Montana Board of Regents of Higher Education
Meeting Minutes

Regular Meeting
March 1-3, 2006
These minutes were approved unanimously as amended by the Board of Regents at their May 31-June 2, 2006 meeting in Havre, MT

The University of Montana Western
710 S. Atlantic
Dillon, MT 59725

BOARD OF REGENTS MEETING

THURSDAY, March 2, 2006

The full Board convened at 8:30 a.m. *ROLL CALL * Roll Call indicated a quorum present

Regents Present:
Lynn Hamilton, John Mercer Chair, Heather O'Loughlin, Mark Semmens, and Lila Taylor. Regent Mike Foster Vice Chair arrived at 10:10 a.m. (excused) Also present was Commissioner Sheila M. Stearns. Regent Absent: Regent Stephen Barrett, Governor Brian Schweitzer ex officio, and Linda McCulloch ex officio (all excused). Representing Governor Brian Schweitzer: Ms. Jan Lombardi, Education Advisor

APPROVAL OF MINUTES
Regent Hamilton moved APPROVAL of the Minutes of the November 16-18, 2005 Regular Meeting in Bozeman, MT and Minutes of the January 11-13, 2006 Regular Meeting in Helena, MT

The Minutes were APPROVED unanimously on 5-0 vote.

Commissioner Sheila M. Stearns congratulated Chancellor Ron Sexton for receiving a distinguished leadership award for college and university presidents. His award is from the District Eight Council for the Advancement and Support of Higher Education.

Commissioner Stearns also congratulated Award Winners to be recognized at the meeting of the Montana Ambassadors. Those are Educator of the Year President George Dennison, The University of Montana, Dean Rich Semenik, Montana State University, and Ambassador Plenipotentiary Larry Gianchetta, The University of Montana.

SYSTEM ISSUES

a. Announcement of WIRED Grant
Mr. Evan Barrett of the Governor's Office, and Dr. Arlene Parisot of the Office of the Commissioner of Higher Education, gave an overview of this three-year grant with $5M per year and what it means to Montana. Through committed partnerships (Montana's citizens, state agencies, private businesses, investors, academic institutions, entrepreneurs, philanthropists, economic and community development organizations and Tribal leaders) Montana will focus on economic growth, education, and workforce development that is built upon an expansion of the state's efforts to develop bio-fuels, bio-energy, and biolubricants. The development of a bio-based economic and business cluster is the target within the 32 counties and 6 Indian reservations of the target area. The award of this Grant also gives Montana a leg up on EDA and USDA grants.

b. Healthcare Workforce Issues Panel

Participants in the panel were Jan Lombardi, Governor's Office, State Representative Diane Rice, State Representative Debby Barrett, Dr. Loge of Dillon, Lisa Wheeler from Senator Burns' Butte office, Kim Falcon from Senator Baucus' office, and Mike Waite from Rep. Rehberg's Helena office.

Dr. Loge addressed some of the serious issues facing health care in Montana. Few students are choosing primary care as their field, and are going into the high paying specialty fields instead. With the loss of primary care givers, Nurse Practitioners have stepped in to fill part of the gap, but that is not enough. Only ten years ago, 50% went into primary care, and now it is only 10% and the rate is still dropping. Primary Care is the bedrock of healthcare, yet pays the least money of any of the medical professions. Rural areas have suffered this loss even more than urban areas. Educational debt is a factor in the change from primary care to better paying specialties. Dr. Loge indicated that until disincentives are written out of the different programs, things will continue to worsen. Chair Mercer thought that perhaps the use of Nurse Practitioners would help the Medicaid problem in Montana.

Representative Diane Rice noted that across the country, there are skewed demographics with too few young people to help the aging population. There will be stiff competition for younger workers. One solution might be for the State to repay medical school loans with some strict stipulations, such as those working in towns of 10,000 having their loans paid off at one rate, and those working in a town of 5,000 having their loans paid off faster. She noted however, that when the loans are paid off in Idaho they leave, and Idaho suffers a constant turnover.

Representative Debby Barrett said she had no solutions, but saw the need to work together to solve this problem.

Ms. Lisa Wheeler said she is not a health care expert, but appreciated the opportunity to participate in this forum. She indicated Senator Burns was grateful the Board was focusing this meeting on health care in Montana, and he will support them with whatever they need. Ms. Wheeler noted that Montana has ten counties with no physician. Senator Burns will provide legislation for tax incentives, and he supports telemedicine in Montana.

Ms. Kim Falcon agreed on the need to strategize to bring health care providers to Montana's rural areas. She said loan repayment and lower taxes are of interest to Senator Baucus. He would like to encourage more biotech startups. Ms. Falcon also indicated it would be good to bring medical students back to Montana for rotations to give them more exposure. She also indicated there was a need to expand into dental care. Additionally, with all the changes in the industry, there need to be ongoing opportunities for continuing education.

Mr. Mike Waite noted that Amy Aspen, a native of Geraldine who works in the DC office is the Congressman's expert in health care and education issues. He mentioned however, that there is a real need for continuing education opportunities for those in the health industry who want to improve their circumstances. They have also seen a shortage of primary care physicians preventing the expansion of some Montana medical groups to cover the local needs.

Ms. Jan Lombardi said the Governor's Office is looking to improve the conditions of Montana families, with a focus on the health care system. One in five Montanans is uninsured. Young adults are twice as likely to be uninsured as the average, and Native Americans are even worse and have more medical debt than the average citizen. Ms. Lombardi noted that more cuts are taking place at the federal level and that is significant to Montana. Indian Health Centers and sliding fee services are being cut. She said that the Montana University System has an essential role in improving this situation.

In continuing conversation it was noted that the new model in Montana is for the primary care physician to be a team leader handling all the difficult cases that come along with the Nurse Practitioners handling the balance. This is the way of the future. Regent Semmens said there need to be incentives to attract primary care to rural areas that have a true need. He asked if incentives could be targeted to specific areas. Dr. Loge explained that there are some programs but they are inadequate to meet the need. He believes that students need to be acculturated toward the primary care field much earlier, long before they enter their professional training. He said there are certain markers that can identify those who are most likely to return and stay in rural areas. The Admissions Committee should be doing a better job of recognizing these students. Residency is another big indicator of where the student will practice. Dr. Loge said that incentives are another issue. With potential income versus the debt, tax incentives mean nothing to these people. The federal program was wonderful, but has languished over the last 15 to 20 years. Chair Mercer asked if there had been an effort to quantify the dollars that would be saved in Montana with better health care. Dr. Loge indicated there were substantial data available, and it would be easy to model. Rep. Debby Barrett asked Dr. Loge to comment on the Japanese delegation. He responded that the following week, a delegation of Japanese medical educators was coming to Dillon, and said it demonstrates the prowess of WWAMI, which is internationally recognized. It is the only program in the country that brings together and repopulates these states with medical practitioners. The Japanese will be looking at the program as a model for themselves.

Following a ten-minute break, the Board reconvened at 10:10 a.m.

Regent Foster arrived at this time.

Interim President Ralph Lenhart introduced the new President of Dawson Community College, Mr. Jim Cargill.

DISCUSSION WITH CAMPUS LEADERS
President George Dennison, President Jane Karas, Chancellor Dick Storey, and Dean Jane Baker. (See reports from all campuses.)

President George M. Dennison reported on a national campaign promoting the public benefits of higher education. The campaign grew from two discoveries: the general public values the personal and private benefits of higher education, but is not fully aware of the public benefits. Out of 100 8th graders, in six years following high school, only 18 will receive either a BA or an AA. You may visit the web site at http://www.solutionsforourfuture.org. President Dennison indicated the campaign would begin the middle of March with two free full-page ads in the Wall Street Journal. Those will be followed by three different infomercials, with Fox offering free prime time across its 29 cable and broadcast networks. CBS and ESPN will run the PSAs via time provided by the NCAA during coverage of the NCAA men's and women's Division 1 basketball championships. The PSAs will continue to run on ESPN during coverage of the NCAA championships throughout the remainder of the spring. President Dennison invited the other system campuses to join the campaign to make their communities more aware of the necessity of higher education. The University of Montana has already committed to the campaign for its three-year duration. He explained the campuses were free to use the infomercials as they wish, and they can be tailored to meet their local needs. The theme of this campaign is 'American Universities and Colleges Prepare People to Change the World.'

President Jane Karas noted that 95% of Flathead Valley Community College graduates have found jobs in Montana. More than half go on to complete their higher education at the four-year campuses. President Karas said that FVCC provides a $50M per year impact on their local economy, as well as a decrease in crime rates, welfare costs, health costs, and unemployment costs. She indicated that the two-year AA adds the most value for dollars spent on education. On another issue, President Karas reported the completion of their land transaction, and they now have 209 acres of campus.

Chancellor Richard Storey reminded everyone that Western was hosting a reception that evening, and invited everyone to participate. He also gave a brief update on the Experience One scheduling, and indicated it has been very successful, with campus representatives from around the country coming to see how they do it. They have also been busy with workforce development with a group of community members. Chancellor Storey also reported the Equine Center is flourishing.

