June 2002 Minutes/Arizona Board of Regents

A meeting of the Arizona Board of Regents was held June 21, 2002, by interactive television at the following locations: Room 212 in the Center for Excellence in Education in the Eastburn Education Center at Northern Arizona University; Room 328 of the Business Wing C at Arizona State University; and Room 211 of the Harvill Building at the University of Arizona. President Elect Jewett called the meeting to order at 1:00 p.m.

PRESENT:	Regent Fred Boice (At UA) Regent Robert Bulla (At ASU) Regent Chris Herstam (At ASU) Regent Jack Jewett (At ASU) Regent Matthew Meaker (At ASU) Superintendent of Public Instruction Jaime Molera (At ASU) Regent Myrina Robinson (At UA) Regent Christina Palacios (At UA) Regent Gary Stuart (At ASU)
ABSENT:	Regent Kay McKay Regent Donald Ulrich Governor Jane Dee Hull

Also present were: President John Haeger at NAU; President Lattie Coor at ASU; President Peter Likins at UA; Executive Director Linda Blessing, Board Counsel Joel Sideman, and Secretary to the Board Judy Garza, Central Office Staff, at ASU; and Dr. Andrew Jackson, Arizona Faculties Council, at ASU.

All lists, reports, summaries, background materials, and other documents referred to in these minutes can be found in the June 21, 2002, Documents File.

Regent Herstam led the Pledge of Allegiance. There were no requests to speak at Call to the Audience.

CONSENT AGENDA

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 Stuart and seconded by Regent Herstam. There was no individual discussion of these items.

Regent Bulla declared a conflict of interest on Item 9, Post-Presidential Terms and Conditions of Employment for Lattie F. Coor.

The Board approved the April 25 and 26, 2002, Regular Meeting, March 15, 2002, Special Executive Session, March 19, 2002, Special Executive Session, March 21 and 22, 2002, Executive Session, and June 6, 2002, Special Meeting minutes.

Changes were recommended to make Board policy consistent with state statute and provide more flexibility to meet student needs. Board Policy 4-308, Waivers for Children and Spouses of Slain Peace Officers, Fire Fighters, or Emergency Paramedics, currently provides resident tuition waivers for children and spouses of slain peace officers, fire fighters, or emergency paramedics. To make this policy consistent with state statute, the word “resident” was deleted and the word “Arizona” was added. Board Policy 4-308B, Conservation Corp Education Tuition waivers, was deleted to make Board policy consistent with the state statute which was repealed in 1998.

Board Policy 4-316, Resident Tuition Waivers for Members of the Community College All-Arizona Academic Team, currently provides for community college members of the All-Arizona Academic Team to receive waivers to attend the universities on a full-time basis only. Since a significant number of community college waiver recipients are non-traditional students and cannot attend on a full-time basis, representatives of the community college presidents and the State Community College Board have requested the Regents consider broadening the policy to include waivers for part-time students.

Due to budget constraints, full implementation for the Arizona Regents Honors Endorsement Program is being delayed and an expanded field study was recommended for the 2002-2003 academic year. Based on feedback from the focus groups with the pilot schools, it was recommended the word “unweighted” in reference to grade point averages be deleted due to differences in how schools assign weight to grades for honors and advanced placement classes. The Board approved the minor revision to the criteria for an expanded field study during the 2002-2003 academic year.

The Board authorized ASU West to implement a B.S. in Applied Computing. The Board also received a summary of program changes approved by the Executive Director: Change in Title of an Academic Degree Program - B.S. in Exercise Science and Physical Education to B.S. in Kinesiology and M.S. in Exercise Science and Physical Education to M.S. in Kinesiology (ASU); Master of Vocational Education to M.Ed. In Career and Technical Education (NAU); B.S. in Public Management to B.S. in Public Management and Policy (UA). Departmental Name Changes - Department of Exercise Science and Physical Education to Department of Kinesiology (ASU); Disestablishment of an Academic Degree Program - M.S. in Physical Therapy and M.Ed. In Reading and Learning Disabilities (NAU).

The Board authorized the ABOR President to execute all agreements and documents necessary to implement the terms and conditions described below, approved as to form by Board Counsel.

In order to facilitate Dr. Coor’s transition into a faculty position and to facilitate the establishment of the Office for the President Emeritus, the Board agreed to the following: 1) Authorized Dr. Coor to begin a one-year sabbatical leave on July 1, 2002, at a salary of $224,250 (the same as his presidential base salary); 2) ASU will support an Office for the President Emeritus at the ASU Downtown Center for FY2003. The support for this office will include a full-time Assistant (budgeted at $53,000 plus ERE), telephone, computer support, travel, and other normal expenses, as necessary, the total not to exceed $10,000 per year; normal and customary office equipment to support the office; and up to 1500 square feet of office space. Subsequent to FY2003, continuing support for the Office for the President Emeritus may be provided at the discretion of the President of Arizona State University; 3) Dr. Coor will continue to receive a supplemental contribution to a cash balance defined pension plan in the amount of 18% of his earned faculty salary, beginning July 1, 2003, and continuing for so long as Dr. Coor retains a faculty appointment at ASU; 4) The Board will amend its Plan Document regarding the cash balance defined pension plan to permit Dr. Coor, as President Emeritus, to continue his participation in the plan, effective July 1, 2003.

