minorities and those of lower socioeconomic backgrounds. Arizonan faculty athletic representatives Dr. Doug Woodward (UA) and Dr. Jerry Kingston (ASU) were among the academic members of this group.

The Division I Board of Directors resolved to increase academic standards of incoming and enrolled student-athletes. The focus will be on progress toward degree rather than eligibility. Regular progress will be required toward acquiring a degree and the percentage of degree requirements met will increase. More core academic courses will be required in high school; the requirement will first go from 13 to 14. The NCAA will continue to use test scores for initial eligibility, but they will not be the only indicator. Performance in high school will also be considered.

Mr. Lennon was asked about the requirement for 14 academic courses and said the Board had said 14 was a starting point. They are looking at the possible increase of courses to 16 with the high school graduating class of 2006 or 2007, depending on data received after the current increase. President Likins commented that Arizona already requires 16 courses.

The NCAA has created a new measure: annual academic progress rate. The current graduation rate is measured over a 6-year period of time. The proposal is to measure in real time every member of a team on a year-by-year basis. This would allow the measurement of every coach’s stewardship of their students’ progress on a year-by-year basis. An ongoing group is also beginning to study possible incentive awards for academic performance of a team such as allowing participation in post-season competition based on the team’s academic performance. They will consider whether the revenue distribution formula from the NCAA should also include academic performance. Grants and aid money could also include academic performance data in their requirements.

There is an attempt to look at a new NCAA graduation success rate measure that treats transfer student-athletes differently. The current method does not give an institution credit if an athlete leaves in good standing to transfer to another institution; rather the institution is penalized. There is also a need to examine the time demands placed on athletes to make certain they have the time necessary to study to meet the new academic requirements.

Mr. Petr talked about the underlying philosophy behind the proposed changes. The current rules were designed to use the high school academic variables–test scores, grade point averages, number of core courses taken, etc.–to predict college graduation.

The new model proposes using college academic variables much more to predict college graduation and puts more emphasis on continuing eligibility. The initial eligibility standards are being adjusted to minimize adverse impact while maintaining the same required minimum performance level.

In continuing eligibility issues, the methodology was to separate the profiles of those who graduate from those who do not graduate. There are clear delineations between the groups. For example, over 90% of graduates had greater than a 2.0 GPA in the freshman year versus 60% of non-graduates. There is an attempt to set the minimum standards so those who fit the profile of a graduate will be selected.

Another consideration is how often to check to check the GPA-once or twice a year or term by term. More study has been requested on this issue. President Likins stated the Arizona requirement is currently term by term.

Mr. Lennon said the Board of Directors and the presidents of the NCAA Division 1 are committed to reform. They know what should be done, but they are asking for input from various groups on how to get there. He said these reforms will be done in stages. The academic standards will be voted on by the NCAA Board in October 2002 with implementation in August 2003. It is hoped formal legislation for the annual academic progress rate and the NCAA graduation success rate can be presented in April 2003 and begun with a pilot program. Proposals for time demands will be presented in April 2003 and October 2003. It is hoped possible incentives/disincentives can be presented to the NCAA Board in October 2003.

Regent Herstam thanked the NCAA representatives for their presentations and said he was very glad to hear what was on the horizon for the NCAA as those were the issues the Arizona Board of Regents (ABOR) had been discussing. President Jewett asked about the criticisms leveled at the first and second Knight reports. He was told the first report criticized the academic standards and the NCAA took exception to the statements in the second report that improvements had not been made. There is a need for support from boards such as ABOR to help the presidents keep the reforms on the right track. University presidents have the authority to mandate the necessary reforms, but will face criticism from many directions, including their own coaches in some cases.

Mr. Lennon said the most recent report was critical of the academic standards in place, the lack of incentives, and the issue of time demands. All those issues are being addressed. The number two issue mentioned by the Knight Commission was fiscal responsibility and that issue is also being addressed. The third issue the Knight Commission raised was commercialization and the NCAA believes athletics should not have been singled out for this issue as all of higher education is dealing with this during these tight financial times.

The NCAA Board believes academic reform and dealing with the funding dilemma are the two top priorities at this time. President Likins said he was a member of the NCAA Presidents’ Commission at the time of the first Knight Commission Report. The Commission was proud of the way it responded to the Report which focused on corruption and lack of presidential control. There are different issues raised in this Report.

President Jewett asked how the NCAA would respond to people who do not follow the new rules and was told that is a problem that will have to be dealt with as the requirements unfold. The NCAA does have certification as one way to deal with problem schools. Regent Boice asked who was on the NCAA Board and was told President Likins would be joining the Board in January as the PAC 10 representative. It is composed of 18 executive officers from Division 1 universities. There is a management council made up of athletic administrators, faculty representatives, and others who provide reports and recommendations to the Board.

Regent Boice asked if the more stringent rules adopted by ABOR had placed the Arizona schools at a disadvantage and was told it was hard in the implementation phase, but was working now. President Crow suggested President Likins present to the Board the possibility of working with professional sports to require a college degree for professional players.

Regent Stuart asked if the raising of the GPA would cause any problems for the Arizona schools and was told it should not. The implementation of any new requirement is always hard; but once everyone adjusts, there should be no competitive disadvantage. There may be some high schools that will not have eligible students and the athletic directors need to work with the coaches to make sure the recruiting follows the new rules. Also, there will need to be collaboration on campus to make sure the athletes are able to obtain the classes they need as there is a problem on campuses in tight budget times with all students obtaining the classes they need.

