September 30-October 1, 2004 Minutes - Arizona Board of Regents

A meeting of the Arizona Board of Regents was held September 30 and October 1, 2004, in the Alumni Lounge of the Memorial Union at Arizona State University, Tempe, Arizona. President Stuart called the meeting to order at 9:24 a.m. on September 30.

PRESENT:	Regent Fred Boice Regent Robert Bulla Regent Ernest Calderón Regent Lorraine Frank Regent Ben Graff Regent Chris Herstam Regent Jack Jewett (Thursday Morning and Friday) Regent Wes McCalley Regent Christina Palacios Regent Gary Stuart Superintendent Tom Horne (Thursday Afternoon Only)
ABSENT:	Governor Janet Napolitano

Also present were: President Michael Crow, Dr. Milt Glick, Dr. Mernoy Harrison, Dr. Christine Wilkinson, and Mr Scott Cole, Arizona State University; President John Haeger, Dr. Elizabeth Grobsmith, Dr. M. J. McMahon, and Dr. John Burton, Northern Arizona University; President Peter Likins, Dr. George Davis, Ms. Edith Auslander, Mr. Dick Roberts, Dr. Randy Groth, Mr. Greg Fahey, Dr. Saundra Taylor, and Mr. Joel Valdez, University of Arizona; 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, Ms. Kathy Bedard, Ms. Gale Tebeau, and Ms. Stella Galaviz, Central Office; and Dr. Frances Bernat, Arizona Faculties Council.

All lists, reports, summaries, background materials, and other documents referred to in these minutes can be found in the September 30 and October 1, 2004, Documents File.

Regent Bulla reminded the Regents they had authorized an expenditure of funds to retain two consulting firms to assist in identifying and directing the future development of Arizona Regents University (ARU). WCET (Western Cooperative for Educational Telecommunications), a division of WICHE (Western Interstate Commission for Higher Education), has been looking at online student services, and Hezel Associates has been developing a roadmap with different scenarios of ARU’s possible future.

Regent Bulla acknowledged the work of the ARU Project Management Team. WCET made a presentation on their evaluation of online student services and their recommendations for system-wide student services. Their charge was to evaluate the availability and quality of specific on-line student services available to the distant student and to identify those services that would best serve the needs of distant students if they were coordinated on a system-wide basis. Currently, with very limited exceptions, online student services are offered individually by each of the universities.

Ms. Pat Shea and Ms. Darlene Burnett made the presentation. Ms. Burnett said they were charged with looking at 10 specific on-line services. They were for undergraduate students and from the student perspective. Services on a campus are four-fold: web services delivered online, face-to-face services, print services, and phone, fax, and mail services. WCET looked exclusively at services delivered on the Web for the students of the three universities. They looked at services in the administrative core: admissions, registration, student accounts, financial aid, and schedule of classes. WCET looked at one service in the communications suite. In academic services suite they looked at academic advising, career counseling, and orientation.

Ms. Burnett said ARU had undertaken two very important services, the library and tutoring. Those services were offered to on-line students and created for all students in the three universities.

The ten specific services the WCET reviewed were Academic Advising, Admissions, Career Planning, Catalog, Communications (institution to student), Financial Aid, Orientation, Registration, Schedule of Classes, and Student Accounts. Within each of the ten services, WCET looked at and evaluated specific components. The over 100 service elements evaluated at each of the three institutions were evaluated against four sets of criteria--Generations I through IV. Generation I focused on institutional contact, where institutions start by putting their services online. Generation II groups information by student segments. Generation III is a web portal with personal information and has an account and a password. Generation IV starts to organize information, advise, and form a personal interaction created on the Web.

Ms. Shea discussed the potential future role of ARU. ARU currently serves a small segment of students, primarily those that have already matriculated at one of the three universities. Distance learning is now coming from across the campus, not just the distance learning department; therefore, it is very important from a student’s perspective that campus and distance learning opportunities be merged. Some studies suggest that 90% of students have their first encounter with a university through its web site. However, ARU’s broader mission is to serve the under-served students of the state and the Hezel recommendations move ARU in that direction.

Ms. Shea presented three different options from the Hezel Associates study. Option A was to retain ARU focused on distance learning, but to expand its current operations so that it serves all students in the State of Arizona who are interested in distance learning at the three institutions. Option B is to retain the distance learning focus, but to broaden it to make students aware of all the opportunities available both on and off campus at the three institutions. Option C proposes the universities join forces with the community colleges, the private schools, and other entities in the state to be a one-stop shop where students can find out about all the opportunities for higher education in the State of Arizona.

Ms. Shea described Option A more fully. It was proposed it be implemented in three phases. Phase 1 would be focused on just extending the amount of student services offered at the state level. Different kinds of paths could be added to help prospective students, parents, employers, and educators as well as matriculating students. Profiles of the three universities could be added. The catalogue could be enhanced and different kinds of communications strategies could be added, such as message boards.

Ms. Shea suggested an advisory board of student distant learners at each of the institutions be created and have one representative from each of the institutions board sit on a Regents’ advisory board.

Ms. Shea explained that Phase 2 of Option A is the “Travelocity” Model and would put more generic transactions on the web. ARU would move from just being a site for information and some service to a place where you could actually do transactions such as registering for distance learning courses. It would also be helpful to have an ARU portal so a student could search for classes, save those searches, and come back at a later time.

In Phase 3 of Option A, customized transactions would be offered. This is where ARU would build a FEPRA-compliant interface to the three portals that already exist at the three institutions (MyASU, Louie at NAU, or Student Link at UA). This interface would recognize matriculating degree-seeking students and could automate the process the ARU coordinators are currently doing manually.

There are some pockets of excellence already at the three institutions and they could easily help direct the kind of services that would be provided by ARU. In leveraging these pockets of excellence, it was recommended that NAU be considered as the contractor for the day-to-day operations of ARU, but that the oversight remain with the Board of Regents in terms of policy and vision.

Ms. Shea said the recommendation for Option B is that ARU move past just being a provider of distance learning opportunities in the state and help to inform students about the on-campus opportunities available.

Ms. Shea said the recommendation for Option C was to move beyond the universities and join forces with the other schools in the state to provide a one-stop sight that is very rich in resources concerning all the opportunities for higher education in the state. This site could also provide information about work force opportunities.

Regardless of what site is constructed, Ms. Shea said it is important to have good technical performance. The ARU site is too slow to load. It was also recommended that the name ARU be changed as many believed it was a degree-granting institution. One recommendation is to make it ARUA, Arizona Regents University Advisor.

Ms. Shea said a brand identity should be created and marketed after the decision is made as to what ARU should become. Some kind of guidelines should be established for the institutions as where they can find out about ARU on their site. Currently it is among the distance learning programs at the institutions. If more students knew what options were available to them through ARU, maybe some of the students who leave would not have to leave completely.

Ms. Shea said the next set of recommendations have to do with broadening the Regents’ role as a coordinator of statewide student services. The library services and tutoring services are examples of this. She said the Board should explore the adoption of a statewide e-portfolio product and allow students who just want to take an occasional distance learning course but do not intend to get a degree to use the site as well as degree-seeking students. This would help work force needs.

The Board should consider establishing a data warehouse to collect information about distance students to better understand trends. The transfer articulation system between the universities and community colleges is very good, but there should be a tracking system for use among the universities. Systems exist now where recruiters in the field can check to see what courses will transfer to their institution from other institutions. There should be a gallery of best practices in student services online. And meetings should be hosted where student services staff from the universities could meet with each other.

Ms. Shea said WCET recommends the Board review the options presented and see which one aligns with the Board’s goals. The Regents should define the scope of who should serve on a work group and what time frame makes sense for this issue. Costs of the various paths should be determined. The second part of the WCET proposal was to look at the costs once the options have been narrowed.

