Arizona Board of Regents-Minutes

A meeting of the Arizona Board of Regents was held September 29 and 30, 2005, in the Northern Arizona University, University Union, Flagstaff, Arizona. President Palacios called the meeting to order at 9:35 p.m. on Thursday, September 29.

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

Also present were: President John Haeger, Dr. Elizabeth Grobsmith, Dr. M. J. McMahon, and Mr. Rich Bowen, Northern Arizona University; President Peter Likins, Dr. George Davis, Dr. Leslie Tolbert, Mr. Greg Fahey, Ms. Judith Leonard, Dr. Juan Garcia, Ms. Edith Auslander, Dr. Patti Ota, Dr. Randy Groth, and Mr. Joel Valdez, University of Arizona; President Michael Crow, Dr. Milt Glick, Dr. Christine Wilkinson, Mr. Scott Cole, Mr. Paul Ward, and Dr. Carol Campbell, Arizona State University; Executive Director Joel Sideman, Board Counsel Paulina Vazquez-Morris, Secretary to the Board Judy Garza, Dr. Art Ashton, Ms. Cathy McGonigle, Mr. Ted Gates, Ms. Stephanie Jacobson, Dr. Mark Denke, Ms. Kathy Bedard, Mr. Dan Anderson, and Ms. Stella Galaviz, Central Office; and Dr. Robert Mitchell, Arizona Faculties Council.

All lists, reports, summaries, background materials, and other documents referred to in these minutes can be found in the September 29 and 30, 2005, Documents File.

Regent Graff led the Pledge of Allegiance. President Palacios introduced Tatum Simonson, a graduate assistant in Paul Keim’s laboratory at NAU. Ms. Simonson did a summer study abroad program at the Institut Français des Alpes in Annecy, France, and a Master of Education internship with the Department of Defense in Würzburg, Germany. She plans to complete her Master of Science in Biology in the spring of 2006. Her education was financed through scholarships and working two jobs while attending classes as a full-time student.

Ms. Simonson described some of the experiences she had had since coming to NAU and said there are many great opportunities at NAU for both undergraduate and graduate students.

Joseph Donaldson, Mayor of Flagstaff, spoke in support of Item 8, Conference Center Intergovernmental Agreement between NAU and the City of Flagstaff. He also thanked President Haeger for his vision in working with the City.

Stephanie McKinny, President and CEO of the Greater Flagstaff Economic Council, also spoke in support of Item 8. She said Flagstaff had lost many regional conference activities because of the lack of a conference center. She believes this will also provide needed meeting space for conferences at NAU.

Steve Carlson, spoke on behalf of the Flagstaff 40, a group of business leaders representing the largest employers in Flagstaff. He asked the Regents to approve Item 8 as the business leaders believe the conference center will allow them to rebuild and strengthen the Flagstaff economy by making it a destination for tourism.

Bruce Nordstrom, a Flagstaff businessman, spoke in support of Item 8. He applauded President Haeger and Flagstaff officials for their vision for this project. He also spoke in support of Item 5, UMCC Request to Issue Bonds, and Item 6, Approval to Acquire Interest in the University Medical Imaging by UMCC, as he is a member of the UMCC Board of Trustees.

Julie Pastrick, President and CEO of Flagstaff Chamber of Commerce, spoke in support of Item 8. She provided some statistics as to how the Conference Center would benefit Flagstaff and NAU.

Kolby Granville, former Student Regent, announced he had resigned as of 7:00 a.m. September 29. He will organize a student voter drive.

Items on the Consent Agenda, which are marked in these minutes with an *, were considered as consent maters and were adopted upon the motion of Regent Graff, seconded by Regent Bulla. President Palacios announced that Item 19, Organizational Unit Change Requests, was removed from the Consent Agenda to be discussed under the Programs Committee Agenda.

The Board received the written ASU Research Park Annual report for Fiscal Year 2004/2005. Price-Elliott Research Park, Inc. officially changed its name to Arizona State University Research Park, Inc. on January 24, 2005. As a part of that transition, an Affiliate Agreement was executed between Arizona State University Research Park, Inc. and Arizona State University.

In FY2006, payments to ASU of $1M are anticipated. The current principal amount owed on advances from ASU, including interest, is $3,454,374, which includes interest accruing from FY2005 of $88,215.03. The balance due, which is projected to be repaid in FY2010, has been significantly reduced form a high of $8,953,084 in June 1999. The remaining bonded indebtedness is $17,615,000.

The Board authorized the University of Arizona to permit Dr. Michael E. Hogan, Research Professor in the Department of Biochemistry, to establish and maintain a substantial interest in Argylla Technologies, LLC, while continuing his employment at the University of Arizona. Argylla was founded in Tucson in 2003 to commercialize technology for the separation and analysis of DNA on solid supports which the University’s Office of Technology Transfer chose not to develop and had returned to the inventors, Michael Hogan and Joseph Utermohlen.

Argylla Technologies has confirmed that is has no current plans to develop the released technology. If that plan changes, Argylla Technologies will contact OTT immediately to allow the university to take whatever actions appropriate to remove any conflict between Argylla activities and ABOR requirements.

President Haeger presented each Regent with a copy of My Freshman Year by Rebecca Nathan who is actually Professor Cathy Small. The book has received national recognition.

President Haeger introduced Dr. Stephen Wright, Director of International Programs at NAU. Professor Wright said it is hard to expose students to international experiences in a small area like Flagstaff; so NAU is trying to bring the world to Flagstaff. One of the main strategies is to diversify the student body by recruiting international students.

NAU has also reached an agreement with China to exchange students. The students will go to university in China for two years, come to NAU for two years, and return to China for their last year.

Ms. Gale Tebeau joined the meeting for this discussion. Regent Boice said the Board was being asked to review and approve the FY 2007 State Operating Budget Requests. At the August meeting, the Board reviewed the universities’ preliminary budget requests. A revision incorporating the universities’ twenty-first day enrollment numbers had been distributed earlier. Finalized budget requests must be submitted to the Governor and Legislature by October 1.

Ms. Tebeau said the universities’ requests at the August meeting totaled $143.4M. The final request being presented was $5.3M more than the August request due to adjustments to the universities’ 21st day enrollment growth request which now include the accurate enrollment count and adjustments to the performance funding request which also reflect actual degrees awarded data. The final requests total $148.7M, an increase of 12.1% overall and a 17.6% increase in the general fund appropriations. Of the $148M, $43M, or 29% of this request, is the continuation budget request with the largest component being the 22 to 1 request of $19.5M. ASU’s enrollment formula alone is $17.9M.

Ms. Tebeau said ASU’s Fall 2005 student enrollment at all three campuses grew by 3,064 full-time equivalent (FTE) students. The UA increased by 241 students and NAU decreased by 166 FTE students. The continuation budget request also includes $8.7M in health insurance premium increases, $2.6M for performance funding, $4M for new facilities support which provides operating costs for new facilities planned to open during FY 06 and 07, and $7.6M in student financial assistance programs.

She told the Board there are no changes to the decision packages that the Board saw in August except that more detail is provided at this time. For the system, the decision package requests total $105.7M. The universities will be including two critical issues–faculty salaries for which the universities and central office are seeking support for 1/3 of the FY 07 unmet salary need, deferred maintenance, and increased WICHE support to reinstate 20 slots.

Regent Boice asked if the universities include an inflation factor in the budget projections and was told no as the state does not recognize inflation. Regent Boice asked for a sentence or two that said, “If this request is granted, this is what we would accomplish with the money,” in the budget.