The Board authorized the renewal of President Likins’ appointment as President of the University of Arizona for the period from July 1, 2002, through June 30, 2003; adjustments in President Likins’ compensation package to reflect an increase in his base salary to $250,000 per year (increase of $25,750); and the establishment of a separate defined benefit pension plan for President Likins that will provide a pre-tax benefit based on an annual contribution of $118,007. The total amount of President Likins’ compensation package will be $468,394 (identical to the ASU presidential compensation package).

The Board President was authorized to execute all agreements and documents necessary to implement the recommendations as described above and approved as to form by Board Counsel.

*Proposed Amendment to the Multiple-Year Employment Contract for John D. Haeger, President of Northern Arizona University

The Board authorized President Haeger’s compensation package to be adjusted to increase his base salary by $40,000/year, effective July 1, 2002; by an additional $20,000/year on July 1, 2003; and by an additional $20,000/year on July 1, 2004. The annual contribution to his cash balance defined benefit pension plan will increase to $39,600, effective July 1, 2002, to $43,000, effective July 1, 2003, and to $46,800, effective July 1, 2004. The total amount of President Haeger’s annual compensation package will increase to $314,987, effective July 1, 2002, and will increase as described above on July 1, 2003, and July 1, 2004.

The Board authorized the Board President to execute an amendment to President Haeger’s multiple-year employment contract as described above and approved as to form by Board Counsel.

The Board authorized the Board President to execute an amendment, approved as to form by Board Counsel, to Executive Director Linda Blessing’s multiple-year employment contract, effective July 1, 2002, over the remaining term of her contract to allow her the opportunity to participate in the ABOR cash balance defined benefit pension plan (employer’s contribution equivalent to 18% of base salary, $31,000).

The Board approved the appointment of Dr. Elizabeth S. Grobsmith as Provost and Chief Academic Officer of Northern Arizona University. Dr. Grobsmith’s fiscal year salary will be $160,000 and she will hold a tenured appointment in anthropology at NAU.

The Board approved the appointment of Virgil Renzulli as Vice President for Public Affairs, effective July 1, 2002, at Arizona State University. Mr. Renzulli’s fiscal year salary will be $175,000.

The Board authorized the University of Arizona to enter into a multiple-year employment contract with Frank Busch, Head Coach of the Men’s and Women’s Swimming and Diving Teams at the University of Arizona, for the period of May 2, 2002, through May 1, 2005, according to the terms and conditions summarized below.

Busch’s salary for duties related to coaching Men’s and Women’s Swimming and Diving will be $90,000 per annum. 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, Busch shall receive additional compensation in an amount equal to one-twelfth of the annual salary for certain stated accomplishments that either the University Men’s or Women’s Swimming and Diving team attains in any academic year. He may also receive, annually, additional compensation for stated academic achievements; but such amounts shall not be cumulative, and in no event shall he receive more than $12,500 for Women’s Swimming and Diving team academic achievements and $12,500 for Men’s Swimming and Diving team academic achievements in any given contract year.

To the extent required by NCAA and Pacific-10 Conference regulations or University of Arizona policy, Busch must disclose all outside income to the Athletics Director, the University President, and the Board President annually. The contract contains termination clauses.

The Board authorized the University of Arizona to receive a grant from the Goddard Space Flight Center, National Aeronautics and Space Administration (NASA) to support the Recalibration of the Near Infrared Camera and Multi-Project Spectrometer (NICMOS) and Analysis of the NICMOS Scientific Data Project. The proposed grant period is June 15, 2001, through June 15, 2003, in the amount of $1,127,294 for the first year of the project with a total anticipated funding amount of $3,019,774 for the life of the project.

The Board authorized the University of Arizona to receive a grant from the Public Health Service to support the Prostate Carcinoma-Invasion and Metastasis Factors Project. The proposed grant period is December 1, 2002, through November 30, 2007, in the amount of $1,271,033 for the first year of the project with a total anticipated funding amount of $6,684,498 for the life of the project.

The Board authorized the University of Arizona to receive a grant from the National Institutes of Health to support the Specialized Centers of Research Cellular and Molecular Mechanisms of Asthma Project. The proposed grant period is December 1, 2001, through November 30, 2006, in the amount of $1,357,373 for the first year of the project with a total anticipated funding amount of $9,792,693 for the life of the project.