Regent Bulla said money had been set aside for WCET to do cost determination as soon as the Regents narrow the scope. He was delighted to see the student focus and believes the articulation dimension is a critical component. Since the universities are working on the issue, he stated he hoped to see a complete inventory of courses this fall with notification as to which courses would apply for graduation credit. He believes the other dimensions, such as recruiting, will fall into place once this is accomplished. He agrees with the suggestion of changing the name.

Regent Bulla said both consultants suggested having at least one of the universities involved in administering ARU. He said it could be NAU because of their expertise in distance learning or expanded ABOR staff. All of this is dependent on the decision of the Regents to continue ARU.

Regent Bulla said Hezel associates was charged with developing multiple scenarios and creating a roadmap for the future development or dissolution of ARU. ARU does currently have 40,000 annual registrations for technology–delivered courses, representing 1,700 courses.

Mr. Richard Hezel said Hezel Associates and WCET worked collaboratively during this process; but the reports are independent. There is a great deal of similarity between the two reports and the recommendations of each.

Mr. Hezel said Hezel Associates were to assess ARU’s accomplishments and ability to meet the mission in light of the future. There was a great deal of confusion about the mission of ARU. ARU’s accomplishments, difficulties, management, programs, and services were reviewed. Over 100 people were interviewed. The roadmap is a tool by which it is hoped ARU can be moved from its present state to some new state.

Higher education in Arizona was assessed as well as an environmental assessment of distance learning throughout the United States. E-learning is growing rapidly; 75% of colleges and universities in the U.S. offer some form of e-learning programs or courses and the market is projected to be 11 billion by next year. The most troubling part of it is that proprietary schools, such as the University of Phoenix, are taking a major part of the e-learning market.

Mr. Hezel said Arizona has economy and employment rates that are the envy of many states. However, Arizona is expected to have a student enrollment that will overwhelm the higher education institutions unless great care is taken. There is little competition in Arizona higher education. Over the next few years, he believes competition from out-of-state institutions will increase.

Mr. Hezel said they did look at many currently growing and established “virtual” universities in other states to see what is really working. One of the decisions to be made is whether one goal is for Arizona to grow its on-line services. Those states that have brought together in a coordinated way their on-line services have done better than states that have not coordinated. ARU represents a means by which there can be a coordinated way of establishing Arizona as a state that provides to all its students coordinated and collaborative education.

The best practices among other state institutions is to try to fill high-enrollment courses as this provides a cost benefit. Some of them offer competency credits. They have very good service organizations and there is some form of centralized registration. Mr. Hezel described the current e-learning at the Arizona universities. In terms of coordination of student services and the development of coordinated on-line services, the universities use different course management systems.

Mr. Hezel said interviews brought out the fact that articulation, work force development, competition with other systems, and collaboration are important issues with the universities. Quality and excellecellence were important issues for everyone, including faculty and administrators at the three institutions. However, access to higher education for all Arizona students was the prominent theme.

Mr. Hezel said all the ARU projects were evaluated and he highlighted a few. The ARU campus coordinators have been effective in bringing people to ARU and helping them through the programs and on-line tutoring has been very good, but marketing has been a problem.

With all the information accumulated, four scenarios were developed to give Regents a sense of what might be possible. Scenario 1 is to dissolve ARU and let the institutions pick up the pieces. Scenario 2 is to strengthen the current ARU activities to make a stronger organization internally within the staff of ABOR. That would involve the creation of a fairly large staff as ARU grows. Mr. Hezel said he had heard a desire on the part of Regents to keep the ABOR staff small and this would create a problem for Scenario 2.

Scenario 3 is progressive expansion for ARU to become an organization that is similar to the very best of the world’s campuses, such as Penn State. But also to even go beyond that by being creative and putting into place new activities. Scenario 4 is very expansive rapid growth globally so ARU becomes an exporter of courses.

Two choices were created within Scenario 3 and Scenario 4. Scenario 3 could be done within ABOR operations, but as previously mentioned, many of the Regents did not want to build staff. The second part of both Scenario 3 and 4 is to have ABOR guide the money, but out-source operations.

Upon discussing the various scenarios during the interviews and Hezel’s internal considerations, Scenario 3 is being suggested. Progressive expansion over time, not an outrageous commitment of new funds, but through concerted activity, internal growth, focused marketing, and outsourced operations. NAU is suggested as the provider of the outsourcing, but that should be decided by Regents. This would put policy leadership within ABOR but operations somewhere else. This organization would broker activities with others. There would have to be substantial external marketing of ARU as an entity, an approach toward access and innovation, some determination of revenue sources, and the distance education concierge (AzDEC). AzDEC is a model by which all the services that are appropriate for on-line students would be offered through ARU.

Mr. Hezel said there should be a focus on access, and in particular, degree to completion. ARU needs to involve a broad range of higher education programs. Right now it is focused on three different areas and it should encompass many more areas. It should integrate with community colleges, government training, private colleges, distance learning providers from other states, and corporations. Articulation needs a lot of work. Innovation is going to be the area in which ARU will succeed or fail. If it develops as just another on-line institution, it will not be successful. One example of the kind of innovation that needs to happen is competency credits.

Mr. Hezel said Hezel Associates was recommending Scenario 3b be implemented and ARU be renamed. The Regents should make sure ARU continues to research work-force development needs and makes that a critical part of its service. A new management structure should be implemented within an out-source environment. There is a real opportunity for ARU to host conferences to develop programs needed in the state. This could lead to a new level of collaboration and articulation among the universities.

ARU should also look at high enrollment courses, especially lower division courses. There should be a staff member at ABOR to be the liaison between ABOR and the operations and ABOR should continue to fund appropriate projects.

Regent Palacios asked why Scenario 3b was chosen. Mr. Hezel said discussions had been held with Regents and Scenario 3b seemed to be the most realistic to maintain ARU as a force in Arizona, to address the work force development processes, and to address some of the ongoing and future needs of the citizens of Arizona.

President Stuart said he believed 3b is the answer. He said it is vital for the universities to address e-learning to keep up with all the rest of the universities in the world. He said he had met the day before with a group composed of all the private higher education entities in the state, all of which charge much higher tuition and program fees than the Arizona universities. They have a combined enrollment of 90,000 students in Arizona,. Some of them cannot provide the same level of quality as the Arizona universities. He believes students go to these schools because they are looking for a different methodology than the standard university, especially e-learning.

President Crow emphasized the expense of building an e-learning system. Regent Herstam said he believed Scenario 3b is the appropriate one to follow with progressive expansion. He called the Board’s attention to the proposed roadmap of activities that is recommend-ed. He was pleased by how much could be accomplished by the end of 2005 and the proposed shift of ARU operations to NAU.

Regent Boice said he would like to see costs before deciding what course to take. President Haeger said he did not believe money should be a limiting factor in this case as progressive expansion implies the use of the infrastructure in place at the three universities with NAU having an identified mission in e-learning. As ARU becomes more successful, the money can be moved back into the operation to continue growth progressively.

President Likins said Option C is the best option from the student’s perspective. He said the three universities had been taking e-learning seriously for a long time. As the decision is made as to how to develop that capability, there is a need to look for the competitive advantage. It is clear that NAU has made a substantial commitment, for a long period of time, to develop on-line courses and that should be built upon. UA has taken internet and information technology based learning seriously and it continues to be a high priority, but it is not about developing on-line courses, especially on-line courses for mass education of lower division students. UA uses the internet to enrich the education within existing courses of students primarily on campus. There are some areas, such as an optical sciences master’s degree and master of library science degree, where UA has a national and international competitive advantage in on-line course production. He asked the Regents to keep in mind the different strategies used by the three universities as they consider the development of ARU.

President Likins said articulation between the community colleges and the universities is successful because blocks of courses do transfer between the universities and the community colleges to meet certain requirements. The articulation between individual universities usually is a request for a course to transfer and that is dealt with on a course-by-course basis. It is possible to develop a database that lists every course and which course from each university will be acceptable as a transfer, but that is not currently available. Dr. Likins said he believed there is an interrelatedness between the proposed Redesign and a change in the status of ARU. He believes they should be thought through simultaneously, not sequentially.