Dr. Douglas Woodard and Dr. Jerry Kingston joined the meeting at this time. Mr. Smith spoke to the preliminary report of the NCAA Working Group on Student-Athlete Welfare. A group comprised of two Chief Executive Officers from six conferences in Division 1-A, the Southeastern Conference, Big East Conference, Pacific-10 Conference, Atlantic Coast Conference, Big Ten Conference, and the Big 12 Conference, appointed a working group of athletic administrators and faculty representatives to focus on academic issues and student athlete welfare.

Mr. Smith said it was believed there should be a study made of the time demands on athletes and whether they will impact the athletes’ ability to meet the new academic requirements, particularly in light of the growing out-of-season conditioning commitments and the sports with the long playing seasons. The question of financial aid for athletes is being considered. The preliminary report will be considered in October.

Regent Boice asked if the proposed financial aid could be incorporated into the athletic programs and still allow the programs to be self-supporting and was told it would be a challenge as there are only a few Division I university athletic programs left in the country that operate at a profit. It would require better management of money and the reduction of expenditures.

Regent Herstam proposed the Board meet with the athletic directors annually, starting the same time next year, to hear an update on the status of Arizona programs and NCAA reforms. President Likins suggested the Board receive an update from the athletic directors in November 2002 so they could report on the latest information coming from the NCAA meeting in October. Upon motion of Regent Boice, seconded by Regent McKay, the Board agreed to meet with the athletic directors annually, starting in November 2003.

The Regents thanked the athletic directors and the faculty athletic representatives for their time and cooperation and the NCAA representatives for their presentations.

The meeting recessed at 11:15 a.m. and reconvened at 1:10 p.m. in the same room.

Dr. Patti Ota, Dr. Kathy Church, Dr. M. J. McMahon, and Dr. Tom Wickenden joined the meeting for this discussion. President Jewett acknowledged these individuals as the members of the Changing Directions workgroup. He said the focus of this study session was a proposed action plan and guiding principles for implementing the Changing
Directions initiative.

President Jewett said the Board had talked about this initiative at its Retreat meeting in August. It is an attempt, as a system of universities, to help deal with the adverse financial climate by utilizing strategic management and by examining funding streams to make sure they are as maximized as possible.

Dr. Wickenden said the purpose of this Study Session was for the Board to provide guidance on the proposed action plan and guiding principles for Changing Directions, to provide a framework of assumptions that will be used for directing this initiative. In October, the universities and central office staff will present concept papers for review. The October discussion is intended to allow the Regents to discuss, at a general conceptual level, each of the various directions in which university practices and Board policies might be changed. With the guidance given in October, the directions will be developed into specific proposals for changes in policies or procedures and brought back to the Board for review and action at subsequent meetings later in the year.

The proposed action plan describes two sets of papers to be reviewed in October. A paper prepared by each university describing possible changes in the mission for that university. These proposed mission changes would be supported by possible modifications in the management of enrollments, proposals to modify current tuition levels and financial aid, and the implication of these changes for adjustments in the inventory of academic programs and admission requirements.

In addition to the university papers, there will be papers that describe, in concept, possible changes in Board policy and in state support that might be needed to implement the institutional changes and to insure that statewide needs continue to be addressed. Possible policy changes will be described in each of the areas addressed in the university papers. In addition, state support will be addressed in terms of four topics-- state financial aid programs, state budget mechanisms, state enterprise models, and state revenue streams.

To provide guidance for the development of these concept papers and to describe a context within which to better understand the need for Changing Directions, the Board was asked to review and offer revisions to a set of principles.

Dr. Wickenden called the Board’s attention to the proposed guiding principles. At the most general and fundamental level, there are seven principles that describe how the university system might best serve the needs of the State of Arizona and its students.

Speaking to state needs in general are the principles of quality, diversity, specialization, and financial viability. Student success, affordability, and accessibility principles speak more directly to the needs of the students. In order to encourage the development of special strengths at each university, it may be necessary for the Board to review and approve proposals that will differentiate the missions, the management of enrollments, tuition, financial aid, and academic programs at the universities and to modify current policies in these areas to allow more flexibility.

Dr. Wickenden said the Board was being asked for additions, deletions, or modifications to either the Action Plan or the Guiding Principles.

President Crow said the Arizona State University System is attempting to position itself for the next level of its maturation and development as the State moves forward in its competitive positioning relative to other parts of the country and other parts of the world. Building a university system for the state that is able to be flexible, dynamic, creative and complementary and at the same time meeting the diverse needs of citizens of Arizona seems to him to be a fantastic point in history.

Dr. Crow said Arizona State University was focusing its planning energies on mission objectives that center around academic excellence. He believes a university can be both big and great. ASU has laid out five key points: 1. Academic excellence for all programs, making certain to recognize differences between the programs; 2. Compre-hensive educational opportunities that match the needs, demands, social structures, and the dynamics of this metropolitan area; 3. Imbedding ASU socially at all levels throughout the community; 4. Differentiating among the universities and within ASU; and 5. Developing entrepreneurial behavior.