The Board authorized the University of Arizona to receive a grant from the National Cancer Institute to support the Specialized Program of Research Excellence in Gastrointestinal Cancer Project. The proposed grant period is April 1, 2002, through March 31, 2007, in the amount of $1,750,000 for the first year of the project with a total anticipated funding amount of $9,269,802 for the life of the project.

The Board authorized the University of Arizona to receive a grant from the National Oceanic and Atmospheric Administration to support the Variability, Social Vulnerability, and Public Policy in the Southwestern United States: A Proposal for Regional Assessment Project. The proposed grant period is June 1, 2002, through May 31, 2007, in the amount of $1,200,000 for the first year of the project with a total anticipated funding amount of $7,199,972 for the life of the project.

The Board authorized the University of Arizona to receive a grant from the National Cancer Institute to support the Colon Cancer Prevention Program Project. The proposed grant period is July 1, 2001, through June 30, 2005, in the amount of $4,160,605 for the first year of the project with a total anticipated funding amount of $20,545,742 for the life of the project.

The Board authorized the University of Arizona to receive an amendment to Grant No. P30CA23074 from the National Cancer Institute to increase funding and provide support for year four of the Cancer Center Support Project. The proposed grant amendment period is July 1, 2001, through June 30, 2002, and the proposed amendment amount is $2,531,456. The total new grant amount is $9,775,333 with a total anticipated funding amount of $18,427,905 for the life of the project.

The Board authorized the University of Arizona to receive an amendment to Grant No. P50AT00474 from the National Institutes of Health to increase funding and provide year two support to the Arizona Center for Phytomedicine Research Project. The proposed grant amendment period is August 1, 2001, through July 31, 2002, and the proposed amendment amount is $1,572,510. The new total grant amount is $3,318,391, with a total anticipated funding amount of $7,963,670 for the life of the project.

The Board authorized the University of Arizona to receive an amendment to Grant No. P42ES04940 from the National Institute of Environmental Health to provide year three support to the Hazardous Waste Risk and Remediation in the Southwest Project. The proposed grant amendment period is April 1, 2002, through March 31, 2003, and the proposed amendment amount is $2,449,815. The new total grant amount is $6,714,797 with a total anticipated funding amount of $15,633,810 for the life of the project.

The Board authorized the University of Arizona to receive an amendment to Grant No. P01CA27502 from the National Cancer Institute to provide support for year four of the Chemoprevention of Skin Cancer Program Project. The proposed grant amendment period is July 1, 2001, through June 30, 2002, and the proposed amendment amount is $2,861,091. The new total grant amount is $11,281,844 with a total anticipated funding amount of $14,067,676 for the life of the project.

The Board authorized the University of Arizona to enter into a contract with the University of Washington to support the Science and Technology Center on Materials and Devices for Information Technology Research Project. The proposed contract period is August 1, 2002, through July 31, 2009 in the amount of $1,200,000 for the first year of the project with a total anticipated funding amount of $6,000,000 for the life of the project.

The Board authorized the University of Arizona to enter into a contract with the Semiconductor Research Corporation to support the National Science Foundation/Semiconductor Research Center, the Engineering Research Center for Environmentally Benign Semiconductor Manufacturing Project. The proposed contract period is April 1, 2001, through March 31, 2006 in the amount of $1,500,000 for the first year of the project with a total anticipated funding amount of $7,500,000 for the life of the project.

The Board authorized the University of Arizona to enter into a contract with the Large Binocular Telescope Corporation to support the Large Binocular Telescope Mirror Cell Integration Project. The proposed contract period is August 1, 2001, through December 31, 2004, in the amount of $1,100,000 for the first year of the project with a total anticipated funding amount of $2,700,000 for the life of the project.

The Board authorized the University of Arizona to enter into a contract with the Jet Propulsion Laboratory to support the HiRISE: High Resolution Imaging Science Experiment for the Mars Reconnaissance Orbiter (National Aeronautics and Space Administration) Project. The proposed contract period is November 1, 2001, through January 31, 2009, in the amount of $3,304,376 for the first year of the project with a total anticipated funding amount of $40,000,000 for the life of the project.

The Board authorized the University of Arizona to enter into an amendment to Contract No. EEC952881 with the National Science Foundation to increase the funding and provide support for year two of the joint project, the Environmentally Benign Semiconductor Manufacturing Project, between the University of Arizona, the National Science Foundation, and the Semiconductor Research Corporation. The proposed contract amendment period is April 1, 2002, through March 31, 2003, in the amount of $1,600,000 for the second year of the project with a total anticipated funding amount of $10,000,000 for the life of the project.

The Board authorized the University of Arizona to enter into an amendment to a contract from the University Medical Center to support the University Medical Center Resident Teaching Project providing funding for clinical assistants. The proposed contract amendment period is July 1, 2001, through June 30, 2002, in the amount of $9,719,237 for the second year of the project. The new total contract is $18,070,450 with a total anticipated funding amount of $29,948,556 for the life of the project.