Regent Calderón said NAU has a twenty-year history relative to distance learning and he believes the Board should use Scenario 3b to use NAU’s expertise and national reputation.

President Haeger said the Arizona universities have an advantage because there is already a distance learning structure in place and it is possible to draw from all three universities. NAU would definitely be interested in taking on ARU, under the direction of the Board of Regents and with cooperation from the other two universities. At the start, the organization needs to be highly entrepreneurial and must be driven by the market, not by the traditional campus desire for an existing program structure. It needs to be able to respond to the market in a one or two month time frame. Student services must be totally student focused and money needs to be spent to make student services seamless in order to compete with private providers.

Dr. Haeger said academic innovations are extremely important in this area of higher education. Experiential learning and competency-based credit will be important. There will need to be more freedom to operate and run in ways that may not have even been considered. He believes this kind of operation can ultimately be self-funded.

Regent Palacios asked President Crow and President Likins to react to the proposal to outsource ARU to NAU. Dr. Likins said he was comfortable with the identification of NAU as the manager of the enterprise, primary source of on-line courses, and the coordinator of the statewide program if the system is reconstructed so the system is headquartered in Flagstaff at NAU by not bound by the constraints of NAU. He does not want all three universities to be constrained to act in the same way. He sees UA as being part of the system to allow its students to participate to the degree it meets their needs.

President Crow said he supported moving the coordination of ARU to NAU with the modifier that it not be listed as a university, but as a program of delivering university content. It needs a modifier so ASU can aggregate its content with and co-market with ASU, but he does not want to go to ASU Deans and say their responsibility of reaching out to their communities is over or that they should no longer be evolving materials or developing their own markets. As long as there is no prohibition of all three universities being allowed to act entrepreneurially and the content will be aggregated at NAU, he supports the outsourcing. If it is given to NAU to drive and make it happen, he does not believe it will succeed. However, he still believes it will take more money than is being discussed.

President Haeger said he agreed all three universities are in the business of teaching on- line and he expects the strength of the three universities is that each will continue to offer totally web-based on-line programs. He believes ARU will provide a portal for students to access all of the various offerings.

Regent Graff said he believed the Board should strive towards Option C to educate students as to what is available on the website. Executive Director Sideman reminded the Regents they had made a decision at the outset of ARU that it would be a primary focus for students who are time and place bound. He believes it is implicit in the discussion that this would continue to be the primary thrust. He agreed the issue of how much money is available is a critical issue. He said the allocation of funding for ARU had been $2M a year since its inception which is a substantial amount of money. With this money, ongoing programs and one-time initiatives have been funded. Mr. Sideman said his assumption would be this could be continued, but there should be an analysis of costs for options for upgrades to the system. The Board could start with the less costly options to proceed on a step-by-step basis to reach a goal.

Regent Bulla said he had dismissed dissolving ARU because he did not see the world going in that direction and because he believed the universities have a great advantage if this can be a coordinated effort. He believed, if left to the individual universities, there would be redundancies and costs inefficiencies. He believed Scenario 2 was an enhanced status quo that would not keep up with the world. He believed Scenario 4 was too aggressive. All the things that need to go together to make ARU a success led him to favor Scenario 3, but he does not favor adding a huge staff to ABOR when NAU already has the expertise and it would be incrementally less expensive. Therefore, he selected 3b.

Regent Bulla suggested the ARU/IT Subcommittee come back to the Board with specific recommendations, including cost proformas, cost benefit analysis, and what is necessary in each university in order for this to succeed. He wants more creativity and more entrepreneurship within each university to do what they need to do, but have a tool in place to interface between the citizens of Arizona and the students of Arizona. Even though students on campus use the system, he believes the original purpose of ARU should continue to be to help accessibility and graduation rates. He offered to work with NAU and the consultants to bring a plan to the ARU/IT Subcommittee as soon as possible. President Likins asked that this work product be integrated with the discussions of system redesign.

Regent Bulla said he would like to be able to bring a plan to the Regents as soon as possible, but he did want to take the time necessary to do this right. President Haeger said NAU and the consultants have both done some work on costs, and he believed the issue could be moved forward. Dr. Haeger said he believed it is important to move forward with the ARU as that may have an impact on the redesign.

Regent Frank asked if the suggestion of working with the community colleges was off the table and Regent Bulla said nothing is off the table, but he believed the plan for ARU should be developed first so everything could be done in a more efficient manner.

The Study Session recessed at 11:34 a.m. and President Stuart reconvened the meeting at 1:25 p.m. President Likins led the Pledge of Allegiance.

Jane Jimenez, said she had spoken to the Board in April about her belief that ASU instructors present personal political vies as unsupported fact, restrict balanced debate, promote misinformation, and ridicule those who hold contradictory views. She offered to visit individually with any Regent on this matter.

Penny Hurley, a resident of Tucson, asked if the Board thought is was a wise decision for Michael Moore to be invited to speak on the UA campus before the election. She asked if the students that had invited him to speak at the UA acted in accordance with university standards, if they received input from other members of the university community, or if it was a unilateral decision by a small group of people.

Deanna Smith, said she was speaking for her late Father, Lester Smith, who was a major donor to the UA. She said he would be appalled the university was allowing an anti-American and anti-Semite like Michael Moore to speak right before the election. She did not believe this was done by the students on their own; she believes the university administration must have helped. She asked the university to either move him off campus or to get a Republican speaker of the same caliber to offset the appearance of Michael Moore and Ted Kennedy.

Michael Martin, representing the Tri-University Classified Staff Executive Board, said he had read with interest the 2004 Annual Personnel Report, to be considered later in the Agenda. He said the gap in salaries is expressed well in the Report. He stated appreciation for the universities’ and the Board’s attempts in the past years to address salary issues. However, he said the Report does not address the issue of retaining classified staff, but instead the retention of faculty is the single issue expressed. He asked the Regents to continue to address the issue of all staff salaries, including classified staff, with the legislature.

President Crow introduced Dean Wellington “Duke” Reiter of the ASU College of Architecture and Environmental Design, who has taken the lead position for ASU in working with the downtown Phoenix people in the conceptualization of Downtown Phoenix.

Dean Reiter said Vice President Stanley was present in the room along with others who have been involved in the process as it has been a group effort. He said the objective was to build a comprehensive metropolitan research university that is an unparalleled combination of academic excellence and commitment to economic, social, and cultural responsibilities in an environmental setting.

Dean Reiter said the College of Nursing, the Public College with its various subgroups, the Cronkite School of Journalism, KAET, the School of Health Management and Policy, and the University College are slated to move downtown. The only way this can be accomplished is through a partnership with the City of Phoenix. He described the differences and the similarities of the needs of the City of Phoenix and ASU. He explained that he had been working with the entire downtown, including the private sector, to make certain the university’s position there is well situated.

He showed the Board the area where ASU has decided to concentrate its efforts and where it has made inquiries about property that might be available. ASU would like for all its buildings downtown to be “mixed use,” so the ground floors can have non-academic activities. An economic impact study was conducted that looked at what the arrival of the university to downtown would mean to the City of Phoenix and it illustrates the many opportunities that will result from this location.

President Crow said all the people who have been working on all four ASU campuses will be prepared to present more details about this campus and others at the January meeting. In anticipation of ASU moving forward, the City of Phoenix is advancing to acquire those pieces of property that have been identified in the conceptualization. He said some of the property has been acquired and others are offered for sale.

President Stuart said the ASU downtown development will also involve the other two universities. Regent Boice asked why the location had been changed to Central Avenue and was told primarily to take advantage of light rail. Regent Boice asked if the purchase of property by the City of Phoenix was an agreement by ASU to locate on that land. He said he wanted the Regents to be able to make the decision as to where ASU would locate. President Crow said the City was reacting to the scenario presented by ASU when they purchased the property and would expect the university to locate there. Dean Reiter said the City was reacting to ASU’s desire to keep from implementing the campus “piece meal” as they did not believe students would come downtown if they could not offer a complete experience.