Dean Jane Baker indicated the enrollment has increased at the College of Technology at Montana Tech. She believes this is due to the fact they now offer health courses on-line for credit, along with the addition of the radiology, historic preservation, and construction carpentry with a specialty in interior finishing programs. They also will be offering the ultrasound certification in Miles City. Dean Baker noted an increase in student clubs, with the first charter induction into the Phi Beta Kappa Society. Despite their current successes, the campus suffers from a chronic problem with the lights and plumbing, which need to be replaced. Dean Baker indicated they will continue to address local and state needs, the dual credit issue, will incorporate service learning into the curriculum, and increase on-line courses.

END DISCUSSION WITH CEOs

SYSTEM ISSUES (continued)

d. Finding a Permanent Location for the Office of the Commissioner of Higher Education and the Guaranteed Student Loan Program - ITEM 130-111-R0306

==> Regent Mercer moved approval of Item d.

Regent Mercer said he believes a lot of people didn't want to have OCHE in Helena, and that perhaps someone else in the State would. He asked the Commissioner to give an update on the circumstances surrounding the new building for the Office of the Commissioner. Commissioner Stearns indicated that as the bonding program was in the works, the Helena College of Technology was going to be short of meeting all their needs, but by combining their needs with that of her office, they could make common cause and cover various needs. They would construct a building that could eventually accommodate expansion of the College of Technology, along with the parking lots needed. They had a setback after meeting with the neighbors, and it required a super majority of the City Council to approve the building. That requirement was not met. Commissioner Stearns indicated she would like some background from Dave Gibson, and City Manager Tim Burton. She said she might recommend deferral of this item to the May meeting. Associate Commissioner David Gibson gave the fundamentals of what had transpired, indicating that his predecessor Rod Sundsted had tried for a year and a half to find a building to lease in Helena, in cooperation with the Department of Administration. OCHE is now downtown in temporary space. There is no room for GSL in this space, and the Department of Administration indicated they would not allow a long-term lease at this location in its present condition. Mr. Gibson stated there is nothing in Helena to accommodate bringing OCHE and GSL together. It could be accomplished through the partnership with the Helena College of Technology, but if that doesn't materialize, they would need to go somewhere else. Mr. Gibson indicated it could be worth about $1M in savings to partner with the College of Technology due to the property being owned, no profit margin, and the shared parking. City Manager, Tim Burton said he had been asked to attend on behalf of the City Commission. He emphasized that OCHE is important to Helena, and it is not that they do not welcome this project. They have partnered with OCHE, MHESAC, GSL and the College of Technology for several decades. He offered as examples, the airport facilities on city/county property for the College of Technology, the new building for SAF on public properties intermixed with private property, and provision for a 50-year lease. The City has been engaged for at least four Legislative Sessions in expansion of funding for the College of Technology. Mr. Burton recognized that on the current transaction the zoning issue was denied. This shut the project down two weeks ago. The public process brings out private citizens. He indicated they have been reengaged and met after that because the arrangement of the financing would also shut down the parking lot for the campus. They were able to get approval of the parking area, and the College of Technology will now proceed. On the issue of the building, they have had two meetings including School District 1, and it appears there may be new options available. They are looking at which roads are open or closed, and more workable sites on the campus. Mr. Burton said the City is ready to work with the university system, and indicated he believed that with a little more time, they should be able to site this building in Helena for the long term. He asked that the Board set this item aside and give the City a little more time to do what is needed.

Regent Hamilton asked Mr. Burton to describe the opportunities available with the School District, and the Commissioner to address the new SAF space at the edge of town. Mr. Burton showed on the site map where two public streets run right through the campus. Across from the north end of campus is School District property, and the Superintendent has offered to relocate his facility services that are currently located there. That is already zoned as PLI (Public Lands and Institutions) property. This would be an ideal place to locate the new building. Commissioner Stearns indicated that SAF had purchased the property on the east end of town to protect their future, but it might be a long time before they do anything. It might be possible to push SAF to build faster and include the OCHE and GSL, but the day will come again when they are out of space. Commissioner Stearns said a good solution is to make this proposal work, since SAF is not a near term opportunity. Regent Semmens asked Dean Bingham if he was hopeful or in favor of pursuing the prospect offered by Mr. Burton. Dean Bingham indicated they were hopeful, the city is pulling together and they are working with the City Commissioner. Further, closing the two streets would make a more cohesive campus than they now have. Mr. Burton indicated the City should be able to have a solid proposal for the Board at the May Board meeting. Mr. Robert Duringer noted that one complication is that the bonds have already been sold and time is passing. The parking lot needs to be funded from CHE funds, and this new site needs demolition that will cost even more. He emphasized that time is of the essence. Evan Barrett commented that actions have consequences, and throwing this issue out to the whole state is like throwing red meat before starving dogs. There will be a lot of time and energy wasted in many different areas for towns and cities hoping to draw OCHE. Regent Hamilton asked if the bonding requirements precluded building in another area, to which Mr. Duringer indicated no, but they had to stay on budget. There is no attachment to the City of Helena. Regent Foster agreed with Evan Barrett, and indicated they must be serious about this if they plan to throw it open to the rest of the State. It is a big-ticket item, and not just an effort to send a message. Regent O'Loughlin indicated there is more here than just a building, such as moving staff out of Helena. She also noted that the university system has reached a point where it is working very well with the State, and moving out of Helena could hurt that. She said that if they make this decision, they must be serious about moving out of Helena. Regent Mercer stated it would be good to stay in Helena, but there is no place. He said he had a difficult time understanding why everything had to be located in Helena. Many other state agencies are scattered all around the State.

==> Chair Mercer withdrew his motion.

c. Update on Strategic Plan Action Items and Budget Initiatives Campus Initiatives from Tuition
Associate Commissioner David Gibson explained that the Strategic Plan Action Items were based on Shared Leadership guidance. This document will show where the campus foals and achievements should be five years from now. Along with Bill Muse and Jim Rimpau he will be working with the campuses to put these in order and they will bring numbers, goals and measurable targets to the Board at the May meeting. Mr. Gibson asked the Board if they had any guidance to offer them. Regent Hamilton wondered if OCHE would be able to manage the extra work of tracking the measurements and goals. Commissioner Stearns said she does not envision they could manage this within her office, but the campus executives would present the reports to her office, and in turn they would be presented to the Board. She indicated they may want to change the manner in which they measure graduation rates, since they do not now account for who is admitted. Her office will work with the campuses on this issue. Regent Semmens said it is important to identify the campuses or groups that would have most impact on what the goals should be. They should have input in this process. He noted that some goals are co-dependent, such as retention and affordability. Further, addressing family income compared to surrounding states will be difficult. Regent Semmens believes that discussion needs to be with a broader group, including the executive branch, the legislature, PEPB, etc. Mr. Gibson summarized the next steps, as he sits down with OCHE, works with Jim Rimpau and Bill Muse, and decides who does what as a lot of this is campus level work, and then assign the tasks. They will make progress by May. Chancellor Sexton commented that he saw no reference in the work plan reflecting a method to pay competitive salaries, maintain quality and assure quality in the classrooms. Without that, he believes there is no vision for the future. Discussion followed on the history of these goals, from Shared Leadership, to the PEPB agreement with the Board. The PEPB had recommended discussing quality in the preamble of the document since it is so integrated into everything the system does. State Senator Hawks, a member of PEPB said they came into the process late in its evolution. They had reviewed and modified the goals and came to agreement with the Board. If these are not comprehensive, and if there is internal conflict on the goals, he said the PEPB stands ready to reconsider the goals. It is an ongoing refining of the goals. Regent Hamilton mentioned that they had had a quality initiative at the beginning of Shared Leadership, and one measure that was agreed upon with PEPB was this kind of funding and competitive salaries. Chancellor Sexton stated that unless this issue is addressed in the strategic plan, it makes the assumption that everyone has a workforce problem except the Montana University System. He said they need to give consideration to putting on the table for the system, what they are putting on the table for others. Chair Mercer asked the committee to take this into consideration. He expressed a desire to see specific goals. Mr. Gibson said he would be glad to add the quality component, but does not know how to measure it. He needs more guidance on what is expected. Faculty Representative Shannon Taylor said the faculty could come up with the language for him. It would not necessarily be salary, but points on recruitment and retention of quality faculty. Those can be compared to peers, and to their turnover rates.

==> Chair Mercer gave a homework assignment to staff to provide metrics and language for the plan so the Board can review it.

The meeting recessed at 12:10 for lunch. The Board reconvened at 1:35 p.m.

ADMINISTRATIVE/BUDGET ITEMS

Regent Semmens indicated that the Budget Initiatives would be taken up on Friday with the Budget as a whole.

a.1 Letter from Scott Seacat , Legislative Audit Division
Approval of an independent audit of the Northern Rockies Center for Space Privatization to be sure there was value received for federal dollars expended. The audit committee will include members of the legislative branch of government and members of the public. This independent audit group will also review the dealings of Lloyd Chesnut, who was UM's Vice President for Research from 1997 to 2003 - _ITEM 130-112-R0306_ ' Chair Mercer

==> Item a.1 was set aside since the Legislative Auditor will be conducting a thorough audit of these issues.

a. Report from the Associate Commissioner for Fiscal Affairs - Robinson

1. Financial-Compliance Audit - Office of the Commissioner of Higher Education - Regent Semmens reported that Associate Commissioner Robinson had given a report to the Committee indicating that OCHE had worked with the Governor's Office and is in compliance with the audit.