President Haeger said he could not overemphasize the importance of communicating what changes might take place. He said, due to the deregulation of public universities through the marketplace, public institutions are no longer monopolies and have to change their own behavior. He does not believe Changing Directions means the universities will become totally different. He believes it is an essential focus on the core mission of the university. For Northern Arizona University, the undergraduate residential experience on the mountain campus drives everything else. The faculty has been asked to look at the things that build the residential core in new ways. For instance, Dr. Haeger said he believed high graduation rates were more important than entry requirements.

Dr. Haeger said undergraduate education would drive the research and graduate education mission. He said NAU would explore the tremendous opportunities that exist in distributive education.

President Likins said the public needs to understand that to continue in the same manner and keep the status quo would be disastrous for the universities. The universities are receiving funding; however, the increases in funding are coming disproportionately from grants and gift aid which are restricted funds. There is a need for unrestricted dollars to support academic programs and other student and university needs.

Dr. Likins said the University of Arizona has chosen to strive for focused excellence. He said diversity, both ethnic and social, is part of excellence. Also, the university has certain responsibilities as a land-grant institution. There is a collaborative process underway to help determine the developmental themes that will help guide the university in the years ahead. He said the hard part would be determining what programs should be merged, dissolved, or phased out, but that is part of focusing. The UA will strive to create an environment in which those students who are admitted to the university have a realistic prospect of graduating.

President Jewett recognized former Student Regent Mary Echeverria and NAU President Emeritus Clara Lovett who were in attendance.

Regent Herstam said the Regents should be prepared to stand behind the presidents when it is time to implement the proposed changes as many will be completely new to the State of Arizona and will not be popular with some constituencies both on and off campuses. Regent Stuart agreed the presidents will need to be supported as he believes this is a great opportunity for the universities, but also agreed there will be negative feedback from some areas.

Regent Stuart said he did not have any additions or deletions to the material presented. He might change the order if they are listed in priority order as he believes financial aid should come before tuition. He also suggested the enterprise model be higher on the list.

Regent Bulla asked the work group to keep in mind the impact on compensation and how resources, such as real estate assets, are managed as Changing Directions unfolds. He would like to see those two areas addressed in the guidelines. He believes this initiative is very important as he also agrees the status quo will lead to decline.

Regent Palacios echoed the statements made by others. Regent Meaker thanked the universities for their collaborative methods and asked them to continue to work with students and faculty on these issues.

Regent Molera said there should be well documented steps as to how these changes will be made and imbedded in the process should be the consequences of what will happen if the goals aren’t reached. President Jewett thanked Regent Molera for his service on the Board of Regents.

The meeting recessed at 2:17 p.m. and reconvened at 2:34 p.m. Regent McKay led the Pledge of Allegiance.

President Jewett recognized several Central Office employees for their years of service. Carolyn Bennett, On-Line Communication Specialist, received a certificate for 15 years service; Art Ashton, Assistant Executive Director for Strategic Planning, received a certificate for 20 years of service; and Louise Lynch, WICHE Certifying Officer, received a certificate for 25 years of service.

Yolanda Sanchez, President of ASASU West, introduced herself to the Regents and reported on the growth at ASU West.

Items on the Consent Agenda, which are marked in these minutes with an *, were considered as consent matters and were adopted upon motion of Regent McKay, seconded by Regent Bulla. There was no individual discussion of these items. Item 5, Approval of Board’s Action Plan for 2002-2003, was removed from the Consent Agenda to be discussed during the Strategic Planning Committee Agenda.

The Board approved the, April 25, 2002, Executive Session, June 6, 2002, Special Executive Session, August 15, 2002, Retreat Meeting, and August 16, 2002, Regular Meeting minutes.

The Board received a written report on Information Technology (IT) projects over $1M.

The Chief Academic Officers review all projects over $500,000 and the Council of Presidents review projects over $1M. The purpose of the review is to determine if there is potential for collaboration, coordination, and joint projects, to avoid unnecessary duplication, and for private/public partnerships. Annually, the reviewed projects are reported to the Board. A new IT project approval process involving greater Board oversight will be presented to the Board for approval at this meeting.

The report for FY 2002 has one ASU project, a new Human Resources/Payroll replacement software system. ASU has issued an RFP for vendors to propose solutions for this project. The RFP responses, including other possible options, will be reviewed before a selection is made.

The subject property is a rectangular shaped parcel of approximately 28,741 square feet, including the two-story Sigma Kappa sorority house with a partial basement. The University’s acquisition of the property is beneficial to Sigma Kappa’s plan to build a new sorority house in the University Village area. Acquisition of the property is consistent with the policies and guidelines of the Campus Comprehensive plan adopted in April 1988. The parcel is the last to be acquired within the block. The Department of Residence Life will fund the purchase and will rent the building to the sorority during construction of its new house. Upon completion of the sorority relocation, the building will serve as housing for freshmen girls. The source of funds is Residence Life proceeds from the sale of Christopher City.

The Board granted permission to the University of Arizona to purchase property located at 1125 N. Vine Avenue, Tucson, at the current appraised value of $1,400,000, subject to approval of legal documents by University and Board counsel.

The Board authorized the University of Arizona to receive an amendment to a grant from the National Cancer Institute, No. PO1CA27502, to provide support for year five of the Chemoprevention of Skin Cancer Program Project. The proposed amount for the amendment, the final year of the award, is $2,785,832, with the total grant amount of $14,067,676. The proposed grant amendment period is July 1, 2002, through June 30, 2003.