The Board authorized the University of Arizona to enter into an amendment to Contract No. SAO1T2801GM with Lockheed Martin. The proposed contract amendment period is January 1, 2002, through December 31, 2002, in the amount of $3,000,000. The new total contract amount is $8,000,000 with a total anticipated funding amount of $28,497,110 for the life of the project.

The Board authorized the University of Arizona to enter into an amendment to Contract No. EAR9876800 with the National Science Foundation to provide year two funding to support the Sustainability of Water Resources in Semi-Arid Regions Project. The proposed contract amendment period is January 1, 2001, through December 21, 2001, in the amount of $3,087,262 for the second year of the project. The new total contract amount is $6,333,262, with a total anticipated funding amount of $15,993,844 for the life of the project.

The Board granted Project Approval to the University of Arizona for the Meinel Optical Sciences Expansion Project which combines new construction and renovation that will accommodate the Optical Science Center’s immediate space needs. The budget remains at $17.1M and will be funded by Certificates of Participation with debt service funded by 301 State Appropriations and indirect cost recovery. Operation and Maintenance costs will be funded by future 301 State Appropriations.

At its January 31-February 1, 2002, meeting, the Board authorized the University of Arizona to lease space in a building being constructed by the Marshall Foundation at Park Avenue and Second Street in Tucson, Arizona. At that time, the university indicated the space constituted approximately 70,000 square feet and the term of the lease would be “five years with an option for additional five-year terms.” Under the final design of the building, the university leased space will now be 83,000 square feet. To accommodate the tax-exempt financing of the new building, the Marshall Foundation has asked that the lease be for a term not to exceed 40 years.

The Board authorized the University of Arizona to lease space from the Marshall Foundation or its designee, pursuant to the resolution at the meeting of January 31-February1, 2002, for a term not to exceed 40 years and for approximately 83,000 square feet.

On May 24, 2001, the Board approved AzAHEC budgets for fiscal years 2001, 2002, and 2003. Due to the timing of the receipt of Tobacco Litigation Settlement Funds in FY 2001 and FY 2002, it became necessary to revise the expenditure plans. The revised budgets for FY 2002 and FY 2003 request approval for expenditure of $2,792,500 and $2,930,000, respectively, of the Arizona Tobacco Litigation Settlement Funds.

It is unclear as to the amount of Settlement Funds, if any, that will be available after June 30, 2002, for the six public health programs referenced in Proposition 204. In the event that no Settlement related funds are transferred to AzAHEC after June 30, 2002, the program will continue to operate for one additional year (through June 30, 2004) at its current level, utilizing carry forward funds from FY 2003. If the ballot referendum to increase the tobacco tax is approved by the voters, the increase may provide additional funding for AzAHEC.

The Board reviewed and approved revised budgets for the Arizona Area Health Education Centers (AzAHEC) for FY 2002 and FY 2003.

The Board amended the resolution establishing the Tom Chauncey Endowment Fund and expressly approved the use of same for scholarships to needy students subject to criteria to be developed at each institution.

The Board received legal advice regarding the Cash Balance Pension Plan from its tax counsel, Mr. Charles Whetstine, who recommended the restatement of the Cash Balance Pension Plan to comply with numerous laws that have been enacted since 1994 (collectively referred to as “GUST”). Under rules recently announced by the Internal Revenue Service, ABOR must adopt a “Good Faith’ Amendment to comply with the Economic Growth and Tax Relief Reconciliation Act of 2001 (EGTRRA).

The Board approved the Restatement to the Arizona Board of Regents Cash Balance Pension Plan and EGTRRA Amendment effective July 1, 1998.

The Board received a written report on wireless technology at the Arizona universities. Balancing the desire to provide more mobile access to students with maintaining a secure service environment, all three institutions have recognized wireless networking as a valuable enhancement to the existing wired environment and have made progress.

ASU has implemented several pilots and projects to evaluate their applicability to university users. Given the positive results, ASU has designed and is implementing a campus-wide wireless networking service that is being deployed by Telecommunication Services on the Tempe Campus and ASU East. Wireless service is also being deployed at the ASU West Campus in cooperation with ASU West Information Technology.

Several key locations have already been set up for service. To coordinate use of these new wireless environments, ASU has incorporated appropriate usage policies and guidelines within their existing set of procedures. The next phase of ASU’s implementation will be to continue installing wireless services upon request and to provide new security options for users in fiscal year 2002/003 to improve the privacy level of the network.

NAU is currently in the process of testing and developing wireless data architectures suitable to meet its academic and administrative needs. Plans are underway to make the technology available for use during the 2002/2003 fiscal year. The implementation plan begins with a pilot project and security design for the Information Technology Services Building. Implementation will then take place in the University Unions and two academic buildings. Upon successful installation of these first few sites, wireless networking will be available as requested and funded by other campus departments and colleges.