2. Retirement Holdback Distribution FY06 & FY07 (Memo | Table)
Regent Semmens said he would like student input on this item. He believed it made more sense to build this item into the Budget and not deal with a surcharge. These funds were held at OCHE in anticipation of a requirement by the Legislative Special Session. Since the funds were not required, the first $800,000 is in place. The appropriation is there for two years. Associate Commissioner Robinson recommended returning the funds to the campuses and providing them with the flexibility to decide to eliminate the utility surcharge, fund the retirement reserves, or put the funds to financial aid. The Committee wants input from the campuses as well as the students. Regent O'Loughlin asked if it could be returned to the students in FY07. Regent Semmens indicated the tuition had been set for two years, but it could be done. Mr. Robinson also indicated all of the funds could be used in FY07. Students indicated they would like to see the funds rolled into FY07 with a tuition reduction. Regent Foster believed that those who had paid the dollars should get them back. Regent Semmens noted that the '07 Legislature may take the action that the Board had anticipated at the special session, which would increase the employer contribution. A second factor involved is guessing when people will be retiring which will trigger an unfunded liability. Bob Duringer of UM indicated they paid $103,000 in termination pay in FY03, and it is now up 150%

==> Regent O'Loughlin moved approval to allocate the held funds to the students in FY07 as a tuition reduction.

Regent O'Loughlin recommended allocating the funds based on a per credit basis to assure equitable distribution. President Dennison requested with the caveat only up to 12 credits since that is all students pay for. It was the consensus that the OCHE would still retain $10,000 from the funds to cover a study of the optional retirement plan, and how to deal with it.

==> It was unanimously approved on 6-0 vote to return the funds to the students on a one time basis in FY07 based on credit hours taken, less the $10,000 to be retained by OCHE for the study.

b. Wood-fired boiler-UM-W - ITEM 130-1605-R0306

c. Subzero Cold Chambers-MSU - ITEM 130-2004-R0306 | Attachment

d. New Wellness Center-MSU-N - ITEM 130-2802-R0306 | Attachment

e. Renovate BLM Building-MSU-N - ITEM 130-2803-R0306 | Attachment

==> Regent Semmens moved approval of Items b. through e.
==> Items b. through e. were approved unanimously on 6-0 vote.

f. Loan for Renovation of Atrium-MSU-Bozeman -ITEM 130-2010-R0306

g. Loan for Construction of BioSafety Animal Containment-MSU-Bozeman - ITEM 130-2011-R0306

==> Regent Semmens moved approval of Items f. and g.
==> Items f. and g. were approved unanimously on 6-0 vote.

h. Naming the Education Center-UM - ITEM 130-1017-R0306

==> Regent Semmens moved approval of Item h.
==> Item h. was approved unanimously on 6-0 vote.

i. Recommendation of Vendor-MFES - ITEM 130-106-R0306 - Marks Current Handbook

==> Regent Semmens moved approval to negotiate the contract with the understanding that the Board wants regular annual reports on the cost relative to bench mark peers and other State 529 plans. The first report is due at the May, 2006 meeting of the Board, and will include the specific terms of the contract.
==> The motion was approved unanimously on 6-0 vote.

j. Policy on Disposal of Computers -MUS - Discussion Item

==> No action was needed on Item j.

k. Use of Timber Sales revenues-MUS - ITEM 130-107-R0306 | Attachment

==> Regent Semmens moved approval to to make the revenues distributable. They were distributed last year at the direction of the Legislative Auditor to DNRC.
==> The motion was approved unanimously on 6-0 vote.

l. Allocation Model Review

There was discussion on what guidance needs to be given to the working group and the Administrative/Budget Committee for their next meeting. At the suggestion of the Governor's Budget office and the Legislative Fiscal office, it was recommended that the Board look at one time money from the projected surplus since they will not have a ballpark number before June or July, and a firm number by fall. Jan Lombardi of the Governor's office will provide a copy of the report Terry Johnson presented from the Revenue Committee to keep the Board abreast of what the legislature knows. She indicated that David Ewer was concerned that the oil and gas revenue was one-time-only (OTO) money. Associate Commissioner Mick Robinson noted the committee is approaching the budget and allocation model based on current level services as the starting point. They have not spent a lot of time on the revenue side, but are still building a model that could be used to predict tuition. They also anticipate more discussion on differential tuition and how to allocate level state dollars to address it. Regent Semmens noted that key issues that will affect the revenue side are how to deal with enrollment changes and differential tuition. He also indicated they will continue to assume $500,000 per biennium for Regents' initiatives.

m. Biennial Budget Process Review - Robinson/Joehler (Present Law by Campus | Fee Waiver Utilization)

Regent Semmens noted that across the system there had been a fairly modest enrollment growth of about 4.5% annually. Former State Representative Ray Peck addressed the Board and mentioned that Chair Mercer had indicated he was not aware of the decline in the budget funding for the university system. Chair Mercer responded that he had been unaware of the automatic decline in support to the university system that was built into the State budget. Mr. Peck noted that to cover all the bills will require changes to the tax rules. He believes that both parties must go to the back room, trust each other, and make those changes. Mr. Peck suggested Jim Elliott and Ken Toole as a couple of people that could help them. He invited Chair Mercer to join in this effort. Regent Semmens noted that they need to establish expenditures that will maintain quality. He asked Mr. Robinson if he needed action by the Board today. Mr. Robinson indicated they needed authority to go to the OBPP with what they had developed.

==> Regent Semmens moved approval to proceed to the executive level with the present law budget projections as presented. The motion was approved unanimously on 6-0 vote.

The Board recessed at 3:10 p.m. to go into Committee meetings at 3:30 p.m.

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FRIDAY, March 3, 2006

The full Board reconvened at 8:45 a.m.

ACADEMIC/STUDENT AFFAIRS ITEMS

d. Portion of the Meeting Devoted to Chief Academic Officers.

1. Level I memorandum - Regent Hamilton reported on the Level I items, and there were no questions raised.

2. Level II items

a. Bachelor's in Media Arts, UM-Missoula - ITEM 130-1002-R0106 - Request | Summary | Proposal

b. Bachelor's in Accounting, UM-Missoula - ITEM 130-1003-R0106 - Request | Summary | Proposal

c. Bachelor's in Finance, UM-Missoula - ITEM 130-1004-R0106 - Request | Summary | Proposal

d. Bachelor's in Information Systems, UM-Missoula - ITEM 130-1005-R0106 - Request | Summary | Proposal

e. Bachelor's in International Business, UM-Missoula - ITEM 130-1006-R0106 - Request | Summary | Proposal

f. Bachelor's in Management, UM-Missoula - ITEM 130-1007-R0106 - Request | Summary | Proposal

g. Bachelor's in Marketing, UM-Missoula - ITEM 130-1008-R0106 - Request | Summary | Proposal

h. Master's in Information Systems, UM-Missoula - ITEM 130-1010-R0106 - Request | Summary | Proposal | Budget

i. Associate in Natural Horsemanship, UM-Western - ITEM 130-1601-R0106 - Request | Summary | Proposal | Budget

j. Certificate in Agricultural Marketing, Dawson Community College - ITEM 130-201-R0106 - Request | Summary | Proposal | Budget

k. Associate in Web Development, Dawson Community College - ITEM 130-202-R0106 - Request Summary | Proposal | Budget

Regent Hamilton moved approval of Items a. through k.

The motion was approved unanimously on 6-0 vote.

3. Level II submission memorandum

There were no questions on Item 3

e. Portion of the Meeting Devoted to Topics of Concern to both Academic and Student Affairs Officers.

1. Transfer goals - ITEM 130-101-R0306 | Goals

==> Regent Hamilton moved approval of Items a. through k. The motion was approved unanimously on 6-0 vote.

3. Revisions to Policies 301.1 and 301.2 - ITEM 130-102-R0306 | Attachment 1 | Attachment 2

The Committee withdrew Item 3 from the Agenda.

4. Revisions to Policy 301.5.1 - ITEM 130-104-R0306 | Attachment

==> Regent Hamilton moved approval of Item 4. The motion was approved unanimously on 6-0 vote.

5. Discussion of Policy 940.29, tuition for post-baccalaureate students

==> Regent Hamilton indicated the Committee wanted to know more about the fiscal impact of Item 5 before bringing it before the full Board.

f. Portion of the Meeting Devoted to Topics of Concern to Student Affairs Officers.

2. ISBN numbers and textbooks - ITEM 130-105-R0306 | Attachment

Regent Hamilton moved approval of Item f. The motion was approved unanimously on 6-0 vote.

Staff and Compensation Items

a.Discussion of draft guidelines for "Board of Regents employment contracts" and "Montana University System employment contracts."

Regent Semmens indicated there were no action items for the Committee at this meeting. However they had had a lengthy discussion of employment contracts in the Committee meeting. It is the consensus that only about 60 to 80 position will continue to go before the Board, those being the Commissioner and staff, and CEOs down to Vice Presidents, Chancellors and Vice Chancellors. He asked the Board to look at the proposal and then talk to Kevin McRae with input on whether they should put in policy the form in which compensation changes can take place. There is also the possibility of signing bonuses and perhaps retention bonuses. This is not intended to give greater authority, but more clarity. Regent Semmens said the final piece is the question of multi-year contracts for professionals. There exists no policy on multi-year contracts for coaches, but in practice the Board has been against them. He asked if the Board believes they should be considered. Also requested was input on under what circumstances to allow multi-year contracts. There must be substantiation of extreme difficulty and evidence of market support as reasonable and customary. Other nuances are if they should be for two or three years, and what documentation would be required. All multi-year contracts would have to come before the Board for approval. Regent Semmens said the campuses had been tasked to survey and return with current market circumstances on multi-year contracts in other states for coaches, as well as other positions as far down as Deans. There are a number of complex issues, and Regent Semmens asked that the information be provided to the Board before the next meeting so they do more than simply discuss it then. Commissioner Stearns indicated they would put out an inquiry through the SHEEO list serve, asking how many regret using multi-year contracts, as well as other qualitative and quantitative questions.