President Haeger gave the Regents a more detailed look at the NAU budget. He said the NAU budget focuses on serving Arizona any time at any place. If the state grants the budget, we will begin to see NAU expand its distance learning mission substantially. Another part of the NAU budget is strengthening teacher preparation. Faculty and staff retention is also an important part of the NAU budget. Building renewal is a very immediate need.

President Crow said ASU had taken roughly 90% of the system growth. While growing, they are also enhancing quality and diversity. Therefore, ASU’s request is focused on enrollment growth. The second part is a revenue stream for capital investment for the Polytechnic campus. ASU also wants to invest in key faculty and staff on a merit basis. He said ASU is moving on two fronts–a large scale expansion of the educational enterprise to meet the demand for baccalaureate degree education and a modest expansion of the research and development enterprise. Regent Boice said he was glad to see the emphasis on education and wondered if vacated research space could be used for classrooms. President Crow said ASU had dramatically reduced its class size by hiring dozens of new instructors for the freshman classes, particularly on the Tempe campus, to reduce the size of the classes and add more sections.

Dr. Likins explained the outreach activities and the money requested for these activities. The UA has also asked for money to invest strategically in the manner consistent with the Focused Excellence they have been developing. It is all about strengthening the Arizona culture and economy to enable the state and universities to compete more effectively in the knowledge-based global economy. He explained the request for money to support this and the virtual water university, teacher training and Mexican border issues. He said the UA had the best Native American Studies Ph.D. program in the country and has many other Native American programs that are scattered through the university. They are seeking funds to connect these programs. He said they have an outstanding College of Pharmacy, but it is small and it needs to be expanded. There is an acute need for more pharmacists and the research programs that can work with TGen, and the UA is seeking funds for this, also.

Regent Calderón said he had heard the UA graduates such a small number of pharmacists that companies in Arizona are relying on private schools to meet their needs. He also said he had been approached by people who say the UA is not providing much in the way of borderland studies and asked for his help in establishing programs at ASU. He said he had received something from the UA Integrated Warehouse that said in the Fall, Hispanic first time, full time freshman had dropped from 14.1% to less than 13% and asked why if that is true.

President Likins said the UA would never be able to supply the need for pharmacists in the state as they are too small a program and their graduates are more likely to run the pharmacy company than be a regular pharmacist. There is little state money invested in the College of Pharmacy and the faculty competes effectively for out-of-state research funding; so the UA also produces pharmaceutical scientists who work with pharmaceutical companies to develop products and bring them to market.

Dr. Likins said the UA had made modest investments in strengthening their programs in Mexican American studies, public health, and a number of enterprises that have a substantial engagement in border studies. These modest investments were made at a time when the money had to come from reallocation of resources; there was no new money to spend. He said it was not his place to decide whether ASU or NAU should also have border studies.

President Likins said the enrollment statistics concerning Hispanics do show a slight dip in this freshman class despite all the strategies the UA has put in place to shape the freshman class. There has been success on all other fronts. They are not happy with the results, either, and have made a commitment to slowly grow the size, increase the probability of graduation, and increase the diversity in all four areas. There is good data to show they are succeeding slowly.

Regent Calderón asked if the decrease in Hispanics was due to the UA moving toward the Cal-Berkeley model with capitation limits. President Likins said the UA has planned to increase the numbers and percentages in all four minority categories every year. The plans on the Hispanic front were more aggressive, not less aggressive than on the other three fronts. The UA simply did not succeed this year.

Regent Stuart asked for a matrix for the continuation budget requests that would follow the exact same format as the current Executive Summary, with health insurance increases, 22 to 1 enrollment growth formula, and performance funding, that would contrast FY 2004, FY 2005, and FY 2006 with FY 2007 so it could be used with the Governors staff and the legislature in January.

Upon motion of Regent Boice, seconded by Regent Bulla, the Board approved the FY 2007 State Operating Budget Requests for submission to the Governor and Legislature.

Ms. Gale Tebeau joined the meeting for this discussion. Regent Boice said the Board was being asked to review and approve the 2005 Annual Personnel Report for the Arizona University System. He reminded the Regents the report is not considered part of the State Operating Budget Requests; however, critical issues will be submitted to the Governor to address faculty and staff salary issues. This report will be submitted by October 1, as required by statute, to identify a projected unmet salary need of $127.2M by the end of FY 2007.

Ms. Tebeau said the information in the report commanding the most attention is the amount of the unmet need, the amount needed to bring faculty salaries up to the 50th percentile of their peers and to raise all other salaries to the market average. The total unmet need for FY 2007 is $127.2M, a decrease of about $8.6M from what was reported last year, primarily because the universities reallocated funds. In FY 2005, each university was able to make significant headway in their faculty rankings. ASU and UA went from the 17th percentile to the 34th percentile for ASU and the 27th percentile for UA. NAU went from the very bottom percentile up to the 4th percentile. In spite of these improvements, ASU and NAU still rank lower than they did in FY 2000.

Ms. Tebeau said classified staff salaries are anywhere from 6.3% to 15.8% off the market and other staff are between 6.4% and 21.4% off the market.

Upon motion of Regent Boice, seconded by Regent Frank, the Board approved the 2005 Annual Personnel Report for the Arizona University System.

Regent Boice chaired this portion of the meeting. Mr. Ted Gates joined the meeting for this portion. Regent Boice said the Capital Committee, comprised of Regent Bulla, Regent Jewett, Regent Calderón, Student Regent Graff, with himself acting as Chair, met on September 7 to consider all of the Capital Committee items appearing on the agenda, with the exception of Item 25, Student Referendum for Continuation of the Student Recreation Center Bond Fee (UA). At the meeting, the Committee reviewed and approved Arizona State University’s Instructional/Research Laboratory Renovation Phase II Project Approval Request. The executive summary for that item was in the Board book behind the Capital Committee Appendix tab for information purposes only.

Mr. Kevin Burns, Chief Financial Office of UMCC, joined the meeting for this discussion. Regent Boice said the University Medical Center Corporation (UMCC) was requesting approval to issue Hospital Revenue Bonds in an amount not to exceed $200M for the purposes of (a) financing the costs of several UMCC capital projects, (b) establishing a debt service reserve fund in connection with the Series 2005 Bonds, (c) paying costs of issuance of the series 2005 bonds, and (d) if appropriate, refunding and refinancing its Series 1993 Bonds.

Regent Jewett, Bulla, and Herstam did participate in the discussion and recused themselves from voting on this item. Regent Boice did not vote on the item since he is the Board’s representative to the UMCC Board of Trustees.

Mr. Burns said the purpose of the bonds is to allow UMCC to expand. They are the only Level 1 Trauma Center in Southern Arizona and their emergency room traffic has been expanding, along with the wait time. He presented the proposed building expansion and described the increase in services it would provide. He said UMCC said it had held its bond ratings, even with the bonding contained in this item under consideration.

Upon motion of Regent Calderón, seconded by Regent Palacios, the Board granted UMCC approval to issue Hospital Revenue Bonds in an amount not to exceed $200M, as presented in the executive summary.

Mr. Kevin Burns, UMCC Chief Financial Officer, joined the meeting for this discussion. Regent Boice said UMCC was requesting approval to acquire membership interest in University Medical Imaging, L.L. . through an investment in, a contribution of capital into, the guaranty of obligations or indebtedness of University Imaging or some other combination of the foregoing, in an aggregate amount to exceed $1M.