The University of Arizona has spent the last several years evaluating and piloting various wireless solutions. Given the successful outcome of these projects, implementation has continued both on and off campus as is appropriate and needed. The next phases of implementation will be to expand wireless coverage in other “common” areas for students. The University Network Managers Group is developing a set of campus security standards and usage policies. Another area of interest and pursuit is the use of wireless to support campus communication in the advent of a communication infrastructure failure resulting from an unexpected disaster.

The Board received a written update on the Business Advisory Team which met on May 6, 2002. The team accepted its charge, reviewed the annual report on the Board’s Technology and Research Initiative Fund (TRIF), and heard presentations on the universities’ TRIF-funded research initiatives.

With assistance from the university Business Deans, Regent Ulrich developed a Business Plan Model that has been reviewed by the Research Vice Provosts, the Chief Academic Officers, and the Presidents. The team agreed to review and comment on the business plans that are to be developed for each of the TRIF-funded initiatives. These plans will then serve as the basis for a comprehensive evaluation system for the Board’s TRIF program. This evaluation system will be developed by a consultant who will be hired by the Board and work closely with the Business Advisory Team. The team also agreed to review the status of technology transfer at the universities and provide advice on enhancing the technology transfer process.

RESOURCES COMMITTEE

Ms. Louise Houseworth, Mr. Alan Carroll, Mr. Josh Allen, and Mr. Dick Roberts joined the meeting for this discussion. Ms. Houseworth reminded the Regents they received a revised Executive Summary reflecting ASU East’s revisions in tuition revenue due to higher enrollment than originally anticipated.

She told the Regents the state expenditure authority includes state general funds appropriated by the Legislature, tuition, and other miscellaneous revenues that support the state operating budget. As shown in the summary table of the Executive Summary, the preliminary FY 2003 Arizona University System state expenditure authority is $1.05B, which represents a 4.8 percent or $48.5M increase over revised FY 2002. However, it should be noted that, while the $785M in state appropriations is a net increase of 2.5 percent over FY 2002 after budget cuts, it is 3.5 percent and $48M less than original FY 2002 appropriations.

Ms. Houseworth said the FY 2003 Initial All Funds Operating Budget will be presented to the Board at the August meeting, and will include detailed allocations by program as well as revised general fund appropriations reflecting the employee health insurance rate adjustments approved by the Legislature and calculated by the Joint Legislative Budget Committee.

Upon motion of Regent Herstam, seconded by Regent Bulla, the Board approved the FY 2003 State Expenditure Authority for the universities and the central office.

Ms. Louise Houseworth, Mr. Alan Carroll, Mr. Josh Allen, and Mr. Dick Roberts joined the meeting for this discussion. Ms. Houseworth reported legislation was passed during the 2002 legislative session that moved major state agencies, including the Arizona University System, back to annual budgeting beginning with the October 2002 budget submission.

The Governor’s budget guidelines, which were not available at the time the Executive Summary was prepared, have been issued. The universities have indicated an interest in developing the budget requests in a format similar to that used in the past. The proposed process would be that the universities and central office preview their requests for the Board at the August meeting. At that time, the Board would have the opportunity to provide any guidance for development of the final budget requests to be presented for Board approval at the September 26-27, 2002, meeting.

Regent Herstam said he assumed the central office staff and the universities’ financial staffs are working along with the JLBC and OSPB in looking at the projections for FY 2004 in regards to deficits, etc., and was told yes. Regent Stuart said it would be helpful for the Regents to receive detailed information as soon as possible on projected budget shortfalls, especially to the extent they differ among the budget offices.

Ms. Tonya Drake joined the meeting for this discussion. She provided a brief overview of the Student Financial Aid Plans, reminding the Regents they had approved financial aid policy changes at the last meeting to increase institutional flexibility and broaden Board oversight. The universities are now required to submit financial aid plans for Board approval during the annual budget process; but due to the lateness of the approval of the FY 2003 state budget, the universities’ annual budgets were delayed to provide time to complete the budget process. However, the universities made a concerted effort to provide financial aid plans at this meeting.

The new requirements for the budget plans and reports include the total value of institutional gift aid, the total net and tuition revenues, and the distribution of these resources by student academic level, residency, need and merit. The implications of these new policies from the Board’s perspective include that formulas will no longer be used in waiver policies. Instead, the Board will approve, through these financial aid plans, the amount of waivers and cash. The universities will also report the actual waivers and cash in their annual financial aid reports.

Although the formulas are no longer used in the waiver policies, the universities agreed to keep financial aid at the same level as the previous year. The only changes in the financial aid plans include changes in the value of waivers and cash set-asides due to increases in tuition. Also, the plans indicate the overall amount of financial aid has decreased due to teaching and research graduate assistants being reclassified and no longer reported as waivers. The plans also include total and net tuition revenue.