Chancellor Gilmore took the opportunity to counter incorrect statements that impugned the faculty at Montana Tech made at the Committee meeting the day before by Professor Brower. Professor Brower had claimed quality had gone down on campus. Chancellor Gilmore indicated that the Northwest Association of Schools and Colleges had reaccredited them, and they were the only institution in the Northwest with absolutely no recommendations. Professor Brower also had indicated a young man had been hired with only a Masters degree and was earning more than long time professors. Chancellor Gilmore said that in reality the young man was Mr. Todd Hoffman, a 4.0 graduate of their campus, who received his doctorate from Stanford. Montana Tech hired him the year before he completed his doctorate and waited for him. He indicated that some Tech faculty salaries are supplemented by industry endowments. Chancellor Gilmore said they do have trouble hiring, but the number of Ph.Ds at Tech has increased, not decreased. He also countered the statement that two faculty are leaving only because of salaries, stating they are leaving for several issues that will be addressed.

Regent Semmens said Mr. Kevin McRae will bring before the committee at the next meeting the CUPA data that was gathered before Kathy Crego left. He said the contract policy issue is important, and invited the Board to give their input to Mr. McRae when he provides the new documents. Regent Foster asked if the intent on coaches was to take up recommendations for multi-year contracts on a case-by-case basis. Regent Semmens indicated that was correct, and that the policy would authorize multi-year contracts, not as a rule, but as needed, with the campuses demonstrating a true need.

Workforce Development Items

a. Review recommendations for expanding WWAMI, expanding physician residency program(s), and improving physician location incentives. Document to be mailed to the Committee next week

b. Healthcare panel discussion: How can the university system most effectively train the healthcare workers needed in Montana in the next decade? Healthcare Workplan V4

==> Regent Foster indicated that Items a. and b. would be taken up with the Budget.

c. Discuss progress of the effort to develop speech pathology programs at UM-Missoula and MSU-Billings. Regent Foster indicated he was frustrated about this item since he understood that both campuses were to work together for a system approach on this program. As it is, each campus will try to evaluate the cost and market for graduates from the program. The question is whether they can get a job with just the BA. Questions remain, and he hopes there will be more information to evaluate at the May meeting, and that the two campuses work together to decide what is best for the students and the system with these two degrees.

d. Discuss proposal for a public sector workforce needs survey. Public Sector Study | Vitae. Regent Foster referred to the survey of the private sector done by Mr. Paul Polzin, and indicated a survey of the public sector needs was also needed. He noted they will focus on what has been done in health care, construction, and then the public sector so they don't become overwhelmed.

e. Discuss workforce development initiatives of other states. Economic Development | Health Care Economic Development (This was an information item only.)

CONSENT ITEMS

Staff Items:

a. ITEM 130-1000-R0306 - Staff; The University of Montana-Missoula

b. ITEM 130-1012-R0306 - Authorization to Confer the Titles of Dean Emeritus of the School of Fine Arts and Professor Emeritus of Drama/Dance Upon James D. Kriley; The University of Montana-Missoula

c. ITEM 130-1013-R0306 - Authorization to Confer the Titles of Dean Emeritus of the School of Education and Professor Emeritus of Educational Leadership and Counseling Upon Dr. Donald R. Robson; The University of Montana-Missoula

d. ITEM 130-1014-R0306 - Authorization to Confer the Title of Professor Emeritus of Environmental Studies Upon Thomas Roy; The University of Montana-Missoula

e. ITEM 130-1015-R0306 - Authorization to Confer the Title of Professor Emeritus of Wildlife Conservation Upon Jack Ward Thomas; The University of Montana-Missoula

f. ITEM 130-1016-R0306 - Authorization to Confer the Title of Professor Emeritus of Journalism upon William L. Knowles; The University of Montana-Missoula

g. ITEM 130-1500-R0306 - Staff; Montana Tech of The University of Montana

h. ITEM 130-1500A-R0306 - Staff; Montana Bureau of Mines and Geology

i. ITEM 130-1600-R0306 - Staff; The University of Montana Western

j. ITEM 130-2000-R0306 - Staff; MSU-Bozeman

k. ITEM 130-2001-R0306 - Professor Emeritus of Cell Biology & Neuroscience-James McMillan; MSU-Bozeman

l. ITEM 130-2002-R0306 - Professor Emeritus of Education-Ramona Marotz-Baden; MSU-Bozeman

m. ITEM 130-2003-R0306 - Professor Emeritus of Soil Science-Gerald Nielsen; MSU-Bozeman

n. ITEM 130-2009-R0306 - Regents Professorship upon Paul A. Grieco, MSU-Bozeman

o. ITEM 130-2300-R0306 - Staff; Ag Experiment Station

p. ITEM 130-2400-R0306 - Staff; Cooperative Extension Service

q. ITEM 130-2700-R0306 - Staff; MSU-Billings

r. ITEM 130-2701-R0306 - Professor Emeritus of English-Assistant Professor Randall Gloege; MSU-Billings

s. ITEM 130-2702-R0306 - Professor Emeritus of Philosophy-Professor David Karnos; MSU-Billings

t. ITEM 130-2703-R0306 - Professor Emeritus of Educational Theory & Practice-Professor George Madden; MSU-Billings

u. ITEM 130-2704-R0306 - Professor Emeritus of English-Associate Professor Walter Utroske; MSU-Billings

v. ITEM 130-2800-R0306 - Staff, MSU-Northern

w. ITEM 130-2801-R0306 - Professor Emeritus of Biology-Dr. Reno Parker, MSU-Northern

==> Regent Hamilton moved approval of all staff items. The motion was approved unanimously on 6-0 vote.

Labor Agreements/Other

a. Student Loan Advisory Council - ITEM 130-109-R0306

==> Regent Foster moved approval of Item a. The motion was approved unanimously on 6-0 vote.

STUDENT REPORTS

President Gamble thanked Blake Rasmussen for all he had done for the MSU campus in Bozeman, noting he had been elected twice as President of the Associated Students, and already had a job lined up.

Students that provided verbal reports to the Board on behalf of their associated student bodies were, Solomon Redfern, ASMT Treasurer, Blake Rasmussen and Deepu Philip MSU-Bozeman with PowerPoint presentations on Bobcat Transit-The New Face and An Overview On System & MSU-Bozeman Issues, Brad Cedarburg, The University of Montana-Missoula, Tracy Oldenberger, MSU-Billings, Fay Clark, The University of Montana Western, and on behalf of MAS was Blake Rasmussen.

Regent Semmens noted that the figures shown in the presentation An Overview On System & MSU-Bozeman Issues on conversion from non-resident to resident seemed significant, and requested that staff follow-up on that issue, as well as retention. Regent Hamilton said it would be difficult to do a comparison between admissions and retention since there is no consideration given to the types of admissions, including those with low requirements. Chair Mercer requested MAS to try to make a change in their By-Laws to include this type of presentation to the Board of Regents at least once a year. Regent Foster was concerned about the retention rates presented. He asked the campuses to make an effort to identify students that should be looking at different programs or campuses, depending on their needs, and to guide them in that direction rather than trying to keep their own FTE higher.

Public Comment: There was no public comment.

Following a ten minute break, the Board reconvened at 10:30 a.m.

ADMINISTRATIVE/BUDGET ITEMS (continued)

n. Budget Initiative Proposals

Campus Initiatives: Regent Semmens indicated they would begin with the campus initiatives, then move to the system initiatives, and noted that all of these are above the present law budget. He indicated they would need guidance from the Board on whether to increase tuition to fund these initiatives. He recommended no more than .5% of an increase. Regent Semmens added that the campuses will need to make a decision on whether they should even go as high as .5% for the initiatives. He recommended that if the Board authorizes the campuses to look at .5%, they also encourage extensive involvement of students since their dollars will be funding these initiatives. Regent O'Loughlin agreed, and indicated students would not want to go any higher than .5%. She encouraged all the CEOs to work with their students on these issues. Dean Mary Moe said she could not ask students for an increase to fund faculty salaries. In the two-year system salaries are inadequate and create an untenable situation for faculty. Regent Semmens clarified that this was not to the exclusion of the allocation issues. Chancellor Gilmore indicated he had hoped there would be relief for their faculty salaries through the allocation model, but feels less optimistic based on the current conversation. He believes they now need to get student buy-in to address salary issues with increased tuition. Chair Mercer said his desire is to point out the realities because they are not understood. If there are ideas on campuses to improve quality, he doesn't want to see them swept under the carpet because they exceed the .5%. He doesn't believe they can sell these ideas only to the students, but rather should sell them first to the legislature. Chair Mercer indicated that when he was in the Legislature his objective was to give the university system as little as possible so there would be more for other things. He believes no one tried to sell him on the system. Regent Hamilton suggested there were two approaches ' either they need new money, and more money, or the other approach which is more like business, choosing which items need to be done because they are so important, and letting the rest fall by the way. She believes the Board needs to take responsibility for the budget they set, and suggested they make the decisions, decide on tuition, and then let the CEOs manage the resources provided. Regent O'Loughlin asked if any of the items were needs, or if they were wants. President Gamble indicated there were both types, and it would be okay if the wants were not done. Regent Semmens suggested that perhaps these items should be funded by the state as well as the students, and staff would need guidance on this issue as they work on the budget. Dean Moe said that as she worked through the initiatives for her campus, there was the presumption that faculty would get 3%, but even 4% would not be enough. Regent Semmens indicated that was an important point, and asked Kevin McRae for the next Staff and Compensation committee meeting to see how they could make these adjustments in relation to unions.