Regent Boice said he wanted the Regents to approve the Capital Improvement Plan and be involved in the beginning of the process, not at the end. President Crow said ASU is negotiating an intergovernmental agreement with the City of Phoenix and that will require the approval of the Regents.

Items on the Consent Agenda, which are marked in these minutes with an *, were considered as consent matters and were adopted upon the motion of Regent Stuart, seconded by Regent Boice. There was no discussion of these items.

The Board approved the June 24 and 25, 2004, Executive Session, the August 19, 2004 Retreat Meeting, and the August 20, 2004, Regular Meeting minutes.

The Board reviewed the draft 2004-2005 Action Plan at its annual retreat in August. Currently there are nineteen objectives, and additional objectives can be added at any time. The Action Plan is focused and strategic. It does not encompass all of the activities of the Board and its staff as numerous other important activities are performed and are separately reported to the Board each year.

The Board received the Annual Report for the ASU Research Park. During the fourth quarter, the ASU Research Park (Park) completed negotiations with its most recent ground lease tenant, North Central Association, for 1.9 net acres. The Park dedicated staff and financial resources in support of ASU’s pursuit of the federal $43.7M grant to establish the ASU Flexible Display Center at the Park. The Park was instrumental in supporting the Arizona Pavilion at the 2004 Bioindustry Organization Conference held in San Francisco, California.

In March 2004, the Park celebrated its 20th anniversary. In order to market the it more effectively with its statewide economic development partners, the 25 members of the business community were invited for a real estate overview and tour of the Park. In addition, the Park hosted several workshops on behalf of ASU Technopolis and participated as sponsor and exhibitor at Connection One’s Arizona Wireless Expo.

Several capital improvements were made to the Park in FY 2004. The original rule signs were replaced, and several landscape enhancements were undertaken to improve the health and appearance of the land material and to reduce water consumption. The Park has 73% of its land leased. Positive net cash flow after (bond) debt service resulted in payments totaling $1,130,398 to ASU in repayment of previous advances. This is slightly higher than the budgeted payment. The current principal amount owed on advances from ASU, including interest, is $4,393,796. The remaining bonded indebtedness for infrastructure improvement to the Park is $17,950,000.

The Board approved a continuation of a cooperative research agreement with the National Science Foundation, #HRD-0114712, to increase funding and provide continuing support of a Hispanic Research Center. The proposed amount of the amendment is $987,000 for a total new award amount of $3,757,000. The project period is November 1, 2001, through October 31, 2006.

The Board authorized ASU to accept an award from the National Science Foundation, #EF-0412824, for support of a Department of Chemistry and Biochemistry, College of Liberal Arts and Sciences research project to complete genome sequencing proposed for four photosynthetic prokaryotes. The proposed amount of the award is $1,254,415 and the project period is July 15, 2004, through June 30, 2007.

The Board authorized ASU to accept an award from the National Institute of Health, #1 U19 A1062150-01 for support of a Biodesign Institute research project to analyze mucosal antibodies as mechanisms of exclusion and complimentary passive and active immunizations. The proposed amount of the award is $1,549,727 and the project period is September 1, 2004, through August 31, 2009.

The Board authorized ASU to accept an award from the National Science Foundation, #0412537, for support of a Center for Research on Education in Science, Mathematics, Engineering and Technology (CRESMET), Ira A. Fulton School of Engineering, W.P. Carey School of Business, and College of Liberal Arts and Sciences to offer 4 integrated mathematics and science graduate courses designed specifically for secondary teachers.

The proposed amount of the award is $12,323,992 and the project period is September 15, 2004, through September 14, 2009.

The Board approved the revision to Board Policy 4-307, “Tuition Waivers for Children and Spouses of Slain Arizona Peace Officers, Arizona Firefighters, Arizona Emergency Paramedics, and Arizona Military Service Personnel” as presented. This will expand the availability of tuition scholarships to the children and spouses of Arizona correctional officers and Arizona National Guard members killed in the line of duty and for certain categories of injured Arizona National Guard members.

The Board authorized the Arizona State Museum to join the lawsuit and to enter into an agreement that would allow legal representation by the Arizona Attorney General’s Office in the litigation regarding destruction of archaeological sites on the La Osa Ranch north of Marana. Portions of La Osa ranch, including areas located on lands leased form the state, have been subjected to extensive blading and earth-moving activities that damaged known archaeological sites on the state-owned lands in violation of A.R.S. §41-841 et seq. The Arizona State Museum has potential claims that could be included in that lawsuit.

Ms. Gale Tebeau joined the meeting for this discussion. Regent Boice said the Board was being asked to review and approve the FY 2006 State Operating Budget Requests. At the August meeting, the Board reviewed the universities’ preliminary budget requests. A revised Executive Summary for substitution into the Board books was distributed as an addendum earlier in the week. The revision incorporated the universities’ twenty-first day enrollment numbers that were not yet available when the Books were distributed. The budget requests must be submitted to the Governor and Legislature by October 4.

Ms. Tebeau said the universities’ preliminary estimated requests at the August meeting totaled $135.4M. The final request is $24.5M less than the August request. Because of direction received from the Board in August, some of the prior year’s unfunded requests were withdrawn. The final requests include the adjustments to the 22 to 1 formula. The system incremental requests now total $110.9M, a 9.7% increase overall, a 14% increase in general fund. Of that $110.9M, $39.9M is for the continuation budget request with the largest component, $19.3M, being the 22 to 1 funding with ASU experiencing the largest growth. The continuation budget also includes $2.6M for annualization of the Fiscal 05 health insurance premium increases, $2.9M for performance funding (that will change by $400,000 due to a correction by UA), $2.9M for new facilities support, $6.8M at NAU for academic program development and debt service, and $5.4M from the Central Office for student assistance programs. The request also includes $12M to support a tri-university water initiative.

President Crow said the ASU budget request, which he likes to refer to as ASU’s State Investment Request as the ASU budget comes from many sources, focuses on student access, strategic investments, and student success.

Dr. Crow said Student Access is formula driven by enrollment numbers. He presented a list of 5 priority investment areas for strategic investments–Biomedical Informatics, $8M; Urban Climate and Water Management, $1M; International Institute for Sustainable Futures, $2M; Arts, Media and Engineering, $1M; and Faculty Start Up Support, $8M. The third element of the ASU request is $12.5M, the first half of a one-time request for state investment in student success associated with the building of a platform for digital media. This is not intended to be part of the base.

President Stuart asked for an explanation of how the Biomedical Informatics decision package benefits the university system in expanding the UA College of Medicine in downtown Phoenix. Dr. Crow said this would be the creation of a Department of Biomedical Informatics or a School of Biomedical Informatics as a part of the overall computer science program. It would allow ASU to deploy approximately 30 academic positions in building a department across the spectrum of intellectual challenges that ASU believes are critical to biomedical informatics. The development of a biomedical informatics department is a part of the agreement with the University of Arizona as its medical school is evolved.

President Stuart said one of the things that would happen would be engaging both a private and legislative funding approach to expanding the medical school in Phoenix and this will further the effort. Regent Boice asked if the ASU program would be located at what was AZ Bio. President Crow said all of AZ Bio 1 and 75% of AZ Bio2 are already subscribed. They will be primarily wet laboratory orientated scientists and engineers and this will be a computer science intensive program.

President Haeger said NAU’s new first-time freshman enrollment numbers are up approximately 7.5%, new transfers are up about 20%, and that results in a total enrollment increase. NAU will be changing their budget request for enrollment growth funding as a result of those increases. Other requests are for infrastructure, faculty retention initiatives, and debt service. Part of the request is also for $5M for academic program development. NAU has a decision package of over $lM for K-12 education and one as a part of a consortium with ASU and UA for water research.

