April 28, 2003 University of Illinois
Urbana-Champaign Senate
Final;Information
SC.03.09 Report of the Board of Trustees’ Meeting, Rockford Medical Center, March 13, 2003
The agenda was rearranged significantly because the Board Chair, Lawrence Eppley, President Stukel and others were asked to attend the Governor’s press conference. They joined the Board shortly before the afternoon Executive Session.
Meeting of the Board of Trustees, 10:10-10:35 a.m.
The Chair Pro Tem, Trustee Schmidt, distributed the list of committee assignments of the Board and introduced the University Officers and Senate representatives in attendance. In the public comment period two individuals spoke opposing the sale of land at Allerton and a third spoke against the Chief.
Meeting of the Board of Trustees as a Committee of the Whole, 10:35-11:04 a.m.
Dean Bernard Salofsky of the UIC College of Medicine at Rockford described the goals of a proposed Center for Rural Health Professions, an interdisciplinary collaborative initiative designed to improve health and health care delivery and related economic outcomes for rural communities through education, evaluation, and research. The Center would build on the success of the existing program of recruiting individuals to practice in medically underserved rural communities. An addition to the existing building would house the program and staff with an estimated cost of $24M to be raised from federal, state and private grants.
Meeting of the Committee on Buildings and Grounds, 11:04-11:45 a.m.
The design for the Urbana-Champaign East Campus Commercial Building was presented. The building to be located at Oregon, Gregory Place and Nevada will have commercial space on the ground level, relatively upscale apartments on the upper 3 floors and a 60 car parking area underneath. At a later date a second phase would be built. A private firm, JSM, will build and manage the building on ground leased from the University.
The proposal to employ a construction management firm for the renovation and expansion of the UIUC IMPE building evoked a discussion of the terms of the contract. Some Board members felt provisions should be made for a lower fee if some elements of the project turned out not to need management by the firm. The item was rewritten to proceed with initial work so as not to delay the project while work further in the future will be covered in a revision to be presented at the next meeting. A report on the status of capital projects on the campuses was distributed.
Meeting of the Committee on the University Hospital and Clinics, 11:45-12:05.
A report on efforts to improve quality at the Medical Center was followed by a financial update. Seven months into the year, the Center is showing a positive balance of income over expenses and is largely on-target in terms of patients served.
Meeting of the Committee on Finance and Audit, 1:05-1:40 p.m.
An investment review of the University’s endowment (which is separate from the U of I Foundation) noted that the operating funds portfolio that utilizes fixed income investments is currently quite large given the largest construction effort in the University’s history. The Foundation currently enjoys a better return on its investments due to differences in investment strategies. Given all the uncertainties including the rising cost of oil and the impending war, there is no scenario suggesting a positive return by June 30. The portfolio takes a very long-term view and Trustees were asked to view its performance in that context. Passive funds are utilized as one means of keeping down investment costs. Bonds and stocks are unusually close in terms of yields. We are at a 24-year low for interest rates.
Meeting of the Board of Trustees as a Committee of the Whole, 1:40-2:55 p.m.
President Stukel and Chancellor Manning joined the group. He described the University’s response to the Governor’s call to reserve 8% of the FY 03 state funds for operating, 10% of capital and 5% of grants and contracts. These funds are subject to recision. Expecting some cuts, the University had held back some funds centrally in anticipation of a 2% cut this year while also planning for FY 04. An 8% cut in the last quarter of the fiscal year is a 33% reduction in this quarter. (Spending is not evenly spread across all quarters.) The University believes it can find 4.25% without doing egregious harm to the institution. Last year the University essentially took a $1K cut per student and an 8% reduction is an additional $840 per student. The spike in natural gas adds a $10M cost to our utilities budget.
The chancellors described the impact of the cuts on the campuses. At the 4.25% scenario UIUC loses $6.73M, UIC $6.42M and UIS $550K after taking $13.43M from centrally held reserves. Since centrally held reserves are already used the 8% scenario would require $20.72M from UIUC, $19.27M from UIC and $1.16M from UIS. The 4.25% cut at UIUC would eliminate 120 freshman discovery courses, discontinue support for learning technologies, and eliminate at least 50 positions in areas such as grounds maintenance, custodial service, painting, mail delivery, etc. The 8% scenario would eliminate all freshman discovery courses, 75-80 general ed courses, reduce matching grant funds leading to a loss of about $20M a year in research funding and 230 research related jobs, cut 50 business support office staff and about 200 TAs and around 50 instructors/lecturers, and reduce Fire Services Inst. services. Campuses vary: Chicago would eliminate its summer session with the 8% cut. If the University were to offset each 1% cut in state funds through tuition it would require a 3% tuition increase; taking into account helping those students who otherwise could not afford to enroll, it would be a 3 ½% increase.
Executive Session of the Board, 3:00-4:15 p.m.
Meeting of the Board of Trustees, 4:20-4:50 p.m.
Chair Eppley noted that items 1, 2, and 3 on the agenda went to the “heart of what the Board is about:” accountability and responsible stewardship of a top university. Item 1 placed the Board under the same travel rules as the staff. Item 2 requires the President of the University to budget all unrestricted funds by object of expenditure at the University level. Unrestricted funds include state GRF money, tuition, federal indirect costs recovered (ICR), administrative allowance and royalties. Board approval would be required to move any unrestricted funding from personal services to any other object of expenditure and for any transfer from an unrestricted object of expenditure that would cause total transfer to exceed 2% of the total value of unrestricted funding. The president and the Board shall cooperatively establish budget allocation priorities. Item 3 mandates the president to examine “all existing administrative structures” to propose consolidation, streamlining, and simplifying wherever possible and calls for support programs where possible to be centralized to achieve economies of scale. A progress report is due by July 2003. The chair noted that new committees or altered committee functions will be proposed in May that may require changes in the Board’s bylaws.
The regular agenda and roll call items were adopted with some revisions as previously noted and withdrawal of an item dealing with a settlement in a medical case. Items included a resolution honoring the service of former Trustee Roger Plummer, appointment of Fellows and Associates in the Center for Advanced Study UIUC, new appointments including that of the UIUC Dean of LIS, sabbaticals, sale of the Allerton land subject to the promised approval of the head of Alumni Association and approval by the Chief Justice of the Supreme Court (her views not known), revenue bonds for auxiliary facilities, purchases and the revision on the construction manager for the IMPE project. Ken Andersen Senate ObserverN.B.: Materials I received prior to and at the meeting are on file at the Senate Office.