==> Regent Semmens moved to authorize campuses to submit campus initiatives that could be funded with a .5% per annum tuition increase, with the understanding that such initiatives would be included in the OCHE submissions to the executive budget office, and that such initiatives would be subsequently reviewed with student groups for their input.

Regent Hamilton asked if the .5% was in addition to the amounts on the list. Regent Semmens indicated it was, but the percentages will depend on discussions of the future. Mick Robinson suggested it was a good idea to move the initiatives into the budget process, and recommended placing a cap on the dollar amounts to prevent extensive lists for the appropriation process. Regent Hamilton suggested it might be a good idea to talk in real dollars rather than percentages, and Regent Semmens indicated that in real dollars funding from the state for the university system and the educational units had dropped. Mark Bruno reminded the Board that one exercise required of all agencies is to provide a budget reflecting a 5% reduction to the Budget Office in September.

==> The motion was approved on 5-1 vote with Chair Mercer dissenting

System Initiatives: Regent Foster suggested they begin with the allied health care, and that there were three recommendations that Dave Gibson had put together following the panel of the previous day.

==> Regent Foster moved adoption of the first three recommendations of the Primary Care Liaison Groups' review of the Martz Blue Ribbon Task Force

Regent Semmens requested they discuss WWAMI with this rather than separately. Regent Foster said they are related but are also separate issues. Regent Semmens wanted a better understanding of health care in total.

==> Regent Foster moved adoption of the recommendations of the working group regarding the physician incentive programs, expanding residency programs, and expanding WWAMI. The recommendations are described in detail in the report 'Recommendations to the Montana Board of Regents Regarding Physician Education and Incentives in the State.'

There was an extended discussion on the value of adding 20 new WWAMI slots considering the added cost of $6.8M per year to the State. It was pointed out that Montana had never been offered more slots in the past, and it would probably not happen again for many years, and it would thus behoove the Board to consider this opportunity to increase the WWAMI slots for Montana. It is difficult for Montana students to enter these programs except through WWAMI. Jan Lombardi cautioned that David Ewer had only evaluated the executive budget based on the 20 current slots at a cost of $170,000 each. Regent Semmens asked if the Committee had considered adding fewer than the 20 slots, and Regent Foster indicated they had. The Board reached a relative stalemate on the addition of up to 20 new slots.

==> Regent Hamilton moved to table this initiative until the next Legislative Session, and to ask the Office of the Commissioner to work with the Legislative groups, the Executive Budget Office and the advisory committee. The motion was failed on 5-1 vote with Regent Hamilton supporting. The Original Motion to added the 20 new WWAMI slots failed on a tied roll call vote of 3-3, with Regents Hamilton, O'Loughlin and Semmens dissenting.

==> Regent Semmens moved approval to submit a Healthcare Workforce Training Initiative in the amount of $4.0 million that includes development of a healthcare worker strategic plan, creation of data and program advisory groups, implementation of physician recruitment recommendations, expansion of up to ten WWAMI medical school slots, and development and expansion of allied health programs to address critical shortage areas. Motion approved unanimously on 6-0 vote.

==> Regent Semmens moved approval to submit the following other System initiatives: Improve Transferability and Student Data: $1.9 million; Expand Indian Education for All: $500,000; Improve Affordability: $2.5 million (with the understanding that a buy-down of tuition at 2-year programs would be a part of the funding discussion for current level services); and Coordinate and Expand Distance Education: $600,000. Motion approved unanimously on 6-0 vote.

Regent Semmens indicated the initiative on the Montana Energy System should be under the Governor's office, rather than the university system. Chair Mercer asked Regent Semmens where he would put $5.5M in the university system if he had it. Regent Semmens indicated he would first put it into core services, and then affordability. Regent O'Loughlin noted they should discuss whether they wanted to decrease tuition, or support these initiatives 100%. Regent Hamilton indicated that for the most part, these initiatives could be done with one time money. Tuition buy-down is a long-term issue. President Dennison commented that in the context of this discussion, no attention was given to the one-time-only requests from the campuses. He suggested it was an opportunity for each campus to pick one of counties with the highest level of poverty in the state, and work with the various public and private elements of that county to lower the high level of unemployment and improve their economic development. He mentioned also the request from UM for one-time-only funds in the amount of $250,000 for new equipment for the speech pathology program. Chair Mercer asked Regent Semmens if he would suggest something for the campuses to bring forward for one-time-only funding. Regent Semmens indicated he was under the impression that the one-time-only was encompassed in the system, or discretionary 1%. Chair Mercer asked Jan Lombardi to confer with David Ewer and the Governor to see if there would be one-time-money that could be set aside to entertain ideas from the campuses. Ms. Lombardi did not know if they would be able to earmark a certain amount, but she would check for the Regents.

Regent Foster handed around the WWAMI annual report for the Regents information. He also mentioned that if the Board is ever interested in going to Washington to see the campus, it could be arranged. Commissioner Stearns noted that significant policy issues had come forward during the public comment period in the committee meetings that need more attention from the Board. Also leading to the 2007 Legislative Session, they need to decide how to consider the 6-mill levy, which brings in between $12M and $15M to the budget. The University System backers would need to communicate across the state, and she hoped they could make a compelling case for quality and competitive needs in the university system. She asked the Board for direction in these areas. She thanked David Ewer for meeting with the Community College Presidents the previous day on their budgets. She noted that in each session Mr. Ewer says the Governor's office is open to good ideas, one-time-only ideas, and dollars that can be leveraged. They will put placeholders in the executive budget for good one-time ideas.

Chair Mercer announced the Board was recessing into Executive Session at this time. He sincerely thanked The University of Montana Western for hosting this meeting, and for their warm hospitality.

With no further business to come before the Board, the meeting recessed at 12:45 for the Executive Session after which the meeting adjourned.

MINUTES OF THE COMMITTEE MEETINGS

WEDNESDAY, March 1, 2006

Budget and Audit Oversight Committee

The Budget and Audit Oversight Committee convened at 10:20 a.m.

Committee Members Present: Mark Semmens Chair, and John Mercer Committee Member Absent: Stephen Barrett, excused. Others Present: Mick Robinson, Pam Joehler, Alan Peura, Cathy Swift, Kevin McRae, Susan Patton, MaryEllen Baukel, Dean Mary Moe, Terry Iverson, Rolf Groseth, Dave Gibson, Commissioner Sheila Stearns, Chancellor Dick Storey, Susan Briggs, Chancellor Frank Gilmore, Bob Duringer, Bruce Marks, Rosi Keller, President Geoff Gamble, Regent Lila Taylor, Regent Lynn Hamilton, Bill Muse, Craig Roloff, Dean Daniel Bingham, President George Dennison, (Elsie Arntzen, Bob Hawks, and Robin Hamilton of the PEPB), Karen Wing, Theresa Branch, Jim Foley, Shannon Taylor, Regent Heather O'Loughlin, John Cech, Chuck Johnson, Mark Bruno, Allen Yarnell, Jim Rimpau, and Dave Dooley

a.1 Approval of an independent audit of the Northern Rockies Center for Space Privatization to be sure there was value received for federal dollars expended. The audit committee will include members of the legislative branch of government and members of the public. This independent audit group will also review the dealings of Lloyd Chesnut, who was UM's Vice President for Research from 1997 to 2003 - ITEM 130-112-R0306

==> Regent Mercer referred to the letter received from Scott Seacat in the Legislative Division which indicates his department will be including this item in their full audit. Under the circumstances, Regent Mercer asked that no action be taken on this item except to offer full cooperation to the legislative auditor.

i. Recommendation of Vendor-MFES - ITEM 130-106-R0306 - Marks | Current Handbook
Ms. Karen Wing of the Montana Guaranteed Student Loan Program indicated this item provides their recommendation to the Board for the vendor of this program. The contract expired at the end of January 2006. They had put out the RFP, reviewed the current contract and gathered feedback from the participants. There were concerns about the rate of return and the fees being paid. It was also perceived that marketing could be improved. Ms. Wing said they reviewed other states' programs, industry experts, and a consultant. They received two proposals in answer to the RFP, one of those being from UPromise and the other College Savings Bank. Chair Semmens indicated he had also received some letters complaining about the rate of return and the fees, and wanted to know what options could be provided to encourage Montana families to invest. Mr. Ted Benedict of Pacific Life Funds indicated he saw strong returns on the performance of these funds. However, Chair Semmens said the Prospectus did not correlate with what Mr. Benedict had just said. He suggested that if they had more current data, he would like to have it to give guidance to people who raise these issues. Mr. Benedict indicated the current performance after net fees is shown on their web site on a daily basis. He indicated they will be beefing up their marketing efforts. Mr. Peter Roberts, CEO of College Savings Bank said he manages the program, files the tax aggregation, reports to the Board of Regents, and works with Pacific Funds. Chair Semmens asked if there were comparables available, and Ms. Wing indicated they had put together reports on comparisons to all other plans. She would be happy to provide those reports to the Board on a periodic basis. She said it appeared Montana was much lower than other states. Chair Semmens said it would be good to reconcile what Mr. Benedict had said, but Ms. Wing indicated it is difficult since other plans have more history behind them, and the Montana plan is hurt by its small size. Bruce Marks noted that date of inception has had a heavy impact on returns, with the newer investors doing better than those who invested earlier.