Mr. Burns explained why UMCC wants to acquire this company. Their volume in the imaging area has increased 44% and they have had to refer MRI’s and CT’s to others in the market place. UMCC views this as an important part of their ongoing expansion plans for the Tucson market. Regent Jewett, Bulla, and Herstam did not participate in the discussion and recused themselves from voting on this item. Regent Boice did not vote on the item since he is the Board’s representative to the UMCC Board of Trustees.

Upon motion of Regent Boice, seconded by Regent Calderón, the Board granted UMCC approval to acquire membership interest in University Medical Imaging, L.L.C., as presented in the executive summary.

Mr. Rich Bowen joined the meeting for this discussion. Regent Boice said the Board was being asked to review, at first reading, the proposed Campus Master Plan for Northern Arizona University. Mr. Jim Wheeler, of Ayers St. Gross, the architectural firm that assisted in formulating the master plan, presented the Plan to the Regents. He said one of the biggest problems on campus currently is the amount of surface parking lots. The Plan targets obsolete buildings as logical areas for growth in the future. They are also looking at buildings with one or two stories as that is not the best use of land.

Removing these buildings provides development zones. Mr. Wheeler emphasized the Plan is a road map that allows the University to have a flexible approach; so as opportunities develop in the immediate future, the most logical places where new development would occur have been identified. It is not something that will happen immediately or even completely as planned.

The plan has been divided into three five-year phases. Mr. Wheeler explained what was proposed for each phase and how the under-utilized portions of the campus could be used. He showed how the campus might look in the future.

President Palacios asked if enrollment growth had been considered as the Plan was developed. Mr. Wheeler said it had been addressed in what was called the responsible capacity of the campus or how many buildings can the campus hold. They project the campus can accommodate 20,000 FTE easily and could even go beyond that. Regent Bulla asked if there was any parking planned around the Student Union and was told there would always be convenience and handicapped parking. Regent Jewett and Regent Boice said how pleased they were with the Plan.

Mr. Dave Harris and Mr. Rich Bowen joined the meeting for this discussion. Regent Boice said NAU was requesting approval of an IGA to govern the participation and financial investment by the City of Flagstaff in the NAU Conference Center Project.

President Haeger said this IGA was the culmination of many years of work. He thanked all the people who had worked on this agreement. Mr. Harris said NAU was still negotiating with one final partner and hoped to bring the finished product to the Board in December. Regent Calderón expressed his appreciation to the community leaders of the City of Flagstaff for their support and work on this project.

Upon motion of Regent Calderón, seconded by Regent Bulla, the Board authorized Northern Arizona University to enter into an Intergovernmental Agreement to govern the participation and financial investment by the City of Flagstaff in the NAU Conference Center Project as presented in the executive summary.

Regent Boice said the universities are required by statute to annually prepare and present Capital Improvement Plans containing proposals for state spending on land acquisition, capital projects, energy systems, energy management systems, building renewal, and deferred maintenance.

Ms. Carol Campbell and Mr. Scott Cole joined the meeting for this discussion. Regent Boice said ASU was requesting approval of its FY 2007-2009 Capital Improvement Plan. Mr. Cole said he would skip over years 2008 and 2009 and focus on the first year of the plan. He said the most important thing ASU was bringing forward was the building renewal request and if it was received, a lot of the deferred maintenance issues on campus could be taken care of. Regent Boice asked what the amount of building renewal money would be if the State had funded its own formula through the years and was told in the last five years it would rachet from roughly $16M in the first year of the five years to $22M, so by now it would be at least $100M.

Mr. Cole identified four projects in the first year of the Capital Plan. The first one is planning for the Downtown campus which will move forward as a public/private project. He described the Academic Renovations, Phase III, Phase III of the Instructional and Laboratory Renovations, and the third building in the AZ Biodesign projects.

Mr. Cole said the Polytechnic campus had five projects in the first year. The first one is a science and technology building to deal with the science and engineering computing studies and related technologies growth over the next several years. The second building is a classroom/office building targeted for the social sciences and humanities. The third building is a second classroom/office building for the social sciences, humanities and the arts and several general classrooms. The fourth project is a hazardous materials storage facility which is required by Federal and State licensing requirements for the research being conducted there. The fifth project is a bond issue the City of Mesa is doing in conjunction with ASU to provide utilities and infrastructure needs for the near term of the campus.

Regent Boice reminded the Regents that approval of these plans did not entitle any of the universities to implement any of the projects. That would require a return to the Board with the individual project for approval. Upon motion of Regent Boice, seconded by Regent Herstam, the Board approved the ASU FY 2007 - 2009 Capital Improvement Plan.

Regent Boice said Northern Arizona University was requesting approval of its FY 2007- 2009 Capital Improvement Plan. Mr. Rich Bowen joined the meeting for this discussion. He said NAU was requesting approval to begin planning in 2007 to evaluate three projects: Building 24, the former physical plant in the center of the campus, an academic facility, and a new transportation spine.

Upon motion of Regent Boice, seconded by Regent Calderón, the Board approved Northern Arizona University’s FY 2007-2009 Capital Improvement Plan.

Mr. Joel Valdez joined the meeting for this discussion. Regent Boice said the university of Arizona was requesting approval of its FY 2007-2009 Capital Improvement Plan. Mr. Valdez said the University of Arizona had two projects: the Arizona State Museum and the renovation and expansion of the James Rogers College of Law.

Upon motion of Regent Boice, seconded by Regent Bulla, the Board approved the University of Arizona’s FY 2007-2009 Capital Improvement Plan.

Ms. Carol Campbell joined the meeting for this discussion. Regent Boice said ASU was requesting authority to lease a building that would be newly constructed and located on the Flight Line at Williams Gateway Airport in Mesa, Arizona.

Ms. Campbell said the Aeronautical and Management Technology Department, located at the ASU Polytechnic campus provides pilot training and is continuing to expand its programming into ground services. It currently has 275 students and is projected to grow to 500 students. She described the building which will be owned by Williams Gateway Airport and leased to ASU.

Regent Boice thanked Ms. Campbell for the changes that ASU had made to the executive summary between its presentation to the Capital Committee and the Board meeting. He said the reason this lease was before the Board was the term of the lease, not the dollar amount.

Upon motion of Regent Boice, seconded by Regent Bulla, the Board authorized Arizona State University to lease a building, which will be newly constructed and located on the Flight Line at Williams Gateway Airport in Mesa Arizona, as presented in the executive summary.

Mr. Rich Stanley joined the meeting for this discussion. Regent Boice said Arizona State University was requesting authority to lease approximately 16,292 square feet of office, clean-room, lab, and storage space at 7700 S. River Parkway, Tempe, to Amersham Biosciences (SV) Corp.

Mr. Stanley said ASU was proposing a lease with Amersham, a division of GE Healthcare, for about 16,000 square feet of space in the Macro Technology Works building at the ASU Research Park for $872,000 per year. The lease is for two years with a one-year renewal. It is short term so it can be determined whether there are reasons for them to be in proximity to the university’s research areas.

Regent Boice commented that there was quite a bit of space left at the Research Park and asked what the plans were for that area. President Crow said they were being very selective as to what tenants they secured for that area and were comfortable with the pace at which the space was being leased. Regent Boice said he noticed the University Operating Budget Allocation was what kept the building viable and was told that was accurate. However, the budget allocation is consistent with the proforma that was presented when the project was approved. Regent Boice asked the amount of money that was required to keep the building running, even if it was empty, and was told it requires substantial dollars to maintain with no occupancy, something less than $6M to $7M a year. President Crow explained how revenue money is being spent. Regent Boice asked ASU to come back to the Capital Committee once a year with an updated proforma for that building.