The Board authorized the University of Arizona to receive an amendment to a grant from the National Cancer Institute, No. P30CA23074, to increase the funding and provide support for the fifth year of the Cancer Center Support Project. The proposed amount for this amendment is $2,434,873 for a total new grant amount of $12,210,206. The total anticipated funding amount for the life of the project is $18,427,905. The proposed grant amendment period is July 1, 2002, through June 30, 2003.

The Board authorized the University of Arizona to enter into a contract amendment with the National Science Foundation, No. EAR9876800, to increase the funding and provide support for the third year of the Water Resources in Semi-Arid Regions Project. The proposed amount is $3,210,000 for the third year of the project for a new contract amount of $9,543,262. The total anticipated funding amount for the life of the project is $15,993,844. The proposed contract period is January 1, 2002, through December 31, 2002.

The Board received the written ASU Research Park Annual Report for 2001/2002. The ASU Research Park added over a quarter of a million square feet of improved space to its portfolio this year with the opening of the first phase of the Edward Jones Regional Headquarters and the new ASML Training Center.

Presentations, conferences, and events sponsored and/or arranged by the Park include the Southwest BioPartnering Conference, the Arizona Corporate Real Estate Expo, Bright Horizons Child Development/ASU programs, and numerous others.

The Park has contracted with a landscape architecture firm and a sign designer to redesign the landscape and signage along the new frontage road. Park staff has begun a year-long project to redesign the wiring and irrigation systems in no-turf areas to conserve water.

As of June 30 of this year, the Park had ground leases in effect for 173 acres of the Park’s total net leaseable 238 acres. Of the remaining available acres, Avnet CMG has optioned 18 acres and Edward Jones has optioned 7 acres. At the present time, 8,647 square feet of space in the Lakeside Technology Center is available and being actively marketed.

A positive net cash flow after (bond) debt service resulted in payments totaling $1,294,058 to ASU in FY 2002. The end of year FY 2002 balance owing ASU, including principal and interest, was $6,486,460. IN FY 2003, payments to ASU of $1,014,706 are anticipated. The remaining bonded indebtedness as of end of FY 2002 was $18,025,000.

Changes to program and organizational units at Arizona’s universities that have been approved by the Executive Director are reported to the Board. Two name changes were reported for ASU. The Department of Manufacturing and Aeronautical Engineering Technology was changed to the Department of Mechanical and Manufacturing Engineering Technology and the Arizona Biomedical Institute (AZBio) was changed to the Arizona Bio-design Institute (AZBio).

As the designated State Agency for Higher Education (SAHE) in Arizona, the Board of Regents is responsible for coordinating Arizona’s participation in a new federal grant program for improving the quality of K-12 teachers; Improving Teacher Quality (ITQ). This program replaces the Eisenhower Math and Science Teacher Professional Development program which was previously coordinated by the Board office.

The ITQ is a pass-through grant program, similar in nature and size to the Eisenhower program. Funding for FY 2003 includes $1,115,269 for grants and $57,516 for administration. Administrative funds provide support for a quarter-time Senior Coordinator and for the expense of the proposal review process.

The ITQ program includes professional development programs for teachers in all subject areas of the K-12 curriculum and is focused upon the “No Child Left Behind” goal of placing a qualified teacher in every classroom.

Because of the expanded scope, the Eisenhower program has been expanded and reestablished as an ITQ Advisory Board. With the help of the Advisory Board, the Request for Proposals has been revised to reflect the new federal requirements. Because funding for the new ITQ Program is included with other Title II funds that are allocated by the U.S. Department of Education to the Arizona Department of Education, an Interagency Service Agreement is being developed by the AZ Department of Education to enable the Board office to draw down the grant and administrative funds for this program.

The Board accepted the responsibility for coordinating Arizona’s participation in the new federal Improving Teacher Quality grant program.

The Board approved a revision to Policy 2-102, Conditional Admission Policy, which extends the temporary modification to allow students two years to satisfy academic competency deficiencies until spring semester 2004. Having the continued flexibility, as needed, to allow a student to satisfy deficiencies during the first two years will allow the universities to support increased access and retention of students.

The Board accepted five audit reports issued by the central office internal audit staff. These reports were accepted by the Audit Committee at its June 14, 2002, meeting. There were no Findings Reportable to the Board.

Multipurpose Card Audits (ASU, NAU, and UA): Six internal recommendations were made at ASU and six internal recommendations were made at NAU. Undergraduate Consolidated Accountability Reports (UCAR) (ASU and UA): One internal recommendation was made at UA. An audit of the NAU UCAR was postponed at NAU’s request. The Board accepted the five audit reports issued by the central office internal audit staff as presented.

The Board accepted the State of Arizona Office of Auditor General financial statement audit management letters for ASU, UA, and NAU for the fiscal year ended June 30, 2001. These management letters were accepted by the Audit Committee at its June 14, 2002, meeting. There were no audit findings that were required to be reported by GAS and OMB Circular A-133.

President Crow gave a status report on happenings at ASU. He reported some academic programs, while remaining constant, have been losing ground in relative position to other institutions with similar programs on a nationally competitive basis. The rate of research growth remains below those institutions ASU considers its competitors, even with 20% growth on the part of ASU. ASU is going through a substantial internal reconceptualization. He said it would be a significant challenge to manage the day-to-day needs, transforming the university, and competing on a national level.