Each university is in compliance with Board Policy 4-300 in that at least 50% aid is awarded to needy students and 30% to meritorious students. The FY 2003 waivers and cash awards have substantially been implemented and also depend on actual enrollments for Fall 2003. The Fall 2004 plans may change to reflect subsequent Board decisions related to tuition levels and financial aid policies. If revisions are necessary, the universities will submit the revisions for Board approval.

Regent Molera said he would like the issues of financial aid and tuition and how they fit together to be addressed prior to the tuition setting process. President Elect Jewett said he planned to begin to focus on goals and challenges concerning tuition and financial aid at the August Retreat. He hopes to work on these issues during the year, especially since the central office has secured a grant through WICHE to work on this problem. The effort will be done under the title of “Changing Directions” and will try to identify the core businesses of the universities, what gaps exist, financial aid requirements, and what resources are needed by the universities to move forward.

Regent Stuart reported the lead article in yesterday’s Wall Street Journal was about the increase in public university tuition in FY 2004, including Ohio State University. The range of increase was from 14% to 25%. The reason given was the budget crunch in all of the states.

Upon motion of Regent Herstam, seconded by Regent Bulla, the Board approved the FY 2003 and FY 2004 Student Financial Aid Plans for the universities.

Provost Elaine Maimon joined the meeting for this discussion. Regent Herstam said ASU West was requesting approval to form the non-profit West Campus Housing L.L.C, approval of a ground lease with this company, and approval for this company to issue $15M in tax exempt bonds to facilitate the construction of a 392-bed residence hall.

President Coor said it is expected ASU West will remain predominantly a commuter campus, but the new student population (with the addition of freshmen and sophomores) has expressed a desire for some residence capability. The original Request for Proposals had a minimum of 350 beds, but the proposed developer determined it is more economical to build at least 392 spaces.

Regent Palacios said she had concerns about this project because the order in which it was being done was backwards. She believes there should be planning, not evolution. The ramifications of adding a residence hall should be studied. The global ramifications, such as how the addition of another residential campus will affect the other campuses, should also be considered. For those reasons, she will not support it at this time. She is trying to send a message that she believes the planning process should always precede a decision.

President Coor said ASU considers this is not evolution responding to the moment, but evolution that is part of a long-term set of plans ASU has had underway conceptually. He does not believe the addition of one residence hall will change ASU West into a residential campus. Regent Palacios said she believed the university had done its internal planning as it should have; she believed the Regents should have had more global planning time before being asked to make this decision.

Regent Boice said he will support the project, but he looks forward to greater planning as he believes the same as Regent Palacios. This project was done backwards as far as the planning was concerned. Regent Bulla said he was beginning a new strategic planning effort the following week and all the Regents’ comments would be considered. He did believe, however, that this project was in keeping with the basic strategic direction of adding freshmen and sophomore students.

Upon motion of Regent Boice, seconded by Regent Molera, the Board approved the formation of the West Campus Housing L.L.C.; the lease of the project site to the Company pursuant to a Ground Lease; and the issuance of not exceeding $15,000,000 in principal amount of the Company’s student housing revenue bonds for the purpose of financing the design, construction, furnishing and equipping of a 400-bed student housing project on the ASU West Campus; and authorized the President of Arizona State University or the Provost of Arizona State University West or their designee to negotiate, sign, and deliver said ground lease agreement on substantially the terms described in the executive summary and any other necessary and appropriate documents in connection with the transaction and to take all necessary and appropriate actions in this connection, provided that Counsel to the Board has reviewed the ground lease. Regent Palacios voted no and Regent Robinson abstained.

Mr. Dave Harris, Dr. M. J. McMahon, and Mr. David Cain joined the meeting for this discussion. Regent Herstam said Northern Arizona University was requesting authority to sell $31.4M in System Revenue Bonds for the purpose of financing four renovation and improvement projects. The university also requested the Board to waive Board Policy 7-106(D)(2), which requires Project Implementation Approval prior to the issuance of debt on any capital project.

President Haeger said the reason the university had been able to move this fast on this project was the collaboration with central office staff. Shortly after he became president, he realized the capital development plan needed more discussion on campus. A plan had been submitted containing 17 separate projects which would each receive a small amount of money from bond sales if the university received its requested $4M from the legislature. Dr. Haeger said it did not make sense to him to put small amounts of money that would not fix the problems into many buildings that would then have to return to the legislature and the Board in a few years for money to fix the same buildings. Therefore, the campus deans met to consider long-term needs and in-depth engineering studies are underway to see what is really needed for the buildings on campus. It is hoped to have most of the engineering studies done by December.

President Haeger said NAU is asking for permission to sell $31.4M, or half of the total bond issue now, to begin moving on four critical projects. The most critical project is the South Campus Infrastructure Project.

Dr. McMahon explained the process of selling both this and the second issue of bonds and the planning process that led to this request. Mr. Cain described the projects. He said the most important was the South Campus Infrastructure. The second project is the Gateway Student Advisement Center; the third is the Modular Swing Space; and the leading candidates for the fourth project are the College of Engineering, the College of Business or the College of Communications. Mr. Cain said these projects will address the immediate fire/life safety deficiencies, the recruitment and retention deficiencies, and the programmatic deficiencies. It will also provide temporary modular space.