Regent Mercer indicated he would like to be sure the performance is being tracked over the years. He also asked if there had been any evaluation of the long-term benefits to those who save, as compared to those who use grants and scholarships. Mr. Marks indicated that since new legislation last year had made the Board of Regents the trustee of the program, they will be working with the Oversight Committee who should provide that reporting. He indicated it probably had not been done in the past. He noted that the Oversight Committee meets twice a year and they will be able to provide regular reports to the Board. Chair Semmens requested benchmarking of peers, net of cost and fees, and relative to other State 529 plans. He referred to a mention of piggybacking made by Ms. Wing. Mr. Bruce Marks indicated that no other states had responded to the RFP to offer to let Montana piggyback on their programs. Regent Mercer requested they formalize regular interval reports to the Board. Chair Semmens said they wanted annual reports as identified above. Ms. Wing said there will be periodic review. Regent Mercer asked if anyone had comparisons on savers vs. non-savers. Mr. Peter Roberts reported that 529 accounts are treated specially, and the assets are shown as parental assets, not student assets. Therefore, there is no negative impact on financial aid. He also informed the Board that Pacific Life charges a $25 maintenance fee for non-residents, and those funds are given to the Board. Based on the number of accounts, the Board received $77,000 last year.

a. Report from the Associate Commissioner for Fiscal Affairs - Robinson

1. Financial-Compliance Audit - Office of the Commissioner of Higher Education. Mr. Robinson gave a brief overview on this item. See memo attached to Agenda.

2. Retirement Holdback Distribution FY06 & FY07 | Memo | Table
Mr. Robinson reminded the Board they had decided at the May 2005 meeting to hold back tuition in anticipation of the pending special session of the Legislature. The Legislature had talked about having agencies put more toward their unfunded retirement liabilities, but no action was taken at the special session. The money has been kept in a special fund at OCHE. Mr. Robinson now recommends these dollars (less $10,000 to fund a review of the optional retirement plan) be transferred back to the campuses. There was discussion about the best use of these funds, and whether to retain them for future unfunded retirements, or use them to reduce the utility surcharge, let the campuses make their own decisions on how to spend them, or return them directly to the students in the form of lower tuition. Regent Hamilton reminded the Board that the very issue the funds were set aside for will be coming back as they move down the road. President Dennison said the optional retirement program has become the only thing for faculty. There is a disparity between what the faculty provides and what the state provides. He believes a study of that would be helpful. He said the university system is aware of what the future is, but the rest of state government is not. There is an argument that the State has the same obligation to this retirement program as it does to others. State Senator Hawks said there is no question that the Legislature will be facing this issue in the next session. They need an actuarially sound long-term fix. The one question is how aggressively they will work through it. Chair Semmens asked if the held over funds could be held over for the next biennium. Mr. Robinson indicated that OCHE cannot hold on to excess funds, but the campuses have a little more flexibility. Regent Mercer said the Board should be disciplined in the budgets they put together, and the funds should be put back where they came from. He wants the campuses to provide their plans on how they will use these funds for student assistance before they receive them. Chair Semmens said the $800,000 did not come from state funds, but from tuition. He reiterated that the retirement issue will continue to be a problem. Regent Hamilton asked why there could not be reserve accounts for retirements the same as there are for libraries and utilities. Both Regent Mercer and Chair Semmens remembered that there was some rule that did not allow them to build these reserves. Mick Robinson noted that OCHE has no mechanism, but there is one at the campus level. Chancellor Capdeville noted that they have a number of older faculty at the Northern campus, and $20,000 will not touch this payout. There is a huge unfunded liability for the whole system. State Senator Elsie Arntzen said that if the funds were raised from student tuition, then they should be returned to the students. Senator Hawks believed that if it is construed as tuition, it will serve the Commissioner well. Regent O'Loughlin, in relation to reserve accounts, asked how they would know if they were holding out too much from the students each year. Chair Semmens asked the CEOs if approval of suggestions on these funds could wait till the May meeting. President Dennison indicated that would be the latest since they need to finalize costs to the students. The CEOs agreed they would have their plans ready for the meeting tomorrow, and would present them to the full Board.

b. Wood-fired boiler-UM-W - ITEM 130-1605-R0306

c.Subzero Cold Chambers-MSU - ITEM 130-2004-R0306 | Attachment

d. New Wellness Center-MSU-N - ITEM 130-2802-R0306 | Attachment

Mick Robinson indicated that Items b., c., and d. met all requirements for approval.

Regent O'Loughlin asked if the wellness center would be open to all students. Chancellor Capdeville indicated it would be.

e. Renovate BLM Building-MSU-N - ITEM 130-2803-R0306 | Attachment
The Committee will recommend that Items b. through e. be approved by the Board.

f. Loan for Renovation of Atrium-MSU-Bozeman - ITEM 130-2010-R0306

g. Loan for Construction of BioSafety Animal Containment-MSU-Bozeman - ITEM 130-2011-R0306

Mick Robinson explained that these two items are awaiting approval from the Board of Investments, and they expect it before the May meeting. They currently have a limit of $1M, but are attempting to have that raised to $5M. Regent Mercer asked what the plan would be if they were not approved by the BOI. President Gamble indicated they would seek private and commercial support. However they are optimistic about the possibilities with the BOI. Regent Mercer asked if they would still come before the Board if they needed to get a different lender, and President Gamble indicated they would. Chair Semmens asked if the renovation of the atrium was functional or aesthetic. President Gamble indicated it is both, as well as educational.

The Committee will recommend approval of Items f. and g. contingent on Board of Investment funds.

h. Naming the Education Center-UM - ITEM 130-1017-R0306

The Committee will recommend Item h. for approval.

j. Policy on Disposal of Computers -MUS - Discussion Item

Item j. was deferred until someone could address the issue.

k. Use of Timber Sales revenues-MUS - ITEM 130-107-R0306 | Attachment

Regent Mercer said he was not ready to move ahead on this until he had a full understanding of the funds as they are now being used, and how much is involved. Chair Semmens asked how they are transferring the funds if they are non-transferrable. Mr. Robinson explained that before FY05 the funds were placed in the permanent trust. In FY05, the Legislature required DNRC to distribute the funds to the campuses. They are recommending that this change be continued. Regent Hamilton asked if this would change policy, and if they would need to approve it each year. Chief Legal Counsel Catherine Swift noted this does not require a change in the policy. It only designates that the funds be distributed. The Board has the option to distribute them money or put it in the permanent trust. It will only come back for approval if the Board decides they want to change it. Senator Hawks said he hoped they were not commingling information. There are two issues in the Legislature this year, one the lack of policy on a maximum return on trust lands, and the other is overhead costs. Regent Mercer recommended Senator Hawks discuss this issue with Chancellor Gilmore.

The Committee will recommend approval of Item k.

j. Policy on Disposal of Computers taken up at this time
Mr. Ray Ford indicated that as with a lot of Board policies, this one is based on State policy. However it is a little more complicated than the State's policy. The issue is how to rid a computer of files without making it inoperable when it is being passed on to someone else. With the university system, granting agencies retain title so some computers. Mr. Ford said that the Department of Defense has these requirements, and also has a program that will clean computers to their standards, and it is available and free to everyone.

The Committee will recommend Item j. for approval.

The Committee recessed for lunch at 12:20 p.m. The Committee reconvened at 1:00 p.m.

The campuses provided a handout at this time which showed their plans to use the $800,000 retirement holdback funds if they are referred back to them. Regent Mercer said he would like to see the money go directly to the students. President Dennison noted that the UM plan is a direct benefit to students since it will eliminate an increase to the students. Senator Hawks said that in the mind of the Legislature, it needs to be simple and direct. If the campuses can provide the linkage that ties in to the actual expenditure from student funds, he believes it will stand the test. Chair Semmens asked President Gamble about the $300,000 for the utility surcharge. President Gamble indicated they calculated it would give a break of about $10 per semester in tuition. Chancellor Sexton reported that over the biennium the $214,000 would prevent a utility surcharge on their campus for FY06 and FY07. Final discussion of this issue was taken to the full Board the following day.

l. Allocation Model Review - Robinson/Duringer/Roloff
There was extended conversation on the Allocation Model, with the final outcome of the committee believing there could be no change to the apportionment of state funds without detriment to different campuses. Regent Mercer suggested the Budget and Audit Oversight Committee take over the work on the model, since he believes the campuses do not want to see one or more of them injured. It was agreed that the Budget Committee would join with the Allocation Model committee to work toward policy.