Upon motion of Regent Boice, seconded by Regent Herstam, the Board authorized Arizona State University to lease approximately 16,292 square feet of office, clean-room, lab, and storage space at 7700 S. River Parkway, Tempe, to Amersham Biosciences (SV) Corp., as presented in the executive summary.

Mr. Rich Bowen joined the meeting for this discussion. Regent Boice said NAU was requesting authority to issue auxiliary revenue bonds in the amount of $15.5M to
construct the recently approved New Parking Structure. Mr. Bowen said $370,000 of the money requested would be in issuance costs and $130,000 would be for contingency and capitalized interest during the construction period. The bonds will not exceed 6% and will be funded through parking revenues.

Upon motion of Regent Calderón, seconded by Regent Bulla, the Board authorized Northern Arizona University to issue auxiliary revenue bonds in the amount of $15.5M to construct the recently approved New Parking Structure as presented in the executive summary.

Ms. Carol Campbell and Mr. Dave Harris joined the meeting for this discussion. Regent Boice said ASU and UA were requesting Project Approval with a budget increase for the Arizona Biomedical Research Collaborative Building. In addition, subject to favorable review by the Joint Committee on Capital Review, the universities request authority to sell lease purchase Certificates of Participation in an amount not to exceed $33M for this project. Approval was also requested for an amendment to the IGA with the City of Phoenix for an upfront purchase of the land by ABOR.

Mr. Harris said there had been two changes since the project was reviewed at the last Board meeting. President Crow has added $2.4M to the project to finish shell space and a contract has been negotiated with the City of Phoenix to purchase the parcel of land so Certificates of Participation can be sold.

Upon motion of Regent Boice, seconded by Regent Herstam, the Board granted Arizona State University and the University of Arizona Project Approval with a budget increase for the Arizona Biomedical Research Collaborative building, authorized the universities to sell lease purchase Certificates of Participation in an amount not to exceed $33M for this project, and approved an amendment to the IGA with the City of Phoenix for an upfront purchase ob the land by ABOR, as presented in the executive summary.

President Likins said the Student Recreation Center was the second most popular spot on campus. The original proposal by the students would have raised the student recreation bond fee. The current fee is binding through 2011. Dr. Likins asked the students to come back with a plan that would continue the fee beyond 2011, but not raise it. This item is the result of that request. President Likins said he endorsed the project which is being presented to the Board as an information item.

Regent Boice reminded everyone that, regardless of the outcome of the referendum, the Regents and the President have a right to veto this project. Regent Graff asked if the Regents and President would decide to do the project anyway if the vote failed and Regent Boice said he could not imagine the Regents authorizing the project if the vote failed. President Likins said he could not imagine bringing the project to the Regents if the vote failed and he would not expect the Regents to authorize the project if he did bring it when the student vote had failed.

President Palacios said the Board was scheduled to move into Executive Session. Upon motion of Regent Herstam, seconded by Regent Frank, the Board voted to go into Executive Session and the meeting recessed at 12:43 p.m.

Regent Herstam said the Board adopted the redesign proposal submitted by the Feasibility and Planning Study in April and requested that each university prepare a university specific plan to implement the redesign recommendations. During the Board’s Retreat in June, strategic questions that were proposed as a framework for developing the redesign implementation were discussed and approved. Each university was asked to use this framework as an outline to redevelop their redesign
implementation plans.

President Haeger introduced Ms. Karen Appleby who assisted him in his presentation. He said each university was aware this presentation is a plan; not something that is set in concrete, but a plan that is being talked about with people on campus and community college partners. The NAU issues that are driving the design concept are affordability, accessibility, and economic demand. NAU wants to build on its strengths.

Dr. Haeger said a system approach shows the Arizona University System has the capacity to handle the students coming into the system for at least the next ten to fifteen years. When you add in the delivery by technology and the community college partnerships, the capacity is expanded even more.

President Haeger said the NAU response is divided into two parts. The core mission at NAU has to be the best it can be and this will require significant movements on the main campus in terms of significant resources. He explained the developments necessary for the Mountain Campus like more diversity and increasing the graduation rate. Dr. Haeger said NAU excels in research related to specific problems that need to be resolved. A great deal of research at NAU is related to public service and instruction and undergraduate students must participate in the research.

President Haeger said NAU needs to become a “steward of place.” NAU is responsible for economic development in Flagstaff and Northern Arizona because it is a great agent to mobilize capital and put together projects. He said there would begin to be differentiated tuition at the various locations as not all students access all the benefits of the Mountain Campus.

The second piece of the NAU response is the distance learning mission. President Haeger said NAU offers 70 programs all around the state. Some are on the web or some combination of web and ITV or a combination of on-site and web. As the number of students grows, NAU will offer more courses on site. He described the variations among the off-site locations. The statewide promise of access and accessibility has to be similar to that of the Mountain Campus.

Dr. Haeger said the biggest concept of growth for NAU is to grow the Mountain Campus to make it one of the very best campuses in the west having undergraduate education and research and to grow the distributed education to make it the best for the state.

President Likins recognized Dr. Juan Garcia who had developed his presentation. He said all three institutions were making excellent progress in better understanding how to function as a system, in conjunction with community colleges, to meet the needs of their constituents. He said the universities realized each of the three institutions had to define its mission as distinct from the other two as they got further into Changing Directions. With Redesign, each university has to develop more coherent strategies for managing multiple missions, with each one of those missions focused.

Dr. Likins said the UA also has a significant responsibility for outreach. Redesign has made the UA reevaluate their outreach programs and see how they could be better. They are focusing on getting better, not bigger, but at the same time are experiencing controlled growth. In the past, the sites other than UA South and the medical complex around the state were viewed as an extension of the College of Agricultural and Life Sciences. They are increasingly being viewed as places where the UA has a presence and has an opportunity to serve.

President Likins explained the UA collaboration with community colleges. He described UA South’s mission and outreach. He said the UA was determined to serve the Arizona population in an inclusive way as that population evolves over time. Diversity is an essential element of excellence to the core programs on the Tucson campus. He presented statistics to show how diversity has increased at the UA. He said the growth in Hispanics, however, was in nonresident Hispanics and obscured a drop of 18 resident Hispanics. He said the UA was not satisfied with this drop. He said they also did not meet their goal with the transfer students from the State of Arizona.

President Likins said the duality of missions forces a price differential. The UA outreach strategies are inherently full cost strategies, partly because the faculty allocation of time is substantial between teaching and outreach and partly because they are trying to respond to the market place. He said the UA was developing lower cost programs at UA South and for continuing education. Even in the core programs, as the tuition price has gone up financial aid has gone up so needy students are not being driven from the university.

Regent Calderón said he was glad to see budget requests for extension agents to be funded once more as rural counties suffer when the agents are lost. Specifically, Regent Calderón asked Dr. Likins, who in turn confirmed with the University of Argriculture Dean Gene Sander, who was in the audience, to verify that the proposed budget would guarantee that Greenlee County would receive a new agent position. Both Dr. Likins and Dean Sander confirmed that to be the case.

President Crow said the mission differentiation within the system that system redesign has put into place is beginning to take hold. He said ASU’s mission is to provide a high quality university level education experience while remaining aggressively inclusive.