Dr. Crow said the 6-year graduation rate for first-time, full-time freshmen places ASU in the third tier of universities. However, ASU has the highest ranked faculty of all third tier universities and has a faculty ranked at or higher than 80% of the second tier universities with some faculty and programs ranked higher than some first tier universities. Raising the graduation rate is the key to improvement in the university’s national ranking.

President Crow said there was a faculty consensus to build the new School of Life Sciences. The faculty, working with the academic leadership at the College of Liberal Arts and Sciences, has decided to move to dissolve 3 academic departments. These departments will be collapsed into a unified, interdisciplinary School of Life Sciences where they will work together in new and creative ways to become a world class group of life scientists. The School of Life Sciences will not be limited to science only as the social and ethical questions must also be considered as biology moves forward.

Dr. Crow said the university was considering its Proposition 301 Fund money investment in the biological sciences to be the equivalent of having been awarded a National Science Foundation Science and Technology Center and intends to place on the faculty that level of competitiveness and expectation in terms of their achievement.

President Crow said ASU plans to launch as soon as possible the Arizona BioDesign Institute which will link with UA and NAU in scientific and engineering areas. ASU plans to focus its energy and thematically link groups together. This represents a shift away from the clinical and translational research focus to fundamental science, engineering and technology development where ASU’s strengths lie.

Dr. Art Ashton joined the meeting for this discussion. Regent Bulla said the Board was being asked to review and approve the university and central office Operational Plans that were required by State Statute. They show missions, strategic issues, goals, performance measures, a crosswalk from the Board’s strategic directions to the university goals, and a report on university accomplishments for the past year.

President Crow said ASU is involved in two simultaneous, complicated planning processes--the strategic planning process and the bigger policy level driver coming out of Changing Directions. This is made more difficult by the tight budget level and the expected budget cuts.

Dr. Crow said one of ASU’s accomplishments is that over 90% of the graduating seniors rated their overall university experience as good or excellent. ASU Main enrolled over 100 National Merit Scholars for the fourth consecutive year and the largest number of minority students in the university’s history. ASU West opened its doors to its freshman class and received national recognition for its partnering with the community. The satisfaction rate for ASU East for exposure to innovative technology was 95% of the graduating students.

President Haeger said NAU’s Ecological Restoration Institute had been in the national news in terms of the new paradigm for fighting forest fires. The first doctoral-level physical therapy class graduated last year. The masters of science in management has rapidly expanded in terms of providing workforce development education. The use of technology on campus has exploded. Work has begun on the renovation of the Mountain Campus.

Dr. Haeger said he believed the number one issue facing NAU, like the other universities, is the financial stability and health and welfare of the institution due to tight budgets and budget cuts. Some contracts were not renewed, people were laid off, and vacant positions were not filled. In a small community like Flagstaff, that makes a dramatic impact. The good news is that enrollment has increased in all categories on the Mountain Campus. However, he said NAU’s retention rate must be improved.

President Likins said it was remarkable that the satisfaction of graduating students in Arizona was so high as not much money is spent educating each student. He pointed out the data that showed how much of the university money was restricted funds. Among those who received graduate degrees, only 25% graduated from Arizona high schools, but 60% intend to remain in Arizona after graduation.

Dr. Likins pointed out that faculty being paid by state dollars are bringing into Arizona the restricted research dollars. When the state dollars for salaries collapse, the faculty and research dollars are also lost.

Regent Boice said the salary data from different sources used different schools for comparison and therefore reached various conclusions. He would like to be able to say definitively where Arizona universities rank when confronted by legislators. He also asked if the universities were hiring the stars of tomorrow, not just trying to hire the superstars of today. President Likins said the quality of the data is good; it is important that the correct peers are used. Dr. Likins said the problem with the stars of tomorrow is that they leave when they get to be tenured professors or become the superstars. This makes the Arizona universities the training ground for faculty.

Regent Stuart said the Regents needed data to show that funds are reallocated to allow the universities to pay salaries of the superstars when necessary, but it is not filtering down to salaries that allow the universities to be competitive in other faculty salaries.

Regent Bulla said he believed one of the key issues in the 5-year plans should be compensation issues for faculty and staff. President Haeger said a problem with faculty leaving is the tearing apart of the culture of the university, one of the reasons faculty come in the first place.

President Crow said the presidents should work with Board staff to find a way to articulate a different way of sending the message of faculty salary needs rather than quoting percentages that few people understand. Recruitment and retention by field should be explicit.

Upon motion of Regent Bulla, seconded by Regent Boice, the Board approved the Operational Plans of the major budget units of NAU, ASU-Main, ASU-East, ASU-West, UA-Main, the Arizona Health Sciences Center, and the central office.

Dr. Art Ashton, Dr. Bill Lewis, Dr. Sally Jackson, and Mr. Fred Estrella joined the meeting for this discussion. Regent Bulla said the Board was being asked to review and approve a new Information Technology Project Approval Process for administrative and academic information technology (IT) projects. Projects $500,000 and greater will come to the Board annually for approval. Projects that are approved through another process, for example, sponsored research or the capital improvement process, will be reported to the Board but not be subject to an additional approval. An annual report showing total annual university IT expenditures will also be provided to the Board.