Following a ten-minute break, the Committee reconvened at 3:30 p.m.

m. Biennial Budget Process Review - Robinson/Joehler
Chair Semmens indicated a significant amount of time and effort had been put into this process. He indicated staff needed support of the Board to move ahead with the present law adjustments in order to provide them to the OBPP by April 30. Regent Mercer asked if the campuses are underestimating enrollment or it is actually beginning to decline. Ms. Joehler said the campuses do their best to estimate enrollments because revenue projections are built around these numbers. The curve will be going down because of the demographics. The full discussion of this item was taken up before the full Board the following day.

n.Budget Initiative Proposals

Item n. was deferred to the full Board.

o. Public comment.Erik Burke, MEA-MFT, Mike Kupilik, President, University Faculty Association of The University of Montana, and Professor John Brower, President, Montana Tech Faculty Association, addressed the Committee regarding faculty salaries and ongoing retirement contribution inequities between faculty enrolled in TRS and those enrolled in TIAA-CREF. The group requested that the Regents work to prioritize faculty salaries and the retirement system issues as they prepare their budget proposal for the 2007 legislative session.

The Committee adjourned at 5:45 p.m.

DRAFT Minutes
The Academic & Student Affairs Committee
of the Montana Board of Regents

Regent Lynn Hamilton, Committee chair, called the meeting to order at 1:00 p.m. and welcomed the new members of the Committee, Regents Taylor and O'Loughlin.

a. Roll Call. Regent Foster was excused. All other committee members were present.

b. Review and adoption of the agenda.
Regent Taylor moved to adopt the agenda. Motion carried.

c. Approval of the minutes from the November 16, 2006, meeting of the Committee.
Regent O'Loughlin moved to approve the minutes. Motion carried.

d. Portion of the Meeting Devoted to Chief Academic Officers.

1. Level I memorandum
Deputy Commissioner Barber presented the Level I memorandum for the Regents' information. The Regents had no questions or concerns about the memorandum.

2. Level II Items -All Action Items

a. ITEM 130-1002-R0106: Bachelor's degree in Media Arts, UM-Missoula

b. ITEM 130-1003-R0106: Bachelor's degree in Accounting, UM-Missoula.
Regent Hamilton asked what the employment outlook is for students with a four-year degree instead of the five-year Master's of Accountancy degree. Students graduating with the baccalaureate degree are eligible to sit for the CPA exam.

c. ITEM 130-1004-R0106: Bachelor's degree in Finance, UM-Missoula

d. ITEM 130-1005-R0106: Bachelor's degree in Information Systems, UM-Missoula

e. ITEM 130-1006-R0106: Bachelor's degree in International Business, UM-Missoula

f. ITEM 130-1007-R0106: Bachelor's degree in Management, UM-Missoula

g. ITEM 130-1008-R0106: Bachelor's degree in Marketing, UM-Missoula
Regent Hamilton asked if any of the options that are being converted to majors were previous degree programs that were consolidated under a program review process. They were not.

h. ITEM 130-1010-R0106: Master's degree in Information Systems, UM-Missoula
Regent O'Loughlin asked about the difference between this program and the Master's in Computer Science offered at MSU-Bozeman. The Computer Science program focuses on technical aspects and theory, while the Information Systems program is more management focused. It can be thought of as the "workforce arm," blending theory and practice. Provost Dooley was enthusiastically supportive.

i. ITEM 126-1601-R0106: Associate degree in Natural Horsemanship, UM-Western
This item seeks continuation of a provisionally approved program. Regent Hamilton asked why the program carries the Associate of Applied Science credential instead of the Associate of Science designation. Provost Ulrich said that it is because the A.S. can't carry a major designation and the designation is important for students. The A.A.S. articulates fully into the bachelor's program in Natural Horsemanship. Regent Taylor asked about the on-going commitment from La Cense. The letter of agreement between Western and La Cense guarantees that if the agreement were terminated, existing students would be allowed to finish their programs.

j. ITEM 130-201-R0106: Certificate in Agricultural Marketing, Dawson Community College

k. ITEM 130-202-R0106: Associate degree in Web Development, Dawson Community College
By consensus, all of the action items will be forwarded to the full Board with a recommendation for approval.

3. Level II submission memorandum
Deputy Commissioner Barber explained the two-step approval process for new program proposals. The Level II items on submission at this meeting are informational, and will be on the action agenda for the next Board meeting. The Regents were asked to forward questions or concerns about any of these items to Deputy Commissioner Barber.

e. Portion of the Meeting Devoted to Topics of Concern to both Academic and Student Affairs Officers

1. Action: ITEM 130-101-R0306: Transfer goals
The proposed transfer goals were developed by the Chief Academic Officers in response to a request from this Committee. The first goal focuses on students transferring from two-year to four-year programs. This type of transfer deserves special attention because it can be particularly problematic, and because of the Board's emphasis on the importance of two-year education. Goal two emphasizes multiple pathways including some new ones relating to common coursework and learning outcomes.

Shannon Taylor, chair of the Faculty Council at MSU-Bozeman, proposed the addition of a fifth transfer goal, aimed at preserving the integrity and quality of campus-specific programs. Grant Mitman, chair of the Faculty Senate at Montana Tech, said that their Curriculum Review Committee takes a special interest in transferability when developing courses, but there are some courses that don't have equivalencies elsewhere in the system due to the uniqueness of the program or accreditation issues. Deputy Commissioner Barber noted that accreditation issues shouldn't impede advancing transfer goals, and if necessary, the accrediting agencies can be called on for assistance.

In response to a question from Regent Taylor about tracking transfer students since the performance audit, Deputy Commissioner Barber discussed the need for good data to assess the success of the new transfer policies. Tyler Trevor, the new data person at OCHE, will help identify remaining problem areas. There are also places on the website for students to tell their transfer stories, as well as to give feedback on the transfer website itself.

Regent Hamilton asked if the Committee wanted to add a fifth goal respecting the quality of campus programs. Dr. Taylor said that if the spirit of honoring faculty and the quality of individual programs was present, he had no objection to the goals as presented. The Committee will forward the goals to the full Board as written.

2. Next steps in the transfer area

a. Enhancements to the transfer website. Recent additions include exceptions to the Minimum Grade policy and courses that fulfill the Montana University System Core, both listed by campus. More information will be added as it becomes available, including exceptions to the Outdated Coursework policy. Deputy Commissioner Barber asked that each campus establish a prominent link from their website to the OCHE transfer website.

b. The proposed budget initiative on transferability. The initiative includes funds for a comprehensive data system and resources to support faculty workgroups developing common course outcomes and evaluating general education courses. It does not include funds for additional campus staff to assist with implementing the new transfer policies, which Regent O'Loughlin noted is an issue for the smaller campuses. The Committee endorsed the budget initiative by consensus.

3. Action: ITEM 130-102-R0306: Revisions to Policies 301.1 and 301.2. The proposed revisions to policies 301.1 and 301.2 would formalize the admissions program being phased in at the University of Montana-Missoula. This program, which has been briefly discussed with the Board in the past, directs students meeting the minimum requirements for admission to a four-year institution but deemed at risk of failure to begin their studies at UM-Missoula's affiliated College of Technology.

After lengthy discussion, the Committee declined to act, and the item was forwarded to the full Board without a recommendation. The key issue was that the suggested changes would allow campuses to force students into two-year programs even when a student meets the admission criteria for entry to a four-year program. Whether or not this improves the student's chance of succeeding, it has the potential of depriving the student of the ability to make his/her own choice. The discussion illuminated the need for a broader conversation regarding admission standards and preparing students for success in post-secondary education.

4. Action: ITEM 130-104-R0306: Revisions to Policy 301.5.1. The revision is a housekeeping item, to insure that the provisions in Policy 301.5.1 mesh with the expectations of Policy 301.5. Regent Taylor moved to forward this item to the full Board. The motion carried.

5. Discussion of Policy 940.29, tuition for post-baccalaureate students. Regent Hamilton asked to revisit this "super-tuition" policy that was adopted at a time when moving students through the university system quickly was a priority. She said that the policy flies in the face of life-long learning, career changers and the needs of teachers. Provost Dooley said that the difference in tuition would be approximately $600,000 on the Bozeman campus, and this would have to be shifted to other students. All campuses were asked to report on the fiscal impact of charging post-baccalaureate students the same tuition as undergrads for the May meeting.

f. Portion of the Meeting Devoted to Topics of Concern to Student Affairs Officers.
(Because it was late in the day, the action item was taken before the discussion item.)

2. Action: ITEM 130-105-R0306: ISBN numbers and textbooks. This is a follow-up to Regent French's suggestion, allowing students to comparison shop for textbooks. Several campuses are already doing this. The bookstore representatives present at the meeting, David Knickerbocker and Jeni Luft support the policy as written. There was consensus to forward this item to the full Board.

1. Discussion of institutional liability, in light of the MIT decision. OCHE staff attorney Cathy Swift was asked to discuss the ramifications of a recent decision denying summary judgment in the Shin v. MIT case. In this case, the parents of a student sued the university, administrators, and mental health staff for failing to protect the student from suicide.

Ms. Swift said that even though this was a preliminary decision and it has no direct application to the Montana University System, it shows the law moving in a new direction. Traditionally courts have hesitated to hold institutions responsible for suicide, holding the person responsible for their own actions. However, people who commit suicide are now seen as victims. The essential finding in this ruling is that there can be a duty to prevent if the action was foreseeable.