Dr. Crow said most universities that try to offer a high level university education remain aggressively exclusive. ASU is able to take the opposite view partly because of its mission assignment within the system, partly because it has thousands of acres of property in a rapidly growing metropolitan area, and partly because it finally has become, within ASU itself, disciplined as to what the various campuses will have as their particular missions. ASU is one university in many places. The various schools will be deployed across four campuses. The schools will be nonreplicative within the university. There will be no main campus. Every campus you go to will be a different address for an ASU
school.

President Crow said there are currently 51,000 students on the Tempe campus. The plan is to remain at that size and to intensify the research mission and to intensify the depth and breadth of the schools that remain on that campus. ASU at the West campus is planned for growth to 15,000 students. The campus will be made up of a series of interdisciplinary schools and differentiated programs, each with their own identities. The West campus and the Polytechnic campus will be comprehensive in the sense they have heavy liberal arts and sciences at the core of both institutions. The Polytechnic campus in Mesa will be a specialty campus that will have less of an emphasis on liberal arts and sciences and more emphasis on engineering technology, applied sciences, biomedical technology, and applied arts and sciences. That campus has a lot of land and could grow into a mammoth university campus. Currently, the planning profile takes it to 15,000 students. The Downtown Phoenix campus, which is still a speculative aspiration, would be about 20 acres in the urban core and would be a specialty campus that emphasizes public service and health medicine related activities. This campus could accommodate 15,000 students.

Dr. Crow said access to the universities at all levels has never been higher, even though tuition has increased. Any reduction in resources will reduce access. Regent Palacios asked about the time table and method he would use for tuition differentiation. President Crow said ASU was on the path for tuition differentiation. At the schools without heavy doctoral programs, the tuition levels can differentiate. He is prepared to advance tuition differentiation in this cycle.

President Crow said ASU, at the Tempe campus and to a lesser degree individual degrees on other campuses, the goal is to go from roughly $185M in current research expenditures currently to $350M. ASU is also committed to moving its diversity index to match the state’s diversity index. That will require huge amounts of effort to recruit, attract, communicate with, educate and acquire the students. He said he is amazed by the number of students who qualify for Pell grants and do not go to college at all. So there needs to be more work on letting those students know how to apply for college.

Dr. Crow said ASU is putting a lot of focus in trying to overcome the low performance of all educational institutions in Arizona (K-12, community colleges, universities) in graduation and retention. He said the secret to solving this problem is resource driven.

Regent Stuart asked about ASU’s statement that graduate enrollments will grow with a shift toward more doctoral education and fewer part-time graduate students. He asked how ASU was going to manage the fewer part-time graduate students part of the equation. Dr. Crow said it is anticipated the number of undergraduate students on the Tempe campus will grow modestly and the number of graduate students will grow more than modestly. Within the total mix of graduate students, the number who are part-time graduate students as a relative number within the system will go down.

Regent Stuart asked if students would have a choice of which campus they would like to attend as they start with freshman English. President Crow said this has not yet been decided as Dr. Jim Rund is designing the university and schools admission processes. He will be working to try to admit students to the schools they desire, depending on their qualifications, while also keeping distribution and diversity among the campuses. He said ASU is about a year away from facing the problem of a student being admitted to ASU but not to the campus they wish to attend. This is why he wants all the ASU campuses to be of the best quality possible.

Regent Stuart said he was interested in whether all the basic majors, such as English, would be available on all campuses. President Crow said the basic majors, such as English, would be available in some form at all the campuses; but they might not be the same programs. Regent Frank asked how an English major might differ among the campuses and was told it might be a literature degree, a logic and rhetoric degree, or a technical writing degree.

Regent Bulla said he believed the universities had come a long way with Redesign, but it is really just beginning. He said there still needs to be a way to look at the total system to make sure there aren’t gaps or unwanted duplication so there will be the resources to do what needs to be done at each of the universities. Another step is to figure out how to do financial proformas so that cost effectiveness is assured. He would like to be able to show how incremental funds could be a allocated to satisfy the needs of the campuses.

President Haeger said obviously some of the university plans would be impacted by a community college baccalaureate degree. He said the universities need to spread the word that there is accessibility to baccalaureate education in the state. It is simply not true there is an absence of baccalaureate programs or accessibility and the baccalaureate degree is not affordable in Arizona. He said there is a myth that there are not enough teacher preparation programs in the state. Every program has vacancies. The issue is finding enough students to fill the need.

President Likins said the method of delivery of courses may change over time; so the universities need to remain flexible. Regent Bulla said he agreed there would be more combinations that would include distance learning.

Upon motion of Regent Herstam, seconded by Regent Boice, the Board conceptually approved the universities’ redesign implementation plans as presented by each university president.

Regent Calderón chaired this portion of the meeting and Dr. Art Ashton also joined the meeting for this portion.

Regent Calderón said the Board was being asked to review and approve the draft Five-Year Strategic Plans for FY 2007-2011 for the universities and Central Office. The plans are to be submitted to the executive branch of government in draft form by October 1, 2005, and are due in final form on January 1, 2006. There is an environmental scan included with the plans and each University submitted a list of accomplishments that are important in demonstrating their value-added to the citizens of Arizona.

The university presidents presented key strategic issues in their plans. President Likins said he would try to connect the UA institutional strategic plan with the system redesign. He said the UA had to do a lot of campus strategic planning to make sure its mission is to discover, serve, educate, and inspire. It needs to be perceived to be an institution that is honest and just and works well with partner institutions and the other universities in the system. The UA understands the necessity of being at the forefront of creative discovery. The UA strategic issues for 2007-2011 have not changed from the prior plan. The subtext and the budgeting strategies change, but the strategic issues remain.

Dr. Likins said the first UA strategic issue is to build a world class and diverse academic community at the forefront of discovery. The second strategic issue is to increase student engagement, achievement, retention, and graduation rates. The third strategic issue recognizes that UA is a land grant university which comes with a set of responsibilities. There is an obligation to link the scholarship and creativity on the campus with the needs of society and the community. The fourth strategic issue is to secure a strong financial foundation. The fifth strategic issue involves the UA understanding of its role as a research extensive university to commit itself to an outstanding educational experience connecting what the university does to the community and to the larger world. President Likins said the strategic planning process involves developing the broad initiative, the strategies are laid out, layer by layer.

President Haeger said there is an absolute relationship between the strategic planning document and the FY 2007 budget proposal and the redesign proposal. The strategic plan is another way of framing the discussion which we then send in to the state. Throughout the year, at any place in the process, you can see the campus as a whole engaged in the discussions about each of the strategic issues that have been identified. There is a university-wide strategic planning council which he chairs with representation by faculty, staff, deans, and vice presidents. Conversations are also conducted with the university as a whole.

Dr. Haeger said one of NAU’s strategic issues is to expand and improve baccalaureate degree access and achievement. Access is building the various outreach components so you can see the visible aspects of that when buildings go up on community college campuses or in other areas outside the campus. The plan to develop achievement in baccalaureate education can be seen in the yearly report. NAU hopes its strategic plan comes together with a single set of goals and directions that reflect the Board’s desire for how they want NAU to fit into the system and also to respond to the state.

President Crow said ASU planned to be a national comprehensive university by 2012, have access and quality for all, establish national standings for colleges and schools in every field that is within the niche, and enhance local impact and social imbeddedness. He explained the specifics of how ASU plans to accomplish those four goals.

Dr. Crow said ASU was more interested in what they produce instead of what students entered the university. This is what they will be measuring to attain national standing in value added to ASU graduates in each school. The Rand Corporation has begun a project where the sole objective is to come up with measures of value added to every student. ASU is part of that project and President Crow is part of the national board of that project. President Crow said ASU is planning to become the leading university academically in one subject within each school or college.