Regent Boice asked how NAU had turned its enrollment numbers around. Dr. Haeger said there is now expertise on the campus in recruiting and the campus has worked hard and put money in recruitment. Regent Boice asked if the out-of-state enrollment had increased and was told it had.

President Likins talked about the requests that come from all three universities. The first is the request for the state to augment the Arizona Financial Aid Trust Fund and the second was funding the formula for building renewal. The final request was to fund salaries. Dr. Likins said last year the UA received 28% of the money necessary to fund the UA from the State of Arizona. The rest of the money comes from other sources such as tuition, gifts, and grants.

President Likins said the graduation rate had changed and the number for performance funding would increase in the budget request. This year’s state request focuses on biotechnology, water resources, and teacher preparation. UA’s request for $20M to invest in strengthening the foundations of the health sciences and health care delivery is part of the fundamental curricular structure reevaluation of the College of Medicine that leads to the expansion into Phoenix. UA is following a national pattern of deepening the integration of medical education with a scientific base that underlies the practice of medicine. UA has decided to focus on cancer, diabetes, and neurological diseases in the College of Medicine. Bio Imagining and Bio Informatics underlie the research that allows you to impact practice.

President Likins said the UA is recognized worldwide for its water studies and the UA can invest further in helping the state deal with its daunting challenges relating to water issues.

Regent Boice said he was pleased to hear a number on the Focused Excellence program. He also said he was pleased the universities were using performance funding and concentrating on water issues. Regent Horne spoke for the decision packages related to education and offered his help at the legislature to advocate on their behalf.

Upon motion of Regent Boice, seconded by Regent Bulla, the Board approved the FY 2006 State Operating Budget Requests for submission to the Governor and Legislature. Regent Horne left the meeting at this time.

Ms. Tebeau joined the meeting for this report. Regent Boice said the Board was being asked to review and approve the 2004 Annual Personnel Report for the Arizona University System. The salary requirements included in the report are not considered part of the State Operating Budget Requests. However, the report will be submitted as required by statute to identify a projected unmet salary need of $135.8M by the end of FY 2006.

Ms. Tebeau said this report includes information on employee compensation, turn over, and overtime pay. The amount of unmet need draws the most attention, the amount of money needed to bring faculty salaries up to the 50th percentile of their peers and to raise average salaries of all other staff up to the market average. Total unmet need estimated for FY 2006 is nearly $136M, a decrease of $42M from last year’s report. The reduction is due to the recent general fund appropriation for salaries, internal reallocation of resources, and the slow down in the market due to the economic down turn. In spite in the decrease in the amount of unmet need, ASU’s faculty ranking still dropped from the 35th percentile to the 17th percentile. UA’s dropped from the 26th percentile to the 17th percentile, and NAU’s dropped from the 19th percentile to the bottom. The universities’ classified salaries are anywhere from 13% to 17% off the market and other staff salaries are anywhere from 10% to 13% off the market. There is also a section of faculty turnover and how that has impacted the universities.

Dr. Bernat said last year the ASU Faculty Senate conducted a systemwide survey of pay compression that included academic professionals and lecturers. The other two universities have also expressed concern about salary compression and pay equity. At the November meeting, more information will be presented on this issue.

President Stuart said the Report is a statutory requirement, but the Board set up a three-year plan eight years ago to deal with the lack of competitiveness in university salaries. It seems the universities have fallen further behind every year but this year. He said there is no money in the state system to deal with this large unmet need. He suggested the Board either abandon the effort to catch up, or take on the cause by looking for some kind of a project to deal internally with this problem with the university system resources. He does not want to “let the legislature off the hook” on this issue, but he does not believe it will be solved by dealing with the general fund budget. He suggested a work group be appointed to study the unmet salary need and look for solutions that are Board driven and revenue streams that can be dedicated in some way to help with this problem. He does not believe reallocation or legislative appropriations will solve the problem.

President Crow said the Regents have already exercised a powerful tool they have available to advance the ability of the universities to acquire and retain faculty and to advance academic programs. This would be the monumental decision to increase tuition. This has resulted in faculty salary increases and expansion and new resources for the institutions. The decision of the Regents to go to the 34th position will help the universities address resources issues. President Stuart said tuition was raised to increase financial aid and affordability. Regent Boice agreed something needed to be done because he believed the system was better at reporting the need than doing something about the need.

Upon motion of Regent Boice, seconded by Regent Frank, the Board approved the 2004 Annual Personnel Report.

President Stuart reported the project is now called Phoenix Biomedical Campus of the Arizona University System (PBCAUS). Regent Calderón and Regent Bulla have volunteered to help with this project. He said there are things to do every day and he appreciates the help. A consultant is going to be retained to prepare a business plan for the UA Medical College in Phoenix. A recent meeting at City Hall established a new steering committee that will be co-chaired by President Stuart and Cheryl Sculley from the City of Phoenix. That is the forum from which the business plan will be started. Everyone agrees this effort could fail unless it has a great business plan. The Flinn Foundation has agreed to help with the business plan.

The partnership with the City of Phoenix has been solidified. He said Mayor Gordon and his staff are very energized about this project. A white paper will be produced on how a biomedical campus combined with UA College of Medicine from Tucson moving to Phoenix to a new campus with two research universities providing the bioscience and the basic science structural effort can work. ABOR will take the lead in the process and strategy for hospital participation. Some of this has been started by the Health Sciences Input Group. The announcement of a new lead lobbyist to help with legislative, municipal, and private fundraising will be made soon.

A twelve-member steering committee of physicians will begin to hear reports and Dr. Joiner will then keep President Stuart informed of what goes before that committee. It is expected the first cohort of students will begin in July 2006 with the number still to be decided. President Stuart said he would report at each Board meeting so the Board would remain informed.

Regent Bulla thanked President Stuart for all the work he has done on this project and for all he has achieved. Regent Boice said this model has never has been done before; so he asked everyone to have patience with the process.

Mr. Dan Anderson and Dr. Art Ashton joined the meeting for this discussion. Regent Bulla said the Board was being asked to review and approve the new Five-Year Strategic Plans for FY 2006-2010 for the major budget units in the Arizona university system: UA, ASU Main, ASU West, ASU East, NAU, and the Central Office. The plans are to be submitted to the executive and legislative branches of government in draft form by November 1, 2004.

Regent Bulla commented that each year the process gets a little bit better. He thanked everyone that had taken part in the planning efforts.

Mr. Anderson presented a University Environmental Scan. The universities are starting to take their own paths in dealing with the same forces. Mr. Anderson explained the four general themes shaping the future: Sustainability, Globalization and Regionalization, Personalization and Collaboration, and Complexity and Simplicity. He said Arizona will continue to grow, but not at the current pace. That will mean a reduction in government resources.

President Stuart said he would like to see parts of this university environmental scan on the ABOR and university websites. And he would like to see the environmental scan blended into the Public Awareness Plan.

President Likins said the UA mission is to discover, educate, serve, and inspire. He said Changing Directions was liberating to the universities and he wished there was the money available to carry out all that could be done. He said each year the strategic plan is more internalized within the university and drives the strategic plan of the university of the whole and the various colleges and departments within the university. The UA is working to integrate horizontally among the disciplines and among the colleges. The UA aspires to be among the top public universities in America by the criteria advanced by the American Association of Universities.

Dr. Likins said the UA’s determined goal is to build a world-class and diverse academic community at the forefront of discovery. He explained how the University is managing enrollment growth and maintaining quality. He described retention rates and diversity and said the University needs to grow its endowment.

Regent Bulla asked what the optimum research space would be for a campus of 40,000 with the components present at the UA and was told that changes. Regent Herstam asked for an estimate of when the UA would reach the 40,000 students that will be the limit for that campus. President Likins said as the UA limits enrollment, the other two universities will have the capacity to absorb the enrollment growth. The UA will be controlling its enrollment growth so moving from 37,000 to 40,000 students will take place gradually. He assumes this may take place in five years if the universities are able to build the facilities to support the 40,000. However, there will be a different strategy between managing enrollment strategies for undergraduates and graduates. Most likely the undergraduate population will be 30,000.