Dr. Ashton said the legislature established a Government Information Technology Agency in 1996 that covers information technology planning for all of state government. It does not include the universities, but does include language asking for a centralized information technology review process to be established by July 1997. A review process was established with the Board receiving an annual report on projects approved. In the sunset audit report of the central office audit by the Auditor General, it was recommended that the Board should have more oversight of IT at the universities.

Dr. Bill Lewis told the Board the proposed process has two major components. The first is the integration of the IT strategic planning activities into the university strategic planning activities. Overall IT expenditures will be considered within the university structure and this will be accomplished by an annual report of the previous years’ expenditures. The three universities have been trying to do bench marking with regard to job classifications, capital classifications, and financial system expenditures to make the classifications similar among the universities. The only people being considered for job classifications are those with a primarily IT related title as all administrative personnel and all faculty engage in some IT activities.

The second major component is an IT project approval process which has been broken down into three categories. The first category is projects from $100,000 to $250,000 which will be approved within the university. Projects from $250,000 to $500,000 will go to the Council of Presidents for review to consider the impact on the individual campus along with possible opportunities for cooperation among the campuses. Projects $500,000 or over will be presented to the Board for review and approval.

It is anticipated that most of the projects will come to the Board for approval once a year, but some flexibility should be granted for special projects that arise during the course of a year. The Board will also see, as an information item, previously approved projects, such as capital expenditures that are part of an approved building, research grants where the use of the money is predetermined, and some Proposition 301 projects.

As part of the justification process, the Board will see a project overview, deliverables, some indication of service or what the economic benefits will be to the particular group of interest for that project, project origin responsibilities, project management time lines, opportunities for collaboration among the universities, a summary of proposed costs, indications of marginal operating costs, and evaluation criteria.

Dr. Lewis indicated this is a major undertaking as the IT projects at the universities are scattered throughout the campuses and this will be a completely new approach to IT reporting. Regent Palacios asked if the costs would include hardware, software, and consultant costs and was told as close as possible. Regent Palacios asked if the Regents would be able to see variables in time lines and dollars on major projects and was told that would be worked into the process as long as some variance would be allowed.

President Likins said it would be hard to capture the costs associated with the occasions when a staff member is assigned to perform consultant duties for a project and the remaining staff is left to carry the additional load until the assignment is finished.

Regent Stuart said he would like to encourage more emphasis on collaboration than has happened in the past. Upon motion of Regent Bulla, seconded by Regent Palacios, the Board approved the new Information Technology Implementation Plan process and asked for the completed reports to be brought to the Board for review and approval at the January 2003 Board meeting.

Dr. Art Ashton joined the meeting for this discussion. Regent Bulla reminded the Board it had committed to reviewing its Strategic Directions at the August meeting. Some of these directions, such as financial aid, financial viability, tuition, compensation, and building renewal, may change as they are reviewed next spring. Upon motion of Regent Bulla, seconded by Regent Herstam, the Board approved its Action Plan for 2002-2003 as presented. Regent Boice asked when the modifications would be made to the Plan and asked that it be strengthened. Regent Bulla said it was planned to make modifications in the spring in concert with other issues such as Changing Directions.

The meeting recessed at 4:00 p.m. and reconvened at 10:25 a.m. President Jewett recognized the presence of former Regent Rudy Campbell.

Ms. Louise Houseworth, Mr. Dick Roberts, Mr. Alan Carroll, Mr. Dave Harris, and Ms. Gale Tebeau joined the meeting for this discussion. Ms. Houseworth explained the 21-day enrollment figures were not available when the Board materials were distributed. She said the basic change between the request in the book and the one the Board saw in August was that each of the universities had trimmed back their strategic reinvestment requests, making the final budget $16M less than the preliminary budget.

Ms. Houseworth said that since the materials were received, the universities have calculated the official 21-day enrollment requests and have revised their 22 to 1 enrollment growth formula accordingly. The new numbers were reflected in the new executive summary which was distributed. Each part of the universities’ requests that have changed have been highlighted. The reflection of the actual 22 to 1 enrollment formula requests reduced the budget request by a little over $5M. Also, ASU changed its strategic reinvestment request by developing one $14M request to lease purchase new interdisciplinary research laboratory classroom facilities with a combined construction cost of approximately $178M.

President Crow said, particularly on the east and west campuses of the university, increasingly large numbers of students that are continuing to demand the services the university has to offer. The enrollment growth formula provides the bulk of the 2004 budget request. ASU is asking for $21,461,000 based on that enrollment projection increase. This is combined among all 3 campuses. The university, in both its enrollment growth and in its structural alignment, is moving into the one university model.

Dr. Crow said the significant change in ASU’s strategic investment request was from a long list of items to the capital resources necessary to build facilities that allow ASU to increase its revenues from non-state sources. ASU changed its request to a $14M line that would allow ASU to begin the process of building $180M of new facilities. All $180M of these facilities would be targeted for enhanced research activities and revenue generation. This is beyond the $67M AZ Biodesign Institute that has already been approved by the Regents. ASU believes it needs increased, diversified revenue streams to keep from being impacted by the uncertainty of general fund budgets. Therefore, ASU has eliminated all other requests under strategic investment and is focusing on the building of facilities that can generate additional revenue for the university.