Regent Boice asked if there was some way to integrate the Strategic Plan in such a way you could see what was done in the various years. A way in which the Strategic Plan could be measured on an annual basis that would show progress on how the various schools are getting along in the implementation of the plans. Regent Calderón said he believed a benchmark summary document could be prepared.

President Crow said the document presented this year by ASU has more specificity than it has ever had before. He said he had prepared something for the Human Resources Committee that allowed Regents to see if objectives of the strategic vision had been met on the time line proposed. President Haeger said the current documents do examine what was done last year and compare prior years. He said it could be done in a more formal way. President Likins agreed and said he thought the universities could go further in that direction.

Regent Bulla said a lot of progress had been made; but he thought some quantifiable goals attached to the documents would be helpful. Some of the funding and budgeting charts were not completed. He thought that could be taken to another level, almost proformas that would be helpful to the entire discussion. Regent Calderón asked if staff would come back with a rough template by the middle of winter so the Regents could make suggestions and the universities could use it next year.

Upon motion of Regent Calderón, seconded by Regent Boice, the Board adopted the 2005-2006 Five-Year Strategic Plans (2007-2011) for the universities and the Central Office.

Regent Bulla chaired this portion of the meeting and Dr. Art Ashton joined this portion of the meeting.

Regent Bulla reported the IT/AZUN Committee met the day before and received an encouraging update on the marketing plan for the Arizona Universities Network. Over 50,000 registrations for on-line classes are expected this year. He complimented Mr. Fred Hurst and his team for their efforts on AZUN. The web site has been redesigned and it looks great. Articulation is in place.

Regent Bulla said the Committee spent time looking at the IT Architecture guidelines of all the universities. Some of the universities’ Chief Information Officers’ (CIOs) scope has been expanded as a result of the discussion. The Committee approved the universities’ annual implementation plans and expenditure reports. Overall, last year, the universities’ IT expenditures were up about 6%. The UA gave an update on COSMOS and reported they had retained the Gartner Group consultants to advise on the COSMOS Proof of Concept Exercise for Alternate COSMOS Goals.

Regent Bulla reported ASU and NAU are close to signing a Memorandum of Understanding to partner on the student and human resources systems of Oracle People Soft. The Committee reviewed the ASU Biodesign Institute IT elements, the one TRIF project the Committee had not yet reviewed. The Committee also approved $40,000 for consulting, hardware, and software implementation of the Microsoft SharePoint collaborative portal software for the Central Office, and $11,000 to continue Darel Eschbach’s services.

Regent Bulla said he was pleased by progress being made in different IT areas in all three universities.

Regent Bulla said the University of Arizona was requesting approval of annual expenditures for the Center for Computing and Information Technology Network Technology Solutions in three categories: delivery of local and long distance voice services, delivery of off-campus data network service, and delivery of on-campus data network services. These services’ annual anticipated expenditure is $3.1M.

Upon motion of Regent Bulla, seconded by Regent Boice, the Board approved the UA annual IT expenditures as discussed by the Committee.

Ms. Paulina Vazquez-Morris joined the meeting for this discussion. Ms. Vazquez-Morris explained the policy revision that amends the requirements for resident status to include spouses of Arizona residents in order to conform to the provisions in House Bill 2078 and A.R.S. §15-1802.

Dr. Milt Glick joined the meeting for this discussion. Regent Frank said there had been approximately ten new centers created since she had joined the Board. She asked for an explanation of the purpose the centers and institutes serve in the universities and how they may relate to departments. Dr. Glick said departments primarily exist for the purpose of organizing undergraduate curriculum. However, for graduate uses and interdisciplinary purposes, departments can be destructive. Centers bring people together from different disciplines for the purpose of research, service, or instruction. Faculty do not receive tenure in centers.

Upon motion of Regent Frank, seconded by Regent Herstam, the Board authorized Arizona State University to establish the Center for Film and Media Research at the Tempe campus and the Phoenix Urban Redesign Laboratory at the Downtown campus.

Ms. Kathy Bedard joined the meeting for this discussion. Regent Bulla said the universities have done many things to respond to Hurricane Katrina. President Haeger said NAU had responded to a request from the Governor and was ready to host up to 120 evacuees in the field house. Eventually, only three ended up on the campus since Phoenix and Tucson had more resources to deal with the needs of the evacuees. They also advertised through education resources that they would take students from the campuses that were shut down by the hurricane and agreed to admit them as guests since they had already paid their tuition elsewhere. At one point, NAU had five students, mostly from Tulane who came with the clear intent of returning to their own university when they could. These were typically Arizona students who had gone out of state for their education. NAU faculty, stuff, and students have had and are participating in fund raisers for victims of both Hurricanes Katrina and Rita.

President Likins said the UA first located the UA students who were from the hurricane areas to make sure they were okay. Then students who needed temporary accommodations were accommodated with living quarters, food, and whatever they needed: twenty undergraduates and sixteen graduate students. He said he did not believe all of the undergraduate students would return to the southern schools, but probably most of the graduate ones would. He said faculty, staff, and students had also engaged in fund raising activities and had participated in helping evacuees that were housed by the City of Tucson.

President Crow said many individuals from ASU participated in hurricane relief on their own. ASU agreed to take 1,000 evacuees but they weren’t needed. They admitted the senior design class of Tulane University and their faculty for their design project. About 135 students were admitted and are covering the cost for any of those students who need help. ASU hosted the ASU-LSU football game on five days notice which turned into a fund raiser that raised $1,150,000, half of which went to a student relief fund at LSU for some 3,000 students that LSU has received from other schools who do have not resources. The other half of the money went to the Bush-Clinton fund for Katrina relief.

Regent Stuart reported that Regent Bulla had worked hard the past summer on the issue of the UA College of Medicine in downtown Phoenix. He reported the universities and the Central Office staff had answered many questions posed by the legislature and thanked Ms. Bedard for her help on assembling the data and preparing the reports. He said it had culminated in the Joint Legislative Budget Committee releasing the other half of the $7M that had been budgeted for this project. There are two more reports due–one at the end of the year and one in February. He said the new Vice Dean for Academic Performance at the UA, Beth Schermer, is trying to put together the hospitals, curriculum, and other things that need to happen to make the Phoenix program happen.

Regent Bulla thanked Ms. Bedard for her work. He said everyone must continue to work together and the UA College of Medicine in downtown Phoenix will happen.

The meeting recessed at 4:25 p.m. and reconvened at 9:30 a.m. on Friday, September 30.

Regent Palacios said the Board had requested that several tuition-related matters be studied. A tri-university work group, composed of Mr. Fernando Ascencio, Ms. Edith Auslander, Mr. Robert Fischer, Ms. Cathy McGonigle, Dr. M. J. McMahon, Mr. Robert Mitchell, Mr. Russell Reiten, and Dr. Christine Wilkinson, was formed by the Council of Presidents and were present for this discussion. Regent Palacios was the lead Regent for the study.

She said the Study Session was to cover two of the areas being addressed by the workgroup - options for complying with Senate Bill 1517 and the timing of tuition setting. She emphasized the financial models to be presented were designed to be illustrative in nature. They did not represent recommendations regarding tuition levels, recommended tuition-setting methodologies, funding requests of the legislature, incorporate all of the universities’ funding needs, and were not intended to produce precise results. Instead, they were meant to serve as a management tool to help the Board consider how tuition and state funding are linked and to provide a way to assess the impact of various tuition and state funding levels and possible options for tuition caps for continuing students. The modeling process that was presented was not in any way intended to supplant the Board’s normal tuition setting process.