President Haeger described the process the university goes through to arrive at its strategic plan. He said conditions change so rapidly that this year’s strategic plan is already outdated. Dr. Haeger said NAU’s mission statement is to provide an outstanding undergraduate residential education strengthened by important research, graduate, and professional programs, and a responsive distance learning network delivering programs throughout Arizona. He said if NAU is known for outstanding undergraduate education, everything else will work.

Dr. Haeger said NAU’s strategic issues were to build excellence in undergraduate education and they plan to begin the process of restructuring the academic mission of the institution. He believes this will occupy the campus for several years. He said the retention rates have improved, but they need to be much higher to raise the graduation rate significantly. Dr. Haeger said strategic issue number two is improving faculty salaries. The third strategic issue is to renew the physical environment and the infrastructure of the campus. In terms of increasing student access, he said the management of financial aid will determine how many more students can be accommodated on the Mountain Campus as it is more expensive to attend a residential campus than to live at home. NAU is working to create a broader image for itself both in Arizona and in the other western states. NAU needs to add more diverse students to reflect the population of Arizona.

President Haeger said NAU has highly focused research and graduate programs. He said NAU is about to become one of three institutions in the nation which will adopt the U.S. President’s new policy related to practical science based-treatments that will reduce the threat of forest fires. He said he and the Provost will be establishing a research and graduate education task force, composed primarily of the academic deans who now have responsibility for the research centers, to develop a plan for NAU to take the research and graduate education mission into the future.

President Crow said differentiation within the system is essential to the system’s success. ASU has set out to be among the first to build a university that is simultaneously inclusive and has the highest quality of faculty possible. ASU will not be changing its admission requirements. To do this, they need to be able to manage and deal with growth. ASU must expand its research to attract the top quality faculty they desire. ASU also wants to remain a “neighborhood” school and they will do this by becoming one university in many places. He explained how ASU would be organized in this manner.

In response to the question concerning research space asked earlier, Dr. Crow said ASU had calculated they would need 80,000 to 100,000 square feet of new research space per year beyond what is already in motion to get to the position they desire. He said ASU will be in contact with cities, private corporations, parents, and everyone who can advance the university.

Upon motion of Regent Bulla, seconded by Regent Boice, the Board approved the Five-Year Strategic Plans for UA, NAU, ASU-Main, ASU-West, ASU-East, and the Central Office.

Mr. Ted Gates, Dr. Mernoy Harrison, Mr. Scott Cole, Mr. Joel Valdez, and Dr. M. J. McMahon joined the meeting for this discussion. Regent Bulla said the universities are required by statute to annually prepare and present Capital Improvement Plans to the Joint Legislative Budget Committee (JLBC) by October 15. Regent Bulla said ASU was requesting approval of its FY 2006-2008 Capital Improvement Plan. The first year of the Plan includes three new projects at an estimated cost of $143M, a third-party financed Capital Center Complex Phase II; and a building renewal request of $20.8M.

Regent Bulla said NAU was requesting approval of its FY 2006-2008 Capital Improvement Plan. Included in the first year of the Plan are three new projects at an estimated cost of $27M, and a building renewal request of $7.1M. The UA was requesting approval of its FY 2006-2008 Capital Improvement Plan. Included in the first year of the Plan is one new project at an estimated cost of $47.3M and a building renewal request of $31M.

Upon motion of Regent Bulla, seconded by Regent Calderón, the Board approved FY 2006-2008 Capital Improvement Plans for Arizona State University, Northern Arizona University, and the University of Arizona.

Mr. Ted Gates, Mr. Rich Bowen, and Dr. M. J. McMahon joined the meeting for this discussion. Regent Bulla said the Board was being requested to approve the Revised FY 2005 Capital Development Plan for NAU. The revised Plan adds two new projects, the Wayfinding/Landscaping Infrastructure project at an estimated cost of $4M, and the Building System Repair and Replacement project at an estimated cost of $6.7M. Regent Boice said he had trouble seeing the Wayfinding/Landscaping project as one of NAU’s top priorities when so much money is needed for infrastructure, and he asked why the community was not participating in paying for this project. Dr. McMahon said it was part of the strategic plan for the campus because it allows NAU to define its boundaries and make the campus a comfortable place to visit. It also allows people to make their way around and through the campus. This folds into the new branding and logo for NAU. It puts the university into a common look and feel. It is hoped this will pull the community onto the campus. It is part of NAU’s recruitment and retention.

Regent McCalley asked if the new logo had been finalized and was told the report should be back to the campus in December. President Stuart asked how the group of projects was selected for this funding and if this was the first time system revenue bonds had been used to fund building renewal at NAU. Dr. McMahon said system revenue bonds had not been used before for infrastructure. President Stuart asked the Regents to remind the legislators the universities are using revenue bonds for infrastructure because they have not received legislative funding for the last several years.

Upon motion of Regent Bulla, seconded by Regent Calderón, the Board approved Northern Arizona University’s Revised FY 2005 Capital Development Plan.

Regent Bulla reported the ARU/IT Subcommittee, at a meeting Thursday morning, had approved $180,000 to be distributed over three years for an ASU Nurse Educator program. ASU has also secured federal funds in the amount of $622,242 for the program. The Subcommittee approved six Tri-University IT Architectures developed by each of the university Chief Information Officers and their top mangers.

Regent Bulla said the Subcommittee approved the University IT Implementation Plans for this year. Last year $209M was spent on IT, up from $177 the previous year. A Tri-University Plan to achieve greater central coordination of IT responsibility was approved that addresses the issues raised by an audit. In addition, the Subcommittee heard a presentation on the LambdaRail system, a new national telecommunication network. ASU and UA are especially interested as it will be needed to stay on the cutting edge of research. It carries a $5M price tag with $1M in dues each year, so there is work being done to see how it could be financed.

Regent Bulla said ASU presented the Atlas Project, $25M over two years, decision package that was approved this morning. It is to be brought back to the Subcommittee at its next meeting for more details.

The meeting recessed at 4:45 p.m. and reconvened at 10:35 a.m. on Friday, October 1. Regent Jewett rejoined the meeting.

Regent Herstam chaired this portion of the meeting. Ms. Mary Jo Waits joined the meeting for this discussion. Regent Herstam said Student Regent Graff and Nancy Jordan, ASU Associate Vice President for Community Development, had been added to the Work Group.

Ms. Waits reported the Work Group had had its second meeting and had been working primarily through subcommittees that are looking at the needs assessment, other state’s experiences, and the guiding questions for the evaluation criteria for redesign proposals.

Ms. Waits said the Needs Assessment Committee made a presentation to the Work Group. The model developed by Governor Hull’s Higher Education Task Force is tracking with current enrollment growth, and the Work Group plans to use that model for enrollment forecasting. They will also look at labor force demand, occupations that require post secondary education. The Work Group will also look at what it would take to get the state to the top third of the top ten states with the percentage of the population with a bachelor degree. NAU is looking at the projections in the census data to do some mapping by geographical region to see what it looks like.

Ms. Waits said the second part of the Needs’ Assessment is determining the capacity of the current system. The first two meetings of the Work Group concern capacity. NAU and UA have made presentations and the next meeting will include presentations by ASU and the community colleges. The Subcommittee working with the guiding questions is also well underway.

The Stakeholders Groups are or will be meeting. The student stakeholder group met last night and the faculty stakeholder group has met once by telephone and will meet later in the day in person. The business and economic development stakeholder groups have had initial meetings. They have chosen to meet by region and have a combined meeting at a later date. The classified staff council stakeholder group and the community colleges stakeholder groups have already met. The diversity stakeholder group is still in the process of being organized. The alumni stakeholder group is ready to begin its work.