Regent Stuart said state law requires this request to go through ASU’s Capital Improvement Plan, so the modification of ASU’s CIP will be brought back to the Board. President Crow said ASU was preparing a white paper to inform legislators and others on the return on investment on these kinds of structures. Regent Bulla asked what percentage of ASU’s budget request was for building maintenance and renewal and was told building renewal is included in the Capital Improvement Plan and moves separately from the budget request. Regent Ulrich said there might be a time in the future when the approval process would need to be revisited.

Regent Herstam said he was intrigued by the new innovative approach by President Crow; however, the Regents received the material too late to ask staff to consider any ramifications that might occur. He asked Mr. Sideman if there were any legal problems with this approach. Mr. Sideman said any request for general fund support for debt service needs to be included with the Capital Improvement Plan. If the Board approves the request, there will be a need for the Capital Improvement Plan to be revised.

Regent Stuart said state law requires each budget unit to submit separately; so the state request will contain separate requests for ASU East, ASU West, and ASU Main. The 22 to 1 formula will be included separately for each. But Dr. Crow’s strategic investment packages will be submitted by ASU Main only. President Crow said, regardless of state law which requires submissions as if ASU is three universities, they are trying to make ASU one university. This issue will need to be dealt with over time so ASU can work together to solve its problems. Regent Herstam said ASU would need to deal with the reality of supporters from the East and West Valley for separate campuses.

President Jewett said he applauded the new approach to secure a funding source; but the Regents were being asked to approve the request with little notice, so it required some study and discussion.

President Haeger said he believed the Board was seeing the first example of what Changing Directions can represent to the system. However, NAU has chosen a different direction. He believes the questions are, “What is the core mission and how do you balance both revenue enhancement and budget cutting at the same time?” NAU’s core mission of undergraduate education on a residential campus, while very costly, is of great value to the citizens of Arizona. It does mean permanent faculty in the classrooms, small classes, and available advisors. NAU’s second core mission is providing access all over the state of Arizona.

NAU has invested in workforce development, educating teachers, preparing nurses, areas in biotech and science education, and a master of science in management. That is the investment NAU has made in Arizona’s future. NAU’s request is a balance of core functions and strategic reinvestments that continue to rebuild the core.

President Likins said the UA was asking for less in 2004 than it was originally to receive in 2003. He said he was reacting to a strategy presented by President Crow during the past week; one in which investments in research buildings have a dramatic return on investment. Dr. Likins reported statistics showing the dollars that are returned to the community when research dollars are received. He said he would like to revise the UA request along the lines of the ASU request. The total dollars are the same; this is a revision of strategy to request financing for research buildings. When the debt financing is incorporated on the 4 buildings already approved by the Board, there is still left a modest sum to continue to invest in graduate assistant workload reduction and salary enhancement for retention of faculty and staff. President Likins said this request would require some revision of the UA Capital Improvement Plan, but it would not require the addition of any new buildings to the plan.

Regent Stuart said his understanding of the substitution is that it would delete the $1M strategic reinvestment request for Water Quality, the $3M request for the Institute of Bioscience, the $1.5M for Undergraduate Education, the $500,000 for the Interdisciplinary Program, the $1M for Classroom Technology, the $500,000 for UA South, and the $500,000 for Plant Genomics. President Likins said it also includes deletions from the Health Sciences budget request for the nursing program, the public health workforce program and the Health Sciences program in Phoenix. He said if the state were to invest in the buildings as requested, it would free money from the university to be used for these programs.

President Jewett stated he was concerned because the information was not presented to either the Board or its staff in a timely manner and the Regents were being asked to decide on a complicated issue which was just provided to them. Regent Boice agreed the information should have been provided earlier, but spoke in favor of the request. Regent Ulrich said the universities need the ability to respond to the market place quickly.

Upon motion of Regent Stuart, seconded by Regent Bulla, the Board approved the state operating budget requests for FY 2004 for submission to the Governor and Legislature, including the amendments made at the meeting by Presidents Likins and Crow. Regent Herstam voted no. President Jewett requested that information, in the future, be forwarded to the central office as soon as it becomes available so the Regents and the public will have time to consider it before it is presented at the meeting for adoption.

Mr. Alan Carroll, Mr. Dick Roberts, and Ms. Cathy McGonigle joined the meeting for this discussion. Regent Stuart said the Board was being asked to review and approve the Annual Personnel Report for the Arizona University System. He said this issue and the budget issue are tied together, because funding is necessary to provide salaries for faculty and staff who meet the needs of students. He also sees a linkage between this Report and tuition decisions. The connection between tuition and salaries is important.

Ms. McGonigle said this item had been previewed at the August Board meeting. This Report provides information on faculty retention, turnover, compensation, and unmet salary needs. This Report provides a picture of the current situation. Dr. Howell asked what happened to the Report after it was submitted to the Governor and the Legislature. Dr. Blessing said the Regents have directed that it be emphasized in transmittal letters along with the budget and it has traditionally been addressed in the budget hearings. Regent Stuart said he uses it for information when he visits with legislators.

Upon motion of Regent Stuart, seconded by Regent McKay, the Board approved the Annual Personnel Report and authorized the Executive Director to submit the Report to the Governor and the Legislature, advising them of the $157,398,700 unmet salary need in the university system.