Regent Bulla said he was concerned NAU was not moving fast enough. He wondered if it would be possible to expedite the projects even more quickly. He suggested authorizing the entire $62.9M at this time. President Haeger said he appreciated Regent Bulla’s effort to speed things up and if it was the decision of the Board to speed the projects, NAU would get it done. However, he was most concerned with starting to move on the projects that were outlined during this summer and fall due to the constraints of winter construction.

President Elect Jewett said he had witnessed the condition of the buildings on campus and was aware of the dire need for renovation. However, he was not sure the planning process was far enough along to warrant the authorization of the entire $62.9M at this time.

President Haeger said NAU did want to stay within the normal planning process. The current request already included one waiver of Board policy because planning was not complete; he did not believe it was an option to look at the full bond issue at this time. Dr. Haeger said he did not believe it would be possible to finish all the engineering studies and to bring all the internal campus constituencies together by the August Board meeting. However, he does believe it can be done by December. Also, he pointed out there are options so NAU can come back to the Board earlier, if ready.

Dr. McMahon said NAU would come back to the Board in August with a Capital Development Plan (CDP) in addition to the four projects in which they are asking for a second level of approval which means, having authorized the bond sale now, NAU would be more in line with ABOR policies. There is an option to revise the CDP in January and to ask for a spring issuance; so Dr. McMahon said she believed there are ways to fast track the projects and still allow time for engineering studies, campus collaboration, and Board approval.

Regent Bulla said he was still concerned about safety issues and believed NAU could save money by issuing the entire $62.9M in bonds now and having the engineering studies done by the August meeting. Regent Boice agreed with Regent Bulla’s concerns.

Regent Herstam moved that the Board authorize Northern Arizona University (1) To sell one or more series of bonds, not exceeding $31.4M principal amount, for the purpose of financing the projects previously described: (2) To include the costs of issuance of the bonds in the principal amount issued; (3) To take all related actions and enter into all necessary agreements as provided in a resolution approved by Board Counsel and staff; and (4) To grant an exception to Board Policy 7-106, D. 2. The motion was seconded by Regent Stuart and a roll-call vote was requested by Regent Boice. The motion passed with Regents Stuart, Herstam, Molera, Palacios, Robinson, and Jewett voting yes and Regents Boice and Bulla voting no.

PUBLIC AWARENESS COMMITTEE

Mr. Matthew Ortega joined the meeting for this discussion. Mr. Ortega reported SB 1243, ABOR Continuation, extended the sunset date for ABOR to July 1, 2012. He also reported SB1257, Universities Bonding Authority, which changes the requirement for legislative approval of bonding authority and instead requires project review by JCCR and sets the limit for capital spending at eight percent of total expenditures and transfers, passed due to hard work by the university government affairs people. SB 1260, Nurse Education Program Expansion, was amended to remove the unfunded mandate portion. HB 2631 amended the lobbyist regulation and requirements. HB 2178 creates two committees to examine tax and fiscal policy. HB 2414 requires all state agencies to post annual reports to web sites and prohibits the agency from making hard copies for distribution to anyone except the Governor, Speaker, Senate President, and State Archives.

Mr. Ortega gave a brief overview of the three Indian Gaming proposals that will be on the November ballot. Regent Herstam said he believed only the proposal that gets the highest number of votes will be enacted, even if all three proposals pass, and was told he was correct.

Mr. Matthew Ortega joined the meeting for this discussion. Mr. Ortega reported there were a number of effective editorial board meetings with the university presidents and President McKay during the past year relating to the budget crises. A strategic communications plans is under development with the institutional advancement vice presidents and there have been improvements to the Board’s web site. The appointment of the legislative subcommittee was especially helpful during the legislative session.

Mr. Ortega called the Regents’ attention to the State of Arizona’s Public Universities Report, a web based document, to comply with the new legislative mandate. It is not live yet. It contains links that can be used to modify the report over time and material that can be used in multi-media presentations.

Regent Palacios thanked Mr. Ortega for his work and thanked the university vice presidents for their cooperative work. Regent Boice asked the status of the two committees that were charged with examining the tax and fiscal policy and was told the bills will go into effect in late August. There is current planning to determine the membership of the committees, which is designated. The universities plan to work with the staff of the House and Senate to see how they could be represented.

AUDIT COMMITTEE

President Elect Jewett reported the Audit Committee held its first meeting on June 14, 2002. The committee members present were himself and Regents McKay and Herstam. Regent Robinson was absent. Attendees included representatives of the central office, NAU, ASU, and UA audit groups and the Senior Associates to the Presidents.

President Elect Jewett introduced Rick Gfeller, the new Internal Audit Chief from the central office.