President Stuart asked for a reminder of the timing. Ms. Waits said the timing has been 9 to 12 months and they are anticipating a fairly complete report by the subcommittees by the December meeting at the latest. This will mean all the data will be collected and the criteria for evaluating the proposals will be established. Based on the fifteen proposals submitted, the Work Group plans to be formulating a proposal by late December or January. Public hearings would then be held in February and March on the recommended proposal.

President Likins asked if the questions for the other states include distance learning and was told that they do. President Crow said an erroneous conclusion by the community colleges had come from one meeting that concluded the universities had made a decision to change their admission standards to the extent that tens of thousands of students would be ineligible to attend the universities, thereby pushing these students to the community college system. He said it is important for the redesign team to understand no such strategy is being implemented on a comprehensive basis in the university system. It is the case that the UA is moving in the direction of a 40,000 student trajectory. However, ASU is moving in the trajectory of 92,000 students and NAU also intends to increase its capacity. He said the universities are working to correct this misunderstanding.

Regent Boice said timeliness was important, but he believed thoroughness was more important and he would rather see the Work Group take more time, if necessary, than to meet a deadline. Dr. Bernat said the faculty also had heard misconceptions and rumors about the process and she had discussed with Ms. Waits putting information on the faculty website to dispel rumors. President Haeger said twelve states are looking at future higher education issues; yet rumors develop because people believe what is happening in Arizona is a unique phenomenon.

Mr. Ted Gates, Dr. Mernoy Harrison, and Mr. Scott Cole joined the meeting for this discussion. Regent Boice said Arizona State University was requesting Project Approval for the Interdisciplinary Science and Technology Building II project on the ASU East campus at a total estimated cost of $12M. No changes to project scope or any other significant changes have been made since Project Implementation Approval was granted at the April 2004 meeting.

Regent Palacios asked what the indirect cost recovery is with this item. Dr. Harrison said there is an allowance for facilities and administration costs associated with the grant. The federally negotiated rate is 49½%.of direct costs. Upon motion of Regent Boice, seconded by Regent Bulla, the Board granted Arizona State University Project Approval for the Interdisciplinary Science and Technology Building II project, as presented in the Executive Summary.

Dr. Mernoy Harrison, Mr. Ted Gates, and Mr. Barry Bruns joined the meeting for this discussion. Regent Boice said Arizona State University was requesting approval of an Intergovernmental Agreement with the City of Phoenix, a waiver from ABOR Policy 7-105, and Project Implementation Approval for Phase I of the Recreational Park project at the ASU West campus. Dr. Harrison explained this project was initiated in 1995 to take a piece of the ASU West campus that was not utilized and convert it into a park and recreation area to be shared by the university and the community. This spring the negotiations finely came together with the City of Phoenix agreeing to provide $500,00 for the first phase, the Arizona Heritage Fund provided a $500,000 grant, and $150,000 came from the Arizona Sports and Tourism Agency. This project had initially been planned for the City of Phoenix to manage and now it has been decided ASU West should be the manager. This decision was made too late for the project to be placed in the updated Capital Development Plan. It is anticipated this will be a boon to the ASU West Campus.

Upon motion of Regent Boice, seconded by Regent Bulla, the Board granted Arizona State University approval to enter into an intergovernmental agreement with the City of Phoenix, a waiver from ABOR Policy 7-105, and Project Implementation Approval for Phase I of the Recreational Park project at ASU West, as presented in the Executive Summary.

Mr. Ted Gates and Mr. Joel Valdez joined the meeting for this discussion. Regent Boice reported an Executive Summary for this item was distributed earlier in the week as an addendum to the Board materials. The University of Arizona was requesting authority to sell System Revenue Bonds in an amount not to exceed $21.9M to acquire the La Aldea Student Housing complex. Mr. Valdez explained the intent was to acquire the facility from the Southern Arizona Capital Facilities Corporation and to have UA Residence Life manage and operate the facility. This is a request to use bonds to acquire the complex. It will no longer be a public-private project.

Regent Graff said he was in favor of the UA acquiring this complex. He said this should be a learning experience in using third party privately owned companies. When students are upset, they are not upset with the private company; they are upset with the university. When students lived in this complex, they did not have access to university administration and no one listened to students’ concerns. It appeared this company did not know how to market this complex to students. Mr. Valdez said there were lessons learned with this project. Regent Boice said there are times when outside money is needed. He would not like this project to be cited as a reason to not enter into public/private partnerships any more, but would like to see this project used as a learning situation that can cause a better job to be done the next time.

Upon motion of Regent Boice, seconded by Regent Palacios, the Board granted the University of Arizona authority to sell System Revenue Bonds in an amount not to exceed $21.9M to acquire the La Aldea Student Housing Complex, as presented in the Executive Summary.

Mr. Ted Gates and Mr. Joel Valdez joined the meeting for this discussion. Regent Boice said the University of Arizona was requesting permission to sell property at 1125 North Vine Avenue in Tucson to the University of Arizona Foundation, and was requesting a waiver from Board Policy 7-204 to permit the sale without public auction. Mr. Valdez said this is about 100 yards west of the existing Foundation Building. The price they have agreed to is $1.6M and the university has one appraisal at $1.440M and another appraisal will be coming shortly. However, it is not expected to be higher than $1.6M. The proceeds will be put back in the Residence Life Fund that is set aside for the replacement of Christopher City.

Upon motion of Regent Boice, seconded by Regent Palacios, the Board granted the University of Arizona permission to sell property at 1125 North Vine Avenue to the University of Arizona Foundation and granted a waiver from Board Policy 7-204, as presented in the Executive Summary.

Mr. Ted Gates and Mr. Joel Valdez joined the meeting for this discussion. Regent Boice said the University of Arizona was requesting ratification of the purchase of property at 1118 East Mabel Street in Tucson. Pursuant to Board policy 7-203, ABOR approval is required for any property purchase over $250,000. Mr. Valdez said the university had purchased the property to keep ahead of speculators who are now circling the campus in view of the adopted land-use plan. The husband of the owner of the property was in the hospital and she needed cash immediately. The property was purchased with parking and transportation money.

Upon motion of Regent Jewett, seconded by Regent Palacios, the Board ratified the purchase of property at 1118 East Mabel Street by the University of Arizona as presented in the Executive Summary.

Mr. Ted Gates, Mr. Rich Bowen, and Dr. M. J. McMahon joined the meeting for this discussion. Regent Boice said Northern Arizona University was requesting Project Implementation Approval for the Building System Repair and Replacement project. This is a $6.7M project that consolidates a number of smaller projects. This project was described in NAU’s revised Capital Development Plan presentation yesterday. Regent Boice asked if this was the first time NAU had to resort to bonding for building renewal and was told yes.

Upon motion of Regent Boice, seconded by Regent Bulla, the Regents granted Northern Arizona University Project Implementation Approval for the Building System Repair and Replacement project as presented in the Executive Summary.

Mr. Ted Gates, Mr. Rich Bowen, and Dr. M. J. McMahon joined the meeting for this discussion. Regent Boice said Northern Arizona University was requesting Revised Project Approval for the School of Communication Building Renovation at an additional cost of $800,000. Mr. Bowen said the new Communication Building is in use and has had high praise from students for the quality of the structure. When the building was built, one wing was left as shell space. This request is to finish this space in modern classrooms and lecture halls that will serve all of the North Campus. It will be funded with revenue bonds.

Upon motion of Regent Boice, seconded by Regent Calderón, the Board granted Northern Arizona University Revised Project Approval for the School of Communication Building Renovation as presented in the Executive Summary.