Regent Hamilton asked about parental notification. Ms. Swift said that there is an exception under FERPA in emergency situations, and parents can be contacted in an emergency. She also said that mental health issues are ADA issues, and that due process must always be followed when working with a student with mental health problems. She encouraged campus staff to work with a team including counseling staff, parents and an attorney when students are in crisis. Campuses should also follow the protocols they have in place for emergency situations, and work closely with campus or community-based mental health services as needed.

g. Other business
There was none.

h. Public comment
No additional comments were offered. The meeting adjourned at 5:20 p.m.
Submitted by Cathy Doyle

-------------------------

THURSDAY, March 2, 2006

Staff and Compensation Committee

The Committee convened at 3:30 p.m. Committee Members Present: Regent O'Loughlin, and Regent Semmens Acting Chair. Committee Members Absent: Regent Barrett, excused. Also Present: President George Dennison, President Geoff Gamble, Chancellor Dick Storey, Chancellor Frank Gilmore, Chancellor Ron Sexton, Chief Legal Counsel Cathy Swift, Rosie Keller, Mark Bruno, Pam Joehler, Susan Briggs, Craig Roloff, MaryEllen Baukol, Bob Duringer, Commissioner Sheila Stearns, Kevin McRae, Jim Foley, Teresa Branch, and Bill Muse.

a. Discussion of draft guidelines for "Board of Regents employment contracts" and "Montana University System employment contracts." Kevin McRae noted this project has been ongoing for some time in an effort to meet the diverse needs and interests of all the campuses. Mr. McRae explained the options presented in this item, as well as the recommendation that the Commissioner be the final approval in the interest of a system-wide focus on equity, market factors, and other impacts. He added some information about coaches' contracts, indicating they were expressly excluded from the policy that limits contracts to one year. The Board has the authority to approve multi-year contracts for coaches, but has chosen not to do so. On the few occasions where they were asked, the Board declined. The options presented here do not apply to coaches. President Gamble said staff is making a decision that is taking the system away from the vision of the Board, and asked where the Commissioner fit into this plan. Commissioner Stearns indicated they had consulted with various of the CEOs as well as other states, and have struggled with this item. Option A has the advantage of using an incremental approach. If there is an anomaly for market reasons, and there is good documentation with an offer in hand, her office will support it on the Agenda so that it doesn't jump out at the Regents as a huge percentage increase. Commissioner Stearns said she has a lot of faith in the CEOs. There has been a vision of a system, although it has been hazy. She is concerned that OCHE not be overwhelmed by the amount of work that could result from this change. She would like to use the OCHE at some threshold to check for big disparities and obtain explanations for them. This is something they already do. Commissioner Stearns believes this is a good way to go but has concerns about unintended consequences. The Board would retain approval of 60 to 80 contracts, while most other states do not have Board approval of staff items. She did want the Board to understand that her office would do the same level of scrutiny they now do, but would not do a more detailed evaluation.

Chair Semmens recommended taking this in component pieces, and suggested the Committee recommend to the Board they proceed with Option A. Regent O'Loughlin agreed.

Chair Semmens indicated the next level is the terms of the contracts. Mr. Kevin McRae referred to Page 583 of the Agenda, under Roman numeral I. The Commissioner will approve increases up to 15%, and the Board will approve those above that limit. He commented that some retention issues exceed that level, and he asked for direction from the Board and the CEOs on what threshold they would approve. He said the board retains approval of annual increases and bargaining. Refer to the noted page for other details of this proposed policy. There was discussion on the need for signing bonuses and the general use of them throughout the country. Commissioner Stearns indicated some possible language might be incorporated to cover signing bonuses. President Dennison was concerned about the 12-month eligibility requirement for increases, and thought that six months would be better, while three months would be best. He also did not see a reason for the 15% limit. Chair Semmens indicated the Commissioner needs to understand there are instances where she needs to take items to the Board. President Gamble indicated the percentage might not give the full picture, since a low paid employee could receive a huge percentage increase, while it would be a low dollar figure. Chair Semmens recommended changing the language to the greater of a certain percentage or certain dollars. Doralyn Rossmann, Chair of the Professional Counsel at MSU suggested they might consider pro-rating eligibility and grant one twelfth for each month served up to the 12 months.

Chair Semmens asked Mr. McRae if the next part is intended to give more flexibility that does not already exist, or if it simply memorializes what does happen. Mr. McRae explained that non-base performance bonuses have no policy either prohibiting or authorizing. This is intended to set some guidelines on what is reasonable, and who is eligible. There is the possibility it might encourage campuses to utilize these bonuses more often since the rules will be clearer. Chair Semmens indicated if that is the case, they need to carefully evaluate it. Resources remain fixed, which means that someone else will need to get less to fund these. Mr. McRae said there were four items presented, with number four being the non-base performance bonus item. President Dennison asked about the dates included, and Mr. McRae indicated those will be cleaned up as they proceed. Kevin McRae further explained the policy before the Board envisioned a scenario where for recruitment only, there might be two-year contracts subject to approval by the Commissioner. Coaches would not be included in this. LeRoy Schramm had believed that multi-year contracts did minimal good for retention. Mr. McRae indicated his office saw some logic in that, and wanted to be careful with multi-year contracts. Chair Semmens asked that they hold off on the multi-year contracts at this time, to put in place pro-rating raises, using the percentage as well as the dollar figure, and signing bonuses. He also recommended no annual effective date for bonuses, and that bonuses be addressed in the next draft. Chancellor Sexton questioned why Letters of Appointment were excluded. Mr. McRae explained they are implicitly temporary positions, and more precarious than contracts. They will therefore remove the first sentence of the last paragraph on page 500 that refers to Letters of Appointment.

Chair Semmens next took up multi-year contracts. He asked if it was believed they were appropriate only for recruitment, or for recruitment and retention. Professor Shannon Taylor indicated that Bozeman had worked on a pilot program for multi-year contracts for the adjunct professors last year. They were supported by faculty and they have used them to great advantage. One of their best adjuncts received a better score for borrowing money with the multi-year contract. Professor Taylor indicated that without their professional staff they would be unable to do their jobs. He believes that multi-year contracts would retain some of those staff what would go elsewhere in the Gallatin Valley. In their area it is very important to have this tool since their salaries do not compete with the going rate in private industry. Commissioner Stearns believes they need some latitude on multi-year contracts, but she has concerns about them. Buyouts are costly, and there needs to be funding in place to cover that possibility. She also doesn't want multi-year contracts to become regarded as an entitlement. They should also be limited to particular fields that are hard to fill. Mr. McRae reiterated this policy applies to professional and administrative positions, and not coaches. Catherine Swift, Chief Legal Counsel advised that to balance the risk between the employee and the employer more evenly, a liquidated damages clause could be written into the policy and it would be for an amount equal to actual damages caused by an employee who leaves before the end of the contract. The penalty could be graduated by time spent on the job. Ms. Swift will work on this before the May meeting. Chair Semmens said no action would be taken on this item at this meeting, but requested input to OCHE with recommendations so it can be ready for approval at the May meeting. He asked further if there should be different requirements for coaches, or should they simply be included in the general policy above. President Gamble believes coaches' contracts are so different that they couldn't be included here. Chancellor Sexton disagreed on offering multi-year contracts to coaches, especially for the smaller campuses. He indicated he had fired coaches for not meeting the philosophy of the campus, or not keeping up graduation rates, but not for losing games. He would rather offer multi-year contracts to his professionals. Chancellor Storey indicated the coaches at Western do more than coach. He would appreciate having flexibility with their coaches, especially since there is one he might lose at this time. Chair Semmens asked if they then thought the policy should be applied to all positions, with the flexibility to apply as needed. Chancellor Storey said they should use multi-year contracts very cautiously. Chancellor Gilmore said he was not necessarily in favor of multi-year contracts for coaches. With limited use, he would like the flexibility to use them for faculty. President Dennison noted it will differ based on the needs of each campus. He argued strongly for multi-year contracts for coaches since they recruit student athletes who will be expecting that coach to be on board during their time at school. Loss of coaches causes problems with lower graduation rates for athletes, and the loss of scholarships. NCAA has requirements for academic progression rates. Further, some contracts are written so that coaches pay the full amount of the contract if they do not complete it. Chair Semmens recommended not distinguishing between administrators and coaches, but to use multi-year contracts in circumstances where the market dictates, and there is a demonstrated need. President Gamble requested a look at the data before a decision is made on this. He also believes it is unfair for the head coach to receive multi-year contracts if administrators do not. Chair Semmens noted that at the policy level, there should be a broader definition rather than distinguishing between types. He also requested that more data be gathered on usage for other professionals and administrative fields. Regent O'Loughlin felt that contract professionals were not leaving under contract, while athletic coaches did not seem to have the same incentive. She also did not see the need to extend multi-year contracts to other contract professionals, unless it could be demonstrated they improved the data. Chair Semmens indicated staff would look into this over the next four to six weeks, and he requested the Board have the information before the May meeting, including research on coaches and other professionals. He indicated he wanted to have this item completed at the May meeting.

Public Comment
Erik Burke, MEA-MFT, Mike Kupilik, President, University Faculty Association of The University of Montana, and Professor John Brower, President, Montana Tech Faculty Association, addressed the Committee regarding faculty salaries and ongoing retirement contribution inequities between faculty enrolled in TRS and those enrolled in TIAA-CREF. The group requested that the Regents work to prioritize faculty salaries and the retirement system issues as they prepare their budget proposal for the 2007 legislative session.

The Committee meeting adjourned at 5:42 p.m.

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