Mr. Joel Valdez, Mr. Tim Pickrell and Mr. Dave Harris joined the meeting for this discussion. Regent Stuart said the University of Arizona was requesting authority to sell Certificates of Participation in an amount not to exceed $17.2M for the purpose of financing the Meinel Optical Sciences Expansion Project. Debt service for this research-based facility will be derived from Proposition 301 and indirect cost recovery funds. The JCCR approved this project on September 19.

Regent Stuart asked if the UA intended to wait to see if the legislature would provide funding for this project, as requested in the previous budget item, or intended to sell the COPs. He was told they intend to sell the COPs. Upon motion of Regent Stuart, seconded by Regent McKay, the Board authorized the University of Arizona to sell one or more series of Certificates of Participation in a principal amount not exceeding $17.2M for the purpose of financing the construction of the Meinel Optical Sciences Expansion Project, to take related actions, to enter into necessary agreements, and to execute required documents, as provided in a resolution approved by Board Counsel and staff.

Dr. Mernoy Harrison and Mr. Dave Harris joined the meeting for this discussion. Regent Stuart said Arizona State University was requesting delegation of authority to the President to execute up to six transactions pursuant to the purchase options included in lease agreements with several fraternities located along Alpha Drive.

President Crow said ASU is committed to the building of a living and learning community for the university students which is diverse, including programs in private sector living, residence halls, sororities and fraternities. Dr. Harrison said ASU had entered into 40-year lease agreements with fraternities in 1961 which provided they could purchase the land under the properties if they made the request sometime prior to September 1, 2002. All six of the fraternities that had not previously exercised their options have now decided to purchase their properties. ASU has negotiated with the fraternities for these sales; but has let the fraternities know ASU intends to redevelop the current site. ASU has offered to work with the fraternities to move them to a new site and have offered the fraternities the chance to participate in the design of the new site.

Regent Stuart asked how long the negotiations had been going on and was told about one month. The university would like to have the matter settled by the end of the calendar year. Upon motion of Regent Stuart, seconded by Regent McKay, the Board approved the future sale of Alpha Drive properties in substantial accordance with the terms and conditions described below; and authorized the execution of all legal documents by the President of ASU or his designee, subject to review of all documents by university counsel. Regent Stuart said he would like to make clear the Regents had been assured ASU was not “anti-fraternity” as had been previously reported in the press.

The Special Warranty Deed and Memorandum of Understanding for the transactions includes a restriction that the conveyance of the property is limited to student housing purposes as approved by ASU, and contains an easement in favor of the grantee for the use of the common areas and the street. ASU will cooperate with the fraternities with respect to zoning issues, if any, raised by the City of Tempe; ASU will continue to provide parking permits to members of the fraternities based on historical practices; the properties will be subject to Tempe jurisdiction after the closing date, and the fraternities will be responsible for their utilities. ASU has proposed to sell the properties at $5.50 per square foot, making the average purchase price $165,000. The transactions must close by December 31, 2002. Upon closing all rights, obligations, and liabilities under the leases shall be extinguished.

Ms. Cathy McGonigle joined the meeting for this discussion. Regent Stuart said the Board was being asked to consider a policy revision which expands the class of eligible employees for the qualified tuition reduction program to include those employees (and dependents of employees) with at least five years continuous service who must terminate their employment due to a permanent disability.

Dr. Howell said the Arizona Faculties Council would like to be involved with and intends to become proactive with the issues associated with the Changing Directions initiative.

Regent Stuart reported the State Board of Directors for Community Colleges would meet on October 11 and would consider articulation issues and several resignations from the Board.

Regent McKay chaired this portion of the meeting as Regent Palacios left due to illness.

Dr. Tom Wickenden joined the meeting for this discussion. Regent McKay reminded the Board members they had heard a proposal from the presidents that the universities would be cooperating to address workforce shortages in health care and to advance education and research in biomedicine. Regents Ulrich and Jewett organized a meeting with CEO’s of all the major hospitals and health care systems in Arizona to get their input into some of the issues that need to be addressed through this collaborative effort.

Regent Ulrich said the group represents 16% to 18% of the state’s gross product and employs approximately 80,000 people in primary health care facilities. They have severe workforce problems as there are not enough nurses and other health care workers. Regent Ulrich said the assessment underway is looking at what the needs are and how they can be fulfilled by working together.

Regent Ulrich said the CEO’s would like to see the academic programs be more aligned with the health care industry needs. They have concerns about the quality of the University of Arizona Medical School if it is expanded. They would like to see university research linked with their research. They believe this will help make the research we fund with 301 money more successful and less dependent on the success or failure of the international genomics program. They discussed what the architecture should look like if everyone collaborated to use the resources of all the entities to a better extent. The group will come prepared at the next meeting to present their thoughts of the proposed system architecture. The group will also discuss workforce development.

Regent Ulrich said there should be a link with the Business Advisory Team, this group, and technology transfer in the future.

Upon motion of Regent Herstam, seconded by Regent Meaker, the Board approved the Public Awareness Plan for 2002-2003 as presented.

The Board received a written report summarizing the propositions and listing the candidates for office for the November election.

Regents and members of the Council of Presidents thanked President Crow and his staff for their hospitality. Regent Boice said he would like to see a presentation from various university departments at the Board meetings to inform Regents what is happening at the universities. Regent Herstam said his no vote on the budget was because he believed the process was violated and he did not have time to study the issues presented. Regent Stuart said he also did not like receiving material at the last minute and hoped in the future the material will come with the Board book.

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