She also said the models did not consist of an all-inclusive set of every conceivable model. Instead, the workgroup had put together four models with multiple scenarios, using different assumptions and approaches to provide the Board different perspectives. The models can be adjusted to assess the impact of changes in assumptions and variables.

Regent Palacios said the universities’ educational programs are dependent on two primary funding sources, tuition and general fund appropriations, both of which are inextricably linked. A few years ago, as university budgets were substantially cut, there was significant upward pressure on tuition rates in order for the universities to maintain high quality educational programs. Senate Bill 1517 now asks the universities to step back and look at options for limiting tuition increases for continuing students. Regent Palacios said she firmly believes the Regents must be committed to a very thoughtful study of that issue. In doing so, however, recognition must be given that any plan to limit tuition increases for continuing students is dependent upon adequate general fund support. There must be a proper balance between tuition and general fund appropriations in such a plan, and variations must be envisioned and permitted if state funding declines or is insufficient to provide the high quality educational programs Arizona citizens deserve.

Ms. McGonigle said the major part of the presentation would be to share with the Board the work the workgroup has done to respond to SB 1517. They are at a midpoint in the project and wanted to update the Board and seek its guidance on completing the project. The models presented were university systemwide, looking at averages of the three main campuses.

Ms. McGonigle said there were four charges to the workgroup. The first one is directly related to SB 1517, to access options for limiting tuition increases for continuing students to no more than inflation. Assessing the alternative time lines for tuition setting came out of the Board’s Retreat in June. In April the Regents asked that a policy framework for special undergraduate program fees be developed and that the existing policy framework for special undergraduate class fees be examined. She offered to do an individual briefing with any Regent who so desired since there are a lot of models and a lot of numbers in each model.

Mr. Anderson explained how the models were crafted and what they illustrate. He said $1 out of $5 went to the state’s universities in the late 1970's. Now it is about $1 out of $10. Growth needs in other areas have been consuming larger percentages of the state budget. Due to inflation, the buying power of the budget dollars purchases less. Inflation and the increase in enrollment means general fund appropriations remained even or declined slightly. During the decade of the 1990's, tuition was rising, but the real value of tuition was virtually flat. The increases essentially captured the amount of inflation. Beginning in 2003, the big increase in tuition did cause an increase in real value. As you look at the trade offs between tuition and general fund appropriations, a dollar lost in general fund appropriation to the universities is not equal to a dollar gained in tuition because financial aid is taken from tuition.

Looking at the privatization index Dr. Kathy Church developed during the Redesign, you can see that during the decade of the 90's, 80% of the revenue to the universities for education was provided by the state and 20% was coming from tuition. Around 2000, you can see it started to change and now the relationship has moved from 80 - 20 to about 65 - 35.

The statute said the universities need to examine the advisability of capping tuition at inflation for continuing students. Mr. Anderson said the workgroup gave the most consideration to the consumer price index (CPI) and the higher education price index as two inflation measures as there are many inflation indices. The workgroup decided to use the higher education price index, HEPI.

Mr. Anderson explained what would have happened over the last 15 years if increases had followed either the HEPI or the CPI and what the universities actually received. Another cap used by the Board is Policy 4-104 that says tuition and mandatory fees will not be any higher than the top of the bottom one third of the public institutions in the fifty states. Since that value is based on the past year, we will always be below that value. In 1990, we were fairly close to that level; over the decade of the 90's, that gap opened up. The large tuition increases moved us somewhat closer; now we are back to a larger gap. If the universities were to raise their tuition up to the top of the bottom 1/3, those increases would range from $520 to $614, still with a one-year lag.

Mr. Anderson explained how the models were constructed. There is an attempt to show the relationships between the various budget resources; how if one if capped it will be necessary to receive more money from another. The models were done on a per FTE basis, using weighted averages of the three main campuses. Total revenue is general fund appropriations and gross tuition revenues. In the models, the assumption is the continuing students tuition increases would be capped at the HEPI rate. Mr. Anderson then explained the models. They do not include deferred maintenance which is a large number.

Regent Jewett said he hoped the Board would hold fast to its commitment to financial aid when time came to set tuition. Regent Stuart asked if it was possible to model the rate of increase of tuition against general fund appropriations overlying a HEPI increase. If it was possible to model a rate of tuition increase against the increase in general fund itself? Could the increases of average family income of university families be modeled? He said some of these models would be helpful to show the legislature.

Regent Graff asked if HEPI was predictable or if it was subject to dramatic jumps. Mr. Anderson said HEPI has been consistent for the last 15 years. Regent Calderón said he believed the university system was heading for a train wreck as he has heard the legislature is moving toward mandating a tuition cap. He wondered if legislators could be shown the modeling to see what will happen with tuition caps.

President Haeger said limiting budget and tuition funds forces public institutions to try to raise funds elsewhere. Since everyone will be trying to raise private funds, few will be successful. Secondly, universities will run toward economic development missions, separate from their core missions, hoping to raise money.

Regent Bulla said he believed the modeling demonstrates that wage and price controls don’t work. Dr. Denke said another challenge during the tuition setting process is to determine when the best time is to set tuition. He looked at the other 50 states and found 32 states approve tuition during the Spring semester, 23 of these during the March-April period. Sixteen states approve tuition during the summer, some as late as June. Most of these states tie their tuition setting process to the budget setting process for their states. Only 2 states approve tuition during the prior Fall semester.

Dr. Denke said there are a number of benefits and challenges associated with setting tuition at various times. He explained many benefits and challenges of various time lines. Ms. McGonigle said the work group thought the Board should consider that the percentage share the students contribute versus what the state provides has shifted greatly over the past 15 years and a reversal of this trend should be considered. For tuition to be kept low for both continuing and new students, additional general fund support will be necessary. More state support for need-based financial aid should still be pursued. There needs to be a dialogue with legislators to discuss the impact of capped tuition.

President Palacios suggested Regents take advantage of staff’s offer to meet with them one on one to go over the information provided as there is so much data. The students on the work group spoke on behalf of keeping tuition reasonable and asked that graduate and nonresident data be included in the models.

Regent Calderón said last May, in reaction to the legislature’s attempts to address the articulation issues, the Joint Conference Committee (JCC) felt there should be some common ground that could be reached even if all the differences could not be reconciled. So the JCC determined to come up with three to five serious recommendations that the universities and the community colleges could agree upon and that would require compromises from both. He thanked the community college and Central Officer staffs for their work over the summer. He presented four points that have strong agreements by the JCC representatives, but need comments from the Board of Regents and the community colleges. He said the JCC was working under a handicap since there is no community college board.

Regent Calderón said the first recommendation was to increase the transfer credits for select programs. Generally speaking, there is a 64 credit limitation on transfer credits. In certain areas where the community colleges offer significant programs, such as Gateway Community College’s medical imaging program, NAU would be willing to accept up to 75 credits. In some cases, there might be as many as 90 credit hours transferred. This would not be an automatic happening; there would be a discussion to make certain the credits were substantial.

Regent Calderón said the increase in the number and scope of institutional partnerships was the second recommendation. This would include critical infrastructure elements, joint appointment of faculty, joint/shared advising services, and joint admission of qualified students. Recommendation three is to establish joint funding models to assure the necessary dollars are available for both sides of the partnership. The fourth recommendation is to expand the university campuses and statewide programs. NAU would open branch or regional campuses where there is an identified need; ASU would expand their branch campuses; and UA would develop UA South.