President Elect Jewett said the Audit Committee was established by the Board in August of last year. The initial charge to the Audit Committee was to review and recommend possible changes to the existing Board policy framework regarding the preparation of both internal and external audits of university functions and activities; recommend improvements in the integration of the central office and universities’ audit plans; establish appropriate protocols and procedures to review audit results and significant findings from internal and external audits of university functions and activities; and to review and recommend possible changes or additions to Board policy framework relating to conflicts of interest, ethics, investigation of fraud and misconduct, and violation of Board or university policies, law or regulations.

The central office and university audit representatives gave overviews of their organizations and activities to the Committee. The Committee recommended the Board adopt the proposed addition of Board Policy 3-700, “Audit Committee Charter,” as presented. This Charter is aimed at strengthening the relationship among the audit staffs and the Board, providing a direct path, if necessary, to the Board, and an opportunity for the audit chiefs to meet with the Committee periodically. The policy addition was presented to the Board for first reading.

The Audit Committee accepted audit reports submitted by central office auditors and instructed staff to place the reports on the Consent Agenda at the August meeting. The Committee accepted management letters from the Auditor General summarizing its financial statement audits and work related to the Single Audit of the State of Arizona at ASU, UA, and NAU. The Auditor General offered no findings.

STRATEGIC PLANNING COMMITTEE

President Elect Jewett asked Regent Herstam to chair this item. Regent Herstam reported the Regents Subcommittee on ARU, comprised of Regents McKay, Jewett, and Herstam, met on June 14, 2002, with the ARU Project Management Team to review various funding requests and information items. The following proposals were funded: a math and science teacher preparation collaborative program for certification of secondary mathematics and science teachers, $750,672 over three years; a tri-university Master of Engineering supplement grant to develop nine additional courses for enhancing and updating content and technology of several courses, $250,000 one-time grant; a Nursing Ph.D. program, $300,000 over three years for the development of a Ph.D. program at UA; a nursing RN-BSN program at ASU and NAU, $600,000 over three years; Scholars Portal On-Line Library Services, $561,350 over three years; and Tri-University Online Tutoring Project, $17,550 for the first year, $23,236 for the second year, $44,635 for the third year, and $82,470 for the fourth year, all contingent on NAU receiving funds from a U.S. Department of Education FIPSE grant.

At the meeting, Ms. Linda Burns and Ms. Betty Craft demonstrated a web registration application which facilitates seamless student services. The NAU and UA software applications are not yet able to communicate for ARU registrations using this application. Regent Herstam said this stems from different computer software being used by the three universities for years.

The ARU campus coordinators have been hired at all three universities. Currently there are over 500 on-line courses available through the ARU Website and the Tri-Universities Masters of Engineering is now offering complete degrees in several areas with specialization online. Regent Boice said he wished for close tracking of the 301 Funds and the success of the projects funded by that money.

ADMINISTRATIVE BUSINESS

President Elect Jewett asked Regent Robinson to present the proposed slate of officers. Regent Robinson said she and Regent Ulrich had been asked to serve as a nominating committee for officers for 2002-2003. She entered the following names, which met the requirements of the By-Laws, into nomination: President - Regent Jewett, President Elect - Regent Herstam, Treasurer - Regent Stuart, Secretary - Regent Palacios, Assistant Secretary - Regent Bulla, Assistant Treasurer - Regent Meaker. Her motion was seconded by Regent Bulla and passed unanimously.

President Elect Jewett said the proposed schedule took into consideration holidays, commencements, finals, budget submissions, and other scheduling needs. The schedule was checked with the universities and with Regent Herstam, who most likely will be president during the 2003-2004 year.

Upon motion of Regent Boice, seconded by Regent Herstam, the Board adopted the following schedule:

August 14 and 15, 2003
September 25 and 26, 2003
November 20 and 21, 2003
January 22 and 23, 2004

NAU
ASU
UA
ASU

March 11 and 12, 2004
April 29 and 30, 2004
June 24 and 25, 2004

UA
ASU
NAU

INQUIRIES, REQUESTS, REPORTS, AND COMMENTS FROM REGENTS AND MEMBERS OF THE COUNCIL OF PRESIDENTS

The Board presented Regent Robinson a glass memento for her service as Student Regent during 2001-2002. President Elect Jewett expressed the Board’s appreciation for her work and wished her the best as she moves through her life. Regent Robinson expressed her congratulations to Student Regent Meaker for his first year on the Board as the first two-year student regent. She said they had worked together well.

The Regents and Presidents Likins and Haeger and Dr. Blessing expressed their appreciation to Regent Robinson and to President Coor for his years as President of ASU. President Coor thanked everyone for their support during his term of office. Dr. Blessing thanked the technical staff for making the meeting a success. President Jewett said he was looking forward to next year and hoped the results of “Changing Directions” would have some impact on other stakeholders as well as the universities.

MINUTES