Mr. Ted Gates, Mr. Rich Bowen, and Dr. M. J. McMahon joined the meeting for this discussion. Regent Boice said Northern Arizona University was requesting Revised Project Approval for the new College of Business Administration at an additional cost of $2.1M. Ms. McMahon said the design includes provisions for a variety of learning porches, both formal and informal. The concept allows for conversation spaces in the hall ways and other areas of the building. This addresses student learning and student behavior in between classes. Mr. Bowen said NAU included a statement in the original Project Approval saying cost of construction materials was increasing significantly. He said NAU had the design of the building in the original project, but not all the elements the College of Business wanted. They needed to begin construction because of the small construction season in Flagstaff. They now have additional funds to add square footage and to improve the quality of the building. Regent Palacios asked if the cost would be higher if the project was done next year and was told yes. She said asking the legislature for funding after the building has already been started seems like a stretch. President Haeger said they knew six or eight months ago that construction costs were going up due to heavy construction in Phoenix. He said they now believe they have the ability to finance a project that would meet their needs. This is a good time to go into the bond market.

Upon motion of Regent Boice, seconded by Regent Calderón, the Board granted Northern Arizona University Revised Project Approval for the new College of Business Administration as presented in the Executive Summary.

Dr. McMahon said this budget increase was to add an expansion to the College of Engineering and Technology given the recent national assessment of this college. The Dean of the college and the Provost brought forward a business plan for research activities in the College of Engineering and Technology. The additional funds will be used to build 10,000 square feet of shell space. NAU anticipates using future research grants and industry partner collaboration funds to finish the shell space as required by selected individual research projects.

Upon motion of Regent Boice, seconded by Regent McCalley, the Board granted Northern Arizona University Revised Project Approval for the College of Engineering and Technology Renovation as presented in the Executive Summary.

Mr. Ted Gates, Mr. Rich Bowen, Mr. Kurt Freund, Mr. Rich Payne, and Dr. M. J. McMahon joined the meeting for this discussion. Regent Boice said Northern Arizona University was requesting approval for the combined refinancing of an existing student housing facility and the construction financing for a new student housing facility.

Mr. Payne said NAU is seeking permission to refinance the existing variable rate bonds used initially for the construction of Pine Ridge Village, a third party financed project. In addition, NAU is requesting approval for a subsequent $30M initiative for the demolition of apartment style housing currently known as Campus Heights.

Regent Boice asked what the refinancing would save and was told the initial Pine Ridge Village was financed with a variable rate bond. It converts to weekly rates effective October and it was always anticipated that once the initial risk involved in the project was finished, it would be converted to a fixed-rate product so the payments could be anticipated for the life of the project. The university was unwilling to give any guarantee to the developer for the initial project, so there was a great deal of risk for the period that is now passed. There is now 99% occupancy as the bonds are remarketed.

Regent Boice asked what the difference was in rates between the variable-rate bonds and the fixed-rate bonds. Mr. Freund said he expected the cost of issuance would run in the 1% to 1 ½% of money borrowed. The initial rate for construction financing was done on a pseudo variable rate as the rate on the bonds was fixed at 3% for the initial three-year period. The long-term fixed rate today will probably be 4½ % to 4 ¾%. The issue, however, will be the rate over the length of time of the financing and what risk profile the university wishes to assume.

Regent Boice said he agreed that the variable rate would probably rise and the project should be refinanced. Upon motion of Regent Boice, seconded by Regent McCalley, the Board approved the formation of Pine Ridge Village/Campus Heights LLC, assignment to the LLC of the existing ground lease from Northern Arizona Capital Facilities Finance Corporation, issuance of Lease Revenue Bonds not exceeding $45M for refinancing Pine Ridge Village and constructing the Campus Heights student housing facility, and lease of both facilities to NAU, as presented in the Executive Summary.

Mr. Ted Gates, Mr. Rich Bowen, and Dr. M. J. McMahon joined the meeting for this discussion. Regent Boice said Northern Arizona University was seeking Project Implementation Approval for the Wayfinding/Landscaping Infrastructure project at an estimated cost of $4M. This project was described in NAU’s Capital Development Plan presentation yesterday.

Regent Boice asked how many phases there would be to this project and was told this is Phase I of probably three phases that will occur over the next six years. This project will promote the “town-gown” improvement and will advance the NAU brand and image. Regent Boice asked that when future projects that are going to be done in stages are presented to the Board, the Executive Summary note how many phases there will be to the project.

Upon motion of Regent Boice, seconded by Regent Bulla, the Board granted Northern Arizona University Project Implementation Approval for the Wayfinding/Landscaping Infrastructure project, as presented in the Executive Summary.

Dr. Mark Denke and Dr. Tim Desch joined the meeting for this discussion. Regent Frank said the request was to amend Board Policy 2-102A, “Requirements for Assured Admission for Residents of Arizona,” that will be effective Fall of 2006. Dr. Denke said current admissions assure home school students admission as long as they meet the general aptitude and basic competency requirements. In Fall 2006, class rank, together with the completion of curricular requirements, will become the criteria for assured admission. Under the new standards, home school students will not have assured admission since they do not have class rank. During the last legislative session a bill was passed that required universities to provide assured admission for home school students. This amendment will allow home school students to continue to have assured admission.

Regent Frank said this item will come before the Board for a second reading and a vote in November.

Dr. George Davis joined the meeting for this discussion. Regent Frank said this is an academic program and organizational unit change request. Provost Davis said this was a proposal to eliminate the Humanities Program and Bachelor in Liberal Arts degree at the University of Arizona. Dr. Davis said the Humanities Program was initiated in 1986. When the program was recommended for elimination, it had 13 faculty members and it was housed in University College, a unit that serves students who have not yet declared their major. As the students determine their major, they move to their college of choice. The only faculty members in the University College are the humanities program faculty. This is different from the faculty of the Humanities College. The humanities program faculty have an instructional responsibility at the lower division level.

Dr. Davis said it was decided to move the faculty into departments for which their skills, expertise, and interest coincide with departmental goals. As a consequence of the proposed elimination, the faculty members are being transferred to different departments.

Regent Bulla asked about the degree being eliminated and was told it was a Bachelor of Liberal Arts degree, a BLA degree. The program had been available through the University College to be elected by individuals who wish to put together a hybrid, broad, interdisciplinary program. There are very few students in this program. Regent Graff asked if this would change the general education requirements at the UA and was told the numbers of offerings within these categories will increase even if these particular courses will not be available.

Upon motion of Regent Frank, seconded by Regent Bulla, the Board approved the disestablishment of the Humanities Program and the Bachelor of Liberal Arts Degree at the University of Arizona.

Ms. Cathy McGonigle joined the meeting for this discussion. Regent Palacios said there are a number of significant initiatives within Arizona’s University System such as the Feasibility and Planning Study of the proposed Redesign of the University System, the expansion of medical education and research in phoenix, and other innovative campus projects that promise to enhance the university experience for students.

The Public Awareness Plan is designed to advance and support these initiatives. The plan outlines a process for media outreach, legislative awareness and advocacy, and citizen and community outreach for the year. This month marks the first time that the complete Board book is available on the Board’s web site. Issue papers are being prepared as ‘briefing tools” on various topics important to the work of the Board, and legislative roundtables are being organized for after the general election to provide Board members an opportunity in informal sessions to discuss university system issues with newly elected and returning legislators.

This Plan is intended to be a useful guide, but it should be viewed as a working document as circumstances change. She said Regent input is important and asked they let her or Cathy McGonigle know if there is something that needs attention.

Upon motion of Regent Palacios, seconded by Regent Herstam, the Board approved the Public Awareness Plan for FY 2004-2005.

Dr. Frances Bernat reported the Arizona Faculties Council (AFC) had discussions yesterday on the request from the UA to eliminate the Humanities Program, the Home School policy amendment, and the Board’s math requirements. The AFC asked for an update on where the universities stood on formalizing their written policies in regard to the Board’s policy on hiring and background check information. The AFC is moving to establish a template on salary compression that will make sure the data is consistent when it is presented.

Regent Graff thanked Regent Herstam for placing him on the Redesign Work Group. Regents thanked President Crow and his staff for the tour last night, the dinner, and all the arrangements made for the Board meeting. President Haeger thanked the Regents for their support of the NAU capital projects. President Likins and President Crow thanked the Regents for their support of the budget requests. Mr. Keith Jennings was welcomed back to work after an extended illness.

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