Regent Calderón said the JCC would meet again on October 19. At that time, there will be an attempt to come to some common ground on the remaining large issue, four-year baccalaureate degrees. The universities are willing to talk about the issue; but want to retain right of first refusal. The community colleges want to be antonymous.

President Palacios said she did not believe community colleges should have the unbridled authority to offer baccalaureate degrees. But she said there had been a proposal there would be a group, perhaps an expanded JCC group along with some legislators, that would consider a request from a community college to offer a baccalaureate degree when a university did not agree. This group would discuss whether the university was meeting or was close to meeting the need or whether the community college would be able to offer the baccalaureate degree. This proposal is also under discussion.

President Haeger said there is a huge distance between the universities and the community colleges on the issue of baccalaureate degrees. The community college proposal was to allow and fund certain baccalaureate degrees at community colleges and to authorize any community college to explore becoming a four-year college. He said that would be going from some statewide governing board determining and coordinating how higher education will serve students to allowing each local governing board of a community college to do anything it wanted. He said Board staff looked at the Florida case where an actual process was established for community colleges to offer four-year degrees. A series of tests had to occur and someone decided whether a statewide need existed and whether the community college should have the program or whether a branch of an existing university should have the program.

President Likins asked what funding models had been explored. President Haeger said he believed the universities were approaching four-year degrees as there would be more some kind of joint funding model that would go to the local tax base; but he believed the community colleges and Representative Knaperek believed they would dip into the total higher education budget as they believed these degrees would be cheaper for the state to fund at the community colleges.

Regent Stuart said the community colleges have been promising to do a gap analysis for several years. He has even been told it is finished. However, a copy has not been circulated. He suggested the JCC ask for the community college gap analysis. Regent Bulla said he could support the proposals except the joint funding models. There should be a gap analysis and financial proformas to establish what needs to be done in this area before the Board could agree. He suggested some agreement might be reached on distance learning and using AZUN by adding community college courses. He said the unintended consequences of four-year community college degrees would be the erosion of 2 + 2 programs. He said there needs to be a white paper for meeting with editorial boards to get out to the public what the unintended consequences will be of deregulation of higher education.

Regent Boice said Chancellor Flores has said he would not offer a four-year degree unless it was state funded. President Palacios said she had hoped the JCC would be able to agree on several issues before the legislative session.

President Haeger said he had noted that if community colleges offered four-year degrees and the universities began to expand their presence in the state, the universities would begin offering one and two hundred level courses. He said the community college and Representative Knaperek’s response was fine; competition is good. Ms. Jacobson said the community colleges have taken the position they should be allowed to offer four-year degrees and then they will solicit funds from the legislature. Also, when the recommendations are put forward, there will be a background paper prepared by APASC, a group that reports to the JCC, to convey to the legislature the outstanding articulation system already in place between the community colleges and the universities.

Regent Jewett said there were community colleges, universities, and private institutions that are joining together to put money up to advance health professions. He said he is afraid this will degenerate into who can do education the cheapest and the degrees will be “dumbed down.” He says he sees this now in his profession; they are accepting qualifications they should not be accepting. He says this is mission creep as opposed to focusing on what you do best and doing that well.

President Crow said he has spoken to the leaders of this movement and they believe there are too many students attending college; the universities are too big and need to be stopped from growing; and the universities are not the kind of institutions Arizona needs. He said he believed the Regents need to be pushing information considering the things they have already done in the last few years since as joint appointments at ASU and the community colleges and other things that have happened that the state has requested. Regent Boice said material like that would make for good comments at the legislative forums that are currently underway across the state.

Mr. Robert Mitchell thanked President Palacios for putting a member of the AFC on the tuition study workgroup. He said the AFC was also concerned about the community college four-year degree issue and offered any assistance they could give. He said the Learner Centered grants are under review now.

Mr. Mitchell thanked Regent Boice for his meetings with faculty concerning the UA Presidential Search process.

Ms. Kathy Bedard joined the meeting for this discussion. Regent Bulla said this is an information item on the expansion of the scope of responsibility of the Board’s Assessment and Compensation Committee and a renaming of the Committee. A proposed charge to the Committee was also presented.

Regent Bulla gave a history of the Assessment and Compensation Committee and what the Committee had done. He said he was asked to Chair the Committee this year.

Other members of the Committee are President Palacios and Regent Boice. As the Committee has proceeded with its work over the last three years, it has become apparent to President Palacios that other critical issues faced by the universities should and could be appropriately addressed by a newly-named and newly-charged Committee. Therefore, President Palacios has asked that the Committee’s scope be expanded and that it be charged to continue performing its current role and to add these responsibilities:

Review and recommend establishment and/or modification of Board policy in the area of human resources for the system; Review the university system’s Annual Personnel report, addressing the salary needs in the system, and recommend strategies for enhancing the competitiveness of University system salaries; Review and make recommendations to the board regarding the university system’s benefit programs; Review the organizational structure of the universities and the ABOR Central Office; and Review staffing levels and resources of the ABOR Central Office.

Regent Bulla said he believes this is a positive step forward for this Committee, now to be named the Human Resources Committee. This change is also consistent with Regent Stuart’s Focused Governance initiative, which has been successful in creating new committees and recharging others to enhance the oversight responsibility of this Board.

Ms. Paulina Vazquez-Morris joined the meeting for this discussion. Regent Boice said he was pleased to say the UA Presidential Search committee has made very good progress since the Board met in August. It has met twice, with excellent turnout and participation. At the first meeting, Dr. Ann Hasselmo and Dr. Stan Ikenberry, from Academic Search Consultation Service in Washington, D.C. address the committee. Dr. Likins told the Committee what characteristics, from his perspective, are critical for the next president to possess. He pledged his full support and cooperation during the transition to the new administration. The job announcement has been published in the Chronicle of Higher Education and other higher education publications, and the consultants have been very busy with outreach since the notice of the position began circulating.

Regent Boice said the Committee reviewed and made changes to the Leadership Characteristics that will form the basis for discussion at the Campus and Community forums at last week’s meeting. The Committee will be gathering input from as many interested individuals and groups as possible on the qualities needed in the next president and the issues facing the UA over the next several years. In keeping with that effort, there are twenty forums scheduled between October 12 and 21st, most of which are in Tucson. However, there will be two forums in Phoenix and one that will be conducted by telephone through the UA Extension offices for stakeholders around the state. He asked Regents to tell himself or Anne Barton after the meeting if they would like to attend one or more of the forums.

Regent Boice said the Search Committee has gone over the Guidelines for the Conduct of the Search that are presented today. Ms. Vazquez-Morris reviewed the Guidelines for the Regents. Regent Stuart asked if the Board could select any candidate that had been reviewed by the Search Committee, even if the candidate had not been forwarded by the Committee to the Board. He was told that would be allowed under these guidelines.

Upon motion of Regent Boice, seconded by Regent Jewett, the Board approved the Guidelines for the Conduct of the University of Arizona Presidential Search.

President Haeger and his staff were thanked for their work and hospitality. Regents thanked Dr. Haeger for allowing them to be part of the unveiling of the Kay McKay Village. Regent Graff reported on his trip to the Nevada Board of Regents to present a history of the Student Regent and what the current status is as the students in Nevada are starting a drive to add a Student Regent to their Board. Regents Jewett and Herstam thanked everyone for their help during their tenure on the Board.

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MINUTES